Antitrust Law Daily Wrap Up, AGENCY NEWS: ACCC Chairman promotes economic reforms for Australian competition policy, (Nov 12, 2014)

By Greg Hammond, J.D.

Australian Competition & Consumer Commission (ACCC) Chairman Rod Sims delivered the keynote address at the RBB Economics Conference on November 7 in Sydney. In his prepared remarks, entitled “Bringing more economic perspectives to competition policy & law,” Sims promoted economic reforms proposed by the Harper Review Panel.

“The Harper Review Panel has proposed reforms to the delivery of human services; cost-reflective road pricing; removing cabotage restrictions on coastal shipping; de-regulating trading hours recognizing that internet trading never stops; and so on,” Sims said. “These are important microeconomic reforms.”

Specifically, Chairman Sims focused on three key areas that the once in 20 year Competition Policy Review should consider: (1) the oddities of Section 46 of the Competition and Consumer Act 2010 (CCA); (2) why the Harper Panel’s draft recommendation on extending the CCA to cover more government activities is one of its most important recommendations; and (3) the benefits of having the ACCC play a role in competition advocacy and doing market studies.

According to Sims, Section 46 of the CCA—misuse of market power—seems “extremely odd” for three reasons. First, he noted that Section 46 focuses on competitors rather than competition, and that it “outlaws a corporation that has a substantial degree of market power from taking advantage of that power for the purpose of, among other things, eliminating or substantially damaging a competitor.” However, that “is exactly what vigorous competition does,” he said. “Firms that make a better offer to consumers and win sales necessarily hurt or damage their competitors.” Consequently, Sims suggests that Section 46 needs to be changed.

The second problem with Section 46 is its taking advantage element, which is supposed to provide a filter for distinguishing between pro-competitive conduct and anti-competitive conduct, in Sims’ view. However, he noted that Section 46 fails to understand that the same action taken by a firm with and without market power can have different intent and consequences. Third, he stated that Section 46 is only concerned with the purpose of the conduct, not its effect.

With regard to the role of governments in competition, Sims suggested that, “[i]n particular, the actions taken by governments in the course of operating and/or privatizing major infrastructure or other assets can have profound and long-term effects on competition. These ultimately flow on to consumers in the form of higher prices or reduced levels of quality or innovation.”

The Chairman also suggested that competition policy advocacy would be best navigated by an agency like the ACCC, “with well developed expertise in dealing with competition issues at a practical level.” He further supported the idea of allowing the ACCC to conduct market studies, noting that “many overseas competition regulators have this ability, and having a broader toolkit can take the focus away from relying on enforcement.”

News: Antitrust