The Australian Competition and Consumer Commission chairman has again spoken of the need to take on recommendations from the Harper Review of competition policy.

ACCC Chairman Rod Sims spoke this week to the Australian Competition Policy Summit.

“Effective and vigorous competition is vital for the proper functioning of a market economy, and to ensure that the profit motive works to benefit consumers,” Mr Sims said.

“While improving, for example, our education and infrastructure can allow us to be more productive and innovative, only by ensuring effective competition can we ensure that we will be more productive and innovative.”

Mr Sims pointed out, however, that introducing pro-competition policies is difficult, as no business likes facing more competition.

“Those currently protected from competition usually react strongly to policies that remove that protection,” Mr Sims said.

Mr Sims outlined three key points.

“First, effective competition requires that we expose as many areas of the economy as possible to competition, and that we have appropriate competition laws to guide behaviour.”

He said the many improvements to Australia’s competition laws recommended by the Harper Competition Review.

“Changes aimed at improving our price signalling, merger and misuse of market power laws and, importantly, bringing them into line with overseas practice are to be welcomed,” Mr Sims said.

“Second, our economy can benefit considerably from implementing the Harper policy reforms.”

Sims said this would involve:

  • Putting more emphasis on choice in human services delivery
  • Ensuring our IP laws have the right balance and are not stifling innovation
  • Removing cabotage on coastal shipping to lower the coast of freight, and repealing laws which allow for anti-competitive arrangements in liner shipping
  • Allowing more competition in the supply of urban water
  • Reforming road transport

“Third, our market economy can benefit significantly from competition advocacy and market studies,” Mr Sims said.

He mentioned, for example, the ACCC’s recent advocacy to ensure that governments do not impose inappropriate market structures or regulation to boost privatisation proceeds.

“Such actions boost short term, one-off proceeds from asset sales by effectively imposing a tax on future users of the privatised assets,” Mr Sims said.

He also mentioned the ACCC’s current market studies into petrol and the east coast gas market as revealing the benefits that can be gained from transparency.

“The working of Australia’s market economy can be strengthened by studies that highlight why some markets are not working as we might expect,” Mr Sims said.

“Such studies can expose policy or other issues, or reveal that the market is actually working effectively,” Mr Sims said.

“Such studies can be a useful ‘safety valve’ in areas of controversy, so we can all understand the facts.”