A roadmap for competition reform?
The Monash Business Policy Forum (MBPF) has released a report containing 12 recommendations to guide the Federal Government’s “root and branch” review (the Review) of Australia’s competition laws (see our previous post on the Review here).
The MBPF is headed by former Australian Competition and Consumer Commission (ACCC) Chairman Graeme Samuel, and includes former Australian Securities and Investments Commission Chairman Tony D’Aloisio, Monash Business School Dean Professor Stephen King, and former Victorian Premier John Brumby. The MBPF seeks to contribute to business and economic reform through non-political research and published analysis.
Clearly stating that the aim of the report is to present an agenda for the reform process, and not solutions to the issues, the report is divided into two parts. The first part considers the provisions in the Competition and Consumer Act 2010 (Cth) (CCA) that should be reviewed. The second part considers areas outside of the CCA that impact on national competition policy objectives.
The report encourages those responsible for the Review to:
- consider the objective of Part IV of the CCA, and whether an explicit objective for these provisions should be included;
- focus on particular provisions in Part IV of the CCA (such as the prohibitions against cartel conduct, the inconsistent approach to joint ventures and the removal or modification of the prohibitions against price-signalling);
- exclude the industry specific regimes in Part XIB and XIC (telecommunications), Part X (international liner cargo shipping) and Part IIIA (access to services) of the CCA, as these are or should be subject to specific inquiries;
- analyse the interaction between the laws that regulate competitive conduct and the authorisation, notification and clearance procedures, with the aim of simplifying the law and improvising accessibility;
- rethink the current roles and allocation of powers and functions to the ACCC, National Competition Council and Australian Energy Regulator;
- consider whether it is appropriate to extend any parts of the Australian Consumer Law to small businesses, such as the laws on unfair contracts;
- reflect on international approaches to ensure that Australia’s competition laws are consistent with international best practice;
- investigate areas where legislation and government regulation impede or create barriers to competition, and create a process for the on-going review of market-level restrictions;
- consider the appropriate processes and institutional structures to promote competition policy at all levels of Australian government;
- provide a preferred process and timeline for advancing competition policy, together with recommendations ensuring that the reform process is inclusive and fair;
- consider the role of institutional “gatekeepers” at state and federal levels to provide a “competitive check” on regulations and carry out legislative review; and
- study three “test” areas (namely restrictions on labour mobility, restrictions on the free movement of goods and services and restrictions that create barriers to entry or exit for specific industries) to ensure that the reform process is able to deal with these areas in a robust manner.
Noting that the Review is likely to take place “against a backdrop of big versus small business”, the report emphasises that “the aim of competition laws is the protection of competition, not the protection of specific competitors”. The Dawson review of competition policy, the High Court of Australia and a range of competition authorities recognise that it is the competitive process that should be protected in the interests of consumers and the economy. Mr Samuel has stated (see here) that “Every time there’s an inquiry it’s reaffirmed [the idea that competition laws should protect competition] but things get lost in the political arena”.
Recommendation number five has generated the greatest media attention, in questioning whether it would be better to have “a single mega-regulator like the ACCC” or “to separate out the consumer law and infrastructure access functions to alternative regulators”. The powers and functions of the ACCC have steadily increased since its inception, with commentators questioning whether it can effectively and consistently give equal attention to its different roles. In a recent article in the Australian Journal of Competition and Consumer Law, Frank Zumbo wrote that “… [the] ACCC’s responsibilities are now so diverse that it is dangerously close to being a generalist body that is not as expert in particular areas that stand-alone bodies could be in performing the key roles currently performed by the ACCC… [I]t is submitted that the time has come to seriously consider giving the ACCC a once in a generation makeover…”
Although the current ACCC Chairman, Rod Sims, has not commented on the MBPF’s recommendations, he has previously rejected suggestions that the ACCC harbours any potential bias towards consumer protection work and should be broken up. In recent speeches, Mr Sims has pointed to the ACCC’s progress in prosecuting cartel conduct.
Sharon Henrick, head of our Australia-based Competition Law and Regulatory Group, commented (see here) that the ACCC should be better funded if there are concerns that it has grown too large:
“Historically, the ACCC and its predecessor… would have taken more enforcement cases on consumer protection matters than under the restrictive trade practices or access provisions of the Act… I don’t know that that’s necessarily a reason for breaking it up or symptomatic of any bias.”
Key issues include the removal or modification of the “unusual” and “undesirable” prohibitions against price-signalling (which currently apply to the banking sector only), resistance to any changes (including the introduction of an “effects” test) to the prohibition against misuse of market power, and the simplification and increased transparency of the authorisation, notification and clearance procedures.
You can access the full report here.