On 27 March 2014 the government released the terms of
reference for its root and branch competition policy review and
revealed the composition of the review panel. This is the most
comprehensive review of Australian competition laws and policy
since the 1993 Hilmer review which led to the development of the
National Competition Policy and, subsequently, the national access
The review panel comprises:
Professor Ian Harper (Chair), a partner at Deloitte Access
Economics and a member on the Wallis Inquiry;
Ms Su McCluskey, the CEO of the Regional Australia Institute
and a beef cattle farmer;
Mr Michael O'Bryan SC, a barrister at the Victorian Bar
with substantial experience in trade practices law; and
Mr Peter Anderson, who recently stepped down as Chief Executive
of the Australian Chamber of Commerce and Industry.
THE TERMS OF REFERENCE
The terms of reference are expansive, covering not only the
operation of the competition provisions of the Competition and
Consumer Act (CCA), but also any broader regulatory impediments to
competition, the structure and powers of the existing competition
institutions and government involvement in markets. The
review's terms raise a range of issues that will be of
particular interest to investors in infrastructure as well as
owners and operators.
First, the panel is asked to focus on government involvement in
markets through government business enterprises or direct ownership
of assets with a view to reducing that involvement where there is
no longer a clear public interest rationale. As a result, it seems
likely that the panel will recommend privatisation, to a greater or
lesser extent, of more of government's remaining public assets
Second, the terms of reference require review of the national
access regime under Part IIIA. The relevant paragraph (3.3.6) is
framed in terms of the adequacy of the current regime. This
language perhaps implies at least a willingness on the part of the
government to consider options for strengthening the regime. A
related matter for consideration by the panel is whether existing
regulation is leading to efficient outcomes in markets that exhibit
natural monopoly characteristics (4.1).
Third, given that owning or operating significant facilities or
infrastructure will often produce a level of market power in the
relevant markets, the panel's review of the sufficiency of the
existing misuse of market power provisions (3.3.2), is also likely
to be of interest.
THE FOCUS OF THE PANEL
Professor Allan Fels, a former Chairman of the ACCC, has
recently described the terms of reference as "sprawling"
and the task of the panel as "vast [and] possibly
unmanageable". He goes on to suggest that in its first weeks,
the panel will have to make crucial decisions about which are the
important topics to pursue in depth and which should be given
"a token runthrough (and effectively discarded)".
We agree that the panel is likely to select a smaller number of
key areas to review in detail. Moreover, given that Part IIIA
(access) has recently been the subject of a Productivity Commission
Inquiry, it may be tempting for the panel to effectively accept
those recommendations and focus its attention on other areas such
as the competition provisions in Part IV where a comprehensive
review is arguably long overdue.
Interestingly, a separate review of the sector-specific access
regime for telecommunications under Part XIC of the CCA is
currently being undertaken as part of the NBN Cost Benefit Analysis
and Regulatory Review. The approach taken by the expert panel in
that process looks set to be equally wide ranging and the recently
released discussion paper even contemplated leaving
telecommunications access regulation to the general access regime
under Part IIIA.
There will be significant scope for stakeholder participation in
the review via the consultation process. Two rounds of consultation
are proposed, one following the release of an issues paper, and a
second following the release of a draft report. The timetable for
publication of the issues paper and draft report has not yet been
released, but the review website indicates that the issues paper
will be released shortly.
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.
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