1 April, 2014

What You Need To Know

• The Federal Government has announced the terms of reference for, and the members of the panel who will conduct, the ‘root and branch’ review of Australian competition law and policy.
• The review will be chaired by Professor Ian Harper, an economist, partner at Deloitte Access Economics and former Chair of the Australian Fair Pay Commission. The three members of the Review Panel are Su McCluskey, Michael O’Bryan SC and Peter Anderson.
• The terms of reference are very broad, but matters specifically identified for review include:
  • The competitiveness of particular industries (including groceries, utilities and fuel);
  • particular areas of law (including the misuse of market power prohibition, industry codes of conduct, and regulation of access to infrastructure); and
  • the structure and powers of the competition institutions (including whether the administration and enforcement of competition law is being carried out effectively).
• The ACCC and other stakeholders have already publicly expressed opinions about matters to be addressed by the review.

What You Need To Do

• Await the release of the Issues Paper for the review, which is likely to provide important guidance on the scope and conduct of the review.
• Consider whether and how your business should participate in the review.

Background And Process

On 26 March 2014, the Minister for Small Business, the Hon Bruce Billson MP, released the final terms of reference for the ‘root and branch’ review of Australian competition law and policy, and appointed three members and a chair to serve on the panel which is to conduct the review (Panel). The review was promised by the Coalition during its 2013 election campaign, and according to the Minister’s press release is intended to “ensure fairer prices for consumers, and competition between business based on “merit not muscle”.
The terms of reference require the Review Panel to release an issues paper, hold public hearings, receive written submissions from interested parties, and publish a final report within the next 12 months.

Context

This review is the first wide-reaching review of the Competition and Consumer Act 2010 (CCA) (previously the Trade Practices Act) since the review by Sir Daryl Dawson AC KBE CB, Jillian Segal and Curt Rendall during 2002-2003. The “Dawson Review” focussed on the restrictive trade practices provisions in Part IV of the Trade Practices Act. Its recommendations, including the recommendation to criminalise “cartel conduct”, have shaped Australia’s competition law landscape. Prior to that, the 1993 “Hilmer Review” recommended (among other things) the implementation of a national competition policy and a regime to govern access to essential facilities infrastructure.

The Terms Of Reference

The terms of reference provide for a wide-ranging review of (among many other things) whether “Australia’s competition regulation, policy, and regulatory agencies are effective in protecting and facilitating competition, provide incentives for innovation and creativity in business and meet world’s best practice”.

The key areas of focus of the review are to:

• identify regulations and other impediments that restrict competition and reduce productivity (and which are not in the public interest);
• examine the competition provisions of the CCA to ensure that they are driving efficient, competitive and durable outcomes, particularly in light of changes to the Australian economy in recent decades and its increased integration into global markets;
• examine the competition provisions and the special protections for small business in the CCA to ensure that efficient businesses (big and small) can compete effectively and have incentives to invest and innovate;
• consider whether the structure and powers of the institutions involved in the enforcement of competition law remain appropriate, in light of ongoing changes in the economy and the desire to reduce the regulatory impost on business; and
• review government involvement in markets, including through government business enterprises and direct asset ownership, with a view to reducing government involvement where there is no longer a clear public interest need for that involvement.

Industries And Areas Of Law For Review

The terms of reference identify particular industries for review by the panel, including those “with natural monopoly characteristics”, “key markets (such as) groceries, utilities and automotive fuel”, concentrated and vertically integrated industries, and government businesses.

They also identify particular areas of the current law for review, including the misuse of market power prohibition (again!), industry codes of conduct, exceptions from the competition laws (including for liner shipping services), and access to infrastructure. The terms of reference exclude the Australian Consumer Law (ACL) from the review except to the extent that the ACL relates to protections for small businesses. (The ACL will be reviewed separately in 2016.)

Members Of The Panel

The Minister’s press release emphasised the “high degree of policy rigour and analytical capability” of the members of the Panel.

• Professor Ian Harper, chair of the Panel, is an economist, partner at Deloitte Access Economics and Emeritus Professor at the Melbourne Business School. Professor Harper was the inaugural Chair of the Australian Fair Pay Commission and was a member of the Wallis Inquiry on the Australian financial system.
• Su McCluskey is the CEO of the Regional Australia Institute and is also a beef cattle farmer. She has held numerous senior public sector roles. Her private sector experience includes roles at the National Farmers’ Federation and the Business Council of Australia.
• Michael O’Bryan SC is a barrister at the Victorian Bar, with substantial experience in competition law. Mr O’Bryan has appeared in and advised on many leading competition law cases, acting for private and public sector clients, and has published papers on a range of associated topics.
• Mr Peter Anderson was previously the Chief Executive (and before that the Director of Workplace Policy) of the Australian Chamber of Commerce and Industry. He has been a delegate to the International Chamber of Commerce, the OECD and regional business forums, and has also been involved in the COAG Business Advisory Forum.

Issues That May Be Addressed By The Review Panel

Current stakeholders, including the ACCC, have already begun making public statements about matters which should be addressed by the review. We expect that matters likely to receive significant attention in submissions to the review may include:

• Misuse Of Market Power: this will not be limited to the particular industries identified in the terms of reference, although there will doubtless be significant focus on them and will include the question whether this prohibition should incorporate an “effects” test (in addition to the current purpose test) – the Dawson Review considered, but did not recommend, this possibility. The review may also consider the current Bill before Parliament which proposes to introduce to confer a “divestiture power” on Courts (that is, a power to order a company to reduce its market share or market power) for use as a remedy in response to breach of the misuse of market power prohibition;

• Cartel Reforms: experience with the cartel reforms introduced in 2009 has shown that these highly technical prohibitions potentially cover a range of legitimate commercial activity, and that “exceptions” for joint ventures and collective acquisitions offer an incomplete solution – the review is likely to receive many submissions on this issue, including in relation to reducing the “regulatory impost” on business;

• Price Signalling: the Chairman of the ACCC has recently suggested, and the review may well consider, the potential to extend the current prohibitions on “anticompetitive disclosure of pricing and other information” (known as the “price signalling” prohibitions) beyond the banking sector, to apply to all industries;

• Unfair Contracts For Small Business: the potential extension of the ACL “unfair contracts” regime to apply to contracts with small business (and not solely to consumer contracts) has often been raised as a candidate for consideration by the review, and we expect it will be raised in submission to the panel; and

• The Efficiency Of The ACCC’s Processes: concerns about the ACCC’s processes, such as the granting of civil and criminal immunity under its Cartel Immunity Program and the delays and burdens imposed by the ACCC’s merger review process will be ventilated in submissions.

What Next?

• Await the release of the Panel’s “Issues Paper”, which is likely to provide important guidance on the scope and conduct of the review.
• Consider whether and how to participate in the review.

For further information, please contact:

Liza Carver, Partner, Ashurst
[email protected]

Peter Armitage, Partner, Ashurst
[email protected]

Bill Reid, Partner, Ashurst
[email protected]

Ross Zaurrini, Partner, Ashurst
[email protected]

Alice Muhlebach, Partner, Ashurst
[email protected]

Darren Grondal, Partner, Ashurst
[email protected]

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