THE MANAGEMENT INTERVIEW : Paula Rebstock – Picking the right fights

She’s not too crazy about the ‘watchdog’ analogies – and bit miffed that photographers usually ask her not to smile. That’s understandable. Paula Rebstock has very warm smile and if you really had to cast her in watchdog mode, it would be more golden retriever than rottweiler.
However, since the softly spoken 48-year-old American took on her role as chair of the Commerce Commission (ComCom) three years ago, the organisation has been pretty successfully proving that it does have teeth. And Rebstock herself is quite chuffed that in this, its 20th anniversary year, ComCom has been winning some record penalties from companies found to have breached the required behaviour standards of competition law.
Amongst beneficiaries of its activities are ANZ National Bank customers who’ve recently been receiving credits for the undisclosed fees charged on their overseas credit card transactions. Earlier this year the bank copped hefty $1.325 million fine as well as agreeing to $10 million worth of refunds after pleading guilty to 45 charges of breaching the Fair Trading Act.
What’s gratifying about that level of penalty is that it acts as real deterrent rather than being written off as cost of doing business, says Rebstock.
“The biggest previous fine was $100,000 and suddenly we have fine well in excess of million dollars. This makes it far more significant for company to risk breaching the law – it’s more than just cost of business.”
This year has also seen ComCom’s crusade against cartels gain critical leverage when the High Court imposed record $3.6 million penalty on Koppers Arch Wood Protection (NZ) and its Australian parent after they admitted participating in price-fixing behaviour and acting to exclude market competition.
That, Rebstock noted after the April judgment, should make others think twice before engaging in what she described as “the very worst kind of anti-competitive behaviour” that saw companies gain at the expense of ordinary New Zealanders.
In both cases, the companies involved (“to their credit”, says Rebstock) pleaded guilty and the Commission was involved in recommending appropriate penalties.
“We’ve set new benchmark,” notes Rebstock with some glee.
These instances also inadvertently precipitated deluge of work on the negotiation front as at least 10 other companies in ComCom’s firing lines have suddenly opted to go down the same track.
The Commission has also earned headlines for its more “aggressive” investigations, and its willingness to stand on governmental toes – as it did by rejecting the proposed Air New Zealand-Qantas merger in what Rebstock has called her “baptism of fire”.
And alongside the high-profile wins are whole series of smaller but significant ones – the butcher fined $10,000 for falsely labelling products as ‘organic’; an appliance shop fined $20,000 for ‘fixing’ second-hand appliances that weren’t broken; four Palmerston North eye surgeons hit with $85,000 in fines and costs for price-fixing; rash of ‘health’ product peddlers facing fines and refunds for misleading product claims.
Yes, the Commission has been busy – but it’s also tighter, more focused organisation that picks its battles with lot of deliberation, says Rebstock.
“I hear people say that we’ve become lot more assertive or aggressive. Well, it didn’t happen overnight. I think we’ve become more effective as team and we’ve done it through thousand different measures.”
While more inclined to talk “we” than “me”, Rebstock concedes that strategy is one of the strengths she’s brought to her role
“I’m probably big picture person and I think that’s right in commission – the chair needs to provide leadership in that area. As commissioners we have governance role and think strategically about how the Commission is positioned at that level. But we also have to be quite strategic about our statutory functions too. I think that is my strength.”
One of her major challenges has been melding different skill sets within the Commission into cohesive team.
“We have teams of investigators, teams of lawyers, of accountants, of economists – just to name few. Then there’s the commissioners themselves who tend to mirror that skill set. All this had to be brought together into coherent, analytically robust result.
“For the chair this is the big challenge – how to get all these streams of individual expertise that you need into one-team approach when the disciplines don’t always sit comfortably together. This has been the big issue in my time at the Commission. We have some great individual performers and individual teams but we really had to refocus on the sort of management matrix that makes that work.”
That took bit of soul-searching and internal reviews of specific functions, and it got results.
“We’ve been tremendously successful in repositioning the Commission in terms of our outcomes. That came as the result of three years of solid work – looking hard at the way the business is operating on the ground and the way we interact with one another both at staff and commissioner level.”
While there are still some “robust” debates, Rebstock believes there is now greater “sense of safety around the table” that all the relevant perspectives will be brought to bear and given their due weight. There’s also been complete revamp of human resources and internal capability, which has reduced staff turnover from 25 percent down to around eight percent.
“As chair it’s been my job to facilitate an environment where that could happen – where we could look hard at what we were doing – first at strategic level in terms of what outcomes we wanted to achieve. Then to support management in making the changes they needed to make and driving these through the whole organisation.”
There is now clear emphasis on picking cases that are of the greatest national importance when it comes to harm done to consumers and to competition. That isn’t as simple as it sounds, says Rebstock.
“But it has unleashed whole series of changes in the way the Commission goes about its business.”
ComCom is resource-constrained and rightly so, says Rebstock.
“We should have to prioritise what we do.”
Take its fair trading responsibilities, for instance, around which ComCom might get about 10,000 complaints year but only takes on 23 prosecutions.
“So we have to rely on whatever we do being so effective that it basically sets standard that companies and competitors know they have to meet because the consequences of getting it wrong are too great.”
It’s bit of balancing act, says Rebstock. The Commission has to show it has sufficient clout to deter anti-competitive behaviour without becoming so heavy-handed that it tramples on company’s rights to determine how best to pursue profits. When it comes to regulating potential monopoly business behaviour, the art of compromise reigns.
“It’s clearly our view that if administrative settlement meets the concerns then it is strongly preferred over declaration of control. This regime has been in place since 2001, we’re currently dealing with 28 companies and while we’ve declared intention to control in respect of two [Transpower and Unison Networks], we haven’t declared control and may not have to. In fact we have no reason to believe we are not progressing well toward an administrative settlement.”
Put all of these alongside bulge in merger activity that seriously stretched ComCom’s resources and life definitely ain’t boring for Rebstock.
“It really is fantastic role – it’s hard to imagine the range of issues we deal with.”
A sample range on the day of this interview included further discussion on electricity issues, Commerce Act cartel case and telling the NZ Rugby Union that it can impose salary cap on players (the Commission agreed that benefits to New Zealand outweighed detriment to competition in this case). “It is,” she says, “an exciting place to be – an exciting job to have.”
New Zealand has offered Rebstock quite lot of career excitement si