Freyja McCarthy

Harper Competition Policy Review

Freyja McCarthy

8 April 2015

Competition and Consumer Law

 

The Competition Policy Review Panel’s final report was released on 31 March 2015 by small business minister, Bruce Billson MP. The review is referred to as the “Harper Review” after the chair of the Panel, Professor Ian Harper. Following the release of the final terms of reference in March last year, the Panel has undertaken a lengthy consultation process, including seeking public comment on an issues paper (released in April 2014) and submissions on a draft version of the report (released in September 2014).

 

Treasury will now conduct its own consultation process ahead of the Government formulating its response to the report. Submissions are due by 26 May 2015.

 

Media around the report has focussed on recommendations that are of obvious interest to consumers, such as misuse of market power reform (specifically, the inclusion of an “effects” test – which is opposed by the big supermarkets and others), deregulation of taxi services, and significant reductions to retail trading hours restrictions. However the report makes other significant recommendations that are likely to provoke debate in the coming months, including recommendations in relation to a new access pricing regulator, a new review into intellectual property laws, and the removal of the exemption in section 51(3) of the Competition and Consumer Act 2010 (CCA) relating to certain conditions in intellectual property licences (see Ben Coogan’s post at the time of the draft report).

 

Intellectual Property (Recommendations 6 and 7)

 

The Panel recommends that the Productivity Commission conduct an overarching review of intellectual property laws. If conducted, the focus of this review will be on competition policy issues in IP arising from new developments in technology and markets; and the principles underpinning IP provisions in international trade agreements. If the Government implements this recommendation, the IP review will commence within 6 months and take 12 months to complete.

 

Separately, the Panel recommends an independent review in relation to processes for the incorporation of intellectual property provisions in international trade agreements. Further, the Panel recommended that trade negotiations should be informed by an independent and transparent cost-benefit analysis of proposed intellectual property provisions, and that this analysis should be published prior to the conclusion of negotiations. Support for greater transparency in trade agreement negotiations came from a range of respondents to the Panel’s draft report, including both industry and consumer groups.

 

Recommendation 7 is that the IP exemption in section 51(3) of the CCA be repealed.  Section 51(3) exempts from competition law (other than in relation to misuse of market power) certain conditions of IP licences and assignments relating to creation of products.  The Panel recommends that this amendment not be put off until after the completion of the above mentioned Productivity Commission review.

 

The Panel also recommended that parallel imports restrictions be eased (see Recommendation 13).

 

A New Regulatory Body (Recommendation 50)

 

The Panel recommends that the access and pricing functions of the ACCC should be given to a new national “Access Pricing Regulator” (APR).

 

An important change from the recommendation in the draft report for a new APR is that the final report calls for the decisions of the APR to be subject to a merits review by the Australian Competition Tribunal.

 

The APR would take over certain functions of the ACCC, the National Competition Council and the Australian Energy Regulator. These would include powers relating to pricing and access in the telecommunications, water, electricity and gas industries, as well as the National Access Regime.

 

The creation of a new regulatory body is unlikely to be popular with industry participants in heavily regulated industries, which already have a range of regulators from whom they expect a high degree of industry knowledge and expertise. However the availability of merits review may be welcomed by some.

 

Misuse of Market Power (Recommendation 30)

 

Much has already been written about the merits of the Panel’s proposal to introduce an “effects” test into section 46 of the CCA.

 

Interestingly, the Panel envisages this reform would do away with the need for the telecommunications specific anti-competitive conduct provisions in Part XIB of the CCA (the equivalent provision of which already includes an effects-based test). When considered alongside the proposed creation of an APR, this reform (if implemented) would result in significant change to the telecommunications regulatory regime. A Government review of Part XIB of the CCA is scheduled for the second half of 2015.

 

Other recommendations

 

The Panel addressed competition policy reform across a broad range of areas of the Australian economy. In addition to those discussed above, the 56 specific recommendations covered diverse areas such as mergers, the National Access Regime (Part IIIA), road transport, human services, shipping, taxis, planning and zoning, Australian Standards, price signalling in the banking industry, simplification of provisions relating to exclusive dealing and cartel conduct, enforcement and remedies, and competition policy (among others). It will be interesting to see how many of these recommendations are adopted by the Government (and how many of those are successfully implemented).