On 13 and 14 October, the UniSA School of Law will hold the 15th edition of its Competition Law and Economics Workshop (CLEC) in Adelaide. The programme is available here.
The workshop will be held in partnership with the Australian Competition and Consumer Commission (“ACCC”). This year, emphasis is placed on the domestic and international context. On both fronts, the tides are rising for Australian competition policy.
MARKET INVESTIGATIONS AND NEW LEGISLATIVE POWERS
At domestic level, the Federal Government has requested the ACCC to conduct a market investigation into the retail electricity pricing sector. The topic is politically sensitive. Polls have singled out energy prices as a top priority for Malcolm Turnbull’s government.Failure to deliver quick and effective solutions to this matter could prove divisive when it comes to public support for green energies and fossil fuel emission targets. In addition, this investigation could pose an administrative challenge for the ACCC. It comes on the heels of an array of ongoing market investigations in the dairy sector, new car retailing and communications sectors. As such, this additional investigation could potentially stretch the resources of the ACCC.
At the same time, however, the ACCC could soon assume new powers. Draft legislation released in 2016 proposes to introduce an express prohibition of “concerted practices” in the Competition and Consumer Act (“CCA”) of 2010. This amendment purports to fill a gap. Under the 2010 CCA, the law only prohibits “contracts, arrangements and understandings” that substantially lessen competition, thereby leaving beyond the ambit of the law less formal instances of collusion, such as price signaling and information exchanges. The new amendment to the CCA, could allow the ACCC to operate more efficiently and confidently in such cases, with lower risks of review before the Australian competition tribunal. Yet the CCA amendment implies an additional workload for the ACCC. Firms involved in “concerted practices” will certainly seek protection under the leniency programme by reporting their conduct to the ACCC. Moreover, the prohibition of concerted practices could burden administrative and judicial proceedings with endless quarrels among economists. All competition systems with a similar provision have, at some point in their history, had to address the issue of whether conscious parallelism amongst oligopolists – think, for example, to two petrol stations on either side of a street – could (and should) be enjoined as a concerted practice short of any explicit agreement. This hard question is contentious. Short of an agreement, there is nothing to remedy. Unless of course one requires oligopolists to behave irrationally…
TRUMP, BREXIT AND INDUSTRIAL POLICY?
On the international scene, last year’s election of President Trump in the US may well be a game changer in an area where international convergence had until then been a stable equilibrium. President Trump’s “America first” rhetoric, and the early withdrawal of the Trans-Pacific Partnership augur a non-trivial possibility that antitrust laws could be used to protect and promote US businesses. At the same time, Republicans have traditionally supported minimalist antitrust enforcement. The Party may thus be reticent to embrace the idea of reinvigorating antitrust in pursuit of a trade agenda. As for other policies, the policy line of the new US administration remains to date in limbo. And key functions within the US antitrust agencies (the FTC and the DOJ) remain to be filled.
Besides, Brexit could also prove a disruptive force. At present, the European Union (EU) internal market rules leave no space for industrial policy interventions in the form of State subsidies, restrictions on foreign takeovers, and discriminatory regulations. But this outlook could be entirely different in a “hard Brexit” world, where UK competition policy has taken back control over market regulation. Should we conjecture a revival of industrial policy in the UK? Theresa May’s Government has already announced it will review the public interest regime in UK merger control and consider greater controls on foreign investment. And the Labour opposition has expressly advocated industrial subsidies and public ownership. Whoever ends up at Downing Street UK post Brexit, the prospect of a “United Kingdom first” is not entirely fictional.
With all this, the tides are rising for Australian competition policy. Large trade partners in the Anglo-American world are increasingly leaning towards a view of competition policy as a trade instrument. And this new policy vision is one that subjects competition policy to a degree of political authority. In contrast, the EU in 2016 reaffirmed its commitment to independent competition policies, suggesting that enforcement agencies be further insulated from executive power. Whilst all those policy developments happen abroad, they create a novel intellectual context that will no doubt inform, and possibly influence (in one way or the other) the conduct of competition policy in Australia in the years to come. These issues are tabled for discussion at the CLEC. They are of concern to all of us as legal practitioners, consumers and global citizens.