KEY POINTS:
Claims of predatory pricing and dirty tricks in the long-haul bus business have been rejected by the Commerce Commission, which says there is not even enough evidence to start a full investigation.
Industry newcomer nakedbus.com went to the competition regulator earlier this year, saying the InterCity group had
been abusing its market dominance.
Daniel Rode, sales and marketing manager for Intercity, said the company had been in the business for the past 15 years.
"We have robust internal compliance processes that adhere to all New Zealand consumer laws so it stands to reason that there were no grounds for a Commerce Commission investigation to be undertaken."
Nakedbus.com began operations last year, with a low-cost business model allowing it to offer tickets for as little as $1 for trips between North Island cities. It heavily relies on internet bookings to keep its ticket prices down.
Its tactics and methods are similar to those used by low-cost airlines overseas. In January, nakedbus.com made a complaint to the Commerce Commission saying that the way Intercity reacted to its market entry was unfair and an abuse of its dominate position.
Intercity slashed its prices - but only on those services that compete directly with nakedbus.com.
Company part-owner and managing director Hamish Nuttall said at the time of making his complaint that Intercity's tactics were "blatant and a clear abuse of its market position". Of the hundreds of bus services Intercity had across New Zealand, it had cut prices on only four or five.
An Intercity bus ticket between Auckland and Rotorua usually costs $55, unless it is for one of the buses that leaves half-an-hour before nakedbus.com and then costs $15.
Intercity was prepared to make a loss on only those services that directly competed with nakedbus.com - while overcharging all of its other customers, some of whom travelled the same route on the same day, said Nuttall.
"If they are interested in giving good value they should do it across their network, which we're trying to do," he said. "My view is that you should behave ethically and within the law. Any competitor that is not operating within the law should be called to task."
Nuttall was not available to comment on the decision by the Commerce Commission to reject his complaint.
Complaints of a big player abusing its position are not new, with now-defunct airline Origin Pacific once claiming that Air NZ abused its market power by launching new services and dumping capacity on certain routes.
The Commerce Commission disagreed, saying Air NZ behaved as any other rival without such a dominant position would have done. It is illegal for any company with a substantial degree of market power to take advantage of this power to prevent competition.
But big players, even those with a monopoly in a particular market, are allowed to cut prices.
An Intercity spokeswoman said the Commerce Commission had told the company that there was not enough evidence to even proceed with a full investigation into the claims made by nakedbus.com.
