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Competition Policy Review

Final Report and Government Response | The Competition Laws

This page provides more detail on the discussion in the Harper Report and the Government response in relation to the proposed changes to the competition laws.

Competition law recommendations (overview)

 

Panel recommendations, government response and discussion

Competition law concepts (recommendation 22)

Harper Recommendation

Government response

The central concepts, prohibitions and structure enshrined in the current competition law should be retained, since they are appropriate to serve the current and projected needs of the Australian economy.

Supported

'Proposed changes to competition laws will retain the central concepts, prohibitions and structure of the current CCA.'

 

Competition law simplification (recommendation 23)

Harper Recommendation

Government response

The competition law provisions of the CCA should be simplified, including by removing overly specified provisions and redundant provisions.

The process of simplifying the CCA should involve public consultation.

Provisions that should be removed include:

  • subsection 45(1) concerning contracts made before 1977; and
  • sections 45B and 45C concerning covenants.

Supported

'The Review Panel considered that the competition law provisions of the CCA, including the provisions regulating the granting of exemptions, are unnecessarily complex and impose undue costs on the economy.'

'The Government will develop a proposal to further simplify the remaining provisions of the CCA, following stakeholder consultation by the Treasury including with the ACCC, business groups and legal advisers.'

 

Discussion

The panel recommended simplification of provisions - including by removing overly specified provisions and removing redundant provisions (like 45(1)). Ther Government has supported this recommendation and will develop a proposal for simplification.

 

Application of law to government entities (recommendation 24)

Harper Recommendation

Government response

Sections 2A, 2B and 2BA of the CCA should be amended so that the competition law provisions
apply to the Crown in right of the Commonwealth and the States and Territories (including local government) insofar as they undertake activity in trade or commerce.

This recommendation is reflected in the model legislative provisions in Appendix A.

Supported in principle

'The Government will consult further with the states and territories on the implications of extending the CCA to apply to government activities in trade or commerce.'

 

Discussion

The panel recommended extending provisions to Crown (inc local government) insofar as they undertake activity in trade or commerce.

 

Definition of market and competition (recommendation 25)

Harper Recommendation

Government response

The current definition of ‘market’ in section 4E of the CCA should be retained but the current definition of ‘competition’ in section 4 should be amended to ensure that competition in Australian markets includes competition from goods imported or capable of being imported, or from services rendered or capable of being rendered, by persons not resident or not carrying on business in Australia.

This recommendation is reflected in the model legislative provisions in Appendix A.

Recommended provision (s 4)

(1) In this Act, unless the contrary intention appears:

competition
includes competition from goods imported or capable of being imported into Australia, or from services rendered or capable of being rendered in Australia, by persons not resident or not carrying on business in Australia.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories to ensure that competition in Australian markets includes competition from goods and services imported or capable of being imported into Australia.'

'The Review Panel considered it is necessary and appropriate for the term ‘market’ to be defined as a market in Australia because the CCA is concerned with the economic welfare of Australians, not citizens of other countries.

Although the objective of the CCA is to protect and promote competition in Australian markets, frequently the sources of competition in Australian markets originate globally. The CCA has been framed to take account of all sources of competition that affect markets in Australia. However, the current definition of ‘competition’ in the CCA could be strengthened so there can be no doubt that it includes competition from potential imports of goods and services and not just actual imports.

This change is not intended to expand market definitions in competition law to include every product and service that could conceivably be imported into Australia, only to clarify that the credible threat of import competition is a relevant component of a competition analysis.'

 

Discussion

The panel recommended retaining substance of existing definitions, but re-wording the definition of 'competition' to ensure competition from potential imports is considered. The Government accepted this recommendation, noting it was not designed to expand existing market definitions but rather to clarify the law.

 

Extra-territoriality (recommendation 26)

Harper Recommendation

Government response

Section 5 of the CCA, which applies the competition law to certain conduct engaged in outside Australia, should be amended to remove the requirement that the contravening firm has a connection with Australia in the nature of residence, incorporation or business presence and to remove the requirement for private parties to seek ministerial consent before relying on extra-territorial conduct in private competition law actions. Instead, the competition law should apply to overseas conduct insofar as the conduct relates to trade or commerce within Australia or between Australia and places outside Australia.

The in-principle view of the Panel is that the foregoing changes should also be made in respect of actions brought under the Australian Consumer Law.

This recommendation is reflected in the model legislative provisions in Appendix A.

Recommended provision

5 Extended application of this Act to conduct outside Australia


Each of the following provisions:

(a) Part IV;
(b) Part XI;
(c) the Australian Consumer Law (other than Part 5-3);
(d) the remaining provisions of this Act (to the extent to which they relate to any of the provisions covered by paragraph (a), (b) or (c));

extends to the engaging in conduct outside Australia by any person in so far as the conduct relates to trade or commerce.

Note: Section 4 defines trade or commerce to mean trade or commerce within Australia or between Australia and places outside Australia.

 

Supported in part

'The Government supports in part this recommendation, noting that the Competition and Consumer Amendment (Deregulatory and Other Measures) Bill 2015 gives effect to the recommendation that the Government remove the requirement for private parties to seek ministerial consent before relying on extraterritorial conduct in private competition law actions.

The Government agrees that the requirement for private parties to seek ministerial consent in connection with proceedings involving conduct that occurs outside Australia is an unnecessary roadblock to possible redress for harm suffered as a result of a breach of Australian competition law.

While the Government does not support at this time the recommendation to amend section 5 of the CCA to remove the requirement that the contravening firm has a connection with Australia in the nature of residence, incorporation or business presence, it will consider how best to effectively capture conduct that harms competition in an Australian market, taking account of international law and policy considerations.'

[my emphasis]

 

Discussion

The panel recommended amending s 5 to remove the requirement that the contravening firm have connection with Australia and to remove the requirement for private parties to seek ministerial consent before relying on extraterritorial conduct. The Government agreed with the second part of this recommendation (removal of ministerial consent requirement) but not the first part (connection with Australia requirement), but indicated it would consider how to best capture conduct harming competition in an Australian market.

 

Cartels (recommendation 27)

Harper Recommendation

Government response

The prohibitions against cartel conduct in Part IV, Division 1 of the CCA should be simplified and the following specific changes made:

  • The provisions should apply to cartel conduct involving persons who compete to supply goods or services to, or acquire goods or services from, persons resident in or carrying on business within Australia.
  • The provisions should be confined to conduct involving firms that are actual or likely competitors, where ‘likely’ means on the balance of probabilities.
  • A broad exemption should be included for joint ventures, whether for the production, supply, acquisition or marketing of goods or services, recognising that such conduct will be prohibited by section 45 of the CCA if it has the purpose, effect or likely effect of substantially lessening competition.
  • An exemption should be included for trading restrictions that are imposed by one firm on another in connection with the supply or acquisition of goods or services (including intellectual property licensing), recognising that such conduct will be prohibited by section 45 of the CCA (or section 47 if retained) if it has the purpose, effect or likely effect of substantially lessening competition.

This recommendation is reflected in the model legislative provisions in Appendix A.

View model legislative provisions relating to cartels

Supported

'The Government supports simplification of the prohibitions on cartel conduct, and will amend the current exception for joint ventures to provide appropriate exemptions for demonstrable and deliberative joint venture activity'

'The Government accepts that the prohibitions on cartel conduct are complex and will develop exposure draft legislation for consultation with the public and states and territories to simplify definitions to improve clarity and certainty, while retaining specificity and meaning.

Exposure draft legislation to broaden the joint venture exemption so that it does not limit legitimate commercial transactions (such as through vertical supply arrangements) will also be developed for consultation.'

 

Discussion

The panel recommended simplification and the creation of additional exemptions. The government accepted this recommendation and will produce exposure draft legislation.

 

Exclusionary provisions (recommendation 28)

Harper Recommendation

Government response

The CCA should be amended to remove the prohibition of exclusionary provisions in subparagraphs 45(2)(a)(i) and 45(2)(b)(i), with an amendment to the definition of cartel conduct to address any resulting gap in the law.

This recommendation is reflected in the model legislative provisions in Appendix A.

Recommended provision

45M Prohibited conduct

(1) A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition;

(b) give effect to a provision of a contract, arrangement or understanding if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

(c) engage in a concerted practice with one or more other persons if the concerted practice has the purpose, or has or is likely to have the effect, of substantially lessening competition.

...

Supported

'The Government supports simplifying the prohibitions on exclusionary conduct and will develop exposure draft legislation for consultation with the public and states and territories.

The prohibition of exclusionary provisions is unnecessary and increases the complexity of the law. The definition of exclusionary provisions overlaps substantially with the definition of market sharing, which is a form of cartel conduct. Simplification can be achieved by amending the cartel provisions and removing the prohibitions on exclusionary provisions.'

 

Discussion

The panel recommended removing the specific prohibition on exclusionary provisions in s 45. The government has accepted this recommendation.

 

Price signalling (recommendation 29)

Harper Recommendation

Government response

The ‘price signalling’ provisions of Part IV, Division 1A of the CCA are not fit for purpose in their current form and should be repealed.

Section 45 should be extended to prohibit a person engaging in a concerted practice with one or more other persons that has the purpose, effect or likely effect of substantially lessening competition.

This recommendation is reflected in the model legislative provisions in Appendix A.

Recommended provision

45M Prohibited conduct

(1) A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition;

(b) give effect to a provision of a contract, arrangement or understanding if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

(c) engage in a concerted practice with one or more other persons if the concerted practice has the purpose, or has or is likely to have the effect, of substantially lessening competition.

...

(4) For the purposes of paragraph (1)(c), competition means competition in any market in which a corporation that is a party to the concerted practice, or any body corporate related to the corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the practice, supply or acquire, or be likely to supply or acquire, goods or services.

(5) This section does not apply to or in relation to a contract, arrangement or understanding in so far as the contract, arrangement or understanding provides, or to or in relation to a proposed contract, arrangement or understanding in so far as the proposed contract, arrangement or understanding would provide, directly or indirectly for the acquisition of any shares in the capital of a body corporate or any assets of a person.

(6) This section does not apply to or in relation to a contract, arrangement or understanding, or a proposed contract, arrangement or understanding, or a concerted practice, the only parties to which are or would be bodies corporate that are related to each other.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories.'

'The Government agrees that the price signalling provisions are complex and create an additional and unnecessary compliance burden for business. Other provisions of the law are capable of addressing anti competitive price signalling, and with the extension of provisions relating to contracts, arrangements or understandings that restrict dealings or affect competition to include concerted practices, the price signalling provisions are not required.

The Government will develop exposure draft legislation to repeal the price signalling provisions of the CCA and extend section 45 of the CCA to capture concerted practices that substantially lessen competition. '

 

Discussion

The panel recommended repealing Division 1A and extending s 45 to capture concerted practices. The government accepted the recommendation and will develop exposure draft legislation.

 

Misuse of market power (recommendation 30)

Harper Recommendation

Government response

The primary prohibition in section 46 of the CCA should be re-framed to prohibit a corporation that has a substantial degree of power in a market from engaging in conduct if the proposed conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market.

To mitigate concerns about inadvertently capturing pro-competitive conduct, the legislation should direct the court, when determining whether conduct has the purpose, effect or likely effect, of substantially lessening competition in a market, to have regard to:

  • the extent to which the conduct has the purpose, effect or likely effect of increasing competition in the market, including by enhancing efficiency, innovation, product quality or price competitiveness; and
  • the extent to which the conduct has the purpose, effect or likely effect of lessening competition in the market, including by preventing, restricting or deterring the potential for competitive conduct in the market or new entry into the market.

Such a re-framing would allow the provision to be simplified. Amendments introduced since 2007 would be unnecessary and could be repealed. These include specific provisions prohibiting predatory pricing, and amendments clarifying the meaning of ‘take advantage’ and how the causal link between the substantial degree of market power and anti-competitive purpose may be determined.

Authorisation should be available in relation to section 46, and the ACCC should issue guidelines regarding its approach to the provision.

This recommendation is reflected in the model legislative provisions in Appendix A.

Recommended provision

46 Misuse of market power


(1) A corporation that has a substantial degree of power in a market shall not engage in conduct if the conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market.

... [see more]

Noted

'The Government notes this recommendation and will consult further on options to strengthen the misuse of market power provision.

The Government acknowledges concerns raised in submissions to the Harper Review about the operation of the misuse of market power provision. In light of the importance of this issue for business and consumers, the Government will consult further on options to reform the provision and release a discussion paper on this topic.'

 

Response following Treasury consultation

On 16 March 2016 Prime Minister Turnbull announced that 'the Government has decided to repeal the current Section 46, and adopt the changes recommended by the Harper Review in full'.

 

Discussion

The panel recommended replacing the taking advantage and purpose elements with a purpose, effect, or likely effect of substantially lessening competition test. No defence is included, but the proposed provision lists factors a court should consider when assessing whether this element satisfied (including efficiency, quality and price issues). The government has deferred a decision on this and will engage in further consultation.

Media and commentary

Caron Beaton-Wells, 'We’ve already had consultation on the effects test: more is just a political smoke screen', The Conversation, 25 November 2015 (also in SmartCompany)

Anna Vidot, 'Federal Government again delays decision on 'effects test' in response to Harper Review' (ABC Rural, 24 November 2015)

Jennifer Hewett, 'Competition law – Harper proposal for effects test has caused real concern' (AFR, 23 November 2015).

 

Price discrimination (recommendation 31)

Harper Recommendation

Government response

A specific prohibition on price discrimination should not be reintroduced into the CCA. Where price discrimination has an anti-competitive impact on markets, it can be dealt with by the existing provisions of the law (including through the Panel’s recommended revisions to section 46 (see Recommendation 30)).

Attempts to prohibit international price discrimination should not be introduced into the CCA on account of significant implementation and enforcement complexities and the risk of negative unintended consequences. Instead, the Panel supports moves to address international price discrimination through market solutions that empower consumers. These include removing restrictions on parallel imports (see Recommendation 13) and ensuring that consumers are able to take lawful steps to circumvent attempts to prevent their access to cheaper legitimate goods.

Supported

'The Government supports this recommendation and agrees that a specific prohibition on price discrimination should not be reintroduced.

The Government will remove parallel import restrictions on books in line with its response to Recommendation 13 and will consult further on options to strengthen section 46 (see response to Recommendation 30).'

 

Discussion

The panel recommended against introducing a specific prohibition on price discrimination. The government agreed.

 

Third line forcing (recommendation 32)

Harper Recommendation

Government response

Third-line forcing (subsections 47(6) and (7) of the CCA) should only be prohibited where it has the purpose, effect or likely effect of substantially lessening competition.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories.'

'Third line forcing involves the supply of goods or services on condition that the purchaser acquires goods or services from another person, or a refusal to supply because the purchaser will not agree to that condition.

Third line forcing is similar to second line forcing which occurs where a corporation supplies a product on condition that the purchaser acquires another product from that corporation (or a related company); that is, the corporation bundles products together as a package.

Under the CCA, third line forcing is prohibited per se; whereas, second line forcing is only prohibited if it has the purpose, or has or is likely to have the effect, of substantially lessening competition. Prohibiting third line forcing only where it has the purpose, or has or is likely to have the effect, of substantially lessening competition will bring the provision into line with comparable international jurisdictions and with other provisions of the CCA. '

 

Discussion

The panel recommended that third line forcing be subject to a competition test; the government agreed.

 

Exclusive dealing coverage (recommendation 33)

Harper Recommendation

Government response

Section 47 of the CCA should be repealed and vertical restrictions (including third-line forcing) and associated refusals to supply addressed by sections 45 and 46 (as amended in accordance with Recommendation 30).

Noted

'Vertical restrictions are agreements with or conditions imposed on acquirers of goods in a supply chain, and their impact on competition can vary depending on the circumstances. Simplification of section 47 will be considered as part of the proposal to further simplify the competition law in response to Recommendation 23 and in light of the outcome of further consultation on Recommendation 30.'

 

Resale price maintenance (recommendation 34)

Harper Recommendation

Government response

The prohibition on resale price maintenance (RPM) in section 48 of the CCA should be retained in its current form as a per se prohibition, but notification should be available for RPM conduct.

This recommendation is reflected in the model legislative provisions in Appendix A.

The prohibition should also be amended to include an exemption for RPM conduct between related bodies corporate, as is the case under sections 45 and 47.

Supported

'Resale price maintenance (RPM) is a form of vertical restraint whereby a supplier requires that a person reselling a product provided by the supplier not advertise that product for sale or sell the product below the price specified by the supplier.

RPM may be beneficial to competition and consumers by creating an incentive for retailers to invest in staff and training that could not be offered if products were sold at a discount. However, concerns remain about the likely anti¬competitive effects of RPM. The primary rationale for a per se prohibition on RPM (as opposed to a competition based test) is that RPM may facilitate manufacturer or retailer collusion. RPM is also emerging as an issue for new models of digital based retailing.

The Government considers that maintaining a per se prohibition on RPM but allowing notification is an appropriate next step. The Government will develop exposure draft legislation for consultation with the public and states and territories to permit notification of RPM conduct to the ACCC, subject to longer timeframes (60 days) and the ability for the ACCC to impose conditions, and include an exemption for such conduct between related bodies corporate. '

 

 

Mergers (recommendation 35)

Harper Recommendation

Government response

There should be further consultation between the ACCC and business representatives with the objective of delivering more timely decisions in the informal merger review process.

The formal merger exemption processes (i.e., the formal merger clearance process and the merger authorisation process) should be combined and reformed to remove unnecessary restrictions and requirements that may have deterred their use. The specific features of the review process should be settled in consultation with business, competition law practitioners and the ACCC.

However, the general framework should contain the following elements:

  • The ACCC should be the decision-maker at first instance.
  • The ACCC should be empowered to authorise a merger if it is satisfied that the merger does not substantially lessen competition or that the merger would result, or would be likely to result, in a benefit to the public that would outweigh any detriment.
  • The formal process should not be subject to any prescriptive information requirements, but the ACCC should be empowered to require the production of business and market information.
  • The formal process should be subject to strict timelines that cannot be extended except with the consent of the merger parties.
  • Decisions of the ACCC should be subject to review by the Australian Competition Tribunal under a process that is also governed by strict timelines.
  • The review by the Australian Competition Tribunal should be based upon the material that was before the ACCC, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied that there is sufficient reason.

Merger review processes and analysis would also be improved by implementing a program of post-merger evaluations, looking back on a number of past merger decisions to determine whether the ACCC’s processes were effective and its assessments borne out by events. This function could be performed by the Australian Council for Competition Policy (see Recommendation 44).

Supported

'The Government considers that overall the merger provisions of the CCA are working effectively.

The informal merger approval process works quickly and efficiently for a majority of mergers. Issues of transparency and timeliness arise with the informal process when dealing with more complex and contentious matters but addressing those issues by changing the informal process could undermine the benefits of that process. Nevertheless, there should be further consultation between the ACCC and business representatives with the objective of delivering more timely decisions in the informal review process.

The recommended changes will streamline and simplify the formal merger review processes, reducing burdens on businesses while maintaining the integrity of the system.

The Government will develop exposure draft legislation for public consultation on changes to the formal merger review process, in consultation with business, competition law practitioners, the ACCC and states and territories.

With regard to the ACCC’s informal merger review process, the Government notes its expectation that the ACCC will take into account this recommendation in performing its role and meeting its responsibilities, particularly in relation to delivering more timely and transparent decisions. The ACCC has recently committed to the Government to improve stakeholder engagement and understanding of ACCC merger decisions, including through changes in relation to detailed engagement strategy planning, engagement with a broader range of stakeholders in the course of a merger review, trial of a third party consultation conference, and better communication of decisions through public documents that explain the ACCC’s merger process and analysis to the broader community, including small business and consumer stakeholders.

This is further to the Government’s Statement of Expectations of the ACCC. See also Recommendation 43 for the Government’s response regarding the Australian Council for Competition Policy. '

 

 

Secondary boycotts (recommendation 36)

Harper Recommendation

Government response

The prohibitions on secondary boycotts in sections 45D-45DE of the CCA should be maintained and effectively enforced.

The ACCC should pursue secondary boycott cases with increased vigour, comparable to that which it applies in pursuing other contraventions of the competition law. It should also publish in its annual report the number of complaints made to it in respect of different parts of the CCA, including secondary boycott conduct and the number of such matters investigated and resolved each year.

The maximum penalty level for secondary boycotts should be the same as that applying to other breaches of the competition law.

Supported

'The Government supports this recommendation, and will develop exposure draft legislation for consultation with the public and states and territories.'

'Secondary boycotts are harmful to trading freedom and therefore harmful to competition. Where accompanied by effective enforcement, secondary boycott prohibitions have been shown to have a significant deterrent effect on behaviour that would otherwise compromise consumers’ ability to access goods and services in a competitive market.

The Review Panel noted that a corporation that contravenes the secondary boycott provisions is liable to a civil penalty not exceeding $750,000, which can be compared with much higher penalties for contravention of other competition law provisions ($10 million).

The Government agrees that there is no good reason for the penalties to vary so widely and will draft legislation to increase the maximum penalty for secondary boycotts to the same level as that applying to other breaches of the competition law. '

 

Discussion

The panel recommended that secondary boycott provisions be maintained and effectively inforced, with the maximum penalty increased to the same level as for other competition law breaches. The government accepted this recommendation.

See, eg, Ewin Hannan, 'Secondary boycott penalties to skyrocket to $10m' (AFR, 24 November 2015)

 

Trading restrictions in industrial agreements (recommendation 37)

Harper Recommendation

Government response

Sections 45E and 45EA of the CCA should be amended so that they apply to awards and industrial agreements, except to the extent they relate to the remuneration, conditions of employment, hours of work or working conditions of employees.

Further, the present limitation in sections 45E and 45EA, such that the prohibitions only apply to restrictions affecting persons with whom an employer ‘has been accustomed, or is under an obligation,’ to deal, should be removed.

These recommendations are reflected in the model provisions in Appendix A.

The ACCC should be given the right to intervene in proceedings before the Fair Work Commission and make submissions concerning compliance with sections 45E and 45EA. A protocol should be established between the ACCC and the Fair Work Commission.

The maximum penalty for breaches of sections 45E and 45EA should be the same as that applying to other breaches of the competition law.

Noted

'This issue is being considered further as part of the Productivity Commission Review of the Workplace Relations Framework, which is scheduled to provide its final report to the Government in November 2015.'

 

 

Authorisation and notification (recommendation 38)

Harper Recommendation

Government response

The authorisation and notification provisions in Part VII of the CCA should be simplified to:

  • ensure that only a single authorisation application is required for a single business transaction or arrangement; and
  • empower the ACCC to grant an exemption from sections 45, 46 (as proposed to be amended), 47 (if retained) and 50 if it is satisfied that the conduct would not be likely to substantially lessen competition or that the conduct would result, or would be likely to result, in a benefit to the public that would outweigh any detriment.

This recommendation is reflected in the model legislative provisions in Appendix A.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories'

The Government will simplify the authorisation and notification provisions of Part VII of the CCA to ensure that only a single application is required for a single business transaction or agreement and allow the ACCC to consider both competition and public benefit considerations.

See also the responses to Recommendations 30 and 33 regarding misuse of market power and exclusive dealing, respectively.

 

 

Block exemption power (recommendation 39)

Harper Recommendation

Government response

A block exemption power, exercisable by the ACCC, should be introduced and operate alongside the authorisation and notification frameworks in Part VII of the CCA.

This power would enable the ACCC to create safe harbours, where conduct or categories of conduct are unlikely to raise competition concerns, on the same basis as the test proposed by the Panel for authorisations and notifications (see Recommendation 38).

The ACCC should also maintain a public register of all block exemptions, including those no longer in force. The decision to issue a block exemption would be reviewable by the Australian Competition Tribunal.

The Panel’s recommended form of block exemption power is reflected in the model legislative provisions in Appendix A.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories.'

'A block exemption removes the need to make individual applications for exemption. The exemption is granted if the competition regulator considers that certain conditions are satisfied: either that the category of conduct is unlikely to damage competition; or that the conduct is likely to generate a net public benefit.

A block exemption power that supplements the existing authorisation and notification frameworks will be helpful in establishing ‘safe harbours’ for business. Block exemptions will reduce compliance costs and provide further certainty about the application of the CCA. They are an efficient way to deal with certain types of business conduct that are unlikely to raise competition concerns, either because of the parties engaged in the conduct or the nature of the conduct itself.

The Government will provide the ACCC with a power to provide a ‘class exemption’ for classes of conduct that could otherwise be authorised individually on competition or public benefit grounds. This will provide certainty for businesses in respect of conduct that is unlikely to raise significant competition problems and help to educate and inform business about the types of conduct that do not raise competition concerns and those that do. '

 

 

Section 155 notices (recommendation 40)

Harper Recommendation

Government response

The section 155 power should be extended to cover the investigation of alleged contraventions of court-enforceable undertakings.

The ACCC should review its guidelines on section 155 notices having regard to the increasing burden imposed by notices in the digital age. Section 155 should be amended so that it is a defence to a ‘refusal or failure to comply with a notice’ under paragraph 155(5)(a) of the CCA that a recipient of a notice under paragraph 155(1)(b) can demonstrate that a reasonable search was undertaken in order to comply with the notice.

The fine for non-compliance with section 155 of the CCA should be increased in line with similar notice-based evidence-gathering powers in the Australian Securities and Investments Commission Act 2001.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories.'

'Further to the Government’s Statement of Expectations of the ACCC, the Government expects the ACCC will take into account this recommendation and review its guidelines on section 155 notices having regard to the increasing burden imposed by notices in the digital age.'

 

 

Private actions (recommendation 41)

Harper Recommendation

Government response

Section 83 of the CCA should be amended so that it extends to admissions of fact made by the person against whom the proceedings are brought in addition to findings of fact made by the court.

This recommendation is reflected in the model legislative provisions in Appendix A.

Supported

'The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories to allow private parties to rely on admissions of fact made in another proceeding.'

 

 

National access regime (recommendation 42)

Harper Recommendation

Government response

The declaration criteria in Part IIIA of the CCA should be targeted to ensure that third-party access only be mandated where it is in the public interest. To that end:

  • Criterion (a) should require that access on reasonable terms and conditions through declaration promote a substantial increase in competition in a dependent market that is nationally significant.
  • Criterion (b) should require that it be uneconomical for anyone (other than the service provider) to develop another facility to provide the service.
  • Criterion (f) should require that access on reasonable terms and conditions through declaration promote the public interest.

The Competition Principles Agreement should be updated to reflect the revised declaration criteria.

The Australian Competition Tribunal should be empowered to undertake a merits review of access decisions, while maintaining suitable statutory time limits for the review process.

Supported in part

'The Government supports in part this recommendation. The Government agreed to respond to the 2013 Productivity Commission inquiry into the National Access Regime as part of its response to the Harper Review.

The Productivity Commission report on the National Access Regime was released on 11 February 2014.

The Productivity Commission recommended that criteria b) include a ‘natural monopoly’ test rather than a ‘private profitability’ test. The natural monopoly test would be satisfied if total foreseeable market demand (including demand for substitute services) could be met at least cost by the facility.

Other key recommendations included that:

  • criterion a) be a comparison of competition with and without access on reasonable terms and conditions through declaration;
  • government‐imposed mandatory access undertakings be reviewed by the National Competition Council (the Council) against the declaration criteria;
  • criterion e) include a threshold clause that a service cannot be declared if it is subject to a certified access regime;
  • criterion f) be amended such that it is a positive test that declaration be in the public interest;
  • the power of the ACCC to order both capacity extensions and geographical expansion be clarified; and
  • a Council recommendation to declare an infrastructure service be deemed accepted by the Minister after 60 days, if the Minister does not publish a decision on the Council’s recommendation.

The Government will adopt all the recommendations of the Productivity Commission, including on criteria (a) and (b) which differ from the recommendations of the Harper Review. These changes will return the focus of the Regime to allowing effective competition in downstream markets by restoring the test applied prior to the High Court decision in 2012. This will ensure that the Regime remains accessible and effective.

The Productivity Commission and Harper Review both recommended that criterion (f) be reshaped as a positive test that declaration would be in the public interest. The Government will adopt these recommendations to ensure that the Regime features sufficient safeguards against inappropriate declarations.

The Government considers that the Australian Competition Tribunal’s existing merits review role should remain in place.

The Government will develop exposure draft legislation for consultation to give effect to this response.

See also the response to Recommendation 1 (Competition Principles) supporting granting third party access to significant bottleneck infrastructure where it would promote a material increase in competition in dependent markets and promote the public interest.