Competitive Markets and Australias Economic Future

Posted on: Wednesday, 1 April 2015 at 10:25:33 AM

The timing was apt for Mr Rod Sims, Chairman of the Australian Competition and Consumer Commission (ACCC) to address an AICC(WA) business lunch on the topic of an “outlook for making markets work” on 1 April, 2015.

As noted by event host Mr Tony Joyner, Managing Partner of Herbert Smith Freehills Perth Office, the recent submission of the Competition Policy Review (“Harper Report”), meant the address was both timely and opportune.

 Competitive Markets

From L to R: Mr John Cluer, Chief Executive, Australia Israel Chamber of Commerce (WA), Mr Patrick Canion, Chief Executive Officer, ipac Western Australia, Mr Rod Sims, Chairman, ACCC - Australian Competition & Consumer Commission, Mr Gregory R. Copley AM, GCHT*, FRCGS, President & Chief Analytical Officer, ISSA-The International Strategic Studies Association, USA, Mr Tony Joyner, Managing Partner - Perth, Herbert Smith Freehills

 

In a surprise presentation, Mr Sims address was subject to a prelude from Mr Gregory Copley, President of the International Strategic Studies Association, a Washington based global intelligence service.  Within a highly focussed and brief address Mr Copley challenged his audience to consider Australia’s very survival as a nation State over the next forty years.  Noting a decline in the balance of capability, a shift of global strategic alliances, and growing regional insecurity, Mr Copley outlined a strategy for Australia to remain sovereign, competitive, and prosperous.  A call towards economic modernisation, technology evolvement, and recovery of agricultural industries driven by water infrastructure management was his formula to realign a population that can leverage its strength over its size to traverse his forecast of disruptive decades ahead.

 Competitive Markets

Mr Gregory R. Copley AM, GCHT*, FRCGS, President ISSA-The International Strategic Studies Association, USA

Although stretched to find a nexus between Mr Copley’s global perspective on geopolitical stability and Mr Sims keynote address on competition and consumer law, Mr Sims was nonetheless able to position the importance of open and competitive markets within Australia at the forefront of economic enablement.    

Mr Sims addressed the current priorities and issues confronting the ACCC.  His agency receives more than 200,000 complaints each year.  Using the metrics that determine relevance and impact, more than 500 investigations are conducted annually.  Approximately 30 legal cases are also advanced to deliver direction and precedent to the market, which the ACCC recognise have a profound influence on regulatory compliance.

 Each year the ACCC advises of its areas of focus.   Mr Sims said priorities for the year ahead include cartel conduct within Government procurement, vulnerable consumers, truth in advertising, ethical supply chain management, and the impact of mergers and acquisitions.  Mr Sims cited examples of activity in each area, including some commentary regarding the telecommunications market.  The ACCC is currently considering the impact of the TPG buyout of iiNet on the competitive market, and NBN issues associated with the valuation of legacy assets and access to network information.

Whilst supportive of many aspects of the Harper Report, Mr Sims also spoke about the ACCC’s role in the area of competition advocacy, speaking against the recommendation to have this function split from the current entity.

Mr Sims said the ACCC supports proposals to make the misuse of market power provision workable. He said the proposed changes to Section 46 have resulted in ‘misdirected discussion’.

 Competitive Markets

Mr Rod Sims, Chairman, ACCC - Australian Competition & Consumer Commission

Whilst the consumer directed and educative role of the ACCC is widely accepted, a further element of the competition watchdog’s oversight of public sector trading has come under greater scrutiny.  Mr Sims noted that privatisation is designed to create efficiency, recognising the market can act more expeditiously than Government.  However competitive neutrality can be compromised by a public agency selling assets in a way that is not always objectively open to the market.  “I strongly contend that public assets must be privatised in the right way and that the ACCC has a role in competition advocacy in supporting this”.           

Mr Sims went on to support the Harper recommendations related to concerted practices, activity that falls short of price fixing, but still entails information exchange that can be construed as cartel like behaviour. 

With rapid changes in the economy, Mr Sims foreshadowed the need for further competition policy reforms within markets such as online trading, transport and shipping, and parallel import restrictions.  The implementation of the Competition Policy Review will have broad sweeping ramifications on these markets, and the role of the ACCC as a regulator.  When asked of his views on the reports adoption Mr Sims politely responded that he “looks forward to an interesting debate in the months ahead”.

In proposing a vote of thanks, Patrick Canion, Managing Director of Ipac and event sponsor, concurred that the ACCC was able to provide generic oversight of Australian markets as it was not structured to be industry specific.  He acknowledged the ability of all business to operate in the open market, expressing appreciation to the ACCC for maintaining a contestable trading environment. 

 Competitive Markets

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