Home > The Body Politic > Blogger lays complaint with Commerce Commission – *UP-DATE*

Blogger lays complaint with Commerce Commission – *UP-DATE*

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Continued from: Blogger lays complaint with Commerce Commission

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Commerce commission logo

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On 1 April (not an April Fools Joke) this year, this blogger laid a complaint with the NZ Commerce Commission, regarding National’s dealings with Mighty River Power and Rio Tinto’s Tiwai Pt aluminium smelter.

The complain was as follows,

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Tony Ryall has recently announced that the NZ Government is intervening directly in negotiations between Meridian Energy and Rio Tinto (which is 80% owner of Tiwai Aluminium Smelter).

Mr Ryall has said,

“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.

“In the meantime, we understand Meridian’s existing contract with Pacific Aluminium remains in place at least until 1 January 2016 with significant financial and other obligations beyond that.”

Ryall added that “all relevant information – including about the smelter electricity contract – will be reflected in the Mighty River Power offer document which is currently being finalised”.

Source: NZ Herald, Govt steps in to sort out stalled Tiwai power deal ( http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10874174)

I therefore submit the following;

(1) This appears to be a prima facie case of the NZ Government manipulating the future stock price of Mighty River Power (and other state owned powercos), by offering a subsidy to Rio Tinto.

(2) This subsidy is not available to any other company nor individual.

(3) As such, I submit that the NZ Government’s intention to subsidise electricity that is provided to Rio Tinto is done with a view to reduce competition in the market.

Specifically, I draw the Commission’s attention to the Commerce Act 1986; sections 27, 30, and related clauses.

(4) Furthermore, I submit that if any other corporation, company, institution, or individual attempted such an act, that they would be deemed to be guilty of price fixing and manipulation of the market.

I await your response and thank you for your consideration of my complaint.

-Frank Macskasy

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Being somewhat naive, I believed that attempting to  instigate events, that would keep the price of shares for a specific company at an inflated value,  would constitute a form of manipulation of  the share market.

Silly me.

What was I thinking?!

The Commerce Commission replied four weeks later,

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from:     Contact <contact@comcom.govt.nz>
to:     “fmacskasy@gmail.com” <fmacskasy@gmail.com>
date:     Mon, Apr 29, 2013 at 9:56 AM
subject:     282199 Meridian Energy Limited and the government

Thank you for the information you provided the Commission regarding the Government’s announcement that it will intervene directly in the negotiations between Meridian Energy and Rio Tinto (owners of Tiwai Aluminium Smelter).  You suggest that this intervention would amount to price fixing

 We assessed the information you have provided and we are satisfied that the Commerce Act is unlikely to have been breached in this instance. Although it owns one of the parties to these negotiations, Meridian Energy, the Crown appears to have tried to meditate in this dispute on an “honest broker” basis. As such, the Crown probably would not have been in trade for the purposes of this exercise.

 The above is merely our view that no prima facie breach of the Commerce Act has occurred. Such a view is not a ruling of law, as only the courts can decide whether there is a breach of the Act. The Commission’s decision not to pursue this matter does not prevent an individual from initiating their own action.

 We have closed the file in regard to your complaint enquiry number 282199.

 Yours sincerely

 Katey Salmond

Commerce Commission |Senior Contact Centre Adviser
44 The Terrace |PO Box 2351 |Wellington 6140 |New Zealand
Free phone 0800 943 600 |Fax +64 (04) 924 3700
Follow us on Twitter @NZComCom

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One would have thought that by providing subsidised (cheaper) electricity to Rio Tinto’s aluminium smelter; for a short term period (as Dear Leader has stated:  PM John Key says fresh Mighty River Float detail due on Friday; may include detail on risks around Tiwai Pt closure);  for the purpose of maintaining a high price for Mighty River Power’s shares – would constitute a form of share-market manipulation.

After all, the point of the whole exercise was to maintain Mighty River Power’s share-value. As Key himself pointed out on 2 April,

“But obviously, for the number of people involved, the jobs, the impact on the local community and the impact in the short term on the electricity markets, the government would like to see the orderly exit of the smelter, or a long term agreement between the companies.”

Acknowledgment: Interest.co.nz – PM John Key says fresh Mighty River Float detail due on Friday; may include detail on risks around Tiwai Pt closure

In an ironic side-issue, it’s interesting to note that merchant bankers, share-brokers, Federated Farmers, etc, haven’t raised merry hell on this issue – as they did with the Labour-Green proposal for a single electricity buyer-desk, NZ Power.

I think we can see all manner of vested interests involved here.

Last point, Ms Salmond writes in her 29 April email to me,

The Commission’s decision not to pursue this matter does not prevent an individual from initiating their own action.”

That almost comes across as a sly hint…

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= fs =

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  1. 30 April 2013 at 2:12 pm

    Suggest you make a complaint to the Financial Markets Authority (FMA) alleging market manipulation, as some of us did yesterday. ASAP. I will send you the ‘Open Letter’ of complaint as an attachment – so you can use whatever you think may be useful. Cheers! Penny

    • 30 April 2013 at 2:22 pm

      Thanks, Penny! I hadn’t considered that option. Good call!

      Once I get the ‘Open Letter’ of complaint, I’ll submit something to the FMA.

  2. 30 April 2013 at 2:21 pm

    “Honest broker”….that could come in handy when you are trying to get away with pretty much anything! I will keep that up my sleeve.

  3. 30 April 2013 at 2:29 pm

    The You Tube clip of our protest outside the Financial Markets Authority (FMA), including reading the contents of our ‘Open Letter’ of complaint to the CEO alleging criminal market manipulation of the Mighty River Power share offer by ‘information insiders’ Prime Minister John Key, Minister of Finance Bill English, Minister of Economic Development Steven Joyce + Minister of State Owned Enterprises Tony Ryall.

    Suggest as many folk as possible make complaints to the FMA.
    Help yourself to any information which will help you do so.

    Cheers!

    Penny Bright
    A Spokesperson for the Switch Off Mercury Energy group

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