On 3 May 2011, the Government announced that it has nominated Rod Sims to become the next Chairman of the Australian Competition and Consumer Commission (ACCC).
The appointment requires majority support from the States and Territories. With Labor Governments in each State and Territory other than Victoria, NSW and Western Australia, majority support is likely. Once that support is received, the Government’s intention is that Mr Sims be appointed for five years, commencing 1 August 2011.
Experience and background
Mr Sims is an Australian economist who has held numerous roles in both the public and private sector. Most of his business experience involves infrastructure access issues and mergers and acquisitions in regulated industries. He has experience across a wide range of industries, including construction, energy, mining, petroleum, rail, agriculture, health, telecommunications and media.
Early in his career he worked for the Commonwealth Secretariat, providing economic and development advice to developing countries. Since then, he has held a number of positions in the public service, including as a key adviser for the then Labor Federal Government’s competition policy reforms during the late 80s and early 90s and from 1990 to 1993 he acted as Deputy Secretary responsible for economic, infrastructure and social policy in the Commonwealth Department of Prime Minister and Cabinet (under the Hawke and Keating Governments).
Mr Sims has held a number of public sector roles in New South Wales and was the first Chairman of the Rail Infrastructure Corporation and then Chairman of the State Rail Authority (1996-2003).
Currently, Mr Sims holds several roles and has indicated that he will stand down from many, if not all, of these roles if he is appointed Chairman of the ACCC. He is a Director of the consulting firm Port Jackson Partners Limited, a Director of Ingeus Limited (a welfare to work services provider with Thérèse Rein as Managing Director), Chairman of InfraCo Asia (a Singapore-based, development company operating in South and Southeast Asia) and a Commissioner on the National Competition Council (the research and advisory body established by the Council of Australian Governments (COAG) to provide recommendations on the regulation of third party access to services provided by monopoly infrastructure).
His most recent public role is as Chairman of the NSW Independent Pricing and Regulatory Tribunal (IPART), which he has held since July 2010. The primary purpose of IPART is to regulate the maximum prices charged for services by government utilities and other monopoly businesses.
Mr Sims has also been appointed as an Expert Adviser to the Prime Minister’s Multi-Party Climate Change Committee.
Approach to competition and market issues
The approach of Mr Sims to the Chairmanship and the issues before the ACCC is clearly yet to play out. Based on his public statements and articles, he appears to favour market based mechanisms and opening up public utilities to competition. In the electricity industry, he has supported private ownership of generation and retail businesses, as well as removing caps on household electricity prices and rolling out smart meters.
On the issue of climate change, he has called for a reduction in the number of federal and state “green” schemes and is in favour of a single price on carbon, as opposed to the various stand alone renewable energy schemes and ad hoc measures to meet reduction targets.
In the water area, he has been supportive of rural-to-urban water trading in urban water, and of introducing both retail and supply competition with private sector involvement. In transport, he has spoken in favour of introducing congestion charging, investing in urban public transport and relying on private sector operation of public transport.
In telecommunications, Mr Sims has given his support to conducting a cost benefit analysis on the NBN to review the project from the perspective of the community’s needs in preference to establishing a business case for NBN Co. This is on the basis of concerns that there is a risk that, in trying to improve the commerciality of the NBN, competition was thwarted.
Influence on the ACCC
The new Chairperson will inherit a regulator that is larger and busier than ever before. Including the Australian Energy Regulator, he will lead a team of over 800 staff and with funding of over $150 million. The number of mergers considered by the ACCC since Graeme Samuel took on the role has almost doubled, and the ACCC has taken on additional and evolving regulatory roles in relation to industries as diverse as airports, electricity, petrol and water.
Many years of experience in the areas of access and regulation are likely to hold Mr Sims in good stead should the appointment be approved, given the regulatory remit of the ACCC and the domestic focus on infrastructure and resources. His consultancy role with Port Jackson partners will have also provided a sound understanding of the issues faced by infrastructure owners.
It is not clear whether the pace of law reform during Mr Samuel’s reign will continue during the new Chairmanship. Much of this depends on the Government and support of the Senate, however, the new Chairperson will have the challenge of enforcing some of the new laws for the first time.
The ACCC is yet to commence proceedings under the new criminal cartel laws or the “Birdsville” predatory pricing laws. The new unfair contracts laws are in their infancy and the regulator has just started to make use of its new enforcement powers. Mr Sims’s position on these reforms and competition law reform more generally is not known and the extent to which he will shape the debate on controversial proposals such as price signalling remains to be seen.
With the appointment of Mr Sims, the ACCC will be predominantly comprised of economists, with only two of the seven Commissioners (Sarah Court and Ed Willett) holding law degrees. The majority of the Commission members have several years of their terms to run, so that Mr Sims will inherit a well-established and stable Commission. While his influence will no doubt be clear over time, Mr Sims (as with Mr Samuel) before him, is likely to stress that decisions of the ACCC are made by the Commission as a whole, and not by the Chairman alone.