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Competition Policy Review

Independent Review ('Harper Review')

 

Background and timeline

Election promise The Liberal Party pledged a 'root and branch' review of competition policy as part of its 2013 election campaign. Image of competition
Draft terms of reference Following success in the federal election, draft terms of reference were released in December 2013.
Terms of Reference Released 27 March 2014
Panel members announced 27 March 2014
Issues paper Released 14 April 2014
Submissions on Issues Paper Due 10 June 2014
(almost 350 received; last of th 316 non-confidential submissions published online on 5 Sept))
Draft report Released 22 September 2014
Submissions on Draft Report Due 17 November 2014
(first non-confidential batch published 14 November 2014)
Final report Released on 31 March 2015
Consultation Government consultation on final report
(submissions were due by 26 May 2015)
Government response Released on 24 November 2015 (see response page)
Further
consultation
Additional consultation on misuse of market power
Discussion paper released on 11 December
See Treasury Consultation on Misuse of Market Power page
Government
response on Misuse of Market Power
Announced 16 March 2016
Government announced it would adopt Harper recommendations
Government bill Exposure draft bill released 5 September 2016

Visit the official Competition Policy Review website.

 

Review panel

Details of the review panel can be found on the review website.

Chair

Professor Ian Harper is the Chair of the Review Panel. Professor Harper is a Partner at Deloitte Touche Tohmatsu, a Director of Deloitte Access Economics Pty Ltd and Emeritus Professor at the University of Melbourne.

Other Panel Members

Mr Peter Anderson is described as a 'national business leader and public policy specialist in national and international affairs'. He 'recently stepped down from the position of Chief Executive of the Australian Chamber of Commerce and Industry.'

Ms Su McCluskey is CEO of the Regional Australia Institute. She has held various public and private sector roles, including as 'Director of Tax and Trade Policy at the Business Council of Australia and General Manager of Policy for the National Farmers' Federation. She is also a beef cattle farmer.'

Mr Michael O'Bryan is Senior Counsel at the Victorian Bar. He was previously a partner at Minter Ellison and is a past chairman of the Competition and Consumer Committee of the Law Council of Australia.

 

Government response

The Government responded to the Harper Report on 24 November 2015.

The Government deferred consideration of the controversial ‘effects test’ for misuse of market power, enabling it to focus on the bulk of the recommendations largely free from the distractions caused by that recommendation.

See my separate government response page for full details.

Briefly, of the 56 Harper recommendations:

  • 39 were supported in full or in principle
  • 5 were supported in part
  • the Government remained 'open' to 12 recommendations

In relation to the competition laws, the following key responses were received:

Cartels
Agreed with recommendation 27 that cartel laws required simplification and to amend the joint venture exemption

Price signalling
Agreed with recommendation 29 that separate price signalling laws should be repealed and s 45 be amended to include prohibition of concerted practices which SLC

Exclusionary conduct (primary boycotts)
Agreed the separate exclusionary conduct provision should be repealed in accordance with recommendation 28

Misuse of market power
The government noted the recommendation and indicated it would engage in further consultation. On 11 December 2015 it released a discussion paper. A response on the discussion paper is expected by the end of March 2016.

Exclusive dealing and third line forcing
Agreed third line forcing should be subject to a competition test (rec 32). Recommendations on repeal of exclusive dealing prohibition in s 47 noted and to be considered as part of misuse of market power consultation and general proposal to simplify the laws.

Resale price maintenance
Agreed per se prohibition should be retained but notification should be allowed (rec 34).

Mergers
Supported recommendation 35 to combine formal merger clearance and authorisation; exposure draft legislation will be produced.

Access
The government supported recommendation 42 in part. It agreed to respond to the Productivity Commission's inquiry (which reported in Feb 2014) as part of its response to Harper. It decided to adopt the recommendations of the PC, including on criteria (a) and (b), which differ from the Harper recommendations. In particular, the government has accepted that criteria (b) should include a ‘natural monopoly’ test rather than a ‘private profitability’ test, which will restore the position to the test applied prior to the High Court decision in 2012.

Ministerial consent
Agreed with recommendation 26 to remove need for private parties to seek ministerial consent before relying on extraterritorial conduct in private actions

Authorisation and notification
Supported recommendation 38 – will be simplified so only single application required per transaction and ACCC can consider both competition and public benefit considerations.

Block exemption
Supported recommendation 39 to introduce block exemption power; exposure draft legislation will be produced.

Admissions of fact
Supported recommendation 41 that s 83 be amended to extend to admissions of fact.

 

Final Report

The final report was released on 31 March 2015. The panel made a total of 56 recommendations.

See final report page for details.

 

Draft Report

The draft report was released on 22 September 2014. See my draft report page for details

Review Panel Chair, Prof Ian Harper, released a video with the draft report outlining the context for the Review and discussing competition institutions.

 

Issues paper

The 59-page Issues Paper for the Harper Review was released on 14 April 2014 and was open for submissions until 10 June 2014.

The Panel also released a fact sheet to accompany the issues guide. An overview of the Issues Paper and full extract of both the Issues Paper and the fact sheet is provided on the separate issues paper page.

Key questions

The Issues Paper asks specific questions throughout and conveniently lists them all at the end of the paper (reproduced on the separate issues paper page). It also identified the following key questions:

What should be the priorities for a competition policy reform agenda to ensure that efficient businesses, large or small, can compete effectively and drive growth in productivity and living standards?

Are there unwarranted regulatory impediments to competition in any sector in Australia that should be removed or altered?

Are government-provided goods and services delivered in a manner conducive to competition, while meeting other policy objectives?

Is there a need for further competition-related reform in infrastructure sectors with a history of heavy government involvement (such as the water, energy and transport sectors)?

Would there be a public benefit in encouraging greater competition and choice in sectors with substantial government participation (including education, health and disability care and support)?

Are the current competition laws working effectively to promote competitive markets, given increasing globalisation, changing market and social structures, and technological change?

Are competition-related institutions functioning effectively and promoting efficient outcomes for consumers and the maximum scope for industry participation?

What institutional arrangements would best support a self-sustaining process for continual competition policy reform and review?

[Source: The Commonwealth of Australia]

 

Official press releases, transcripts and speeches

Speech given to CEDA by Competition Policy Review Chair, Prof Ian Harper (14 April 2015)

Video of Professor Harper's speech is also available from the CEDA website.

Media Release accompanying the release of the draft report (22 September 2014)

Video statement by Professor Harper following first round of consultation (approx 8 mins)

Presentation by Professor Ian Harper to the UNSW Competition Law and Policy Conference
The presentation was delivered on 6 August 2014 and highlights some of the issues raised by submissions to the review. It also notes that the panel 'will work through the issues raised, but will not adjudicate them' (noting Panel is 'looking at broad principles and institutional frameworks') and that a draft report is expected at the end of September - further submissions may be made in response to that draft report.

Speech to the Committee for Economic Development of Australia (Minister for Small Business, The Hon Bruce Billson MP, 9 May 2014)

Government names competition review panel (Media Release by The Hon Bruce Billson MP Media, 27 March 2014)

Prime Minister and Minister for Small Business, 'Review of Competition Policy' (Press release announcing review, 4 December 2013)

 

Submissions and consultation

Submissions in response to issues paper

Non-confidential submissions relating to the issues paper are available from the Review website.

See further my submissions page providing a brief overview of each submission received

Submissions in response to draft report

Non-confidential submissions relating to the draft report are available from the Review website.

See further my submissions page providing a brief overview of each submission received

Consultation

The Panel held a number of consultations in relation to the draft report and issues paper. The seminar held in Brisbane on 29 May 2014 is available as a YouTube Webinar. It runs for approx 45mins. After and introduction and outline for around 20 minutes the panel representatives (Prof Harper and Su McCluskey respond to questions - including a neat sporting analogy at about 25mins))

 

Terms of reference

The final terms of reference were released on 27 March 2014. They are very extensive and list the following key areas of focus:

  • 'identify regulations and other impediments across the economy that restrict competition and reduce productivity, which are not in the broader public interest;
  • examine the competition provisions of the Competition and Consumer Act 2010 (CCA) to ensure that they are driving efficient, competitive and durable outcomes, particularly in light of changes to the Australian economy in recent decades and its increased integration into global markets;
  • examine the competition provisions and the special protections for small business in the CCA to ensure that efficient businesses, both big and small, can compete effectively and have incentives to invest and innovate for the future;
  • consider whether the structure and powers of the competition institutions remain appropriate, in light of ongoing changes in the economy and the desire to reduce the regulatory impost on business; and
  • review government involvement in markets through government business enterprises, direct ownership of assets and the competitive neutrality policy, with a view to reducing government involvement where there is no longer a clear public interest need.'

The Panel is required to engage with stakeholders, including publishing an issues paper, holding public hearings and receiving written submissions. It is also required to publish a draft report followed by further consultation. A final report is due within 12 months.

View full terms of reference

Changes from Draft Terms of Reference

Not a lot changed from the draft terms of reference (DTOR). The changes were:

  • The 'background' contained in the DTOR has been replaced with an 'Overview' which sets out 'key areas of focus for the review'.
  • Para 1: the words 'and the policy priorities' has been added to the end of the paragraph
  • Para 1.1: the words 'against the public interest' have been added - it now reads: 'no participant in the market should be able to engage in anti-competitive conduct against the public interest within that market and its broader value chain'
  • Para 4.5: the word 'and' has been added to the end of the paragraph to avoid any doubt that all sub-paragraphs needed to be considered.

View full draft terms of reference.

 

Journal articles, media and commentary

For academic research and commentary on the Competition Policy Review see my commentary page

There has been a significant amount of media and commentary about the review - see my media page.

The Allens >< Linklaters competition team have also produced a terrific website providing details about the recommendations and the government response as well as the implications for business should they be implemended. Visit Allens >< Linklaters > The Harper Review.

 

Images copyright: Image ('Multi-ethnic Team On The Grid) courtesy of Ambro from FreeDigitalPhotos.net.