The competition review provides a blueprint for the next
wave of deregulation and structural reform
The Harper competition review provides a unique opportunity. The
draft recommendations released in September 2014 are well reasoned,
progressive and pragmatic. If implemented, they will position
Australia well for the coming decades.
As head of the G20, Australia has a once-in-a-generation
opportunity to 'walk the talk' and demonstrate real global
Australia leads the world's G20 economies at a critical
stage in the evolution of the world economy. It has been the envy
of the world, surviving the global financial crisis largely
unscathed. Yet there are economic storm clouds on the horizon. If
Australia is to maintain prosperity it must take immediate steps to
bolster the flagging productivity. This is the critical context to
the Harper review.
So what is so special about the review? It has been 20 years
since Australia's competition policy was last reviewed. The
Hilmer review had a profound impact on the Australian economy. In
2006, it was one of the most deregulated economies in the Western
world. Competition policy reforms led the world and delivered some
of the strongest growth rates in the OECD.
Harper review a blueprint
The Harper review provides a blueprint for the next wave of
deregulation and structural reform. There are 52 recommendations
touching on three general themes.
Firstly, it recommends institutional reforms. Australia's
competition policy institutions need reinvigoration. The draft
report proposes a high-powered policy review and development
entity, the Australian council for competition policy, which could
have real influence, overseeing a new regime of commonwealth-state
It may also provide policy leadership, including via independent
market studies and annual reviews. The review also recommends that
competition access and pricing functions be migrated to a new
specialist regulator that will subsume the National Competition
Council. Fixes to important processes are recommended, including a
merging of the much-criticised 'formal merger review'
process with merger authorisations. The report also suggests
refining governance of the Australian Competition and Consumer
Commission (the ACCC) – although the commission structure
works well and has been integral to the ACCC's
Competition policy reforms
The review also recommends competition policy reforms. Several
sectors are targeted, including health and education, road
transport, shipping, taxis and pharmacies. Deregulating parallel
importing and relaxing planning legislation are contemplated. The
review proposes focusing on national harmonised regulation,
including completing reforms of the electricity, gas and water
Finally, the review recommends refining competition laws. While
some have joked that these rival Australia's tax legislation
for their arcane complexity, they are some of the best in the
world. The review rather focuses on reforming provisions that
regularly attract criticism.
Some notable proposed amendments include repealing the
Birdsville amendments, which relate to below-cost pricing,
streamlining the treatment of joint ventures and relaxing the
prohibitions against third-line forcing. The complexity of the
criminal cartel provisions and exclusive dealing provisions may be
simplified. The prohibition against exclusionary provisions could
be repealed. Some more surprising recommendations include a more
expansive approach to extra-territoriality, repealing an
intellectual property exemption and adopting an 'effects
test' for the misuse of market power prohibition (albeit
qualified by a new defense, perhaps borrowed from Europe).
If these recommendations are not taken seriously by Canberra,
Productivity Commission Chairman Peter Harris says the alternative
is a 'low-growth scenario' for Australia.
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