Review of Australian competition law moves forward

Date: Nov 06, 2014

Australia's competition laws are currently being reviewed, with the Competition Policy Review Panel releasing it's draft report to the public in September. This is the latest step in the review process, which was announced by the Prime Minister on December 4 2013.

The aim of the review is to take a broader look at the issues which are facing Australian businesses and how well current competition laws are supporting their operations. The panel has made a number of draft recommendations, across competition law, as well as the government institutions which support Australia's competition regime. 

The chair of the review panel Professor Ian Harper suggested the review process would be essential for ensuring the country's competition laws are providing support for businesses of all sizes.

"Australia's competition policy needs to be fit for purpose, and updated for the economic opportunities and challenges Australia will face in coming decades," stated Mr Harper.

"The Panel has reviewed Australia's competition policies, laws and institutions against a set of questions to consider whether our current competition policy settings are capable of navigating these changes."

Which issues is the review addressing? 

The draft report covers a number of legal areas which relate to how companies operate within Australia. Here are two of the main competition recommendations to come out of the report:

Taking advantage

Under existing Australian law, large companies with a significant market share are prevented from using that influence to manipulate their sector and engage in anti-competitive behaviour. The review panel has criticised this ruling as being too vague and difficult to apply during a legal dispute.

Extraterritorial reach of the law

One of the main themes of the report is the growing impact that overseas companies can have on competition within the Australian marketplace. In particular, the report recommended that competition law apply to organisations that are operating outside of the country, but which undertake activities that affect the state of competition within Australia's borders.

Currently, offending companies need to have a substantive connection to Australia, through business presence or incorporation, before legal action can be taken over anti-competitive behaviour.

Which areas haven't been addressed?

There are some areas of competition law that the review hasn't addressed in its current form. For example, the draft report hasn't proposed restrictions on creeping acquisitions, where one company slowly acquires a dominant share of another business over a long period of time.

Resale price maintenance is another area that the report hasn't recommended a major change to, instead arguing that current legislation is appropriate to handle these issues. 

What is the next step?

Submissions for the draft report close in mid-November 2014, following a series of consultation meetings with businesses across the country.

Once final submissions have been made, the panel will begin to construct a final version of the review. At this stage, the committee hopes to have a finalised report with the government by March 2015, which will contain recommendations for changes to the country's competition laws.

What actions can companies take? 

If the proposed changes contained within this draft report are accepted by the federal government, there will be a significant impact for companies currently operating in Australia. Companies which may have to adapt their operations to these new laws will need to get the right level of advice and support in order to navigate this regulatory environment.

At the same time, companies that are facing anti-competitive behaviour within Australia will need to consult with a commercial lawyer as soon as possible. Regardless of if or when these new changes come into affect, companies shouldn't hesitate to seek legal advice if they are the victim of potentially illegal trading activity from their competitors.