Australia: The greatest competition reforms in 20 years?

Last Updated: 1 March 2014
Article by Martyn Taylor and Josh Buckland

G20 leads to once-in-a-generation opportunity

The Australian Government's success at the G20 in Sydney over the weekend has paved the way for domestic regulatory reform. The Government's ambitious 'root and branch' review of competition policy ("Review") could result in the greatest regulatory reforms in 20 years.

The intended scope of the Review is ambitious. The formal announcement of the Review panel and final terms of reference will presumably now occur, building on the outcomes of the Group of Twenty (G20) Finance Ministers and Central Bank Governors Meeting. The Communiqué from the G20 meeting specifically mentions the promotion of competition and hence makes the 'root and branch' review all the more important and relevant.

Importantly, the Review provides a once-in-a-generation opportunity for stakeholders to express their views on the future of Australian market regulation. We recommend that those companies and organisations most affected by competition and sectoral regulation give serious thought to making a submission.

This commentary provides an overview of the intended scope of the Review and identifies key issues that may be considered. We have kept this commentary succinct. We are happy to discuss any issues in greater detail.

The political context to the Review

It has been 20 years since our national competition policy was comprehensively reviewed. The so-called 'Hilmer Review' into National Competition Policy, chaired by Professor Frederick Hilmer AO, had a profound impact on the Australian economy. In 2006, Australia was one of the most deregulated economies in the western world. Australia's competition policy reforms led the world and delivered Australia some of the strongest growth rates in the OECD.

As other nations have implemented reforms, Australia's competitive advantage has eroded. However, Australia currently has an important role leading the G20 at a critical stage in the evolution of the world economy. The Review provides a further opportunity for Australia to provide global economic leadership and to reap the corresponding economic rewards.

The recent decline in Australia's productivity levels has already led to a recent renewed focus on the importance of competition policy. Many commentators, including Hilmer himself, have called for a new or invigorated approach. Peter Harris, Chairman of the Productivity Commission, identified in a speech in November 2013 that the alternative is a "low growth scenario" for Australia.

In the 2013 Federal election, a stated policy objective of the Liberal/National Coalition was to boost Australian productivity. Improved competition policy was identified as a key means to achieve that objective. If elected, the Coalition stated that it would:

  • undertake a 'root and branch' review of competition law and policy to deliver more competitive markets; and
  • ensure that big and small businesses get a 'fair-go' when competing in their respective marketplaces.

Following the election of the Coalition in September 2013, these commitments are being implemented. Draft terms of reference for the Review were released in December 2013. Given the successful G20 meeting, the announcement of the review panel and final terms of reference will presumably now occur.

The 'extraordinary' breadth of the Review

The potential breadth of reforms that could be considered should not be underestimated.

In an article in the The Australian in January 2014, John Durie described the draft terms of reference as "extraordinarily wide". As with the Hilmer review in 1993, the Review is not limited to consideration of the Competition and Consumer Act 2010 (Cth)(CCA). Rather, the review encompasses general competition policy and market regulation with a view to more sweeping structural reform.

The G20 has emphasised productivity growth. The promotion of competition is seen as one means to achieve is. Consistent with this theme, the primary objective of the Review is to recommend appropriate reforms to achieve competitive and productive markets throughout the economy. These reforms must be directed at removing impediments to competition that are not in the public interest. Four key principles are to guide such reforms:

  • no market participant should engage in anti-competitive behaviour;
  • any microeconomic reforms should promote fair, transparent and open competition;
  • government should not crowd-out the private sector in competitive markets; and
  • the regulatory burden on business must be minimised.

The remaining terms of reference then flesh out these reforms in four key areas, namely improvement of regulatory institutions, improvement of competition laws, improvement of sectoral regulation, and the appropriate role of Government in competitive markets.

The draft terms of reference are lengthy, partly to address stakeholder concerns that the Review should focus on competition objectives, not sectoral interests. The potential scope of the Review is paraphrased in the following table:

Theme Scope of recommendations
Overall microeconomic reform

The Review must identify reforms to remove impediments to competition that are not in the public interest:
(The removal of impediments to competition may include:

  • removal of excessive Government regulation, such as deregulation and microeconomic reform;
  • prevention of anti-competitive behaviour, such as the application of generic competition law and sector-specific regulation; and
  • reduction in Government involvement in competitive markets, such as privatisation and competitive neutrality requirements).
Improvements to regulatory institutions

The Review must ensure the effectiveness of the relevant competition policy and regulatory agencies (State and Commonwealth):

  • Regulatory agencies must be transparent, efficient, and accountable and they should provide sufficient regulatory certainty.
  • The ACCC's interface with industry should be improved, including for merger clearances and immunity applications.
  • Enforcement practices should be appropriate and regulators should have sufficient enforcement powers and remedies
Improvements to competition laws

The Review must ensure the CCA is operating effectively:

  • The CCA must be effective in achieving its policy objectives.
  • The specific provisions of the CCA must achieve their intent.
  • Uncertain or rarely used provisions may be reframed.
  • The misuse of market power provisions must be effective.
  • The exemptions from the CCA should be reviewed.
  • The industry code of conduct provisions should be reviewed.
  • The unfair contract and unconscionable conduct provisions should be extended to protect small business.
Improvements to sectoral regulation
The Review must advise on appropriate amendments to institutional, legislative and regulatory measures in various industry sectors:
Shipping The need for the continued exemptions for liner shipping in Part X of the CCA.
Infrastructure and natural monopolies The adequacy of the existing national access regime in Part IIIA of the CCA and the adequacy and effectiveness of existing sectoral regulatory regimes.
Technology, including e-commerce The adequacy of existing regulation and enforcement in emerging markets and new technologies to promote entrepreneurship and innovation.
Groceries, utilities, petrol and other key markets Whether key markets are competitive and whether legislative amendments are necessary to enhance opportunities (i.e. promote competition and increase market access)
Parallel importing and global price discrimination Whether regulatory intervention is required to ensure that Australians can access goods and services at internationally competitive prices.
Appropriate role of Government in competitive markets

The Review must examine whether Government businesses serve the public interest and promote competition and productivity:

  • Government funding may be separated from service provision.
  • Privatisation and corporatisation may be considered.
  • Price-regulation in non-competitive markets may be considered.
  • Competitive neutrality policies should be applied.

Relevantly, the Review does not cover the provisions of the Australian Consumer Law (which have already recently undergone comprehensive reform), except where amendments are required to protect small businesses.

The review panel and proposed timing

As at 25 February 2014, the membership of the panel to implement the Review ("Panel") has not yet been publicly announced. We understand an announcement may have been delayed by the need to first finalise the outcomes from the G20 Finance Ministers and Central Bank Governors Meeting in Sydney.

The final terms of reference and timetable for the Review should be announced at the same time as announcement of the Panel. We understand that the final terms of reference should essentially be the same as the draft terms of reference released in December.

The review timetable is expected to be ambitious. While the Government has indicated that it seeks completion of the Review within 2014, we would not be surprised if the timing were extended given the delays in announcing the Panel. A clear challenge for the Panel will be to achieve this timetable given the very broad scope of the terms of reference.

Once the Panel has handed down its final report, there is no guarantee that the recommendations of the Panel will be accepted by the Government. Politically, we expect that the recommendations of the review will be taken seriously. The Government will need to deliver on the G20 outcomes and the 'root and branch' review provides a means to do so.

Where recommendations are accepted, political and legislative processes will still need to be followed. As such, it is unlikely that the Review would lead to formal legislative amendments until at least mid-to-late 2015.

The likely appetite for further deregulation

The Review could provide a blueprint for a next wave of sectoral deregulation and reform.

The G20 has emphasised productivity growth. Poor regulation acts as a drag on the economy by reducing flexibility and innovation, increasing cost, and impeding such growth. The review has been tasked to recommend removal of impediments to competition to enable such growth, including via a process of deregulation. New regulation may also be subject to screening via regulation review.

Historically, there has been a clear appetite within all levels of Australian government to remove superfluous regulation, particularly where regulation is impeding productivity. The "National Partnership Agreement to Develop a Seamless National Economy" in 2008, for example, involved a set of 45 reforms by the Council of Australian Governments (COAG) for that specific purpose. We would expect the Review to recommend enhancements to the regulation review process and to identify a set of recommendations for further deregulation and reform.

In this context, a key philosophical issue for the Review will be the appropriate level of regulation in critical sectors of the economy. Relevant questions may include:

  • Should more sectoral regulation be removed and reliance placed solely on competition law? In January 2014, ACCC chairman and CEO Rod Sims cautioned that "in a frenzy of deregulation, all regulation can be removed".
  • Should new regulation be applied? In February 2014, the Business of Council of Australia urged caution and advocated a 'principle based' approach to the Review.
  • What areas should be the priority areas for further reform? We would expect the Panel to identify those areas where reform will deliver the greatest benefits.

Ultimately, the Review will need to identify an appropriate regulatory balance for Australia for the coming decades.

Regulatory agency reforms may focus on the NCC

The Review may recommend institutional reforms, including the reinvigoration of Australia's competition policy institutions.

In a recent speech, Professor Frederick Hilmer AO identified three distinct tiers in the institutional framework for competition policy in Australia, as set out below:

Hilmer argued that any reforms should focus on the first and second of these tiers.

Consistent with Hilmer's comments, the Review is likely to focus on the role of the policy review agencies, particularly the NCC. Some have proposed the creation of an independent, high powered policy review and development entity to support each responsible Minister and COAG. The new entity would have regulation review powers. Any such reform could involve a greater role for the NCC, the expansion of the Productivity Commission, or even the integration of these entities.

While some have speculated on ACCC reform, the ACCC remains one of the best competition agencies in the world. In 2003, the so-called 'Dawson Committee' undertook a detailed review of the ACCC's functions and powers. That Committee was generally dismissive of proposals for greater reforms to the ACCC at that time.

A more likely outcome will be that the Review will recommend fixes for some important ACCC processes. Of these, the formal merger review process is an obvious candidate for further reform. That process was enacted in 2005, but has never been used, largely due to its perceived inflexibility. The recent experience in the application for merger authorisation by the Murray Goulburn Co-operative may also result in refinements to the merger authorisation procedure.

Competition law reforms may involve a welcome 'trim'

There is welcome scope for fine-tuning Australia's competition laws.

While some have joked that our competition laws rival our tax legislation for their excessive complexity, Australia's competition laws remain some of the best in the world. From 1974, Australia adopted a unique approach that blended the best elements of competition laws in Europe and the United States. Australian competition laws are widely regarded as highly effective and consistent with international best practice. The review is unlikely to recommend a substantive redraft.

However, some provisions of the CCA have been the subject of regular criticism. Other provisions of the CCA were enacted in reaction to historic political concerns and have rarely been used. We suspect these provisions are likely to be the primary focus of the Review. In effect, the 'root and branch' review may provide the opportunity for a welcome 'trim'.

Some important examples are set out below:

Provision Likely approach of Review
Misuse of market power The Dawson Review in 2003 recommended no amendment after detailed consideration. Subsequent amendments were made to s46 addressing below cost pricing, known as the Birdsville Amendments. These amendments have been widely criticised. We would expect the Review to recommend simplification to s46 to address that criticism.
Price signalling Concerns regarding tacit co-ordinated conduct in the banking sector lead to the enactment of provisions regulating price signalling in 2012. These provisions apply only in the banking sector and have also been criticised. The Review may consider whether an alternative approach is desirable.
Third line forcing Australia's third line forcing provisions remain inconsistent with international best practice. The Dawson Review recommended a competition test be applied, but that recommendation was not adopted. We would expect the Review to make a similar recommendation.
Joint venture defence Australia applies a joint venture defence in the context of the per se prohibitions relating to cartel provisions and exclusionary provisions. However, the defences are inconsistent and differ from the approach used overseas. The Review may consider a more harmonised approach.
Exclusionary provisions Concerns remain regarding the drafting of the prohibition on exclusionary provisions in Australia given its 'per se' application. An overlap exists between exclusionary provisions, cartel provisions and exclusive dealing. The Review may revisit the Dawson Committee's recommendations to soften this prohibition and may consider the utility of the current drafting
Cartel provisions Concerns have been expressed at the excessive complexity of some parts of the CCA, including the cartel provisions. We suspect some attention could be given to simplifying the drafting. However, given the fundamental importance of these provisions it is unlikely they will be substantively reformed.

Importantly, the Review has been expressly asked to consider the continued relevance of the various exemptions contained in the CCA. We therefore expect a careful review of the nature of those exemptions, including potentially for intellectual property and liner shipping. The express mention of parallel importing in the terms of reference suggests that the historic conclusions of the Ergas Report on Intellectual Property and Competition Policy in 2000 may be revisited.

Improved outcomes for small businesses

The Review may recommend reforms to address the concerns of small business.

Small business has been a key focus of Coalition policy. The genesis of the 'root and branch' review was to address concerns of small business and ensure "that small business can compete equally with big business". Reflective of this focus, the Review is currently being administered by the Minister for Small Business, Hon Bruce Billson MP, rather than the Treasurer. Billson is quoted as stating that he has a "hunting licence to go where I need to go to give more support and encouragement to the enterprise ecosystem".

The draft terms of reference indicate that the Review will consider extending the unfair contract provisions (which currently apply to consumers) to small business and expanding the protections against unconscionable conduct to small business. While this may benefit small business, it does impose a greater regulatory burden overall. Much debate has also historically centred on such issues. As such, it is by no means certain that any such reforms would ultimately be recommended.

We also expect a careful analysis to be undertaken as to the nature of the regulatory regime associated with industry codes of conduct. One feature of a more deregulated approach is a greater reliance on industry 'self-regulation', including the use of industry codes of conduct. However, sufficient protections are required to ensure that 'self-regulation' does not degenerate into no regulation at all.

In relation to franchising, the Federal Government accepted (or accepted in principle) most of the recommendations made in April 2013 following an independent review of the Franchising Code of Conduct. Given this, it seems unlikely that the Review will seek to revisit Franchising Code of Conduct issues.

Some industry sectors are under particular scrutiny

Companies may push for greater protections against knee-jerk sectoral regulation.

A number of industry sectors have been singled out for specific attention in the draft terms of reference, namely shipping, e-commerce, groceries, utilities, automotive fuel (e.g. petrol, diesel), technology, and natural monopoly infrastructure. Some of these sectors mirror the ACCC's current areas of focus, as identified by ACCC Chairman and CEO Rod Sims in a speech on 21 February 2014. Technology and e-commerce, for example, is a current key focus for the ACCC, including given the disruptive effect of the Internet on traditional business models.

Infrastructure is a key area of G20 focus. As the Productivity Commission has just completed a detailed review of the Part IIIA national infrastructure access regime, it is unlikely that the Review will reopen the need for reform of that regime. However, Part IIIA is but one component of the regulation of Australian infrastructure. The Panel may give attention to such issues as State-based price surveillance (particularly of natural monopoly infrastructure) and State-based access regulation.

The competition issues relating to groceries, utilities, and automotive fuels are perennial and tend to be unique to those particular sectors. For example, in petrol retailing, public concerns may lead to submissions that the price signalling provisions should be extended. Given the likely limited resourcing and timetable of the review, any such detail would be best left to sector-specific inquiries. Yet the review may seek to guide future policy-making and sectoral regulation. A more harmonised, principled and predictable approach may reduce the risk of ad hoc government intervention. The review has the ability to define the circumstances and parameters within which any sectoral regulation should be applied.

We also suspect that the Review is intended to provide a means to revisit competition issues that have been the subject of previous reports and recommendations. For example, the exemptions for liner shipping agreements set out in Part X of the CCA are mentioned. These provisions provide limited exemptions from the CCA for collective arrangements involving international liner shipping for cargo into or from Australia. The Productivity Commission last reviewed Part X in 2005.

Model for Government businesses under review

Interestingly, reforms may occur to the regulatory model for government businesses.

The Review is required to consider whether Government businesses promote competition and productivity. These issues are relevant to competition policy as Government involvement in competitive markets has the potential to 'crowd-out' private sector investment. Moreover, there is an inherent conflict of interest where the Government has the ability to set the regulatory structure for its own businesses.

The draft terms of reference indicate that the focus will be on four sets of issues:

  • whether Government funding should be separated from service provision;
  • potential for greater privatisation and corporatisation of Government businesses;
  • the appropriateness of price-regulation in non-competitive markets; and
  • the continued application of competitive neutrality policies.

The inclusion of these issues indicates that the Review could potentially cover reforms in economic sectors that have traditionally been the domain of Government, including healthcare.

The use of the word "privatisation" in the draft terms of reference has already attracted disproportionate media comment and will likely continue to do so. However, such issues are inherently political and it is unlikely that the Review will be so granular that it will identify particular assets for privatisation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions