The ACCC’s Response to the Harper Review Draft Report Recommendations

​2015 is shaping up to be a significant year for competition law with the release of the Harper Panel’s final report due by March.

This update provides a brief snapshot of the current state of play of the ‘root and branch’ review of Australia’s competition laws.

In response to the 22 September 2014 release of the Harper Panel’s draft report the ACCC has highlighted its “significant reservations” regarding the specific changes to the cartel conduct prohibitions recommended by the Harper Panel.

The Harper Panel’s draft report recommends that the cartel provisions be simplified by:

• restricting the cartel provisions to conduct which affects goods or services supplied or acquired in Australian markets;
• confining the provisions to conduct involving actual or likely competitors (rather than the businesses for whom competition is a mere possibility) by applying a balance of probabilities test;
• removing the prohibition on exclusionary provisions in sections 45(2)(a)(i) and 45(2)(b)(i);
• broadening the joint venture defence to cartel conduct (by recognising that these arrangements will be caught under the section 45 anti-competitive provisions if they have the purpose, effect or likely effect of substantially lessening competition); and
• exempting certain trading restrictions imposed by one business on another in connection with the supply or acquisition of goods (by recognising that this type of  ‘vertical ‘conduct will be dealt with under section 47, which governs exclusive dealing).

While the ACCC acknowledges and agrees with the need for simplification of the cartel conduct provisions, the ACCC believes that:

Such changes would significantly weaken Australia’s cartel laws. While the ACCC supports simplification, any amendments should not fundamentally alter the existing scope of the prohibitions.

One of the key bases for the ACCC’s concern in relation to the Harper Panel’s approach to the cartel prohibitions is that the proposal to narrow the application of the ‘in competition’ definition to conduct involving businesses that are actual or likely competitors (where ‘likely’ means ‘on the balance or probabilities’) would inappropriately reduce the scope of protection afforded by the cartel provisions.  The ACCC submitted that such drafting potentially allows firms engaging in conduct that meets the OECD’s definition of a “hard core cartel” (such as market sharing) to escape sanction under the cartel provisions.

One of the other major points of departure between the Harper Panel’s recommendations and the ACCC’s position is the recommended introduction of a notification process for resale price maintenance.  The ACCC has made it clear that it does not support this recommendation, and has argued that the ability of the ACCC to impose conditions and/or time limits (which are available for authorisations, but not for notifications) may be necessary in order to balance the anti-competitive effects of such conduct against the public benefits.

The Harper Panel’s final report is due by March 2015.