Baycorp shares buckle in 'war'

By Nick Stride

Friday 14th June 2002

A challenger to Baycorp Advantage this week came out fighting with a promise to undercut its larger rival for at least a year.

Credit Data, backed by independent debt-collection houses that have been battling Baycorp for nine months over pricing, claims to have a more up-to- date database than Baycorp.

The new company is half-owned by Law Debt Collection managing director John Campbell and half by Auckland's EC Credit Control.

EC managing director John Harrison said Credit Data would charge half of what Baycorp charges for debtor information.

"If Baycorp comes out and say 'gee, we've got some competition, instead of charging $5 we're going to suddenly cut it to $2.50,' then we'll cut it to $1.25."

"We don't care if we don't make a profit in the first 12 months. We're going for market share."

Credit Data will launch in four to eight weeks with an initial database of 500,000 defaulters in New Zealand, of whom 200,000 have been "loaded" by Law Debt, according to Mr Campbell.

It will launch in Australia soon afterward.

Australian reports have linked the company to a service promised imminently in both countries by Dun & Bradstreet Australasia.

Mr Campbell said Credit Data would look at D&B's system. The country wasn't big enough for three players, he noted.

Mr Harrison was less diplomatic, saying D&B would have to pay to access data like anyone else.

"Frankly, they need us more than we need them."

Baycorp has been locked in dispute with collection agencies around New Zealand since October when it introduced a charge of $5 plus GST for every debtor loaded by other agencies on to its database.

They have been fighting a war of words ever since.

Baycorp has downplayed the dispute, saying it involved "only a few" companies and wouldn't affect its business.

Mr Campbell said there were 138 collection companies in New Zealand. He had talked to, probably, 99% of them and not one was loading with Baycorp.

He estimated Baycorp had only ever had around 40% of the debt collection business, with the independents holding the rest.

When the charging dispute erupted he organised meetings of independents to seek consensus on how to deal with the problem.

"One problem with the industry is that we've never really talked to each other before."

The Commerce Commission is looking into his complaints that Baycorp has breached the Fair Trading Act with claims it has a market-leading database - he says the integrity of its database has degraded steadily since October - and that it has abused a dominant position.

Mr Harrison objected to Baycorp's portrayal of the rebel agencies as "small."

"I've been in business since 1979. I have 20 branches in Australia and New Zealand and 16,000 clients, of whom 80% are former Baycorp clients."

He said the dispute and the threat of competition were the major reasons for the decline of Baycorp's share price, which has fallen 43% this year.

He said he had respect for Baycorp managing director Keith McLaughlin but was astonished he and the Baycorp board tolerated the "arrogant" approach taken by Joe Flynn, the general manager of Baycorp Business Data in New Zealand.

The revenue Baycorp would have gained from introducing charging, had agencies paid, would have been of the order of only $150,000 to $200,000 a year.

He also challenged Mr McLaughlin's assertion, made in an interview with Australia's Open Briefing, that it wasn't in customers' interests to have more than one consumer credit reporting agency.

"It isn't in Baycorp shareholders' interests to have more than one agency," Mr Harrison said.

"Of course it's in customers' interests. Baycorp are being boycotted.

"They don't have up-to-date relevant information."

Baycorp has in turn disputed such claims, accusing the agencies of putting out-of-date information on its database and saying the charges were necessary to keep data up to date.

It claims agencies put debtors on its database as a tool to encourage them to pay but don't update entries when they do.

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