LSB September 2017

COMPETITION LAW
International competition policy: Is
Australia surfing the wave?
NICOLAS PETIT, RESEARCH PROFESSOR, UNIVERSITY OF SOUTH AUSTRALIA SCHOOL OF LAW, & JOHN MANSFIELD QC
The UniSA School of Law, in
partnership with the Australian
Competition and Consumer Commission
(ACCC), will hold the 15th edition of
its Competition Law and Economics
Workshop in Adelaide on 13-14 October 1 .
Emphasis will be placed on the domestic
and international context. On both
fronts, the tides are rising for Australian
competition policy.
MARKET INVESTIGATIONS & NEW
LEGISLATIVE POWERS
At the domestic level, the Federal
Government has requested the ACCC to
conduct a market investigation into the
retail electricity pricing sector. 2 The topic
is politically sensitive. Polls have singled
out energy prices as a top priority for
Malcolm Turnbull’s government. 3 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.
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THE BULLETIN September 2017
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. 4
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. 5 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. 6 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,
of two petrol stations on either side of a
street – could (and should) be enjoined
as a concerted practice short of any
explicit agreement. 7 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 from
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? 8 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. 9
Whoever ends up at Downing Street UK