Transcript Key Issues for the Competition Policy Review

Key Issues for the
Competition Policy Review
Professor Ian Harper
Chair, Competition Policy Review Panel
UNSW, 6 August 2014
Competition Policy Review
27 March 2014:
Panel appointed,
TOR issued for 12 month review
14 April 2014:
Issues Paper released,
submissions sought
September 2014:
March 2015:
Draft Report to be issued,
followed by further submissions
Report to Australian government
Why is competition important?
• Competition drives choice, efficiency and
innovation
• These are important contributors to
productivity growth, and to improved
wellbeing of Australians
• Competition policy facilitates and protects
competition in markets, to enhance consumer
welfare
Why review competition policy now?
• First comprehensive review of Australia’s
competition laws and policy in over 20 years
• View that reform momentum begun under
National Competition Policy (NCP) has flagged
– For example, submissions pointed to the
re-emergence of regulatory barriers with little/no
consideration of impact on competition
The Australian economy has changed
• Considerable change in the Australian
economy since implementation of NCP in the
1990s and early 2000s
• Then, the economy had only recently been
opened to global competition
• Focus of competition policy was on ensuring
that the benefits of competition flowed into
non-tradeable sectors, such as infrastructure
The Australian economy now
• Technological change and disruption
– lowers (or avoids) barriers to entry
– new digital products with very low marginal cost
– consumer empowerment, greater information and
choice
– rapidly expanding network of connections and
applications for business and consumers – information
abundance rather than scarcity is the norm
• Competition policy and law will need to:
– be flexible to new products and modes of delivery
– not impede new sources of competition
How is the Review approaching its task?
• Panel is focused on three main themes
– unfinished NCP reforms (what are the remaining
priorities, what have we learned and where can
competition be applied further?)
– institutional and governance arrangements, to
drive reform for the next two decades
– competition law (is it fit for purpose?)
Where to now?
• Priorities – what areas should be focus for
competition policy reform?
• Submissions point to a wide range of
potentially anticompetitive regulation and
activity
– Regulatory barriers in licensing, planning,
adoption of standards
– Competitive neutrality issues: provision of goods
and services by local government
Competition in the supermarket sector
• Many submissions raised concerns about the
supermarket sector, including:
– market dominance of Coles and Woolworths
– impacts of conduct and acquisitions on small business and
suppliers
• Larger supermarkets and some peak bodies noted:
–
–
–
–
falling grocery prices, expanding choice, competitors (Aldi)
planning restrictions
restrictions on trading hours
inconsistent liquor licensing rules
Extending previous reforms
• We have specifically sought comment on
extending competition principles to new areas,
such as health and education
• Demographic changes will mean:
– shifts in demand, increased spending on health and
aged care
– greater need for choice and innovation in these
sectors
• But we are alert to the capacity of consumers to
exercise effective choice in these markets
Institutional and governance arrangements
• The Panel is focussed not only on ‘what to do’
but also the best way to get it to happen
• That is, considering institutional issues that
can help sustain competition policy, and retain
it as a key ongoing priority for future reform
Competition regulators
• We are also looking at the regulators
– Competition is crucial to the effective operation of
markets, and hence to the economy
– Regulators therefore play a very important role in
the Australian economy
– Do the current competition law institutions work
effectively? Are the roles and responsibilities set
appropriately?
Competition law
• Submissions broadly support the competition law
regime
• Issues raised about:
– Balancing complexity and certainty (cartel offences)
– Over-capture: is pro-competitive conduct being deterred
through the operation of the law? (current joint venture
exception)
– Under-capture: is the law capable of attacking all forms of
anti-competitive conduct? (facilitating practices)
– Mergers (s.50): in particular, the approvals process used by
the ACCC and the Tribunal
– Misuse of market power (s.46): including whether an ‘effects
test’ should be introduced
– Exceptions from the competition law: including licensing of
intellectual property, employment, liner shipping, etc
Next steps
• Panel will work through the issues raised, but
will not adjudicate them
– Panel is looking at broad principles and
institutional frameworks
• Draft Report expected end of September 2014
• Final report to Australian Government in
March 2015