Trade Practices Act Review Critical to Prosperity

The review of the Trade Practices Act must deliver fairness, competitiveness and accountability, the Business Council of Australia said today.

Welcoming the release of the terms of reference, the President of the BCA, Dr John Schubert, said the review was critical for Australia and the capacity of businesses to meet consumer demands for greater convenience, choice and lower prices.

“We are not advocating radical change. Rather, we are seeking to ensure the Act and its administration are transparent, provide confidence and certainty to consumers and businesses of all sizes and deal with the dramatic changes wrought by globalisation,” he said.

Dr Schubert said while the Act had been successful in helping build a more competitive and prosperous Australia, it had held back a number of important commercial activities.

He said there were areas where the Act and its administration should and must be improved to ensure Australia remained a vibrant and competitive economy capable of generating jobs and opportunity.

“It is healthy that important legislation like the TPA is regularly reviewed to ensure it is operating as intended and is keeping pace with the changing market place and community needs and expectations,” he said.

“This includes the demands of consumers for greater convenience, choice and lower prices.”

Dr Schubert said the business community was pleased with the appointment of eminent former High Court judge Sir Daryl Dawson as chairman of the review.

“He has an outstanding reputation as a distinguished lawyer and a man of integrity. We are confident that all parties will be given a fair and equal opportunity to put their views,” he said.

“Jillian Segal and Curt Rendall bring regulatory and small and medium sized enterprise expertise which will be important.”

Dr Schubert said the BCA would pursue three key areas for improvement during the review:

1. Accountability

The powers and reach of the legislation have grown markedly in recent years, but this growth in power has not been matched by necessary improvements in accountability. Like the Australian Taxation Office, the ACCC is an extremely powerful regulator, but the ACCC has very few checks and balances. The BCA shares concerns expressed by others that it is unfair to ask the regulator to be investigator, prosecutor, judge and jury. The ATO has review processes such as the Board of Taxation. Review processes for the ACCC should also be introduced.

2. Operation of the merger provisions

The size of the Australian economy creates an acute dilemma for competition policy. We need to ensure the Act balances vigorous domestic competition with the growing imperative for Australian companies to achieve the scale and efficiencies necessary to compete internationally. It is pleasing to see the ACCC has recently recognised this need for efficiencies and scale. The BCA wants to ensure these considerations are dealt with very early in the process and under strict time limits. The current process is cumbersome and commercially unrealistic. Weaknesses in the operation of the merger provisions have potential adverse consequences for Australia, particularly if mergers are being prevented that are in the public interest.

3. Section 46 (abuse of market power)

Proposals to amend Section 46 of the Act – including cease and desist orders and the effects test – have been considered and rejected a number of times in the past as unworkable. The Business Council will continue to oppose these changes, which would be counterproductive and would diminish competition.

Dr Schubert said the Act also needed to be modernised to ensure its relevance to the global economy. For example, the Act does not recognise new corporate structures such as Dual Listed Companies.

“As the key instrument that facilitates and governs competition, the Trade Practices Act is a major contributor to Australia’s prosperity,” Dr Schubert said.

“But failings in the Act and its administration have serious implications for our competitiveness.

“We welcome the review and the support expressed for it by a broad range of consumer and business interests.

“The Business Council is preparing a detailed submission for the review.”