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Competition Policy Review

Final Report

 

Overview

Official release

The Harper Panel released its Final Report, running to 548 pages, on 31 March 2015.

Visit the Competition Policy Review website to download the report and associated material.
(includes the report, brief overview of changes since draft and various infographics)

See also: Government welcomes Competition Policy Review final report (Media Release, 31/4/2015)

My final report sub-pages

In addition to this page I have created some sub-pages relating to the final report

Final Report recommendations
(this extracts only the 56 recommendations - can also be downloaded asPDF)

Comparison of draft v final report recommendations
(this puts the draft and final recommendations side-by-side and assesses the extent of change (if any)

The Harper Panel's model provisions
(in relation to the competition laws the Harper Final Report included a set of model provisions - these are reproduced on this page and link back to relevant recommendations as well as the existing provisions)

Comparisons of existing and proposed competition laws (including summary PDFs)
This page provides overviews of the current position on key competition laws (misuse of market power, resale price maintenance, mergers) with more to follow.

Academic commentary
(there has already been a good deal of commentary on the final report - much of which I have linked to from my Harper Media Page. I have also created a separate page for academic commentary on the report, linking to published articles and opinion pieces by academics (as well as similar publications by lawyers and economists))

Treasury consultation
(on the day the report was released it was opened for consultation with submissions due by 26 May. Details of the consultation are available on this page)

On this page I will progressively add detail from the report; at this stage it provides a tabled overview of all 56 recommendations.

Key competition law recommendations

In terms of the competition laws, key recommendations include:

  • that section 46 (misuse of market power) should prohibit conduct by firms with substantial market power that has the purpose, effect, or likely effect of substantially lessening competition (SLC) (no defence, but list of factors court must considered when assessing SLC - including whether conduct might enhance efficiency, innovation etc);
  • that the cartel provisions be simplified;
  • that price signalling provisions be removed and replaced by extending section 45 to cover concerted practices having the purpose, effect, or likely effect of SLC;
  • that prohibition on exclusive dealing in section 47 be repealed
    (provided section 46 amendments implemented; if not then recommendation for simplification of s 47 and removal of per se ban on third line forcing. Rationale: section 46 amendments render section 47 redundant - panel notes it is 'well accepted that vertical restrictions will not substantially lessen competition unless they are imposed by a corporation with substantial market power' (p 64));
  • that the per se ban on s 48 (resale price maintenance) remain but that a notification option be made available (consistent with draft recommendation)
  • Mergers - combine and reform formal merger exemption processes; make ACCC decision maker at first instance; make provision for ex-post merger evaluations
  • that changes be made to authorisation and notification provisions, including introduction of block exemption power.

See below for more detailed overview of competition law recommendations

 

Overview of recommendations

The Final Report contains 56 recommendations, broken up as follows:

See also:

Competition policy

Focus Recommendation No
Competition principles Sets out principles that should guide implementation of competition policy - including promotion of long term interests of consumers Rec 1
Human services Intergovernmental agreement should establish choice and competition principles in relation to human services Rec 2
Road transport Cost reflective road pricing should be introduced Rec 3
Liner shipping Repeal Part X but block exemption should be available. Rec 4
Coastal shipping and aviation (Cabotage) Cabotage restrictions should be removed (subject to public interest assessment) (both in coastal shipping and in relation to air cargo and certain air services) Rec 5
IP review Independent review of IP should be undertaken focussing on competition policy issues in IP 'arising from new developments in technology and markets'. Should be separate independent review assessing Govt processes for 'establishing negotiating mandate to incorporate intellectual property provisions in international trade agreements' Rec 6
IP exception Repeal ss 51(3) Rec 7
Regulation review Governments should review regulations to ensure unnecessary restrictions on competition are removed Rec 8
Planning and zoning Restrictions onplanning and zoning rules should be subject to public interest test (list of relevant considerations) Rec 9
Priorities for regulation review Taxis and ride-sharing and mandatory product standards should be priority areas for review Rec 10
Standards review Australian standards not mandated by govt should be subject to periodic review by Standards Australia Rec 11
Retail trading hours Remaining restrictions should be removed entirely or strictly limited to Christmas Day, Good Friday and morning of ANZAC Day. This should not prevent jurisdictions imposing specific restrictions on trading times for alcohol retailing or gambling services Rec 12
Parallel imports Remove remaining restrictions (unless benefits outweight costs and objectives can only be achieved by restricting comp), Parallel import restrictions on books and second-hand cars should be removed. Remainig restrictions should be independently reviewed. Rec 13
Pharmacy Current restrictions on ownership and location should be removed - replace with regulations ensuring access and quality of advice that do not unduly restrict competition Rec 14
Competitive neutrality policy Governments should review competitive neutrality policies (sets out specific matters to be considered) Rec 15
Competitive neutrality complaints Increase transparency and effectiveness of processes Rec 16
Competitive neutrality reporting Government businesses should be required to include a statement of compliance with competitive neutrality principles in annual reports Rec 17
Government procurement and other commercial arrangements All Aus govt's should review policies governing commercial arrangements with private sector and NGO's, including procurement policies, commissioning, public-private partnerships and privatisation guidelines and processes. They should not restrict competition unless benefits outweigh costs and objectives can only be achieved by restricting competition. Rec 18
Electricity and gas State and territory governments should finalise energy reform agenda Rec 19
Water All governments should progress implementation of principles of National Water Initiative with view to national consistency. Should create incentives for increased private participation. See also proposal for national Access and Pricing Regulator (rec 50). Rec 20
Informed choice Governments 'should work with industry, consumer groups and privacy experts to allow consumers to access information in an efficient format to improve informed consumer choice'. Psoposed ACCP (rec 433) should establish working group to develop partnership agreement allowing people access and use of their own data for own purposes. Governments, in dealing with information, should 'present information and choices in ways that allow consumers to access, assess and act on them.' Rec 21

 

Competition law

Law Recommendation No
Competition law concepts Central concepts, prohibition and structure should be retained Rec 22
Competition law simplification Simplify provisions - including by removing overly specified provisions and removing redundant provisions (likes 45(1)) Rec 23
Application of law to government entities Extend to Crown (inc local government) insofar as they undertake activity in trade or commerce. Rec 24
Definition of market and competition Retain but re-word definition of 'competition' to ensure competition from potential imports is considered Rec 25
Extra-territoriality Amend s 5 to remove requirement that contravening firm have connection with Australia and remove requirement for private parties to seek ministerial consent before relying on ET conduct. Rec 26
Cartels Simplify and create additional exemptions Rec 27
Exclusionary provisions Remove specific prohibition in s 45 Rec 28
Price signalling Repeal Division 1A; extend s 45 to capture concerted practices Rec 29
Misuse of market power Replace taking advantage and purpose elements with purpose, effect, or likely effect of SLC test; no defence but factors court should consider when assessing whether this element satisfied (including efficiency, quality and price issues) Rec 30
Price discrimination No specific prohibition should be re-introduced Rec 31
Third line forcing Third line forcing should only be prohibited where it has the purpose, effect, or likely effect of SLC Rec 32
Exclusive dealing Repeal Rec 33
Resale price maintenance Remain per se prohibited but with option for notification Rec 34
Mergers No change to merger law (inc no creeping acquisition law) but improve formal merger exemption process and combine with authorisation process with ACCC decision-maker at first instance plus merits review to Tribunal. Recommends program of post-merger evaluations. Rec 35
Secondary boycott Retain prohibition but require ACCC to report on enforcement and ACCC should pursue cases with increased vigour. Maximum penalty should be same as for other competition law breaches. Rec 36
Trading restrictions in industrial agreements Extend ss 45E and 45EA to apply to awards and industrial agreements (except to extent they relate to remuneration, conditions of employment, hours of work or working conditions of employees and remove certain other limitations. ACCC to be given right to intervene in FWC proceedings concerning these provisions and penalties should be same as for other competition law breaches. Rec 37
Authorisation and notification Simplify tests - only one application should be required for single transaction or arrangement and ACCC should be able to grant exemption from sections 45, 46 and 50 (and 47 if retained) if satisfied conduct would not be likely to SLC or there would be net public benefit. Rec 38
Block exemption power Introduce block exemption powers - enable creation of safe harbours (same test as for authorisation or notification) and maintain public register of block exemptions. To be reviewable by Tribunal. Rec 39
Section 155 notices ACCC should review guidelines; add 'reasonable search' defence to a 'refusal or failure to comply'; extend 155 to cover investigation of alleged contraventions of court-enforceable undertakings; fine for non-compliance to be increased Rec 40
Private actions Amend s 83 to extend to admissions of fact made by person against whom proceedings are brought Rec 41
National access regime Retain Part IIIA with modification - including that criterion (b) require it be uneconomical for anyone to develop another facility. Tribunal should have power to undertake merits review of access decisions. Rec 42

 

Institutions and Governance

Focus Recommendation No
Establish ACCP NCC should be dissolved and Australian Council for Competition Policy (ACCP) established to 'provide leadership and drive implementation of the evolving competition policy agenda'. Rec 43
Role of ACCP Broad role including advocacy, education, monitoring, identifying potential areas of competition reform, making recommendations on market design and regulatory issues (including proposed privatisations), undertaking research into competition policy developments and ex-post evaluation of some mergers Rec 44
Market studies power ACCP should have power to undertake competition studies of markets in Australia and make recommendations to government or ACCC. ACCP should have mandatory information gathering powers, but these should be used sparingly. Rec 45
Market studies requests Governments should have capacity to issue reference to ACCP to undertake market study. Market participants should have capacity to request market studies. Work of ACCP to be overseen by Ministerial Council on Federal Financial Relations Rec 46
Annual competition analysis ACCP to undertake annual analysis of developments Rec 47
Competition payments PC should undertake study of agreed reforms to estimate effect on revenue in each jurisdiction - if disproportionate competition policy payments should be made. Rec 48
ACCC functions ACCC should retain both competition and consumer functions Rec 49
Access and pricing regulator functions Should be transferred from ACCC and NCC and be undertaken by single national access and pricing regulator. Decisions of regulator to be reviewable by Tribunal Rec 50
ACCC governance Half commissions should be part time and positions of Debuty Chair should be abolished. Remove requirement for one samll business and one consumer protection commissioner. Rec 51
Media Code of Conduct ACCC should develop Code of Conduct for dealings with media to strengthen perception of impartiality Rec 52

 

Small Business

Focus Recommendation No
Small business access to remedies ACCC should take more active approach in connecting small business to ADR where complaints have merit but are not priority for public enforcement. ACCC should be resourced to test law on regular basis to ensure it operates as deterrence. Recommendations regarding communcation of ACCC with small business - about specific queries and more general awareness raising. Several recommendations of PC Access to Justice Arrangement report endorsed Rec 53
Collective bargaining Should be greater flexibility in notification process for collective bargaining by small business. Thresholds for notification should be reviewed. Additional recommendations and ACCC powers re: collective boycotts. Rec 54

 

Retail markets

No separate recommendations

 

Implementation

Focus Recommendation No
Implementation Aus Govt should discuss this report with States and Territories asap Rec 55
Economic modelling Productivity Commission should be tasked with modelling the recommendations of this Review to support discussions on proposals to pursue Rec 56

 

 

Final report

View Final Report on the Competition Policy Review website.