The Australian Competition and Consumer Commission has provided a submission to the Harper Review of competition policy. The submission elaborates on comments made by ACCC Chairman Rod Sims at the CEDA State of the Nation Conference in Canberra on Monday.
“The Harper Review provides an ideal opportunity to reinvigorate Australia’s competition culture,” ACCC Chairman Rod Sims said.
“The ACCC’s submission argues that, at its heart, effective competition policy is about three things.”
Firstly, it is about microeconomic reforms that open up as many sectors as possible to competition, and allows price mechanisms to play their crucial role in signalling to businesses how to meet consumers’ needs at the lowest cost.
“The ACCC’s submission identifies a number of priority areas for potential reform, including privatisation, roads, congestion pricing, shipping, energy, water, intellectual property and land use,” Mr Sims said.
Secondly, effective competition laws are critical. 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 systemically poor conduct.
Key recommendations relate to the misuse of market power provisions and so-called “price signalling” provisions in the Competition and Consumer Act 2010.
“Currently the section 46 misuse of market power prohibition is of limited utility in prohibiting anti-competitive conduct by firms with substantial market power,” Mr Sims said.
“The ACCC considers that making this provision effective could be best achieved through the introduction of an effects test, including a substantial lessening of competition, and amendments to overcome limitations inherent in the current interpretation of the ‘take advantage’ test.”
The ACCC advocates expanding application of the ‘price signalling’ provisions prohibiting anti-competitive disclosure of information throughout the whole economy, not just the banking sector.
“An extension of the prohibition against anti-competitive disclosures would better align Australia’s competition law with international best practice,” Mr Sims said.
Amongst other recommendations, the submission notes that greater clarity in the law could be provided by amending the drafting and structure of the cartel provisions as well as the authorisation and notification provisions. Furthermore, a number of specific amendments are likely to assist small business; in particular, to allow greater opportunity to undertake collective bargaining and collective boycotts.
Thirdly, the submission notes that effective competition policy is about governments establishing the processes and institutions that continually foster competition and sustain the commitment to reform.
In particular, to reinvigorate Australia’s commitment to competition, the submission calls for consideration of the role of a market study function for the ACCC. Market studies could be used to assess whether, in particular sectors, competition problems exist or not, and to support better targeted action by the ACCC or others in response.
“Competition regulators in most comparator countries do such market studies, including in the US, UK, EC, Japan and the Republic of Korea, and so this recommendation would bring Australia into line with other jurisdictions,” Mr Sims said.
The submission is available at: ACCC submissions.