BACKGROUND

In our recent regulatory update (ACCC set to target anticompetitive conduct by government), we discussed the Harper Competition Policy Review recommendation (24) that competition law be extended to all government activity in trade and commerce, rather than its present more limited application in situations where government is carrying on a business.

It was widely expected that the Federal Government would accept that recommendation given the Australian Competition and Consumer Commission’s (ACCC) support for it and the Federal Government’s renewed enthusiasm for the Harper recommendations as a whole.

FEDERAL GOVERNMENT RESPONSE TO THE COMPETITION POLICY REVIEW

On 24 November 2015, the Federal Government released its Government Response to the Competition Policy Review. In the response, the Federal Government indicated it will implement the majority of the Harper Review’s 56 recommendations.

However, in a move that will likely be welcomed by those involved in government supply, procurement and PPP activities, the Federal Government has determined not to implement recommendation 24 at this time.

While the Federal Government indicated it supports the recommendation ‘in principle’, it has said it will now consult further with the states and territories on the implications of extending competition laws to government activities in trade or commerce.

HOW WILL THIS BENEFIT GOVERNMENTS?

One of the biggest concerns for governments regarding the application of competition law is that governments at all levels have to balance competing considerations, and that acting in ways which limit competition can sometimes be in the public interest. In such circumstances, governments having to comply with competition laws may cause a detriment, rather than a benefit, to the public. While ACCC authorisation might be sought regarding such decisions on an individual basis, there was a question as to whether the ACCC would be the appropriate body to make such assessments.

Concerns of this type were raised in many submissions to the Harper Review. While the Harper Review did not regard these as sufficient reasons for continuing to exempt commercial activities of government from competition laws, the Federal Government appears to have recognised this is something that needs to be addressed.

In the proposed consultation process, state and territory governments will now have the opportunity to put their legitimate concerns directly to the Federal Government before any changes are made to this area of competition law.