Competition Law Policy

Introduction

The policy of competiiton law - actual and desired - has been the subject of much debate in Australia and elsewhere. Debate has centred around whether or not the competition laws are intended to promote competition per se or whether it has a broader purpose and/or is intended to operate for the benefit of particular groups; in this respect 'small business has often been singled out. On this page some of the background and debate surrounding the purpose of Australian competition law is discussed.

 

---

Object of the Act (including objects clause)

There was no objects clause in the original Act, but in his Second Reading Speech, then Attorney-General, Senator Lionel Murphy, stated that its purpose was 'to control restrictive trade practices and monopolies and to protect consumers from unfair commercial practices.' (Parliamentary Debates, Senate, 30 July 1974, page 540). At page 548 the purpose of the Act was also described as being 'to promote efficiency and competition in business, to reduce prices and to protect all Australians aainst unfair practices.' (see French 2004). Justice French has observed that '[b]eyond that very broad statement of intent and the other statements referred to earlier there was not much in the way of a coherent policy framework or theory to explain the presence in the one statute of its seemingly disparate measures.' (French 2004)

In Qld Wire the Court referred to competition in the context of the Act as being a means to an end. Justice French explains:

Competition is not so much a goal in itself as a means to an end. What Mason CJ and Wilson J said of s 46 in the Queensland Wire case could be applied to all of the provisions of the Act designed to protect competition:

‘… the object … is to protect the interests of consumers, the operation of the section being predicated on the assumption that competition is a means to that end.’

... The Hilmer Committee said that competition policy ‘seeks to facilitate effective competition to promote efficiency and economic growth while accommodating situations where competition does not achieve efficiency or conflicts with other social objectives’. The protection of consumers as a group was seen as an area distinct from competition policy despite its acknowledgement ‘that both policies benefit consumers and that some consumer protection provisions improve the efficiency of markets’ [p XVI and fn 3]. The Dawson Committee, focussing upon Pt IV of the Act, acknowledged that competition is not an end in itself but ‘an important means whereby an economy can achieve economic efficiency’. This it linked to the ultimate outcome of sustaining ‘economic welfare’ [p 33]. (French 2004 at para 7)

The current Act contains an objects clause in s 2.

'The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.'

This clause was inserted by Competition Policy Reform Act 1995 (Act 88 of 1995)

 

Protection of special interests

It has been observed that since its enactment, 'there have been ongoing pressures to broaden or diversify that general [consumer welfare] objective in favour of the protection of particular classes of competitor ... There has also been ongoing pressure to qualify or limit thte application of the Act with respect to particular sectors of the economy' (French 2004 at para 8)

 

Authorisation

Public Benefit Authorisation

A relatively unique feature of Australian competition law is the ability for parties to seek 'authorisation' on public benefit grounds for conduct that would otherwise contravene the competition legislation. This suggests that in some circumstances at least, public benefits beyond those generated by competition may be considered more desirable than competition per se. When recommending amendment of authorisation test (to remove the requirement that a public benefit be a 'substantial' benefit), the Swanson Committee stated (in 1976):

‘However, if in a given case it can be shown that public benefits, ie,not merely benefits to the parties to the restrictive conduct, are available, and that those benefits outweigh the benefits to the public foregone by the absence or restriction of competition, then that conduct should be permitted to continue. In other words, we still favour the maintenance of the primary position that competitive behaviour is to be preferred, but that many who engage in restrictions of competition should be able to obtain an authorisation if they can show that on balance there are public benefits that outweigh the effects on the public of the restrictions on competition.’ [at para's 11.14 and 11.15)

Similarly, the Hilmer Committee observed:

‘Competition policy is not about the pursuit of competition per se. Rather it seeks to facilitate effective competition to promote efficiency and economic growth while accommodating situations where competition does not achieve efficiency or conflicts with other social objectives. These accommodations are reflected in the content and breadth of application of pro-competitive policies, as well as the sanctioning of anti-competitive arrangements on public benefit grounds.' (at p xvi)

In relation to authorisation Justice French has observed:

[para 40] '... While Pt IV of the Act is directed to the maintenance of workable competition, the authorisation provisions recognise that legitimate public benefits can flow from conduct otherwise prohibited. They recognise that competition is not ‘a theory of everything’ when it comes to the public interest. Or as a famous American cosmologist once remarked, ‘There is more to everything than meets the eye’. The political pressures to amend the Act in various ways in the interests of particular groups such as small business, exemplify that reality.'

In Re 7-Eleven Stores the Tribunal stated:

‘We cannot rely upon the functioning of competitive markets to deliver everything ‘of value to the community generally’.

This was quoted with approval by the Tirbunal in Qantas Airways Ltd [2004] A Comp T 9.

Similarly, French J has observed that the authorisation process

'enables social objectives ranging well beyond the realm of economic efficiency not only to be taken into account by the regulator but also to be defined by it in determining whether or not there is a benefit. Moreover the regulator is entitled to weigh the benefit and thus effectively assign non-justiciable priorities or weightings to various classes of benefit which may have something or nothing at all to do with the competition objectives of the Act. In the process the ACCC may negotiate by attaching conditions to its authorisations effectively fine-tuning to achieve satisfactory levels of public benefit or to reduce the risk of anti-competitive detriment. ' (French 2004 at para 11)

 

National Competition Policy

Following recommendations by the Independent Committee of Inquiry on National Competition Policy (Hilmer Committee) the Council of Australian Governments (CoAG) implemented the National Competition Policy. View National Competition Policy page.

 

Reading room

View relevant articles in the reading room.