Today's response states
The Coalition made an election promise early in 2013 that we would deliver the first root and branch review of Australia’s competition laws in more than 20 years. This promise was delivered with the final report of the Review, led by Professor Ian Harper, and publicly released on 31 March this year. The Review provided a far reaching analysis of competition policy across the Australian economy and showed that reforming competition policy will be critical if Australia is to lift its long term productivity growth. Effective competition encourages businesses to pursue efficiencies, rewarding the most innovative and dynamic that provide the best services at the lowest cost. It also benefits households by giving them more and better products and services to choose from at lower prices. As the response shows, the Government will implement the majority of the Review’s recommendations. Many of the recommendations are in areas of state and territory responsibility, and the Government is committed to working closely with the states and territories to advance reform. Indeed, I have already met with state and territory treasurers in October and commenced discussions on the reform opportunities that it presents. I am confident that this package of reforms will deliver stronger economic performance for Australia in the long term by promoting more dynamic, competitive and well functioning markets for the benefit of all Australians.That's followed by unsurprising policy boilerplate -
Competition is one of the surest ways to lift long term productivity growth. Competition energises enterprise and encourages business to pursue efficiencies, rewarding the innovative and dynamic businesses that provide the best services at the lowest cost, and benefiting households by giving them more choice and better value products and services.
The 2015 Intergenerational Report showed that productivity growth is the most important driver of Australian incomes and living standards. That is why the Australian Government (the Government) is laying the groundwork for a more competitive and flexible economy by reforming Australia’s competition framework. These reforms will make markets work better for the benefit of all Australians, reduce barriers to entry for new businesses and encourage businesses to innovate and provide greater choice to consumers.
Previous National Competition Policy (NCP) reforms delivered in response to the Hilmer Review resulted in substantial economic benefits for Australia. Efficiency improvements in the key infrastructure industries targeted by the reforms boosted Australia’s gross domestic product (GDP) by 2.5 per cent. The reforms delivered by the NCP are a strong example of how all governments can work together and utilise competition to increase economic growth. The Competition Policy Review (the Harper Review) was commissioned by the Government as a key election commitment and is an important limb of the Government’s forward economic policy agenda, which also includes the Tax White Paper, the Federation White Paper and the response to the Financial System Inquiry. The Harper Review provides a comprehensive, independent assessment of Australia’s competition framework. It makes 56 recommendations to revitalise competition policy at both the state and Commonwealth level, reshape competition institutions, and modernise and simplify Australia’s competition laws with a view to strengthening competition and incentives to innovate, empowering consumers, and promoting better use of and investment in infrastructure.
The Government will implement the majority of the Review’s recommendations. Many of the recommendations of the Harper Review are in areas of state and territory responsibility and the Government is engaging with the states and territories to advance an ambitious reform agenda. All governments recognise the benefits that were delivered by the NCP and are already working together to develop a new national framework between the Commonwealth, states and territories that will identify and facilitate innovative ways to deliver services and promote economic growth.
The Government supports 39 of the Harper Review’s recommendations in full or in principle and a further 5 recommendations in part. The Government also notes or remains open to 12 recommendations in areas where implementation will be considered following further review and consultation, including with the states and territories. The Government has already announced reform in a number of areas consistent with recommendations of the Harper Review’s final report, including that it will simplify the regulation of coastal trading and review remuneration and location rules in the pharmacy sector. The Government supports removing restrictions on the parallel importation of books following the Productivity Commission’s inquiry into Australia’s intellectual property arrangements and consultations with the sector on transitional arrangements, to make local booksellers more competitive with international suppliers, promote lower prices for consumers and ensure the timely availability of titles. In addition, the Government will review competitive neutrality policies and guidelines, and expand its Regulatory Reform Agenda to incorporate a competition regulation review that will strengthen Australia’s competitiveness by systematically reducing barriers to competition.
The Government endorses the revised competition principles and, through the Council of Australian Governments (COAG), it will propose that all governments commit to a new set of competition principles and reform agenda. These new principles should include choice and diversity of providers in human services. Inefficiencies in human service sectors can result in significant costs to the economy and individuals, and reduce productivity. Promoting innovative funding and delivery of human services is key to improving the effectiveness and efficiency of the sector, and reducing waste will help ensure that high quality service provision remains affordable for all Australians as our population ages and demand and cost pressures increase. The Government will commission a Productivity Commission review to explore how the principles can be applied in practice to the human services sector, following consultation with the states and territories on the terms of reference. Of course, progress over time to improve the efficiency and responsiveness of human services should also take account of important issues such as social equity, particularly in regional and remote areas.
The Government is also exploring early actions in areas where scope for reform in human services delivery has been identified and where action can be implemented independently of the states and territories. For instance, in the health sector the Australian Government Hearing Services Program has introduced the Hearing Services Online website and portal. The portal allows members of the public to search a directory of some 260 contracted providers using a map, and enables Voucher Program clients to lodge applications electronically. The portal also enables clients to move easily between providers should a client be dissatisfied with the service provided or need to transfer providers for other reasons.
One of the priorities for the Government is to work with states and territories to develop ways to promote sound investment decisions in and efficient use of roads in line with other infrastructure sectors, focusing on ensuring road infrastructure services best and most efficiently meet the needs of users. Road transport is a major input cost for businesses and the competing demand for funding of high quality road infrastructure is placing increasing pressure on government budgets. These are long term challenges for governments and the community, but the economic benefits are potentially significant and it is possible to build on existing work underway. In the near term, in consultation with the states and territories, the Government will reform and update the competition provisions of the Competition and Consumer Act 2010 (CCA). This includes introducing a prohibition on concerted practices, refining exclusionary conduct provisions, simplifying cartel laws, streamlining merger clearances, introducing a class authorisation process and establishing more flexible collective bargaining provisions. The Government will also investigate options to apply a class exemption to the liner shipping industry in consultation with the Australian Competition and Consumer Commission (ACCC) following the introduction of a new general class exemption power.
The Government acknowledges concerns raised in submissions to the Harper Review about the operation of the misuse of market power provision (section 46 of the CCA) and the Harper Review’s recommendation for reform. In light of the importance of this issue for business and consumers, the Government will consult further on options to reform the provision and release a discussion paper on this topic.Specific responses are -
R 1: Competition principles
The Australian Government, state and territory and local governments should commit to specific principles. The Government supports this recommendation, will work with the states and territories to secure their agreement to a reform agenda including a new set of overarching principles to guide competition policy implementation, and will seek to negotiate a new competition principles and reform agreement for COAG’s consideration within 12 months.
R2: Human services
Each Australian government should adopt choice and competition principles in the domain of human services. The Government supports this recommendation. It will commission a Productivity Commission review into human services, which will include research on past or ongoing reforms in different jurisdictions that incorporate principles of choice, competition and contestability. The review will also identify human services sectors or sub sectors for more detailed analysis. .
R3: Road transport
Governments should introduce cost reflective road pricing with the aid of new technologies, with pricing subject to independent oversight and revenues used for road construction, maintenance and safety. The Government supports this recommendation as a long term reform option, further to its response to the Productivity Commission’s Public Infrastructure inquiry report. The Government will seek to accelerate work with states and territories on heavy vehicle road reform and investigate the benefits, costs and potential next steps of options to introduce cost reflective road pricing for all vehicles. The Government is willing to consider payments to states and territories for reforms that improve productivity and lead to economic growth, including for significant regulatory reviews that are followed by reforms..
R4: Liner shipping
Part X of the CCA should be repealed. A block exemption granted by the ACCC should be available for liner shipping agreements that meet a minimum standard of pro competitive features. The minimum standard of pro competitive features to qualify for the block exemption should be determined by the ACCC in consultation with shippers, their representative bodies and the liner shipping industry. Other agreements that risk contravening the competition provisions of the CCA should be subject to individual authorisation, as needed, by the ACCC. The Government remains open to this recommendation and will work with the ACCC and relevant stakeholders, including shipping lines and importers and exporters, to investigate options regarding how a class exemption could be applied to the liner shipping industry. Any options considered would need to be consistent with Australia’s international law obligations.
R5: Cabotage — Coastal shipping and aviation
Noting the current Australian Government Review of Coastal Trading, cabotage restrictions on coastal shipping should be removed, unless it can be demonstrated that the benefits of the restrictions to the community as a whole outweigh the costs, and the objectives of the government policy can only be achieved by restricting competition. The current air cabotage restrictions should be removed for all air cargo as well as passenger services to specific geographic areas, such as island territories and on poorly served routes, unless it can be demonstrated that the benefits of the restrictions to the community as a whole outweigh the costs, and the objectives of the restrictions can only be achieved by restricting competition. The Government notes this recommendation, with a plan for coastal shipping to be implemented as soon as practicable following the passage of legislation in 2015-16. The Government does not have immediate plans to ease aviation cabotage arrangements.
R6: Intellectual property review
The Australian Government should task the Productivity Commission to undertake an overarching review of intellectual property. The Review should be a 12 month inquiry. The review should focus on: competition policy issues in intellectual property arising from new developments in technology and markets; and the principles underpinning the inclusion of intellectual property provisions in international trade agreements. A separate independent review should assess the Australian Government processes for establishing negotiating mandates to incorporate intellectual property provisions in international trade agreements. Trade negotiations should be informed by an independent and transparent analysis of the costs and benefits to Australia of any proposed intellectual property provisions. Such an analysis should be undertaken and published before negotiations are concluded. The Government supports in part this recommendation.
The Government supports the recommendation for the Productivity Commission to undertake an overarching review of intellectual property. An inquiry into Australia’s intellectual property arrangements was commissioned by the Treasurer on 18 August 2015, which is to have regard to Australia’s international arrangements, including obligations accepted under bilateral, multilateral and regional trade agreements to which Australia is a party. The global economy and technology are changing and there have been increases in the scope and duration of intellectual property protection. Excessive intellectual property protection can result in higher costs for Australian businesses and consumers and inhibit innovation. However, weak intellectual property protection can lead to under investment in research and development (R&D) which also stifles innovation. A comprehensive evaluation of Australia’s intellectual property framework is needed to ensure that the appropriate balance exists between incentives for innovation and investment and the interests of both individuals and businesses, including small businesses, in accessing ideas and products.
The Government does not support a separate independent review of the Australian Government processes for establishing negotiating mandates to incorporate intellectual property (IP) provisions in international trade agreements. The Government already has robust arrangements in place to ensure appropriate levels of transparency of our negotiating mandate while protecting Australia’s negotiating position. These include public and stakeholder consultation; feasibility studies and cost benefit analyses; and whole of government agreement to negotiating positions. Once a free trade agreement (FTA) is signed, regulation impact statements and national interest analyses are published and the agreement is scrutinised by the Parliament through the Joint Standing Committee on Treaties, prior to ratification. The Government does not support an independent cost benefit analysis being undertaken and published before negotiations are concluded. Such an analysis would reflect incomplete or inaccurate outcomes, signal Australia’s position to our negotiating partners and potentially compromise our capacity to achieve Australia’s national intere
R7: Intellectual property exception
Subsection 51(3) of the CCA should be repealed. The Government notes this recommendation and will have regard to the findings of the Productivity Commission’s inquiry into Australia’s intellectual property arrangements. The Productivity Commission released an issues paper for its inquiry on 7 October 2015. The terms of reference for the inquiry provide that the Productivity Commission is to have regard to the findings and recommendations of the Harper Review in the context of the Government’s response. The inquiry report is expected to be provided to the Government in August 2016. The Government will reconsider its response to this recommendation again in the context of the Productivity Commission’s report.
R8: Regulation review
All Australian governments should review regulations, including local government regulations, in their jurisdictions to ensure that unnecessary restrictions on competition are removed. Legislation (including Acts, ordinances and regulations) should be subject to a public interest test and should not restrict competition unless it can be demonstrated that: • the benefits of the restriction to the community as a whole outweigh the costs; and • the objectives of the legislation can only be achieved by restricting competition. The Government supports this recommendation. The Government will expand its Regulatory Reform Agenda to incorporate a competition regulation review to remove unnecessary regulatory barriers to competition. It will also encourage the states and territories to undertake similar reviews by seeking agreement to a reform agenda, including a new set of competition principles as outlined in the response to Recommendation 1. The Government is willing to consider payments to states and territories for regulatory reviews where subsequent reforms improve productivity and lead to economic growth.
R9: Planning and zoning
Further to Recommendation 8, state and territory governments should subject restrictions on competition in planning and zoning rules to the public interest test, such that the rules should not restrict competition unless it can be demonstrated that the benefits of the restriction to the community as a whole outweigh the costs, and the objectives of the rules can only be achieved by restricting competition. The Government supports this recommendation, noting this is an area of state responsibility. The Government will continue discussions with states and territories on ways to promote these reforms. The Government is willing to consider payments to states and territories for reforms that improve productivity and lead to economic growth.
R10: Priorities for regulation review
Further to Recommendation 8, and in addition to reviewing planning and zoning rules (Recommendation 9), the following should be priority areas for review: • Taxis and ride sharing: in particular, regulations that restrict numbers of taxi licences and competition in the taxi industry, including from ride sharing and other passenger transport services that compete with taxis. • Mandatory product standards: that is, standards that are directly or indirectly mandated by law, including where international standards can be adopted in Australia. The Government supports this recommendation and notes that regulation of taxis and ride sharing is an area of state responsibility. The Government is willing to consider payments to states and territories for regulatory reviews where they result in reforms that improve productivity and lead to economic growth .
R11: Standards review
Given the unique position of Australian Standards under paragraph 51(2)(c) of the CCA, Australian Standards that are not mandated by government should be subject to periodic review against the public interest test (see Recommendation 8) by Standards Australia. The Government supports this recommendation.
R12: Retail trading hours
Remaining restrictions on retail trading hours should be removed. To the extent that jurisdictions choose to retain restrictions, these should be strictly limited to Christmas Day, Good Friday and the morning of ANZAC Day, and should be applied broadly to avoid discriminating among different types of retailers. Deregulating trading hours should not prevent jurisdictions from imposing specific restrictions on trading times for alcohol retailing or gambling services in order to achieve the policy objective of harm minimisation. The Government supports this recommendation, noting this is an area of state responsibility. The Government encourages state and territory governments with remaining restrictions on retail trading hours to consider whether these restrictions are impeding competition and the ability of retailers to meet customer demand for flexibility and choice, and whether they can be removed without imposing undue pressure on retailers to remain open when it is uneconomical to do so. The Government is willing to consider payments to states and territories for reforms that improve productivity and lead to economic growth.
R13: Parallel imports
Restrictions on parallel imports should be removed unless it can be shown that: • the benefits of the restrictions to the community as a whole outweigh the costs; and • the objectives of the restrictions can only be achieved by restricting competition. Consistent with the recommendations of recent Productivity Commission reviews, parallel import restrictions on books and second hand cars should be removed, subject to transitional arrangements as recommended by the Productivity Commission. Remaining provisions of the Copyright Act 1968 that restrict parallel imports, and the parallel importation defence under the Trade Marks Act 1995, should be reviewed by an independent body, such as the Productivity Commission. The Government supports in part this recommendation. The Government supports the removal of parallel import restrictions on books. The Government will progress this recommendation following the Productivity Commission’s inquiry into Australia’s intellectual property arrangements and consultations with the sector on transitional arrangements. Following consultation as part of the review of the Motor Vehicles Standards Act 1989 and having regard to consumer protection and community safety concerns, the Government has decided not to proceed with reducing parallel import restrictions on second hand cars at this time.
R14: Pharmacy
The Panel considers that current restrictions on ownership and location of pharmacies are not needed to ensure the quality of advice and care provided to patients. The pharmacy ownership and location rules should be removed in the long term interests of consumers. They should be replaced with regulations to ensure access to medicines and quality of advice regarding their use that do not unduly restrict competition. The Government notes this recommendation. In light of the Final Report, as well as the National Commission of Audit and the Productivity Commission Research Paper: Efficiency in Health, the Government recognises the need for competition in the pharmacy sector, including that the location rules should be examined closely. The Government recognises the original intention of the location rules was to create a suitable geographic spread of pharmacies to ensure dependable and timely access to Pharmaceutical Benefits Scheme (PBS) medicines, including in rural and remote regions. While the location rules have been extended for another five years under the Sixth Community Pharmacy Agreement, the Government and the Pharmacy Guild have agreed that an independent public review of pharmacy remuneration and regulation will also be conducted. The review will examine whether the location rules should remain in their current form or be updated in the future, with a final report by 1 March 2017. The Government also encourages states and territories to consider the appropriateness of existing restrictions on pharmacy ownership in pursuing public policy objectives. The Government is willing to consider payments to states and territories for reforms that improve productivity and lead to economic growth
R15: Competitive neutrality policy
All Australian governments should review their competitive neutrality policies. Specific matters to be considered should include: guidelines on the application of competitive neutrality policy during the start up stages of government businesses; the period of time over which start up government businesses should earn a commercial rate of return; and threshold tests for identifying significant business activities. The review of competitive neutrality policies should be overseen by an independent body, such as the proposed Australian Council for Competition Policy (see Recommendation 43). The Government supports this recommendation.
R16: Competitive neutrality complaints
All Australian governments should increase the transparency and effectiveness of their competitive neutrality complaint processes. The Government supports this recommendation. Competitive neutrality complaints are considered by the Australian Government Competitive Neutrality Complaints Office, which operates within the independent Productivity Commission. The Government encourages those jurisdictions without independent complaint bodies to consider establishing such a body. It supports the Government responding publicly to the findings of complaint investigations, and encourages other governments to do the same. The Productivity Commission currently includes updates on Government competitive neutrality investigations as part of its annual reporting.
R17: Competitive neutrality reporting
To strengthen accountability and transparency, all Australian governments should require government businesses to include a statement on compliance with competitive neutrality principles in their annual reports. The proposed Australian Council for Competition Policy (see Recommendation 43) should report on the experiences and lessons learned from the different jurisdictions when applying competitive neutrality policy to human services markets. The Government endorses the principles of accountability and transparency of its competitive neutrality policy. It remains open to this recommendation and will be consulting on its competitive neutrality policy in 2016. The Government will ask the Productivity Commission, as part of developing policy options in human services sectors, to consider how competitive neutrality can be improved in these markets.
R18: Government procurement and other commercial arrangements
All Australian governments should review their policies governing commercial arrangements with the private sector and non government organisations, including procurement policies, commissioning, public private partnerships and privatisation guidelines and processes. Procurement and privatisation policies and practices should not restrict competition unless: • the benefits of the restrictions to the community as a whole outweigh the costs; and • the objectives of the policy can only be achieved by restricting competition. An independent body, such as the Australian Council for Competition Policy , should be tasked with reporting on progress in reviewing government commercial policies and ensuring privatisation and other commercial processes incorporate competition principles. The Government supports in principle this recommendation. The Public Governance, Performance and Accountability Act 2013 requires Government entities, when imposing requirements on others for the use or management of public resources to take into account associated risks and the effects of imposing those requirements. The Government will ensure, via the Efficiency through Contestability Programme, that government functions are systematically assessed, including for improved efficiency through competitive arrangements, where appropriate..
R19: Electricity and gas
State and territory governments should finalise the energy reform agenda. The Government is committed to promoting the application of national energy legislation and rules across all Australian jurisdictions. The Government has tasked the ACCC with reviewing the competitiveness of the Eastern Australian gas market. The ACCC is due to report to the Government by April 2016. The Government through the COAG Energy Council has tasked the AEMC to review facilitated markets and pipeline frameworks to improve market efficiency, transparency and operation.
R20: Water
All governments should progress implementation of the principles of the National Water Initiative, with a view to national consistency. Governments should focus on strengthening economic regulation in urban water and creating incentives for increased private participation in the sector through improved pricing practices. State and territory regulators should collectively develop best practice pricing guidelines for urban water, with the capacity to reflect necessary jurisdictional differences. To ensure consistency, the Australian Council for Competition Policy should oversee this work. The Government supports this recommendation and will work with the states and territories to advance water reform. The Government is willing to consider payments to states and territories for reforms that improve productivity and lead to economic growth .
R21: Informed choice
Governments should work with industry, consumer groups and privacy experts to allow consumers to access information in an efficient format to improve informed consumer choice. The proposed Australian Council for Competition Policy should establish a working group to develop a partnership agreement that both allows people to access and use their own data for their own purposes and enables new markets for personal information services. The Government supports allowing consumers to access information in an efficient format, especially as new technologies increase the generation of data that can improve consumer decisions but also raise consumer protection issues. The Government will task the Productivity Commission with reviewing options to improve accessibility to data.
R22: Competition law concepts
The central concepts, prohibitions and structure enshrined in the current competition law should be retained, since they are appropriate to serve the current and projected needs of the Australian economy. The Government supports this recommendation. Proposed changes to competition laws will retain the central concepts, prohibitions and structure of the current CCA.
R23: Competition law simplification
The competition law provisions of the CCA should be simplified, including by removing overly specified provisions and redundant provisions. The process of simplifying the CCA should involve public consultation. The Government supports this recommendation and will develop a proposal to further simplify provisions of the CCA, following stakeholder consultation by the Treasury .
R24: Application of the law to government activities
Sections 2A, 2B and 2BA of the CCA should be amended so that the competition law provisions apply to the Crown in right of the Commonwealth and the states and territories (including local government) insofar as they undertake activity in trade or commerce. The Government supports in principle this recommendation. The Government will consult further with the states and territories on the implications of extending the CCA to apply to government activities in trade or commerce.
R25: Definition of market and competition
The current definition of ‘market’ in section 4E of the CCA should be retained but the current definition of ‘competition’ in section 4 should be amended to ensure that competition in Australian markets includes competition from goods imported or capable of being imported, or from services rendered or capable of being rendered, by persons not resident or not carrying on business in Australia. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories to ensure that competition in Australian markets includes competition from goods and services imported or capable of being imported into Australia.
R26: Extra territorial reach of the law
Section 5 of the CCA, which applies the competition law to certain conduct engaged in outside Australia, should be amended to remove the requirement that the contravening firm has a connection with Australia in the nature of residence, incorporation or business presence and to remove the requirement for private parties to seek ministerial consent before relying on extra territorial conduct in private competition law actions. Instead, the competition law should apply to overseas conduct insofar as the conduct relates to trade or commerce within Australia or between Australia and places outside Australia. The in principle view of the Panel is that the foregoing changes should also be made in respect of actions brought under the Australian Consumer Law. The Government supports in part this recommendation, noting that the Competition and Consumer Amendment (Deregulatory and Other Measures) Bill 2015 gives effect to the recommendation that the Government remove the requirement for private parties to seek ministerial consent before relying on extraterritorial conduct in private competition law actions.
R27: Cartel conduct prohibition
The prohibitions against cartel conduct in Part IV, Division 1 of the CCA should be simplified. The Government supports simplification of the prohibitions on cartel conduct, and will amend the current exception for joint ventures to provide appropriate exemptions for demonstrable and deliberative joint venture activity. The Government accepts that the prohibitions on cartel conduct are complex and will develop exposure draft legislation for consultation with the public and states and territories to simplify definitions to improve clarity and certainty, while retaining specificity and meaning. Exposure draft legislation to broaden the joint venture exemption so that it does not limit legitimate commercial transactions (such as through vertical supply arrangements) will also be developed for consultation.
R 28: Exclusionary provisions
The CCA should be amended to remove the prohibition of exclusionary provisions in subparagraphs 45(2)(a)(i) and 45(2)(b)(i), with an amendment to the definition of cartel conduct to address any resulting gap in the law. The Government supports simplifying the prohibitions on exclusionary conduct and will develop exposure draft legislation for consultation with the public and states and territories. Simplification can be achieved by amending the cartel provisions and removing the prohibitions on exclusionary provisions.
R29: Price signalling
The ‘price signalling’ provisions of Part IV, Division 1A of the CCA are not fit for purpose in their current form and should be repealed. Section 45 should be extended to prohibit a person engaging in a concerted practice with one or more other person that has the purpose, effect or likely effect of substantially lessening competition. This recommendation is reflected in the model legislative provisions in Appendix A. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories. The Government agrees that the price signalling provisions are complex and create an additional and unnecessary compliance burden for business. Other provisions of the law are capable of addressing anti competitive price signalling, and with the extension of provisions relating to contracts, arrangements or understandings that restrict dealings or affect competition to include concerted practices, the price signalling provisions are not required. The Government will develop exposure draft legislation to repeal the price signalling provisions of the CCA and extend section 45 of the CCA to capture concerted practices that substantially lessen competition.
R30: Misuse of market power
The primary prohibition in section 46 of the CCA should be reframed to prohibit a corporation that has a substantial degree of power in a market from engaging in conduct if the proposed conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market. To mitigate concerns about inadvertently capturing pro competitive conduct, the legislation should direct the court, when determining whether conduct has the purpose, effect or likely effect, of substantially lessening competition in a market, to have regard to: • the extent to which the conduct has the purpose, effect or likely effect of increasing competition in the market, including by enhancing efficiency, innovation, product quality or price competitiveness; and • the extent to which the conduct has the purpose, effect or likely effect of lessening competition in the market, including by preventing, restricting or deterring the potential for competitive conduct in the market or new entry into the market. Such a re framing would allow the provision to be simplified. Amendments introduced since 2007 would be unnecessary and could be repealed. The Government notes this recommendation and will consult further on options to strengthen the misuse of market power provision. The Government acknowledges concerns raised in submissions to the Harper Review about the operation of the misuse of market power provision. In light of the importance of this issue for business and consumers, the Government will consult further on options to reform the provision and release a discussion paper on this topic.
R31: Price discrimination
A specific prohibition on price discrimination should not be reintroduced into the CCA. Where price discrimination has an anti competitive impact on markets, it can be dealt with by the existing provisions of the law (including through the Panel’s recommended revisions to s 46. Attempts to prohibit international price discrimination should not be introduced into the CCA on account of significant implementation and enforcement complexities and the risk of negative unintended consequences. Instead, the Panel supports moves to address international price discrimination through market solutions that empower consumers. These include removing restrictions on parallel imports and ensuring that consumers are able to take lawful steps to circumvent attempts to prevent their access to cheaper legitimate goods. The Government supports this recommendation and agrees that a specific prohibition on price discrimination should not be reintroduced. The Government will remove parallel import restrictions on books and will consult further on options to strengthen section 46.
R32: Third line forcing test
Third line forcing (subsections 47(6) and (7) of the CCA) should only be prohibited where it has the purpose, effect or likely effect of substantially lessening competition. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories. Prohibiting third line forcing only where it has the purpose, or has or is likely to have the effect, of substantially lessening competition will bring the provision into line with comparable international jurisdictions and with other provisions of the CCA.
R33: Exclusive dealing coverage
Section 47 of the CCA should be repealed and vertical restrictions (including third line forcing) and associated refusals to supply addressed by sections 45 and 46 (as amended in accordance with Recommendation 30). The Government notes this recommendation. Vertical restrictions are agreements with or conditions imposed on acquirers of goods in a supply chain, and their impact on competition can vary depending on the circumstances. Simplification of section 47 will be considered as part of the proposal to further simplify the competition law and in light of the outcome of further consultation on R30.
R34: Resale price maintenance
The prohibition on resale price maintenance (RPM) in section 48 of the CCA should be retained in its current form as a per se prohibition, but notification should be available for RPM conduct. This recommendation is reflected in the model legislative provisions in Appendix A. The prohibition should also be amended to include an exemption for RPM conduct between related bodies corporate, as is the case under ss 45 and 47. The Government supports this recommendation. ... The Government considers that maintaining a per se prohibition on RPM but allowing notification is an appropriate next step. The Government will develop exposure draft legislation for consultation with the public and states and territories to permit notification of RPM conduct to the ACCC, subject to longer timeframes (60 days) and the ability for the ACCC to impose conditions, and include an exemption for such conduct between related bodies corporate.
R35: Mergers
There should be further consultation between the ACCC and business representatives with the objective of delivering more timely decisions in the informal merger review process. The formal merger exemption processes (i.e., the formal merger clearance process and the merger authorisation process) should be combined and reformed. The Government supports this recommendation. The Government considers that overall the merger provisions of the CCA are working effectively. There should be further consultation between the ACCC and business representatives with the objective of delivering more timely decisions in the informal review process. The recommended changes will streamline and simplify the formal merger review processes, reducing burdens on businesses while maintaining the integrity of the system. The Government will develop exposure draft legislation for public consultation on changes to the formal merger review process, in consultation with business, competition law practitioners, the ACCC and states and territories. With regard to the ACCC’s informal merger review process, the Government notes its expectation that the ACCC will take into account this recommendation in performing its role and meeting its responsibilities, particularly in relation to delivering more timely and transparent decisions.
R36: Secondary boycotts
The prohibitions on secondary boycotts in sections 45D 45DE of the CCA should be maintained and effectively enforced. The ACCC should pursue secondary boycott cases with increased vigour, comparable to that which it applies in pursuing other contraventions of the competition law. The Government supports this recommendation, and will develop exposure draft legislation for consultation with the public and states and territories. The Government will draft legislation to increase the maximum penalty for secondary boycotts to the same level as that applying to other breaches of the competition law.
R37: Trading restrictions in industrial agreements
Sections 45E and 45EA of the CCA should be amended so that they apply to awards and industrial agreements, except to the extent they relate to the remuneration, conditions of employment, hours of work or working conditions of employees. Further, the present limitation in sections 45E and 45EA, such that the prohibitions only apply to restrictions affecting persons with whom an employer ‘has been accustomed, or is under an obligation,’ to deal, should be removed. The ACCC should be given the right to intervene in proceedings before the Fair Work Commission and make submissions concerning compliance with sections 45E and 45EA. A protocol should be established between the ACCC and the Fair Work Commission. The maximum penalty for breaches of sections 45E and 45EA should be the same as that applying to other breaches of the competition law. The Government notes this recommendation. This issue is being considered further as part of the Productivity Commission Review of the Workplace Relations Framework, which is scheduled to provide its final report to the Government in November 2015.
R38: Authorisation and notification
The authorisation and notification provisions in Part VII of the CCA should be simplified. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories. The Government will simplify the authorisation and notification provisions of Part VII of the CCA to ensure that only a single application is required for a single business transaction or agreement and allow the ACCC to consider both competition and public benefit considerations.
R39: Block exemption power
A block exemption power, exercisable by the ACCC, should be introduced and operate alongside the authorisation and notification frameworks in Part VII of the CCA. The ACCC should also maintain a public register of all block exemptions, including those no longer in force. The decision to issue a block exemption would be reviewable by the Australian Competition Tribunal. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories. The Government will provide the ACCC with a power to provide a ‘class exemption’ for classes of conduct that could otherwise be authorised individually on competition or public benefit grounds..
R40: Section 155 notices
The section 155 power should be extended to cover the investigation of alleged contraventions of court enforceable undertakings. The ACCC should review its guidelines on section 155 notices having regard to the increasing burden imposed by notices in the digital age. Section 155 should be amended so that it is a defence to a ‘refusal or failure to comply with a notice’ under paragraph 155(5)(a) of the CCA that a recipient of a notice under paragraph 155(1)(b) can demonstrate that a reasonable search was undertaken in order to comply with the notice. The fine for non compliance with section 155 of the CCA should be increased in line with similar notice based evidence gathering powers in the Australian Securities and Investments Commission Act 2001. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories..
R41: Private actions
Section 83 of the CCA should be amended so that it extends to admissions of fact made by the person against whom the proceedings are brought in addition to findings of fact made by the court.... The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories to allow private parties to rely on admissions of fact made in another proceeding.
R42: National Access Regime
The declaration criteria in Part IIIA of the CCA should be targeted to ensure that third party access only be mandated where it is in the public interestt. The Competition Principles Agreement should be updated to reflect the revised declaration criteria. The Australian Competition Tribunal should be empowered to undertake a merits review of access decisions, while maintaining suitable statutory time limits for the review process. The Government supports in part this recommendation. The Government will adopt all the recommendations of the Productivity Commission inquiry into the National Access Regime, including on criteria which differ from the recommendations of the Harper Review. The Government considers that the Australian Competition Tribunal’s existing merits review role should remain in place. The Government will develop exposure draft legislation for consultation to give effect to this response.
R43: Australian Council for Competition Policy — establishment
The National Competition Council should be dissolved and the Australian Council for Competition Policy (ACCP) established. Its mandate should be to provide leadership and drive implementation of the evolving competition policy agenda. The ACCP should be established under legislation by one state and then by application in all other States and Territories and at the Government level. It should be funded jointly by the Australian Government and the states and territories. The Government supports the need for a body to oversee progress on competition reform and will discuss its design, role and mandate with the states and territories.
R44: Australian Council for Competition Policy — role
The Australian Council for Competition Policy should have a broad role. The Government supports the need for a body to oversee progress on competition reform and, further to R43, will discuss its design, role and mandate with the states and territories.
R45: Market studies power
The Australian Council for Competition Policy (ACCP) should have the power to undertake competition studies of markets in Australia and make recommendations to relevant governments on changes to regulation, or to the ACCC for investigation of potential breaches of the CCA. The ACCP should have mandatory information gathering powers to assist in its market studies function; however, these powers should be used sparingly. The Government supports the need for a body to oversee progress on competition reform and, further to R43, will discuss its design, role and mandate with the states and territories. The ACCC currently has scope to conduct market studies, including under Ministerial direction under Part VIIA of the CCA. The Government agrees that the ACCC should continue to have this role as it can better inform its broader enforcement and regulatory work.
R46: Market studies requests
All governments, jointly or individually, should have the capacity to issue a reference to the Australian Council for Competition Policy (ACCP) to undertake a competition study of a particular market or competition issue. All market participants, including small business and regulators (such as the ACCC), should have the capacity to request market studies be undertaken by the ACCP. The work program of the ACCP should be overseen by the Ministerial Council on Federal Financial Relations to ensure that resourcing addresses priority issues. The Government remains open to this recommendation and, further to its response to R43, will continue discussions with states and territories on the most appropriate institutional architecture to support reform. The Government recognises that state and territory governments may wish to instigate studies of a particular market or competition issue from time to time. Independent institutions, including the Productivity Commission and ACCC, perform a market studies function for competition matters. The Government will consider ways in which any state and territory requests for market studies could be managed and resourcing implications addressed.
R47: Annual competition analysis
The Australian Council for Competition Policy should be required to undertake an annual analysis of developments in the competition policy environment, both in Australia and internationally, and identify specific issues or markets that should receive greater attention. The Government remains open to this recommendation and, further to its response to Recommendation 43, will continue discussions with states and territories on the most appropriate institutional architecture to support reform. ...
R48: Competition payments
The Productivity Commission should be tasked to undertake a study of reforms agreed to by the Australian Government and state and territory governments to estimate their effect on revenue in each jurisdiction. The Government supports this recommendation and will continue discussions with states and territories.
R49: ACCC functions
Competition and consumer functions should be retained within the single agency of the ACCC. The Government supports this recommendation.
R50: Access and Pricing Regulator
The following regulatory functions should be transferred from the ACCC and the NCC and be undertaken within a single national Access and Pricing Regulator: • the telecommunications access and pricing functions of the ACCC; • price regulation and related advisory roles of the ACCC under the Water Act 2007 (Cth); • the powers given to the ACCC under the National Access Regime; • the functions undertaken by the Australian Energy Regulator under the National Electricity Law, the National Gas Law and the National Energy Retail Law; • the powers given to the NCC under the National Access Regime; and • the powers given to the NCC under the National Gas Law. Other consumer protection and competition functions should remain with the ACCC. Price monitoring and surveillance functions should also be retained by the ACCC. The Government remains open to this recommendation. The Government will continue discussions with states and territories on how a new national framework could be developed between the Commonwealth, states and territories to promote economic growth including the most appropriate institutional architecture to support reform.
R51: ACCC governance
Half of the ACCC Commissioners should be appointed on a part time basis. The ACCC should report regularly to a broad based committee of the Parliament, such as the House of Representatives Standing Committee on Economics. The Government supports in part this recommendation. The Government supports the ACCC reporting regularly to a broad based committee of the Parliament, such as the House of Representatives Standing Committee on Economics. The Government considers that full time Commissioners are best placed to consider and take action on the varied and frequent decisions of the ACCC. .
R52: Media Code of Conduct
The ACCC should establish, publish and report against a Code of Conduct for its dealings with the media with the aim of strengthening the perception of its impartiality in enforcing the law. The Government supports this recommendation; it expects the ACCC to take into account this recommendation and establish, publish and report against a Code of Conduct for its dealings with the media with the aim of strengthening the perception of its impartiality in enforcing the law.
R53: Small business access to remedies
The ACCC should take a more active approach in connecting small business to alternative dispute resolution schemes where it considers complaints have merit but are not a priority for public enforcement. Where the ACCC determines it is unable to pursue a particular complaint on behalf of a small business, the ACCC should communicate clearly and promptly its reasons for not acting and direct the business to alternative dispute resolution processes. Where the ACCC pursues a complaint raised by a small business, the ACCC should provide that business with regular updates on the progress of its investigation. Resourcing of the ACCC should allow it to test the law on a regular basis to ensure that the law is acting as a deterrent to unlawful behaviour. Small business commissioners, small business offices and ombudsmen should work with business stakeholder groups to raise awareness of their advice and dispute resolution services. The Government supports the ACCC taking steps to improve its communications with small businesses (and complainants more generally). The Government has asked the ACCC to consider introducing changes to improve transparency and clarity for small businesses on why it is unable to pursue certain complaints. The Government will continue to liaise with the ACCC with a view to enhancing public disclosure of operational procedures and decision making processes where it is appropriate and feasible to do so. The ACCC will also be asked to consider how it can more actively connect small businesses to alternative dispute resolution (ADR) schemes where appropriate. Legislation to establish the ASBFEO received Royal Assent on 10 September 2015. The Government is working to implement this legislation. During the transition, the Australian Small Business Commissioner will continue to operate and service the needs of small businesses across Australia. The Government will explore options for facilitating greater collaboration and cooperation across tiers of government to have a national complaint handling and dispute resolution network that brings together small business commissioners, ombudsmen and relevant agencies. The Government notes that the Panel endorsed findings from the Productivity Commission’s Access to Justice Arrangements report.
R54: Collective bargaining
The CCA should be reformed to introduce greater flexibility into the notification process for collective bargaining by small business. Reform should include allowing: • the nomination of members of the bargaining group, such that a notification could be lodged to cover future (unnamed) members; • the nomination of the counterparties with whom the group seeks to negotiate, such that a notification could be lodged to cover multiple counterparties; and • different timeframes for different collective bargaining notifications, based on the circumstances of each application. Additionally, the ACCC should be empowered to impose conditions on notifications involving collective boycott activity, the timeframe for ACCC assessment of notifications for conduct that includes collective boycott activity should be extended from 14 to 60 days to provide more time for the ACCC to consult and assess the proposed conduct, and the ACCC should have a limited ‘stop power’ to require collective boycott conduct to cease, for use in exceptional circumstances where a collective boycott is causing imminent serious detriment to the public. The current maximum value thresholds for a party to notify a collective bargaining arrangement should be reviewed in consultation with representatives of small business to ensure that they are high enough to include typical small business transactions. The ACCC should take steps to enhance awareness of the exemption process for collective bargaining and how it might be used to improve the bargaining position of small businesses in dealings with large businesses. The ACCC should also amend its collective bargaining notification guidelines. This should include providing information about the range of factors considered relevant to determining whether a collective boycott may be necessary to achieve the benefits of collective bargaining. The Government supports this recommendation and will develop exposure draft legislation for consultation with the public and states and territories. Further to the Government’s Statement of Expectations of the ACCC, the Government expects the ACCC will take into account this recommendation in performing its role and meeting its responsibilities. This includes the ACCC taking steps to enhance awareness of the exemption process for collective bargaining and how it might be used to improve the bargaining position of small businesses. It also includes the ACCC amending its collective bargaining guidelines to provide information about the range of factors considered relevant to determining whether a collective boycott may be necessary.
R55: Implementation
The Australian Government should discuss this Report with the states and territories as soon as practicable following its receipt. The Government supports this recommendation.
R56: Economic modelling
The Productivity Commission should be tasked with modelling the recommendations of this Review as a package (in consultation with jurisdictions) to support discussions on policy proposals to pursue. The Government notes this recommendation. Discussions with the states and territories on potential competition reforms are continuing. Productivity Commission modelling of the recommendations of the Review will be considered further pending the outcome of these discussions.
