ACCC attacks government’s Competition Review recommendations, while other sectors respond

Posted by AFN Staff Writers on 1st April 2015
ACCC attacks government’s Competition Review recommendations, while other sectors respond
ACCC attacks government’s Competition Review recommendations, while other sectors respond

The recommendations published this week in the Harper Competition Review Final Report have been largely welcomed by industry and regulators. However, the Australian Competition and Consumer Commission (ACCC) has expressed concerns about a recommendation to change the way the regulator itself is governed.

ACCC concerns over recommended changes to its governance

The ACCC welcomed many of the recommendations from the Harper Competition Review, but reiterated its concerns over proposals to break up the ACCC.

The Panel has recommended that, while the ACCC retain both competition and consumer functions, a separate access and pricing regulator be established with responsibility for existing regulatory functions undertaken by the NCC and the ACCC. It has also recommended introducing new additional part-time Commissioners and that the Commission as a whole be required to have regard to all sectors and interests.

“The ACCC considers there are considerable synergies between competition law enforcement and economic regulation, which would be lost,” said Rod Sims, ACCC Chairman. “Apart from the increased overheads from having to run two organisations rather than one, there would be very real costs for businesses in having to deal with two regulators, who may have conflicting views,” he said.

“Breaking up the ACCC would also go against the international trend, which is towards agency consolidation,” Mr Sims said. “That said, we recognise that these are issues for government to consider,” he said.

ACCC welcomes ‘pro-competitive’ reforms

However, Mr Sims said the ACCC welcomed the pro-competitive reforms recommended by the Harper Competition Review Final Report.

“This is a very important report. It sets out many pro-competitive reforms which, if adopted, could significantly enhance economic productivity over the years ahead,” ACCC Chairman Rod Sims said.

“The Panel’s recommendations to expose more sectors of the Australian economy to competition show the considerable scope for reform,” Mr Sims said. “The ACCC particularly supports the Report’s findings on roads, shipping, intellectual property and parallel imports,” he said.

Mr Sims said the ACCC also supported proposals to make the misuse of market power provision “workable”, to introduce a prohibition on concerted practices (to tackle cartel-like conduct that may otherwise be permitted), and to improve merger assessment processes. He said the Panel’s recommendations to simplify the Act and make it easier for businesses to understand their obligations under the Competition and Consumer Act 2010 were “commendable”.

“However, the ACCC is concerned that changes to the law should not weaken Australia’s cartel laws,” Mr Sims said. “Any amendments should not fundamentally alter the existing scope of the prohibitions. Some of the proposed Part IV changes will require further consideration of the fine detail,”  he said.

Competition Report provides ‘blueprint’ for more competitive Australia, ACCI

The Australian Chamber of Commerce and Industry (ACCI) said the Final Report of the Competition Policy Review provided a comprehensive and coherent plan for reform of Australia’s competition policy framework.

“This landmark document provides a blueprint for a more competitive Australia,” said Kate Carnell AO, CEO of the ACCI. “It offers a valuable contribution to making Australia a more innovative and productive economy,” she said.

On changes to section 46 of the Competition and Consumer Act, the report recommends prohibiting conduct by firms with substantial market power that has the purpose, effect or likely effect of substantially lessening competition.

Ms Carnell said proposed changes to section 46 of the Competition and Consumer Act, which recommends changes to regulation around misuse of market power would “go a long way towards addressing the concerns small businesses have about misuse of market power by larger suppliers and customers”.

“They strike the right balance between prohibiting anti-competitive conduct and encouraging efficiency, innovation and entrepreneurship,” Ms Carnell said.

Farmers back call for ‘effects test’

The National Farmers’ Federation (NFF) has also welcomed the Harper Review of competition legislation recommendations, particularly recommendations that it said supported its call for an ‘effects test’ – aimed at rebalancing power between large supermarkets and farmers.

“The Harper Review is an important opportunity to improve competitiveness, increase returns to the farm gate and ensure transparency across the supply chain,” said Simon Talbot, NFF CEO.

Mr Talbot said the NFF had for some time sought amendments that focus on protecting competition across the supply chain.

“Ineffective competition legislation can have a particularly detrimental effect on farmers and the agricultural sector,” Mr Talbot said. “That’s why we have supported the establishment of an ‘effects test’ to address the issue of misuse of market power,” he said.

“If used to replace the existing purpose test, an ‘effects test’ could shift the onus of consideration from a company’s purpose in undertaking conduct to the effects that conduct has had on any given marketplace,” Mr Talbot said.

Pharmacy recommendations rejected by Pharmacy Guild of Australia

Meanwhile, recommendations to relax laws around ownership of pharmacies have been rejected by pharmacy industry body the Pharmacy Guild of Australia (PGA).

The PGA said the current model of “community pharmacy” already served Australia well. It said the Federal Government had made its position clear on this issue both before and since the last election – expressly supporting the current pharmacy ownership model and the location rules.

The PGA said current location rules ensured that health care consumers have timely and equitable access to Pharmaceutical Benefits Scheme (PBS) medicines regardless of where they live, rather than having pharmacies clustered around affluent suburbs. It said the ownership rules ensured that local pharmacies are owned by registered pharmacists, who were “healthcare professionals first and foremost, frequently putting their patients before profits”.

“It is regrettable the Competition Policy Review Panel has apparently put ideology before the strong empirical evidence demonstrating that the current community pharmacy model is clearly superior to the deregulated alternatives,” said David Quilty, Executive Director of the PGA.