The Competition Policy Review presents a golden opportunity to resuscitate productivity growth in Australia through micro-economic reform, according to Minter Ellison, which has released its submission to the Competition Policy Review.
Paul Schoff, head of the Australasian Competition Group at Minter Ellison, said: ‘Attending to the “unfinished business” of the Hilmer Review in 1993 is a key aspect of this current review. We see a pressing need to address the complexity and inconsistency that has taken root in parts of the Competition and Consumer Act [CCA].’
Schoff called for the creation of norms of conduct that are capable of general application and enforcement and pointed to the greater clarity of other systems in achieving this outcome compared with approaches under current Australian law.
While the Minter Ellison submission to the Harper Review makes several recommendations, Schoff highlighted some key areas of particular concern it addresses. Notably these include how the CCA should best deal with misuse of market power, the case for the removal of the prohibition on resale price maintenance and avoiding pointless regulation of international price differentials.
In regard to the issue of the misuse of market power, Schoff said the challenge for the Competition Policy Review was to consider how to reshape the current ‘misuse of market power’ provision — section 46 to operate in Australia’s best interests.
‘This requires more than simply opting for a “purpose” test or an “effects” test,’ he said. ‘Deeper consideration of the shape this law should take in Australia’s long-term interest is required. We recommend a move to a standards-based ‘misuse of market power’ provision. This would be one solution for the review.’
On the question of how to effectively regulate international price discrimination without limiting consumer choice or creating adverse outcomes, Minter Ellison said that international pricing differentials should be addressed, if at all, only by removing remaining parallel import restrictions rather than attempting somehow to prohibit price discrimination by international suppliers.
‘Past reviews of Australian price discrimination legislation, in particular the Hilmer Review in 1993, have consistently concluded that price differentiation generally enhances economic efficiency,’ said Schoff. ‘In that context, an attempt to regulate international price differences would be unlikely to succeed and would also potentially undermine the objectives of the CCA.’
On this point, the Minter Ellison recommendation also noted that the inevitable uncertainty created by regulation for international companies risks a chilling effect in Australia’s small, open economy.
‘If that operated then it could lead to higher prices in Australia, create barriers for overseas suppliers to participate in Australian markets and potentially result in less competition and less choice, contrary to the objectives of the CCA,’ said Schoff.