Frontier’s Competition Practice considers the Harper Review findings

The Final Report of the Harper Committee’s Competition Policy Review was released on 31 March this year.

The Report ranged widely over many aspects of competition policy in Australia but essentially aimed to assess whether Australia’s competition policy was still ‘fit for purpose’. A number of questions were considered, including whether competition policy was making markets work in the long-term interests of consumers, and whether it secures the necessary standards of access and equity.

Of the questions posed, the one that the Legal and Competition Practice at Frontier (Australia) were interested in was whether current policy establishes laws and regulations that are clear, predictable and reliable, in particular with respect to Australia’s Competition Law as embodied in the Competition and Consumer Act.

Since its introduction as the Trade Practices Act in 1974, competition law in Australia has become far more complex but, it could well be argued, less effective. The effectiveness of a law depends, at least in part, on its being understood. In the case of competition law, its basic precepts must be understood by the businesses at which it is directed. It must also be understood by lawyers who advise on its effects and by judges who, ultimately, have to decide what it means.

In the forty years since its introduction, Australia’s competition law has had many additions and changes – but very few deletions. The result of these processes of accretion and amendment is that the persons who should be constrained by the law frequently do not understand the ways in which they are constrained – and those who should be assisted by the law are frequently surprised at how little they are assisted.

The Final Report of the Harper Committee proposes a much simpler and much more principled competition law than we currently have. The simplification can be readily appreciated by reading the suggested new drafting provided in the Report – which drastically prunes the verbiage of the current legislation.

The result is also far more principled than our current law. The suggested drafting is designed to implement the stated aim of the current legislation, which is ‘to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection’. It does this by applying the standard of substantial lessening of competition to all conduct (including to conduct undertaken by businesses with substantial market power). It also proposes that the law prohibit, without any enquiry as to its effects on competition, conduct that is highly anticompetitive in most circumstances. In the latter cases, the conduct is so likely to damage the competitive process that it is not worth the cost of the detailed investigation, gathering of evidence and court processes that are needed to prove to a court that the conduct substantially lessens competition.

The Final Report of the Harper Committee is now in the hands of the Government. The Minister for Small Business (the Hon Bruce Bilson) is seeking views of interested parties. Our view is that the Minister has been handed a proposal for a principled piece of legislation that can be understood by those at whom it is directed. We hope this will pass with minimal changes, as modifying it in the interests of lobby groups could well negate the effects of the revision.

For more information, please contact m.okeeffe@frontier-economics.com or phone +61 (0)3 9620 4488.

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