An Update on The Harper Review

Tuesday 2 June 2015 @ 11.22 a.m. | Legal Research | Trade & Commerce

According to the Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims, the proposed Harper Review reforms offer a way forward on the great divide surrounding s 46 of the Competition and Consumer Act 2010 (Cth) (the CCA).

The ACCC welcomes most of the recommendations in the Draft Report. One key concern, however, is the proposal for significant reforms to provisions in the CCA regarding cartels.

Proposed amendments by the Harper Report

The proposed changes recommended by the Harper Report have three elements:

  • Clarifying that the anti-competitive outcome is a “substantial lessening of competition”;
  • Adding the word “effect” so an abuse can have an anti-competitive purpose or effect; and
  •  Removing the words “take advantage” that link “market power” with the conduct.

The first two changes are superficial. The last proposal takes “misuse” out of the “misuse of market power” test.

Section 46 – The Great Divide

The ACCC Chairman said:

“The Harper Panel’s proposed substantially lessening competition test for section 46 will reduce unfortunate debates, align our law more with overseas law, and make our law logical and in line with the rest of the Act. The ACCC sees much merit in the recommendation of the Harper Review to reframe section 46 towards the purpose or effect of substantially lessening competition. This would directly align section 46 with the intent, which we all share, of protecting the competitive process rather than individual firms.”

Mr Sims commented that the divide between what the words of s 46 mean to the wider public versus what they mean to competition insiders and said that the divide between common interpretation and true meaning is bad public policy.

The three divides are categorised as:

  • The divide between what the words of s 46 mean to the wider public versus what they mean to competition insiders. It is bad public policy to have this situation;
  • The divide between Australia and the rest of the world. Only Australia and New Zealand require proof of the nexus between market power and the conduct (the “take advantage) and few jurisdictions rely only on purpose. We are out of step with overseas law; and
  • The divide between the focus on “take advantage” and commercial and economic logic. This will be my most controversial point.

He believes that Harper Panel’s proposed test for s 46 will reduce unfortunate debates, align our law more with overseas law, and make our law logical and in line with the rest of the CCA.

The ACCC’s Submission

The ACCC has provided a submission to the Commonwealth Treasury’s consultation on the recommendations of the Competition Policy Review Panel.

The submission is focussed on a subset of the recommendations, particularly those that changed since the Draft Report, and deals with some specific details as to how the recommendations can be implemented.

The ACCC Chairman said:

“Overall, this is a vitally important reform package and the ACCC will continue to work constructively with Government and other stakeholders to ensure that this reform opportunity delivers a strengthened and more robust competition framework. The proposals may have the unintended effect of undermining the ACCC’s ability to take effective enforcement action to address hard core cartel conduct. Considerable further thought therefore needs to be given to them before any change to the current law is made. In the spirit of the pro-competitive reforms proposed by the Review Panel, we consider that these advocacy and market study functions should clearly be a part of the ACCC’s mandate. This would enhance its effectiveness as a voice for competition going forward.”

The ACCC also reiterates its view that advocacy and market study roles are key functions of competition agencies right around the world, enabling them to identify competition issues and articulate appropriate remedies or policy responses to decision makers.

In its submission, the ACCC again notes its opposition to the proposal to separate infrastructure regulation from the ACCC’s competition and enforcement functions.

Support from the ACCC

The ACCC Chairman commented that aside from the matters raised in its submission, the ACCC supports the bulk of the recommendations to amend the competition law framework, many of which are suitable for direct implementation.

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Sources:

Competition law fix could seriously harm competition – Article from theconversation.com

Section 46: The great divide – ACCC Article

ACCC lodges submission on Harper Review recommendations – ACCC Release MR 94/15 

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