NZX will help develop Emissions Trading Scheme auction platform, plus Kiwis have way less debt on their credit cards

A joint bid by NZX and the European Energy Exchange (EEX) has been selected to develop and operate the managed auction service for the New Zealand Emissions Trading Scheme – one of the Government’s main tools for meeting domestic and international climate policy targets.

Under the terms agreed with the Ministry for the Environment, NZX / EEX will design and implement the platform to manage the regular auctioning of New Zealand emissions units on behalf of the Government. The appointment followed a joint tender from the NZX / EEX partnership.

Development of the managed auction platform is expected to be completed by the first scheduled NZ ETS auction in March 2021.

NZX and EEX announced a Cooperation Agreement in December 2019, with a focus on securing new opportunities in the New Zealand emissions market.

The partnership forms part of the NZX’s international alliance strategy and follows last week’s non-binding heads of agreement to shift NZ’s suite of dairy derivative contracts to the Singapore Exchange’s trading and clearing platforms.

Credit card balances fall 15 percent year-on-year

Outstanding credit card balances continue to decline, according to new figures from the Reserve Bank out yesterday.

In September 2018 and 2019 credit card balances barely changed at $7.21 billion and $7.24 billion, respectively.

Yet this September, balances fell 15 percent year-on-year to $6.17 billion, reflecting weaker consumer spending but also the growing impact of new disruptor buy-now-pay-later providers such as Laybuy – where the customer can spread payments and not incur interest charges.

Adding to the problem for credit card providers, the proportion of credit card debt that incurs interest continues to decline, now down to a near-record low of 58 percent as consumers reduce debt as well as curtaining their spending.

Parking company fined for anti-competitive behaviour

Wilson Parking has been forced to sell three of its large Wellington parking buildings and pay $500,000 to the Commerce Commission following allegations of anti-competitive behaviour.

Wilson Parking and the Commerce Commission have agreed to resolve the High Court proceedings which were filed in 2018 following customer complaints that Wilson had hiked prices at one of its central Wellington car parks.

Wilson acquired the Capital car park on Boulcott Street in June 2016 without clearance from the Commerce Commission.

The Commission began receiving customer complaints in February 2017 about price increases, prompting it to investigate.

The Commission alleged this lessened competition for the supply of car parking in the Boulcott Street area.

In addition to paying $500,000 towards the legal costs of the Commission as part of the settlement, Wilson Parking is required to notify it of any proposed acquisitions of new car parks in Wellington for the next five years.

US Dept of Justice case targeting Google revives memories of similar action against Microsoft

In what is shaping up to be the biggest antitrust case in decades, the US Department of Justice has filed proceedings against Google alleging the company has stifled competition to maintain its powerful position in the market for online search and advertising.

Eleven states — Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas – have joined the suit.

The complaint targets a series of interlocking actions by Google that, as a whole, allegedly harmed competition and prevented rivals from gaining a meaningful audience.

It alleges in part that Google pays billions of dollars a year to device manufacturers including Apple, LG, Motorola, and Samsung and browser developers like Mozilla and Opera to be their default search engine and in many cases to prohibit them from dealing with Google’s competitors. As a result, “Google effectively owns or controls search distribution channels accounting for roughly 80 percent of the general search queries in the United States” the complaint alleges.

Google is also accused of striking restrictive contracts to shut out competitors. For instance, its payments to Apple were so valuable, the DoJ found, that it constituted up to a fifth of that company’s global net income. According to the lawsuit, one senior Apple employee wrote to a Google counterpart in 2018: “Our vision is that we work as if we are one company.”

The allegations mirror the 1998 Microsoft case, which claimed the software company had unlawfully excluded Netscape by insisting PC makers pre-installed Microsoft’s own Internet Explorer browser.

Justice Department officials did not rule out a breakup of Google if the proceedings are upheld.

Google described the Government’s actions as “deeply flawed.”

Shares in Alphabet (Google’s parent company) are up more than 10 percent in the past month.

Bottom of Form

EU says trade deal with the UK still possible, Pound surges

Sterling jumped more than 0.8 percent against the US dollar yesterday after the EU signalled a trade deal with the U.K. is still possible.

“Despite the difficulties we’ve faced, an agreement is within reach if both sides are willing to work constructively, if both sides are willing to compromise and if we are able to make progress in the next few days on the basis of legal texts and if we are ready over the next few days to resolve the sticking points, the trickiest subjects,” the EU’s chief negotiator Michel Barnier told the European Parliament.

Barnier’s comments provided traders with some optimism that a trade deal between the UK and the EU would be reached, even though their negotiations have been stalled for months.

Last week, British Prime Minister Boris Johnson struck a gloomy tone, warning exporters to prepare for a no deal with the EU. A spokesperson for the government went further on the same day saying European negotiators did not need to travel to London this week if the EU wouldn’t change its approach to the talks.

British officials were disappointed late last week that European leaders had called on the UK “to make the necessary moves to make an agreement possible.”

GM announces major push into electric vehicle production

While Elon Musk and Tesla might have opened up an early lead in electric vehicle production, its competitors are fast catching up.

General Motors has announced it’s investing US$2 billion in its Tennessee production facility so it can begin building electric vehicles.

The plant will be equipped to build the new Cadillac Lyriq electric SUV, making it the third GM factory capable of building electric vehicles, the automaker said yesterday.

The factory currently builds two gasoline-powered Cadillac SUVs, the XT5 and the XT6, as well as the GMC Acadia SUV.

Last week, GM announced it had renamed its Detroit-Hamtramck factory “Factory Zero.” GM is investing US$2.2 billion in that factory, which is expected to eventually employ 2,200 workers, which is a few hundred more than in recent years.

The factory will build the new GMC Hummer EV electric truck late next year. It’s also expected to build the Cruise Origin, a self-driving electric vehicle jointly designed by GM and Honda.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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