On 30 November 2012, the Productivity Commission (PC) moved to the next stage of its review of the National Access Regime by releasing its Issues Paper. The Issues Paper is intended to assist interested parties prepare initial submissions, which are due by 8 February 2013.
What is the review?
As noted in our Competition & Regulation Update on 26 October 2012, the PC review is reassessing the National Access Regime's operation and will provide its recommended law changes to the Federal Government in October 2013.
What does the Issues Paper say?
PC review is comprehensive
The review is not limited to considering incremental change. The Issues Paper confirms that the PC is preparing to fully examine the rationale, role and objectives of the National Access Regime and will, as appropriate, assess, report on and make recommendations regarding any aspect of the Regime and its performance to date. The PC is even considering whether Australia needs the National Access Regime at all.
Accordingly, the resulting changes could be significant and we note the Government accepted most of the PC's recommendations for amendments to Part IIIA from its last review. We expect the review will be the primary opportunity to influence Australian access law, including state-based access law, in the near term.
PC asks the big questions
The PC's Issues Paper includes the big questions about the National Access Regime:
- Is there an ongoing need for the National Access Regime at all? If so, what role should it play in the Australian economy?
- What alternative policy measures could be used to promote effective competition in upstream and downstream markets?
- What alternative policy measures could be used to facilitate access to services provided by nationally significant infrastructure?
- What are the relative costs and benefits of alternative policy measures (compared with Part IIIA)?
- Are there approaches used internationally to promote effective competition in upstream and downstream markets that could be implemented in Australia?
PC review is an economic assessment
The PC's review is an economic assessment which weighs up the costs and benefits of alternative policy measures. As the primary independent federal research and advisory body on economic matters, the PC's analysis will focus on the relative costs and benefits of alternative policy measures. Accordingly, submissions ought to address such matters if they are to be effective. This will include a focus on exploring the various policy options available to achieve an overall net economic benefit to Australia.
Some highlights from the Issues Paper
Criterion (b) - uneconomic to develop another facility: As expected, the PC has signalled that it intends to consider the role of declaration criterion (b), whether it is uneconomical to develop another facility to provide the service which is the subject of a proposed declaration. This issue was considered by the High Court in the recent Fortescue case. The High Court decided that criterion (b) should be a test of whether it is privately profitable to duplicate an existing facility. This decision affects the interpretation of other Australian access regimes that also contain a criterion drafted in similar terms.
Criterion (f) – public interest: The PC has asked for input on the public interest test for declaration, which requires decision-makers be satisfied that the declaration would not be contrary to the public interest. The test gives decision-makers much discretion, and effectively expands the range of factors to include anything that relates to the public interest. Reform options relating to this criterion include (i) removing the test and relying on the remaining criteria, and (ii) replacing the test with additional criteria. There are also options around the extent to which the Minister should be required to disclose how he/she determined this factor where it becomes the key element in a facility being declared or not.
Certification of state-based access regimes: Currently, access can be obtained if a state-based regime applies that requires access in the particular case. Such regimes need to be certified as effective under Part IIIA in accordance with the Council of Australian Government's Competition and Infrastructure Reform Agreement. Among other things, the PC is interested in how effective certification has been in delivering benefits from greater consistency between access regimes and in further understanding the extent to which certification has delivered more efficient and effective industry-specific state access regimes.
Undertakings to the Australian Competition and Consumer Commission (ACCC): Currently, a service provided by an infrastructure facility can be exempted from declaration if the firm that provides the service gives an undertaking to the ACCC, which the ACCC accepts. Industry bodies can also have access codes approved, which provide a framework for undertakings in that industry. The PC will consider whether and how an undertakings regime helps the National Access Regime achieve its objectives.
Who decides what: Access decision-making processes influence access outcomes. Currently, the decision-making framework is relatively complex, with the National Competition Council making declaration, certification and ineligibility recommendations to the designated Commonwealth, State or Territory Minister, who is the primary decision-maker. Undertakings and arbitration of access disputes come within the ACCC's realm. The decisions of the Minister and ACCC are reviewable by the Competition Tribunal, albeit in a limited form following the Fortescue decision. In its Issues Paper, the PC raises a number of interesting questions about these decision-making arrangements. It is expected that one of the main themes in submissions will be the complexity, time and cost involved in the existing processes, and how these can be simplified and improved.
How can we help?
DLA Piper can assist you to prepare your engagement strategy for the review, including initial submissions, which are due on 8 February 2013. Given the upcoming Christmas period, this is not far away.
Our dedicated Competition & Regulation team has significant experience advising on all aspects of access regulation. Accordingly, we have detailed insight into the issues and arguments likely to be raised, and how to best frame them. For example, we advised Fortescue in its attempts to gain access to rail infrastructure in the Pilbara that culminated in Fortescue's recent successful High Court appeal.
We can help you:
- Develop and advocate various policy options and the costs and benefits of these
- Prepare submissions and presentations, including preparing robust and credible evidence to maximise persuasiveness
- Understand the specific legal issues relevant to the review, including providing expert legal opinions on relevant issues raised by the review and other parties' submissions.
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