Root and branch competition policy review - What does it mean for infrastructure?

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On 27 March 2014 the government released the terms of reference for its root and branch competition policy review and revealed the composition of the review panel. This is the most comprehensive review of Australian competition laws and policy since the 1993 Hilmer review which led to the development of the National Competition Policy and, subsequently, the national access regime.

THE PANEL

The review panel comprises:

  • Professor Ian Harper (Chair), a partner at Deloitte Access Economics and a member on the Wallis Inquiry;
  • Ms Su McCluskey, the CEO of the Regional Australia Institute and a beef cattle farmer;
  • Mr Michael O’Bryan SC, a barrister at the Victorian Bar with substantial experience in trade practices law; and
  • Mr Peter Anderson, who recently stepped down as Chief Executive of the Australian Chamber of Commerce and Industry.

The terms of reference

The terms of reference are expansive, covering not only the operation of the competition provisions of the Competition and Consumer Act (CCA), but also any broader regulatory impediments to competition, the structure and powers of the existing competition institutions and government involvement in markets.  The review’s terms raise a range of issues that will be of particular interest to investors in infrastructure as well as owners and operators. 

First, the panel is asked to focus on government involvement in markets through government business enterprises or direct ownership of assets with a view to reducing that involvement where there is no longer a clear public interest rationale.  As a result, it seems likely that the panel will recommend privatisation, to a greater or lesser extent, of more of government’s remaining public assets and businesses. 

Second, the terms of reference require review of the national access regime under Part IIIA.  The relevant paragraph (3.3.6) is framed in terms of the adequacy of the current regime.  This language perhaps implies at least a willingness on the part of the government to consider options for strengthening the regime.   A related matter for consideration by the panel is whether existing regulation is leading to efficient outcomes in markets that exhibit natural monopoly characteristics (4.1). 

Third, given that owning or operating significant facilities or infrastructure will often produce a level of market power in the relevant markets, the panel’s review of the sufficiency of the existing misuse of market power provisions (3.3.2), is also likely to be of interest.

The focus of the panel

Professor Allan Fels, a former Chairman of the ACCC,  has recently described the terms of reference as “sprawling” and the task of the panel as “vast [and] possibly unmanageable”.  He goes on to suggest that in its first weeks, the panel will have to make crucial decisions about which are the important topics to pursue in depth and which should be given “a token runthrough (and effectively discarded)”.

We agree that the panel is likely to select a smaller number of key areas to review in detail.  Moreover, given that Part IIIA (access) has recently been the subject of a Productivity Commission Inquiry, it may be tempting for the panel to effectively accept those recommendations and focus its attention on other areas such as the competition provisions in Part IV where a comprehensive review is arguably long overdue.

Interestingly, a separate review of the sector-specific access regime for telecommunications under Part XIC of the CCA is currently being undertaken as part of the NBN Cost Benefit Analysis and Regulatory Review.  The approach taken by the expert panel in that process looks set to be equally wide ranging and the recently released discussion paper even contemplated leaving telecommunications access regulation to the general access regime under Part IIIA.

Next steps

There will be significant scope for stakeholder participation in the review via the consultation process.  Two rounds of consultation are proposed, one following the release of an issues paper, and a second following the release of a draft report. The timetable for publication of the issues paper and draft report has not yet been released, but the review website indicates that the issues paper will be released shortly.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Robert Clarke

Partner. Melbourne
+61 3 9672 3215

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