ACCC objects to Racing and Wagering Western Australia compulsory insurance proposal

The Australian Competition and Consumer Commission has revoked a notification* lodged by Racing and Wagering Western Australia that would require thoroughbred horse trainers in Western Australia to obtain workers compensation insurance from a nominated insurer as a condition of their trainers licence. 

RWWA claimed that by nominating one insurance provider it could achieve discounted premiums for trainers, facilitate the development of an industry risk management program and ultimately ensure that all trainers have adequate insurance coverage as required by legislation.

While the ACCC acknowledges the benefits RWWA is hoping to achieve, the ACCC is concerned that they come at the cost of significant detriment by removing the ability of horse trainers to choose and negotiate with their own insurance provider.

By eliminating competition between insurance providers for the life of the policy, any discount RWWA may be able to negotiate may be eroded in the long term and the incentives for insurers to offer competitive premiums may be reduced.

The detriment is increased by the fact that, under the scheme, horse trainers who do not obtain workers compensation insurance from the nominated provider will not be granted a licence to operate as a trainer in WA.

On balance, the ACCC does not consider that the likely benefit to the public from the proposal will outweigh the likely detriment to the public from the proposal.

The ACCC notes that the benefits which RWWA's proposal is designed to deliver may be achieved in other ways which do not involve the anti-competitive detriment associated with the notified conduct.

A voluntary scheme is not likely to raise the same competition issues but can still deliver volume discounts. A competitively priced voluntary industry scheme may see large numbers of trainers participate even if they are not obliged to do so.

Further, the ACCC does not consider that the development of a risk management program is dependent upon the notified conduct. The ACCC considers that RWWA will be able to continue to work with insurance providers and horse trainers to develop a risk management programme for the industry.

The ACCC also encourages RWWA to work with WorkCover WA if RWWA has concerns about trainers not meeting their legal obligations to obtain appropriate workers compensation insurance.

Copies of the final notice will be available on the ACCC's website.

Background

*Businesses may obtain protection in relation to conduct that might be at risk of breaching the exclusive dealing provisions of the Trade Practices Act 1974 by lodging a notification with the ACCC. Once lodged, protection for the notified conduct commences automatically, or in the case of third line forcing, after 14 days. The ACCC may revoke a third line forcing notification if it is satisfied that the likely benefit to the public from the conduct will not outweigh the likely detriment to the public from the conduct. Prior to issuing a notice to revoke a notification, the ACCC must issue a draft notice setting out its reasons for proposing to revoke the notification.