A draft report by the panel examining whether Australia’s competition policy is ‘fit for purpose’ has been released.
The report, chaired by Professor Ian Harper, considered the current Australian competition policy, laws and institutions in light of changes expected to develop in the Australian economy over the coming decade.
The rise of Asia and other emerging economies, an ageing population and new technological advancements were highlighted as “the three major forces affecting [our] economy” in the next ten years. The report examined the likely challenges these developments present and made recommendations for preparing Australia’s competition policies for change, which included:
- • Reviewing of anti-competitive regulations, with priority given to those governing planning and zoning, retail trading hours, taxis, pharmacy and parallel imports
- • Improving complaints-handling processes and monitoring
- • Amending section 46 of the Competition and Consumer Act 2010 (Cth) (CCA) so that it targets anti-competitive conduct which substantially lessens competition
- • Streamlining merger approval processes
- • Ensuring flexibility and ease of use in collective bargaining arrangements for small businesses
- • Replacing the National Competition Council with the Australian Council for Competition Policy
The panel also recommended changes to Australia’s intellectual property (IP) regime, including repealing the exception for intellectual property licenses under section 51(3) the CCA. The report argued that while IP rights offer potential incentives for innovation, they “can also be used to facilitate monopolistic or anticompetitive behaviour”, emphasising the need for balance in Australia’s approach to IP rights and competition law.
The report noted the difficulty of achieving this amidst the ongoing developments in technology and changes in the market. 3D printing was used as an example of how the distinctions between the physical and online worlds are becoming increasingly blurred, which will likely have wide implications for the operation of IP and competition laws globally.
The report looked to a range of submissions made as to whether this balance had been adequately achieved under the current competition policies. In its submission, the ACCC argued that “there is no reason to treat [IP] any differently to other services”. Noting “that in other jurisdictions…IP rights are subject to the same competition laws as all other property rights and…there has not been an erosion of IP rights for creators, nor any apparent impact on the incentives for the production of copyright material”.
The Australian Recording Industry Association Ltd, held a contrary view, arguing that “the idea that there is no need for the …exemption because IP should be treated like any other form of property is simplistic and misleading. The exemptions under s 51(3) serve partly as a safety net where broadly defined prohibitions under the [CCA] would otherwise be too far-reaching… [They] are important because they avoid liability where IP licensing conditions are efficiency enhancing.”
With consideration given to the range and complexity of the issues involved, the report proposed “that commercial transactions involving IP rights… be subject to the CCA, in the same manner as transaction involving other property and assets.” Such that the exemption contained in section 51(3) of the CCA be repealed but IP licenses be exempt from the cartel provisions of the CCA; meaning “that IP licenses and assignments will only contravene the competition law if they have the purpose, or would have or be likely to have the effect, of substantially lessening competition”.
These recommendations follow on from previous proposals made by Hilmer, the National Competition Council and the Intellectual Property and Competition Review Committee.
Submissions in response to the Draft Report are invited to be made up until the 17 November 2014.