From the Aisle to the Inquiry: Is Australian Competition Law Serving its Purpose?

By Chris Reichert

Recent debate surrounding the adequacy of Australia’s laws on foreign investment has thrust competition law reform onto the legislative and policy-making agenda. This is of prime importance in a regulatory environment undergoing a review process at the Commonwealth level, and especially in light of the release of a draft report of the review in late 2014. Chaired by Professor Ian Harper, the review’s terms of reference include an examination of the adequacy of the Competition and Consumer Act 2010 (Cth), home to some of the most frequently litigated laws in Australia (particularly with respect to ordinary consumer dealings and as witnessed, for example, in the ‘Dukemaster’ case).

While some commentators have called for the abolition of the ACCC, on the grounds that the body fails to promote authentic competition and instead provides a means of facilitating convoluted legal processes, the likelihood of such a dramatic policy entering the review’s recommendations is very remote. One of the chief forces likely to stand in opposition to such ideas, understandably, is the widespread sense that consumer laws inhibit unfair and inefficient business practices. Further muddying the waters is the fact that such propositions sit beside existing scholarly exploration of remedy-based ‘private’ enforcement mechanisms that have been trialed in other Western nations (Beaton-Wells & Tomasic 2012). Community awareness of the ACCC’s activities in pursuing alleged breaches of consumer laws is very widely cast, and the ease with which the regulatory body’s enforcement of consumer laws could be separated from its enforcement of competition laws (that is, a process of bifurcating the body’s twin functions) is not clear. Community sentiment is particularly vulnerable to the pricing behaviour of supermarket chains and the resulting impact on (particularly rural) producers (Briton 2014, 1), even in those cases where the ACCC’s statutory power is perceived as weak.

New technologies, such as the digital disruption of markets, have dramatically highlighted the need for a regulatory framework that proves both effective and, above all, flexible. Recent concerns over discriminatory and differential pricing along supply chains have produced additional imperatives, such as ‘levelling’ the playing field on which smaller, independent competitors operate. There appears little evidence, however, that Australian competition law – which imposes upon industry participants an obligation not to engage in an activity motivated by an anti-competitive ‘purpose’ – is not equipped to handle these challenges, especially with respect to our large supermarket chains. This is the case notwithstanding the recent discussion over a Harper Review recommendation to broaden the ‘purpose’ test in order to include anti-competitive ‘effects’ and therefore expand the test’s application (with the obvious consequence that more corporate activity will potentially be captured within the law’s net). The need for such a broadening, however, is highly disputable. Indeed, an amendment of that nature may in fact produce the opposite of its intended outcome, by inhibiting ‘pro-competitive behaviour’ and raising the legal barriers imposed upon business activity.

While Australia’s markets are often quite concentrated, the country’s placement within the Asian trading region warrants the observation that its competition laws are comparatively strong, a point emphasised by High Court Chief Justice French. This further compels the conclusion that a rigorous tightening of (admittedly well-intended) protections may in fact prove harmful – not merely to large businesses, but to the guiding purpose of competition law itself. Academic commentary has similarly attributed a weakening of competition in the technology sector to anti-circumvention laws, again demonstrating that intentions do not drive results.

Results, after all – whether in supermarket aisles or corporate boardrooms – provide the ultimate test of a law’s inherent merits. Australia’s pre-Harper competition laws, while not perfect, have largely proven their merits.

Chris Reichert is currently completing a Bachelor of Laws at La Trobe University.

Bibliography

Beaton-Wells, Caron and Kathryn Tomasic, ‘Private enforcement of competition law: time for an Australian debate’ (2012) 35(3) University of New South Wales Law Journal 648

Briton, Bob ‘Supermarket monopoly and farm ruin’ (2014) 1662 Guardian (Sydney) 1

Suggested Citation

Chris Reichert, ‘From the Aisle to the Inquiry: Is Australian Competition Law Serving its Purpose?’, Law and Justice, 13 May 2015 (La Trobe Law School Blog, http://law.blogs.latrobe.edu.au/)

Marc Trabsky