EQC policy may break law - expert
The Earthquake Commission's (EQC) new opt-out policy could breach commerce rules, a senior law lecturer says.
The Commerce Commission is considering a complaint by Russell Poole, a co-owner of the Fix It building repair franchise, that alleges EQC's new opt-out rules are anti-competitive.
Poole is worried that EQC's decision to put more financial responsibility on to homeowners who opt out of the commission's repair process will lead to less work being available for builders who have not signed on to the Canterbury home repair programme run by Fletcher Construction.
Debra Wilson, a senior law lecturer at the University of Canterbury, said Poole's complaint had a chance of being upheld by the Commerce Commission, but it would be a difficult case to argue.
She said it was likely that Poole was complaining under section 36 of the Commerce Act, which stated that a person with a substantial degree of power in a market must not take advantage of that power for the purpose of restricting entry of another person into that market.
He could argue that the EQC had substantial power in the quake repair market and that its decision to place more financial risk on those opting out of its mandated repair process effectively meant that other building companies were being prevented from competing for repair work.
Wilson said that Poole would have to convince the Commerce Commission the purpose of EQC's new policy was to prevent the building companies from competing.
"Showing it has the effect is not enough," she said.
If the EQC could convince the Commerce Commission that the purpose of its policy change was to streamline repairs, as it was asserting, then Poole's complaint could fail.
Canterbury Registered Master Builders Association president Clive Barrington said there was now little sense in people opting out of the Fletcher-run repair programme.
"If the [repair] work is under $100,000 they are best to stay with Fletchers," he said.
They could still choose their own builders, provided they were accredited with the programme, but would not face any of the hassles that could be associated with project management. Nor would they face any financial risk.
The EQC is confident that no-one will be left out of pocket as a result of the change to its opt-out policy, which will result in contractors invoicing homeowners rather than the commission.
An EQC spokesman said yesterday that homeowners who opted out would need to reach agreement with the commission over the scope and cost of the work to be done before engaging a builder so both parties knew exactly where they stood before work started.
Once the repairs were satisfactorily completed and all the relevant invoices had been provided to the EQC, the homeowner could expect to be paid by the 20th of the following month, the spokesman said.
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