Harper’s Competition Policy Review Final Report

Professor Ian Harper presented his Final Report of the Competition Policy Review to the Hon Bruce Billson MP, Minister for Small Business on 6 March 2015.

This is the first comprehensive review of Australia’s competition laws and policy in over 20 years.

The mammoth report runs to 539 pages, weighs close to 1.5 kg and contains 56 recommendations. Based on length and weight alone, the Government has certainly got value for money.

The Panel consulted across a wide-section of the Australian community and from participants in all sectors of the economy. It received almost 350 submissions in response to the Issues Paper and around 600 submissions to the Draft Report. AADA’s submission and all non-confidential submissions are published on the website competitionpolicyreview.com.au.

The top five issues raised were misuse of market power, retail trading hours, road transport, planning and zoning, and supermarkets.

Competition policy reform is critical to improving Australia’s productivity performance and to sustaining our living standards into the future. The Panel identified three major forces for change, which stand out as influencing the Australian economy now and into the foreseeable future:

  • industrialisation of developing nations and, in particular, the rise of Asia and the growing Asian middle class;
  • ageing of the Australian population; and
  • diffusion of digital technologies, with their potential to disrupt established patterns of economic activity.

The Panel made a number of recommendations in the areas of:

  • competition policy;
  • competition laws;
  • competition institutions;
  • small business; and
  • retail markets.

Competition policy

In the area of competition policy, the Panel recommended, amongst other things, that priority be given to removing regulations restricting competition in planning and zoning, taxis and ride-sharing and product standards.

The Panel considered that reform of taxi regulation in most jurisdictions is long overdue. Regulation limiting the number of taxi licences and preventing other services from competing with taxis has raised costs for consumers, including elderly and disadvantaged consumers, and hindered the emergence of innovative passenger transport services.

The Panel noted the advent of ride-sharing services both in Australia and overseas has been particularly controversial, with regulatory agencies questioning their legality. Technological change is also disrupting the taxi industry, with ride sharing apps, such as Uber, connecting passengers with private drivers. Booking methods are also being challenged by the emergence of apps such as GoCatch and ingogo.

Competition laws

The effectiveness of competition laws was examined and the Panel found section 46, dealing with misuse of market power, is lacking in its current form and does not usefully distinguish pro-competitive conduct from anti-competitive conduct.

The Panel heard concerns about the behaviours of larger businesses in their supply chains in relation to unconscionable conduct. The Panel noted the recent Federal Court declarations instituted by the ACCC in relation to Coles and noted the current unconscionable conduct provisions are working as intended to meet their policy goals. It recommended active and ongoing review of these provisions should occur as other matters arise.

Competition institutions

The Panel recommended the creation of a new national competition body, the Australian Council for Competition Policy (ACCP). While the ACCC would retain both competition and consumer functions, a separate access and pricing regulator could be established with responsibility for existing regulatory functions.

This would not sit well with the ACCC, which in recent times has been very effective in dealing with misuse of market power and unconscionable conduct.

Small business

Small business concerns are being addressed by the Minister for Small Business with the creation of the Small Business and Family Enterprise Ombudsman and extension of unfair contract provisions. A new Franchising Code of Conduct addressing concerns of small business commenced from 1 January 2015.

Retail markets

Competition in retail markets was an important focus for the review, including competition in grocery and fuel retailing, regulations on planning, zoning and trading hours, and specific regulations such as those affecting pharmacy and liquor retailing.

AADA’s submission and the full report can be viewed at: www.competitionpolicyreview.com.au

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