On 4 December 2013, the Federal Government announced an inquiry into Australia’s competition law, which arises from the Federal Government’s 2013 pre-election pledge to conduct a ‘root and branch review’ of Australia’s competition laws, policies and institutions.

On 22 September 2014, the panel conducting the review (which has become known as the Harper Reviewafter the review panel chair Professor Ian Harper) issued its Draft Report.  We expect that the recommendations of the Draft Report in relation to intellectual property rights will create significant controversy.

There is a natural tension between the statutory monopoly that is afforded to intellectual property right holders in competition policy (which generally regards monopolies as inconsistent with the promotion of free competition).

Section 51(3) of the Competition and Consumer Act 2010 (Cth) currently provides some limited exemptions to intellectual property rights holders.  Some (including the ACCC) have argued the exemptions should be removed altogether, while intellectual property rights holders have generally argued the exemptions simply do not go far enough.

Prior to the Draft Report being released, it was our view that the recommendations would be likely to be consistent with the results of the earlier review by the Ergas Committee in 2000 that s51(3) of the Trade Practices Act 1974 (Cth) (as it was then in force) should be subject to a substantial lessening of competition test, namely an effects based test, not one of purpose.

The Draft Report addresses the issue in 2 recommendations:

  1. It recommends the repeal of the s51(3) exemption for intellectual property licence arrangements.  The effect of this change would be that any licence of intellectual property which has the purpose, effect or likely effect of substantially lessening competition would be illegal.
  2. There be an overarching review of competition policy issues in intellectual property arising from new developments in technology and markets.

While the Draft Report identifies that the granting of statutory IP rights is unlikely in and of itself to raise competition law issues, it is concerned that the use of those rights may have the purpose or effect of substantially lessening competition.

Before finalising this report, the review panel now intends to hold public consultation on the findings and recommendations contained in the Draft Report, including public forums, and through further written submissions and feedback from interested parties.

Submissions in response to the Draft Report may be made with the Competition Policy Review Panel by 17 November 2014.