The Commerce Commission has today released a paper providing more detail about its approach and the next steps for its market study into competition in the residential building supplies sector.
In November 2021, the Government asked the Commission to take an independent look at whether competition is working well and, if not, what could be done to improve it.
“This study will look at the factors affecting competition for a range of building materials that contribute to the cost of house construction in New Zealand,” says Ms Rawlings. “Competition can also affect the quality and range of products available to New Zealanders.”
“The factors we will consider across the range of key building supplies include industry structure and the nature of competition. We will also look at conditions of entry and expansion, such as whether regulatory and standards systems create any impediments to competition and innovation.”
The initial phase of consultation on the study has underlined that the residential building supplies sector is facing challenging conditions, globally and domestically, due to disruptions in supply chains.
“The supply chain is affected by international influences such as worldwide shipping, global manufacturing, and the COVID-19 pandemic, which highlights that some of the current challenges may sit beyond the scope of this study,” Ms Rawlings says.
“The study has a longer-term focus to ensure competition for key building supplies delivers enduring benefits to New Zealanders who are seeking to build new or renovate existing housing. It is possible that this focus could enable greater resilience to international supply chain issues.”
As well as looking at factors affecting competition across the range of key building supplies, the Commission has identified three key building supplies which it will consider in more detail. They are concrete (including cement), plasterboard and structural timber.
“These three key building supplies have been selected primarily as a consequence of the relatively high proportion of the cost of residential building that they represent compared with other supplies, the relatively high concentration of suppliers for these materials, and information gathered to date that suggests these supplies have limited alternative suppliers.
Alongside our study of all key building supplies included in the scope of the study, these three detailed analyses will assist us to more closely consider the factors affecting competition through particular examples,” says Ms Rawlings.
Between now and July, the Commission will continue to engage directly with a range of stakeholders to gather information relevant to our identification of factors affecting competition for key building supplies which are within the scope of the study. In addition:
