What is The Harper Review?

The Harper Review was a review of Australia’s competition law and policy commissioned by the Government in 2013.

The final report was released earlier this year on 31 March 2015 and contained 56 recommendations for reforms in this area including specific recommendations for reforms to restrictive trade practices.

The Government’s response to the Harper Review was released this month on 24 November 2015.

The response provides that the Government supports 39 of the recommendations in full or in principle and 5 recommendations in part.  The response also provides that the Government is open to the remaining 12 recommendations following further review and consultation.

The recommendations concerning restrictive trade practices prohibited by the Competition and Consumer Act 2010 (Cth) (“CCA“) and the Government’s response to these recommendations are summarised as follows:

Recommendation Supported / Unsupported Effect on Competition Law
Recommendation 27: the cartel conduct provisions in the CCA should be simplified and the following changes implemented:- Cartel conduct should be limited to conduct that limits competition within Australia;
– The threshold for whether a person is considered to be in competition with another should be raised;
– Implementation of a broad exemption for joint ventures;
– Implementation of an exemption for trading restrictions.		 Supported in part The cartel conduct provisions will be simplified making the law easier to understand and comply with. Amendments will be made to exempt joint ventures (including vertical supply arrangements) from the cartel conduct provisions.   However this type of conduct may still be caught under the provisions of section 45 of the CCA which provides the general prohibition on conduct restricting competition.
Recommendation 28: the prohibition on exclusionary provisions in the CCA should be removed and the cartel conduct provisions widened to address any resulting gap. Supported The exclusionary provisions were found to overlap with cartel conduct and are therefore unnecessary and should be repealed.
Recommendation 29: the price signalling provisions should be repealed and section 45 broadened to include a situation where a person engages in a concerted practice that has the effect of reducing competition. Supported The price signalling provisions, as currently drafted, are complex and have the effect of creating a general exemption for disclosure of prices in the ordinary course of business.  This will be remedied by repeal of these provisions and amendment of section 45 to include a breach in circumstances where competitors engage in a concerted practice of regular disclosure or exchange of price information even if it cannot be shown that there was any understanding to do so.
Recommendation 30: the misuse of market power provisions in the CCA should include conduct that has the effect of lessening competition (not just the purpose). Noted for further consultation The effect of this recommendation would be to ensure that the restriction is not so broad as to restrict pro-competitive behaviour.
Recommendation 31: a specific prohibition on price discrimination should not be reintroduced into the CCA and price discrimination on an international scale should be addressed by market solutions. Supported Price discrimination is the practice of charging different prices for the same or similar goods or services.  The Panel considered that this prohibition is adequately addressed by the existing provisions under the CCA.
Recommendation 32: third-line forcing should only be prohibited where it has the purpose or effect of reducing competition. Supported Third-line forcing is where a supplier will only supply on condition that the purchaser acquires goods or services from another person.  This type of conduct is currently a per se breach, whereby the conduct does not need to have the purpose or effect of reducing competition to be a breach of these provisions.  The amendment means that only conduct that has the purpose or effect of limiting competition will be prohibited, therefore limiting the scope of the conduct that will be in breach.
Recommendation 33: the provisions on exclusive dealing under section 47 of the CCA should be repealed. Noted for further consultation The recommendation seeks to repeal the exclusive dealing provision that restricts conditions imposed on or agreements with acquirers of goods in a supply chain.  The Panel suggests that this section can be adequately addressed by sections 45 and 46 of the CCA.
Recommendation 34: the prohibition on resale price maintenance should remain a per se breach. Supported Resale price maintenance will continue to be prohibited regardless of its effect on competition.
Recommendation 35:  changes in the informal and formal merger review processes should be implemented to simplify the process and promote transparency. Supported In the informal merger review, it is encouraged that there is further consultation between the ACCC and business representatives to improve efficiency and timeliness of reviews.  For the formal merger review process, the ACCC and Australian Competition Tribunal are to follow a general framework.
Recommendation 36: the restrictions on secondary boycotts should be maintained and the penalties for breach of these provisions should be increased. Supported The penalties (currently not exceeding $750,000) will be brought into line with penalties for other competition law breaches ($10 million).

 

In summary, the Government supports a number of recommendations contained in the Harper Review that relate to restrictive trade practices within competition law.

The majority of the recommendations have the effect of simplifying the provisions contained in the CCA to enable a better understanding of how they apply and are enforced.

A few supported amendments have relaxed the provisions under the CCA, including third line forcing and potentially misuse of market power following further consideration.  However the supported amendments to the provisions on price signalling and the penalties for secondary boycotts should be noted, as these impose more onerous obligations and consequences within the marketplace.