On 27 June 2013, the Australian Competition and Consumer Commission (ACCC) issued its updated Authorisation Guidelines. The guidelines reflect the ACCC’s current approach to assessing applications for authorisation and replace the approach adopted by the ACCC in 2007.

Authorisation provides statutory protection for conduct that may otherwise contravene the competition provisions of the Competition and Consumer Act 2010 (CCA). The ACCC will grant an application for authorisation where it is satisfied that the conduct results in a net public benefit.

The release of the guidelines follows the publication of draft revised Authorisation Guidelines in May this year, as blogged about previously here, and an extensive public consultation process by the ACCC. The final guidelines do not contain any substantial changes to the draft guidelines.

The key changes in the new guidelines are as follows:

Market failure framework

The ACCC has adopted a market failure framework for assessing public benefits and detriments. This approach recognises that sometimes competitive markets may not work to deliver the most efficient outcomes (for example, where there are information asymmetries or negative externalities) and in these circumstances, a restriction on competition may be required to achieve a more efficient outcome.

The ‘future with and without’ test

The ACCC has clarified its approach to assessing the likely counterfactual, against which the public benefits and detriments flowing from the conduct will be assessed. In particular, the ACCC has confirmed that in identifying whether the future with the conduct is likely to result in a net public benefit compared to the future without the conduct, the ACCC does not take into account mere possibilities or speculation but, rather, there must be a real chance that the future with and without the conduct will eventuate.

Medicines Australia decision

The ACCC has amended the guidelines to reflect the decision of the Australian Competition Tribunal (Tribunal) in the Medicines Australia Case.[1] In particular:

  • recognition that the ACCC’s power to grant authorisation is discretionary; and
  • clarification of the ACCC’s power to impose conditions when it grants authorisation.

The ACCC is also currently reviewing its Merger Review Process Guidelines.