In November last year, the Government tasked the Commerce Commission (ComCom) with undertaking a year-long study on competition for residential building supplies (including foundations, flooring, roof, walls and insulation) in New Zealand (Market Study).
For many, the Market Study is a long overdue step in the provision of residential housing, as it recognises that a significant proportion of costs associated with residential builds come from key building supplies. In recent months, with the issues of ongoing shortages causing delays and making news headlines, concerns with the production and supply of building materials has been emphasised.
Now, ComCom has taken a further step in this Market Study, calling for stakeholder engagement and cross-submissions on the Preliminary Issues paper (Paper). This engagement is set to continue throughout 2022.
In this article, we consider the scope of the Market Study, what steps have already been taken and what is still to come, and how you can engage in the Market Study.
The Market Study
The scope of the Market Study is broad and the factors ComCom is authorised to consider include, but are not limited to:
- the industry structure for key building supplies covered by the Market Study;
- the nature of competition for these key building supplies, including industry pricing practices or acquisition requirements that impact on competition; and
- impediments to the entry or expansion of new or innovative building supplies (e.g. prefabricated products or “green” building supplies).
So far, a Statement of Process outlining the intended process for the Market Study and the Paper, outlining ComCom’s current understanding of the residential building supplies industry and the potential issues that ComCom will consider raised by the criteria listed above have been published.
In particular, the Paper provides an overview of potential issues, including:
- the importance of building supplies to New Zealanders;
- the nature of the industry and supply chain for residential building supplies in New Zealand;
- the wide range of products used in residential building construction;
- the unique characteristics of building in New Zealand (e.g. our specific climate and natural disaster risks);
- the current demand and supply chain pressures faced by the industry;
- the evolving regulatory framework; and
- climate change and its implication on the future of building supplies.
The Paper notes the importance of stakeholder engagement, and that this will aid in refining the issues identified and focusing the scope of the Market Study. The Paper indicates the broad range of factors that will make up the Market Study and what a stakeholder may provide responses on. While the timing for initial feedback on the Paper has closed, ComCom is now seeking cross-submissions by 16 March 2022.
Now, ComCom is seeking stakeholder engagement to inform its draft report on preliminary findings about competition for residential building supplies that will be published around July this year. Following its release, there will be another round of stakeholder engagement and may be a consultation conference held on the matter.
This will culminate in a final report, due to be published on 6 December 2022 (Report). While it is too soon to say what will be included, depending on the conclusions ComCom reaches in the Market Study the Report may include recommendations identifying ways competition in the residential building supply sector can be improved.
How to participate
ComCom is seeking to engage directly with stakeholders on a broad range of issues covered by the Market Study. If you consider these relevant to you and wish to provide information or otherwise be part of the engagement process, email ComCom at buildingsuppliesmarketstudy@comcom.govt.nz indicating your interest.
There will be several opportunities for stakeholder engagement ahead of the final report’s publication in December this year.
How we can help
The stakeholder engagement and information ComCom receives from this process will help shape the eventual recommendations contained in the Report (if any). If this is something you are interested in, want help understanding the Paper or what the impacts of the Market Study’s final report may be, please do not hesitate to contact a member of our dedicated Building and Construction team.
