ACCC calls to ‘reinvigorate’ Australia’s competition policy

Posted by AFN Staff Writers on 30th June 2014
ACCC calls to ‘reinvigorate’ Australia’s competition policy
ACCC calls to ‘reinvigorate’ Australia’s competition policy

The Australian Competition and Consumer Commission (ACCC) has provided a submission to the Harper Review of competition policy, calling for a ‘reinvigoration of Australia’s competition policy.

The submission elaborates on comments made by ACCC Chairman Rod Sims at the CEDA State of the Nation Conference in Canberra on Monday 23 June 2014.

“The Harper Review provides an ideal opportunity to reinvigorate Australia’s competition culture,” Mr Sims said.

Mr Sims said the ACCC’s submission argues that, at its heart, effective competition policy required three things.

“Firstly, it is about microeconomic reforms that open up as many sectors as possible to competition, and allows price mechanisms to play their crucial role in signalling to businesses how to meet consumers’ needs at the lowest cost,” Mr Sims said.

The ACCC’s submission has identified a number of priority areas for potential reform, including privatisation, roads, congestion pricing, shipping, energy, water, intellectual property and land use.

“Secondly, effective competition laws are critical,” Mr Sims said.

Mr Sims said that while the ACCC recognised competition laws must strike a careful balance, and not inhibit healthy competitive behaviour, if competition laws were too weak there were “large efficiency and welfare losses from systemically poor conduct”. He said key recommendations in the submission related to the misuse of market power provisions and so-called “price signalling” provisions in the Competition and Consumer Act 2010.

“Currently the section 46 misuse of market power prohibition is of limited utility in prohibiting anti-competitive conduct by firms with substantial market power,” Mr Sims said.

“The ACCC considers that making this provision effective could be best achieved through the introduction of an effects test, including a substantial lessening of competition, and amendments to overcome limitations inherent in the current interpretation of the ‘take advantage’ test,” Mr Sims said.

Mr Sims said the ACCC advocated expanding application of the ‘price signalling’ provisions prohibiting anti-competitive disclosure of information throughout the whole economy, not just the banking sector.

“An extension of the prohibition against anti-competitive disclosures would better align Australia’s competition law with international best practice,” Mr Sims said.

Amongst other recommendations, Mr Sims said the submission noted that greater clarity in the law could be provided by amending the drafting and structure of the cartel provisions as well as the authorisation and notification provisions. Furthermore, a number of specific amendments were likely to assist small business; in particular, to allow greater opportunity to undertake collective bargaining and collective boycotts.

Thirdly, Mr Sims said the submission noted that effective competition policy was about governments establishing the processes and institutions that continually fostered competition and sustained the commitment to reform. In particular, to reinvigorate Australia’s commitment to competition, the submission has called for consideration of the role of a market study function for the ACCC. Market studies could be used to assess whether, in particular sectors, competition problems exist or not, and to support better targeted action by the ACCC or others in response.

“Competition regulators in most comparator countries do such market studies, including in the US, UK, EC, Japan and the Republic of Korea, and so this recommendation would bring Australia into line with other jurisdictions,” Mr Sims said.