The ACCC released its 145 page submission on 25 June 2014.

View ACCC press release.

Principles

Competition law should be (p 8)

• Efficient
• Universal
• Clear
• Effective (efficiently enforced with penalties outweighing gains)
• Proportionate

Misuse of market power

'The ACCC considers that, as currently drafted and interpreted, the provision is of limited utility in prohibiting conduct by firms with substantial market power which has a detrimental impact on competition.' (p 76)

Effects test

Notes that while it has not lost a s 46 as a result of the purpose requirement, the existence of this requirement means that in many cases the 'ACCC has been unable to commence proceedings' because it does not consider it could satisfy the purpose element. Recommends amending s 46 to capture unilateral conduct by a firm with substantial market power 'that has, or is likely to have, the effect of substantially lessening competition in a market'. (p 77) Purpose should also be retained (so it became a purpose or effect test) (p 78)

Taking advantage

Interpretation of take advantage has 'moved away from the original intent that section 46 be construed in the final analysis as a single provision' (p 78) - case examples used, noting that Rural Press and Cement Australia 'best exemplify the narrow interpretation of "taking advantage" (p 79). It is not clear that s 46(6A) is a satisfactory solution (p 80) - possible solutions include defining 'more prescriptively the application of the take advantage limb' or reformulating the test 'to remove the take advantage limb and replace it with a substantial lessening of competition test' (p 80). A provision along the following lines is provided a s possible option (p 80):

'A corporation that has a substantial degree of power in a market shall not engage in conduct that has the purpose or has, or is likely to have, the effect of substantially lessening competition in that or any other market'

Notes any change should be implemented in a way which 'overcomes any concerns regarding over-reach' (p 80) but that as long as amending or removing 'take advantage' is 'combined with the key filter of a substantial lessening of competition test [it] will not capture pro-competitive conduct' (p 81)

Price signalling

Should extend to whole economy - principle of universality. Disclosures having purpose of substantially lessening competition should not be permitted (p 82)

Mergers

Bring merger authorisation back to ACCC at first instance [ironically submission made on same day as Tribunal granted its first merger authorisation since they were given first instance power post-Dawson]. Current approach increases costs and deters 'participation by third parties' (p 83). This could be done without extending timelines by allowing each of ACCC and Tribunal a maximum of three months.

Allow merits review by Tribunal. Notes Tribunal is a 'highly regarded and experienced merits review body' - first instance investigative functions not a 'natural fit for a review body such as the Tribunal' which does not conduct the market inquiries itself and does not have the resources to do so (p 84). Considers current approach (utilising ACCC support) is inefficient (pp 84-85)

Third line forcing

Remove per se ban (should be subject to competition test) - however, potential for consumer detriment means ACL should be reviewed to 'ensure consumers remain adequately protected' (p 86). ACCC notes that it received over 750 third line forcing notifications in 2012-2013 and in vast majority of cases no further action was taken (p 87) - this imposes 'unnecessary regulatory burden on business and the ACCC'.

Extraterritorial operation (s 5)

Act should put beyond doubt that conduct occurring overseas but having an anti-competitive effect in Australia is caught - including by clarifying when an overseas corporation is 'carrying on business in Australia' (s 5) (pp 91-92)

Clarify drafting in relation to cartel provisions and authorisation and notification provisions

Simplify these provisions.

• Substance of cartel laws are appropriate but the provisions are 'overly complex and could be simplified' (p 93)
• Both the authorisation and notification provisions and associated forms 'would benefit from simplification and, where appropriate, consolidation' (p 95)

Collective bargaining/boycott notification

Make more accessible - for example:

• 'ACCC should be able to impose conditions to address competition concerns so that notified collective boycott arrangements can proceed' (p 108)
• Timeframe for assessment of collective boycott notifications should be extended from 14-60 days (p 108)
• In exceptional circumstances ACCC should have limited 'stop power' to require collective boycott to cease (p 108)
• Greater flexibility in nomination of participants/counterparties (p 108)
• Greater flexibility for ACCC re: length of protection (p 108)
• Current $3m maximum value threshold should be reviewed.

RPM

Continue per se ban (discusses international developments). Broadly agrees with Hilmer Review recommendation that 'efficiency enhancing RPM be considered under the authorisation provisions.' (p 117)

International price discrimination and parallel imports

Effects of price discrimination are ambiguous (discussion of issues; no firm recommendation)

No reason to justify blanket restriction on parallel imports (pp 58 and 118)

Exemptions should be reviewed and should be transparent.

Government

Government may rely on s 51(1) and/or legislation may restrict competition without breaching the competition provisions. A 'renewed commitment to legislation and policy review is required' (p 89). Section s 51(1) should be amended to 'provide a sunset clause for exemptions legislated' by government(p 89).

Export

Exemption for export cartels (s 51(2)(g) should be repealed subject to appropriate transition arrangements (p 89). If not repealed greater transparency needed.

Intellectual property

Recommends repeal of s 51(3) (page 58)

• Improve ACCC investigative tools (expand s 155 and greater protection for whistle-blowers)
• Structure of ACCC (should not be split)
• ACCC functions (needs broader market study function)

Recommends reforms to assist small business (p 104)

• Extend unfair term provisions to small business
• Amend collective bargaining/boycott notification to make in more accessible
• Amend all industry codes to improve enforceability and introduce 'civil pecuniary penalties, infringement notices and improvements to the audit provisions regarding industry codes'
• Amend Horticulture Code to improve coverage
• 'Implement a legally enforceable supermarket and grocery industry code of conduct that provides clear rights and obligations' (p 104)
• 'Amend the ACCC’s educative and research role as provided for by the CCA to better reflect current practices and stakeholder expectations'

Extend unfair contract terms provisions to small business

• Amend prescribed industry codes to improve enforceability (see above, small business)
• Implement 'legally enforceable supermarket and grocery industry code of conduct that provides clear rights and obligations' (p 104)

Eight principles 'central to effective and sustained competition policy' (page 6):

• Review of regulatory barriers to competition
• Architecture necessary to facilitate markets (may be necessary in some sectors - eg road infrastructure)
• Structural separation
• Government or private ownership (Government should not retain ownership 'unless there is a clearly stated public policy reason for doing so, and government ownership is the best way to meet this objective' and privatisations 'should never be driven by budget goals')
• Social and equity objectives (regularly review merits of community service obligations)
• Corporation and competitive neutrality (for government businesses governments 'should establish a corporatised governance structure' and ensure it does not enjoy a 'net competitive advantage simply as a result of government ownership)
• Consumer participation
• Economic regulation (may be required where competition not feasible - eg, access or price regulation)

Key areas for microeconomic reform (pages 7-8; expanded further later in submission)

• Privatisation (too much focus by governments on short term budget goals ahead of longer term competition)
• Regulation and productivity (many areas where purpose of regulation and cost are disproportionate)
• Roads (road reform not fully implemented)
• Congestion pricing (enhance productivity of infrastructure assets through utilisation of congestion pricing)
• Shipping (review (and abolish where appropriate) policies which restrict competition in shipping industry)
• Energy (privatising government owned assets and deregulating retail markets would enhance efficiency)
• Water (scope for further reforms to better define types of rights and extend water trading)
• IP (balance to be struck; repeal s 51(3) exemption)
• Human services (scope for greater competition; facilitate competitive neutrality between private and public providers and promoting competition between public providers)
• Land use (some restrictions serve social purposes, but they are inappropriate 'where they are used for the purpose of protecting existing market participants from competition from new entrants')

In this brief 3 page submission AgForce supports the NFF submission and identifies the following 10 priority areas:

• Unconscionable conduct
• Misuse of market power (suggests effects test to replace purpose test)
• Unfair contract terms (extension to small business)
• Collective bargaining (inc raising threshold for primary production bargaining)
• Codes of conduct (potential introduction of mandatory industry code)
• Statutory duty of good faith (to assist with 'take it or leave it' negotiation practices or contract clauses
• Powers of the ACCC (suggest regular price monitoring of at risk industries by ACCC without ministerial direction and greater divestiture powers for ACCC)
• Access to essential services
• Protection from agri-terrorism
• Establishing a Perishable Goods Commissioner

View submission on Harper Review website

Key issues addressed include the ACCC Immunity Policy, the cartel laws (suggesting there is merit in abolishing the convoluted new cartel laws and reverting to the prior definition of price fixing under s 45A; alternatively there is a need for amendment and clarity), joint venture exceptions, third line forcing (suggesting removal of per se ban), resale price maintenance (suggesting removal of per se ban), predatory pricing (suggesting removing Birdsville amendment), price signalling laws (suggesting removing the current ban), the ACCC's coercive powers (proposing the Panel 'consider a requirement of reasonableness and proportionality in the issuing of section 155 notices' (para 38))

View submission on Harper Review website

View submission on ABL website

Addresses six key questions from issues paper:

1. regulatory impediments to competition
   (opposes recommendation 10 by House Standing Committee 2013 (that Govt 'investigate feasibility of amending the [CCA] so that contracts or terms of service which seek to enforce geoblocking are considered void')
2. price discrimination
   (opposes re-introduction of price discrimination laws)
3. IP laws
   (opposes repeal of IP exemptions in 51(3). Suggest 'recommendations of the Ergas Committee and the Government's Response need to be revisited' re: s 51(3) and also notes that the phrase 'to the extent that the condition relates to' in s 51(3) requires clarification. Also claim statutory pricing caps in s 152(8) and (11) of the Copyright Act have an adverse impact on competition and 'create market distortions and reduce economic efficiency'. Refers to Ergas recommendation that s 152(8) of the Copyright Act be 'amended to remove the broadcast fee price cap'.)
4. effectiveness of current competition laws
   (claim CCA is 'less than fully effective because it is too complicated and too prescriptive to be complied with readily by business organisations'; CCA should be simplified)
5. provisions on cartels, horizontal agreements and primary boycotts
   ('ARIA supports the much simpler and more effective cartel-related provisions proposed in the Commerce (Cartels and Other Matters) Amendment Bill 2011 as reported by the NZ Commerce Committee in May 2013')
6. price signalling
   (should be repealed)

The BCA made a 167 page submission (but usefully it provides a summary report comprising a more modest 35 pages). It made several key points (explained in more detail from page 4):

• 'Robust competition grows the economy'
• 'Global markets have changed our competitive environment'
• 'Poor application of regulation has a serious impact'
• 'Competition law must adapt to a changed economic environment'
• 'Review recommendations should boost competition across the economy'
• 'Competition policy review is one part of a strategic reform agenda'

The remainder of its submission was divided into six parts:

The new competitive landscape

The submissions discusses issues and opportunities, noting that, at present, 'Australia's competitiveness is lagging behind other countries' and recommending that the review 'develop its framework for competition policy with the new competitive global and technological landscape in mind'. The implications on the new competitive landscape are stated as follows:

• 'Competition remains paramount to economic progress'
• 'Long-term interest of consumers remains a sound objective' (but noting that over the long term consumer interests will not always be served by the 'simplistic measures of the lowest prices' or 'number of players'
• 'Government must look at markets through a global lens'
• 'Time is everything' (focus on timeliness and consistency of regulatory decisions and approvals)
• 'Regulation may not keep pace'

The BCA recommends that:

'1. The panel should design a competition policy framework that reflects a global mindset by promoting flexibility, innovation and productivity in the national interest of enhancing Australia’s competitiveness.

2. The Competition and Consumer Act (CCA) should be amended to clarify that in any competition assessment, the global dimension of markets must be taken into account, and dynamic competitive effects in markets are to be preferred over static measures such as historical concentration.'

The opportunity for broader pro-competitive reforms

The submission notes that there remain a range of policies that create barriers to competition and that they should be removed - the BCA broadly groups these as follows:

• 'Permits, licences, approvals and other regulations that restrict business growth'
• 'Regulations that limit the ability to compete' (eg, trading hours)
• 'Regulation that restricts ease of movement of resources across state markets'
• 'Regulation and policies that restrict the ease and speed of meeting growing export markets' (eg, coastal shipping regulation)
• 'Delays to regulatory approvals' (eg, planning and zoning)

The BCA makes several recommendations relating to removal of these barriers - many are specific to particular types of regulation and some more general (eg, National Competition Policy principles should continue to be applied and all governments should have robust Regulatory Impact statement processes testing new proposals against competition principles).

The BCA also addresses extension of competition to public sector markets, noting there remain 'considerable opportunities to expose government activities and organisations to greater competition so as to generate better outcomes for consumers, users of subsidised services, and for taxpayers'. Recommendations 12-18 address this issue; in particular, it is recommended (rec 18) that the Productivity Commission:

'be given inquiries that separately look at each of the main areas of state and territory service delivery (education and early childhood; health and human services; justice and transport) to examine the potential to increase competitive provision, drawing on the lessons from Australian and international jurisdictions that have already implemented such models'

Competition law

Notes that despite a strong competition framework, 'aspects of the competition framework impose unnecessary costs and delays by requiring compliance with overly prescriptive regulations, discouraging vigorous competition due to uncertainties in the law, and potentially hindering the efficient use of capital by adopting an overly narrow approach to mergers.' Recommends Australia's competition law be aligned with the following international best-practice principles (see also rec 19):

(I) long-term consumer welfare should be the overriding goal
(II) aim to protect the competitive process, rather than individual competitors
(III) be consistent with best practice competition law
(IV) minimise use of ‘per se’ prohibitions
(V) focus law economy wide, not sector specific
(VI) aim for simplicity to reduce compliance costs
(VII) don’t unduly impede legitimate business interactions.

In relation to existing or proposed provisions:

• Market definition and competitive effects analysis
  (approach to market definition at times unduly narrow and focussed too much on 'concentration rather than the dynamics of competition' and, particularly in merger assessment, this approach can 'fail to take into account the impact of new and innovative small entrants or technology that has lowered barriers to entry')
• Formal merger process
  (Availability of formal process desirable, but current option is 'unduly complicated by strict technical formal requirements' which are 'onerous and inflexible')
• Mergers - creeping acquisitions (rec 26)
  Section 50 should not be extended to address creeping acquisitions or impose market caps
• Predatory pricing (rec 25)
  (Australia has moved away from global practice - Birdsville amendment should be repealed)
• Price signalling (rec 25)
  (Current prohibitions 'long, complex and inconsistent with international best practice' - should be repealed)
• Per se prohibitions
  (RPM and third line forcing should be subject to competition test (rec 25); per se prohibition against 'cartels and exclusionary provisions should be clarified to ensure that they apply only to horizontal arrangements between competitors, and the joint venture exemption should be extended to apply both to non-contractual arrangements and to joint ventures other than for the supply of goods or services' (rec 21); s 45 prohibition against exclusionary provisions defined in s 4D should be repealed (rec 25))
• National access regime (rec's 23-24)
  (Should be used sparingly; currently it can 'create significant regulatory risk for greenfields investment' by 'exposing investors to the possibility of a lengthy and costly declaration process and the risk of access arrangements that materially impact on return on investment' - regulatory costs and risks should be reduced)
• Misuse of market power (rec 26)
  (No need for effects test)
• Public benefit defence (rec 22)
  A public benefit defence should be adopted to reduce reliance on authorisation and notification processes
• Other (rec 26)
  The following changes should not be made: removing related bodies corporate exemption from third line forcing, providing structural remedies (divestiture) beyond mergers, giving ACCC 'cease and desist' power, increasing maximum penalties, changing private profitability test for declaration under Part IIIA.

Regulatory institutions (rec's 27-31)

Australia unusual in combining three regulatory functions in one body - competition, consumer protection and pricing and access regulation of monopoly infrastructure. Panel should consider 'merits of creating a separate national pricing and access regulatory body in Australia'. Suggest regulator performance needs to be improved in relation to expectations and oversight, clarification of policy roles (not appropriate for regulator to have 'general power to initiate its own formal market studies'), timeliness (focus on mergers), use of compulsory investigatory notices (note increase in last year - concern about scope, purpose and intent), transparency (focus on mergers - no access to or opportunity to respond to, the record before decision) and use of media (notes Dawson recommendation for media code of conduct has not been implemented)

Institutions to drive ongoing reform

Recommend Commonwealth, state and territory leaders commit to 'implementing a comprehensive package of reforms to remove barriers to competition that embody a new global mindset' - cannot be a Commonwealth-only responsibility (see recommendations 32-35)

Full list of recommendations provided from page 28-33 (total of 35 recommendations)

Stephen Bartholomeusz, 'The ACCC is sending out mixed signals on competition' (Business Spectator, 26 June 2014)

Includes four short submissions regarding the ACCC's role in merger clearances: global markets, merger timelines, appeals on merger decisions and 'transparency and disclosure to merger parties of the record on which teh ACCC makes its informal clearance decisions.'

This ten page submission deals with the 'appropriateness of mechanisms for dealing with competitive neutrality complaints, particularly in respect of local government', 'the applicability of the CCA to the human services sector', the 'relationship between the CCA and industrial relations legislation' and 'how a market study function could operate in practice.'

This brief submission responds to concerns raised - particularly by Graeme Samuel and Stephen King - about the ACCC's proposal to change the misuse of market power provision (to prohibit unilateral conduct having the 'purpose or effect of substantially lessening competition in a market'). It refers in part to an Op Ed by Commissioners, Jill Walker and Roger Featherston, which is attached to the submission.