The ‘root and branch’ Competition Policy Review, or the ‘Harper Review’, is set to be the largest review of Australian Competition Law and Policy since the Hilmer Review in 1993.

Summary

  • The Competition Policy Review is expected to be a comprehensive review of Australia’s approach to competition law and policy, with the aim of evaluating the effectiveness and longevity of the legal and policy framework.
  • We can expect a detailed evaluation of the effectiveness of our competition policies and practices in Australia with a final report in early 2015.
  • Corporate clients should be aware of this review – with such a broad scope, no industry will go unaffected.
  • Merger processes can (again) be expected to be included in the review.
  • Individuals and businesses can participate in the process by making submissions to the Competition Review Panel by 10 June 2014.

Introduction

The Competition Policy Review (Harper Review)1 is expected to be an ambitious and comprehensive review of competition policy, the effectiveness of the Competition and Consumer Act 2010 (Cth) (CCA), and the administration of competition regulation in Australia. It is set to be the largest review in over two decades since the Hilmer Report in 1993.2

Scope

The terms of reference for the four member Review Panel3 is wide-ranging, with a number of industry sectors, competition policies and legislative regimes to be examined within a short timeframe.

The terms of reference include five key areas of consideration for the Panel:

  • identifying impediments in the economy that restrict competition and reduce productivity;
  • affirming that the CCA is effective in driving efficient and competitive outcomes for the economy;
  • examining how the CCA affects small business in their ability to compete effectively in the relevant markets;
  • considering whether current regulatory agencies are competent in implementing competition laws and policies; and
  • reviewing the role of Government in markets, with a view of reducing government support and intervention in markets that do not require it.

Timeline

The Panel published an Issues Paper on 14 April 2014, with 50 questions posed for consideration by the Review Panel. With the release of the Issues Paper, the Review Panel will be accepting submissions on the issues outlined (and other issues that fall within the scope of the terms of reference) until 10 June 2014. It is then expected that a Draft Report will be delivered in September 2014, with further public consultation prior to a Final Report being issued in early 2015.

Key areas

Although the broad scope of the Harper Review allows the Review Panel to examine almost every facet of Australian competition law and policy,4 there are some key areas of focus, including:

  • the overarching or guiding competition policies dealing with competition policy priorities and principles;
  • whether any regulatory impediments stifle the effectiveness and competitiveness of markets, including regulation at federal, state and local level, with specific reference to intellectual property restrictions and land use;
  • additional reforms in government sectors previously subject to full or partial competition reforms, which will consider a range of ‘unfinished business’ from past reviews as well as the broader policy issue of competitive neutrality when dealing with government businesses;
  • new pro competition reforms that might be possible in the delivery of certain goods and services where government is a significant supplier, including education, health, aged, and disability care;
  • the effectiveness of competition laws, which will consider in detail the provisions of the CCA and whether the CCA is working effectively to promote competitive markets; and
  • the structure and effectiveness of the institutions that administer both the CCA and national competition policy.

We have previously written on the terms of reference of the Review5 and the issues paper released by the Panel.6 These notes provide additional details surrounding the scope and issues likely to be considered during the Review.

Merger process

Whilst it is unlikely that the Harper Review will recommend substantive changes to the current merger laws, there is scope for the Review Panel to reflect on the effectiveness of the current merger control processes, including the informal and formal processes.

In short, we currently have three different avenues available to manage competition risks of a merger:

  • ACCC informal merger clearance, which is by far the most common choice for the vast majority of mergers and acquisitions and operates with sufficient flexibility and rigour to match the needs of most mergers. In more complex matters, however, concerns continue to arise about transparency, timeliness and accountability of the informal clearance process.
  • Merger authorisation, which is available where the public benefits of the merger outweigh detriments, including anticompetitive detriments. Since 2007, merger authorisation applications are made directly to the Australian Competition Tribunal (with the ACCC assisting the Tribunal but having no decision-making role). The process was first used in late 2013.
  • Formal merger clearance, a statutory process introduced in 2007 but which has never been used. 

The effectiveness of these processes and, indeed, whether we need three merger control processes will likely be the subject of consideration by the Review.

Making a submission

We recommend that all businesses should consider how potential changes to competition law could adversely affect them and whether they should participate in the Harper Review with a view to ensuring any recommended changes are thoroughly examined and all the potential consequences fully understood.