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Harper Review gets approval, but 'effects test' still in limbo

Harper Review gets approval, but 'effects test' still in limbo

Martyn.Taylor

After the majority of reforms laid out in the Harper Review were accepted by the government, one partner from a major firm has said that lawyers should be alive to their wide-ranging impacts.

The Federal Government released its response to the Competition Policy Review (Harper Review) on Wednesday, accepting 44 of the 56 recommendations in full or in part.

The government said it was open to further consolation around the remaining 12 recommendations in the review, including the controversial misuse of market power provisions.

The Harper Review, released in April this year, is the first in-depth review of Australia’s competition policy framework in 20 years. It covers a broad range of areas including market restrictions such as retail trading hours, and shipping, road and transport regulations.

Speaking with Lawyers Weekly, Norton Rose Fulbright partner Dr Martyn Taylor (pictured) said the review’s “sweeping, comprehensive approach” could affect lawyers on three levels.

First, the review could drive further deregulation, particularly in more difficult areas that have “escaped attention before” such as human services, pharmacies and transport, he said.

Second, a refocus on competition policy by the states and the Commonwealth will see a “greater harmonisation of state-based regimes through Australia” across areas such as infrastructure regulation. “Again it is probably a good thing because it will ensure we have greater regulatory consistency,” said Dr Taylor.

Third, the review recommends changes to legislation, including the Competition and Consumer Act 2010. This will remove some of the “more anachronistic provisions” and streamline the Act, addressing some of the more practical issues in the application of the legislation, said Dr Taylor.

“So you've got three levels on which this is happening. All of those will drive further work for the legal profession, depending on the speciality of the lawyers involved,” he added.

As the legislative amendments come through over the next three to four years, lawyers will have further work advising clients as to the changes, according to Dr Taylor.

“That will lead to some uncertainty for clients as we advise on different formulations of the law but generally it is a good thing because it reduces complexity and makes our competition laws easier to understand, easier to apply,” he said.

"Moreover, further competition policy reforms should assist the restructuring of the Australian economy and assist to drive economic activity more generally."

'Effects test' on standby

The government has postponed its decision on whether to approve the controversial ‘effects test’ proposed by the Harper Review.

The recommended change to Section 46 of the Competition and Consumer Act 2010 would potentially broaden the definition for what constitutes a misuse of market power to include conduct that has the “purpose, effect or likely effect” of substantially lessening competition.

Dr Taylor said this was the most contentious part of the Harper Review, but that the amount of media attention surrounding it was disproportionate to its likely impact on the market.

“It is disappointing that everyone is focused on that particular issue – the misuse of market power provision – without recognising just how important the whole review is,” he said.

If the government were to approve the changes to Section 46, this will cause some uncertainty for business as lawyers struggle to interpret the legislation without a body of case law to turn to, he said.

“[First] there is a debate about whether this is was an appropriate reform at all given the uncertainty it would create,” he continued. “Then there is a second debate around, well if you did amend it, what would it look like? There wasn't really a consensus on either of those two points.

“Then it became an academic debate about the particulars and nuances of the wording, which was lost on the general public but was still of interest to competition lawyers.”


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