Reinvigorate our competition culture says ACCC Chairman

23 June 2014

The Harper Review provides an ideal opportunity to reinvigorate Australia’s competition culture, Australian Competition and Consumer Commission Chairman Rod Sims said today (Monday) at the CEDA State of the Nation Conference in Canberra.

“Australia has lost a lot of its pro-competition culture that it gained from the 1990s National Competition Policy. Clearly we need ‘Hilmer Mark 2’, as the current Harper Review is styled,”
Mr Sims said.

The Chairman said effective competition policy depends on using competition and other incentives to boost productivity, effective competition laws and creating processes and institutions that continually foster competition.

In listing areas where competition has taken a back seat, Mr Sims said the prevailing approach to privatisation raises particular concern.

“Where governments are increasingly failing is in ‘how’ to privatise. Privatising in ways that limit competition in order to maximise the one-off sale proceeds is the wrong way. Such an approach increases the sale proceeds by effectively taxing future generations and Australia’s future competitiveness,” Mr Sims said.

In discussing micro economic reforms, Mr Sims said infrastructure is a major area of unfinished business. He identified road supply and usage, congestion pricing and shipping as three areas that could be tackled.

“I always find it irritating when people say Australia has picked all the low hanging micro economic reform fruit. We have not; and besides, there is never only one crop,” Mr Sims said.

In foreshadowing the ACCC’s submission to the Harper review, Mr Sims said principles including efficiency, universality and clarity are important in determining where competition laws could be improved.

“While the ACCC recognises competition laws must strike a careful balance, and not inhibit healthy competitive behaviour, if competition laws are too weak there are large efficiency and welfare losses from systematically poor conduct.”

Mr Sims nominated Section 46 of the Competition and Consumer Act as a provision that is particularly deficient, and outlined two areas for improvement.

Mr Sims said a key success story of Australia’s competition policy is the integration of competition enforcement, consumer protection, and economic regulation into a single agency with the sole purpose of making markets work as they should.

“Given this common objective the current ACCC structure provides many synergies and economies of scale; it also avoids the many gaps that would arise if these complementary functions were separated; and it avoids the overlap that would arise as the same behaviour could be pursued by more than one agency,” Mr Sims said.

To address Australia’s diminished commitment to competition, Mr Sims said the role of market studies needs to be considered in order to gain an in-depth understanding of how sectors, markets, or market practices are working.

“The inability of the ACCC to initiate market studies using our information gathering powers means we are out of step with overseas regulators, and Australia is losing an opportunity for a continuing competition focus on particular sectors and activities.”

“The result of these studies can be enforcement action, recommendations to governments, simply shining a light on particular practices or, often more important, they can explain clearly to the public why there is not a problem,” Mr Sims said.

The Chairman’s address to the CEDA State of the Nation Conference will be available on the speeches section of the ACCC website.

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