The Australian Competition and Consumer Commission would lose its powers to regulate the access and pricing of telecommunications and other infrastructure to a new, separate regulator and have half of its commissioners replaced with part-time outsiders, under dramatic recommendations from the Harper competition review.
The recommendations have triggered a backlash from ACCC chairman Rod Sims and split experts on their workability and potential impact on business.
“If you’re a telco or transport company you will have to deal with two regulators, and it will be more costly to run two organisations; there are some real questions to be thought about,” Mr Sims said.
While splitting the commission was a matter for government, he said all of the ACCC’s regulatory roles had a “huge competition element to them”.
Mr Sims saved his harshest commentary for the panel’s recommendations to replace half of his commissioners with part-timers drawn from business, academia and consumer worlds. He noted the heavy workload, in particular the need to attend five two-hour long meetings each week, and said that when it came to having commissioners from different backgrounds, “we’ve got that already”.
“It’s hard to see how that’s workable. I’m not sure what it’s trying to achieve. How can you add value if you’re only part-time?
“They would also have to worry about conflict issues; they couldn’t have a role in business because they would be conflicted out of most of the issues we would have to consider.”
King & Wood Mallesons partner Sharon Henrick said splitting the regulatory functions would increase the burden for business in Australia and could lead to inconsistencies and inefficiencies, even though the final recommendation was a watered-down version of the draft.
“I don’t think Australia needs yet another regulator,” Ms Henrick said.
“It will cause confusion and be inefficient for business and increase costs.
“The ACCC will continue to have the price surveillance function, but the new regulator will have all the pricing access functions.”
Ms Henrick said the proposal for part-time commissioners was also “impractical”.
“It’s a huge workload, it’s hard to see how that could work.”
But Herbert Smith Freehills partner Lisa Carver said that the decision to strip access and pricing regulation roles from the ACCC would be a “plus for utilities and infrastructure industries”.
“These assets should be regulated in a collaborative way and should not sit with a body whose DNA is adversarial,” she said.
Her colleague, partner Matthew Bull, said that it would “hopefully lead to a centre of excellence for regulated industries, which will perform more effectively than the existing patchwork of regulators and reduce compliance costs for business”.
The ACCC’s Mr Sims had opposed the recommendation in its draft form, saying it would create confusion, cause inefficiencies and ultimately push up costs for businesses and the government.
That was to no avail: the recommendation made it into final form, and if picked up by the government the new access and pricing regulator would also subsume the functions of the Australian Energy Regulator and the National Competition Council, with the potential to expand its industry coverage in the future.
“Amalgamating all Australian government price regulatory functions into a single body will sharpen focus and strengthen analytical capacity in this important area of regulation,” the panel says in its final report released on Tuesday afternoon.
The panel warned that there was a “risk that an industry regulator’s views about the structure of a particular market could influence a merger decision”.
“The culture and analytical approach required to regulate an industry differ from those typically characteristic of a competition law enforcement agency,” the four-strong panel led by economist Ian Harper said.
“The panel therefore sees benefit in focusing the ACCC on its competition and consumer functions and separating out its current access and pricing functions into a separate, dedicated regulator.
“The access and pricing regulator could, over time, assume responsibility for other functions, if and when they were elevated into a national framework. For example, submissions propose the rail and water sectors as potential candidates for transfer, should states and territories choose to do so.”
Extracted in full from Australian Financial Review.