Top Menu

The need to champion competition in Australia

Addressing the RBB Economics Conference in Sydney, Australian Competition and Consumer Commission chairman Rod Sims backed economic reforms proposed by the Harper Review Panel.

“The Harper Review Panel has proposed reforms to the delivery of human services; cost-reflective road pricing; removing cabotage restrictions on coastal shipping; de-regulating trading hours recognising that internet trading never stops; and so on. These are important microeconomic reforms.”

The speech makes three vital points.

First, Mr Sims said the once in 20 year review of competition policy is an opportunity to make a choice about section 46 (misuse of market power) of the Competition and Consumer Act.

“We can either stay with a known, but flawed law which currently has limited utility, causes many unnecessary arguments, and could be used to prevent pro-competitive behaviour,” he said.

“Or, we can seek to pursue the objective of the Act, to enhance ‘the welfare of Australians’ by, as other key sections of the Act do, focusing on the purpose or effect of substantial lessening of competition (SLC).”

Mr Sims said the ACCC accepts that companies generally do not set out to break the law, but the test for misleading and deceptive conduct, for example, does not include intent.

“Companies simply strive to maximise profits and sometimes cross important lines. This can happen with misleading and deceptive conduct, agreements that SLC and, surely, with a misuse of market power,” he said.

“I have heard concerns from many leaders in the business community about an effect of SLC test. It seems to me those concerns are based on a misunderstanding.”

“Some business leaders have said that, for example, when they innovate, actively compete on price or enter a new geographic market, and the result is that they succeed and most others fail, they fear their outcomes will have the effect of SLC.”

“This confuses the outcome with how you get there. To be held to have substantially lessened competition you have to do something anti-competitive; pro-competitive behaviour, whatever the outcome, cannot be held to SLC.”

Second, Mr Sims said the Harper Panel’s draft recommendations on extending the Act to cover more government activities is one of its most important proposals.

“In particular, the actions taken by governments in the course of operating and/or privatising major infrastructure or other assets can have profound and long-term effects on competition. These ultimately flow on to consumers in the form of higher prices or reduced levels of quality or innovation,” he said.

“The Harper Panel’s recommendation on the Crown being subject to competition law when it undertakes activity in trade or commerce may also apply to such actions.”

Third, Mr Sims said issues around competition advocacy and market studies need to be debated and decided in the context of the competition review.

No comments yet.

Leave a Reply