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Hands across the Tasman

Hands across the Tasman

Last week, the Productivity Commission released its draft report on the competition and consumer protection framework that would be needed to support a trans-Tasman single economic market.…

Last week, the Productivity Commission released its draft report on the competition and consumer protection framework that would be needed to support a trans-Tasman single economic market. Francis Wilkins reports

The development of a trans-Tasman single economic market does not warrant radical reforms to the Australian and NZ competition and consumer protection regimes, a draft Australian Productivity Commission report has found. The two regimes are already “highly harmonised, particularly by international standards” and do not generally hinder businesses operating within the Australasian market, the report says.

But while sweeping reforms may be unnecessary, existing laws still limit regulators’ ability to deal with Australasian transactions and modest changes are likely to best facilitate development of a single market.

The draft report, released late last week, investigates the potential for greater cooperation, coordination and integration of Australasian regulatory regimes. The Productivity Commission, the Government’s independent principal review body on micro-economic policy and regulation, is seeking public comment on the draft before submitting it to the Government late next month.

“Although the substantive provisions in Australian and New Zealand competition and consumer protection laws are similar, they are not identical,” the study says. “Further, each country retains domestic legislative direction and national jurisdiction, as well as discretion to diverge from the other’s laws. These differences have the potential to impede trade and investment because competition and consumer protection laws apply to trans-Tasman protection.”

The similarity of the two countries’ competition and consumer protection regimes stems from their similar political and legal systems, convergence of their laws towards international standards, institutional and ministerial cooperation, and agreements such as the Australia New Zealand Closer Economic Relations Trade Agreement. But with both governments supporting the long term goal of a single economic market, Treasurer Peter Costello in June asked the Commission to investigate whether the existing regulatory regimes represent a barrier to development of this market.

According to the report, regulators’ handling of Australasian cases could be impeded because: the objectives of each regime only allow consideration of those in its particular country; the market under consideration cannot extend geographically beyond the border of each country; there are differences in the definition of public benefit, appeal and review arrangements, and the timelines for various regulatory decisions; and there are limitations on the extent to which regulators can use their investigative powers to help their counterparts.

The Commission subsequently identified six options for achieving greater integration of Australia’s and NZ’s competition and consumer protection regimes.

‘Full integration’ would require each country to pass identical laws to provide a framework for considering competition and consumer protection policy within a single economic market and administered either by a single, common set of institutions or by separate national institutions retained by each country. This approach would require significant changes, including expanding coverage beyond the domestic market, and substantial expenditure. “Issues relating to full integration are complex, involve substantial matters of sovereignty and extend into the economic and judicial heartlands of the two countries,” the report said. “In light of the small number of cases where Australasian consideration might be warranted and the substantial costs involved, [full integration] would not generate a net benefit and [is] not supported.”

The second option, ‘partial integration’, would require the passage of identical laws to cover selected transactions within the context of a single Australasian market, but each country would retain its own laws for all other matters. While it might not be necessary to replicate the entire competition and consumer protection regime for the single economic market, establishing a framework would nevertheless be “a formidable task”, the report said. Although there could be variations within this option, their cost would likely outweigh their benefits, the Commission concluded, although partial integration could also be “reconsidered in the light of substantial progress in other policy areas that are substantive to the creation of a single economic market”.

The third option, ‘enhanced cooperation under existing regimes’, would require less substantial changes (and therefore less cost). Specifically, the Commission recommends the governments of each country amend the Australian Trade Practices Act 1974 and the NZ Commerce Act 1986 “to enable the ACCC and the [NZ Commerce Commission] to use their information gathering powers for the purpose of acting on a request for investigative assistance from each other” and “to allow [the Commissions] to exchange information that has been obtained through their information gathering powers”. In addition, safeguards should be built into both Acts to protect information from unauthorised use or disclosure.

The Commission concluded in its report that enhanced cooperation under the existing regimes would be consistent with the current policy of pursuing harmonisation and building the foundations of a single economic market. “In time,” the report said, “if continuing economic integration were to lead to an increasing number of significant trans-Tasman competition cases, implementation of [partial integration] might become the next desirable step.”

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