Sectoral protectionism invading competition regulator must end

By Milton Cockburn

Tuesday February 16, 2016

In a little reported decision, the federal government is about to appoint to the Australian Competition and Consumer Commission a person “with specific expertise in agriculture”. This is an outcome of the Agricultural Competitiveness White Paper, released in July 2015. Treasurer Scott Morrison, said recently this appointment is “in train”, although it’s possible there will need to be an amendment to the Competition and Consumer Act before this can be done.

This new commissioner will join the existing commissioners with “knowledge of, or experience in” small business and in consumer protection. Where will it end? Which is the next interest group likely to be successful in lobbying for special treatment at the ACCC?

“The government has ignored the long-term damage it is doing to the reputation of the ACCC by allowing it to become perceived as a collection of special interest groups … ”

The Harper panel, in its review of competition policy and law, recommended against having what it called “sectoral commissioners”. The panel, in its final report, noted the former federal government, when it reappointed in 2013 one of the deputy chairs, Dr Michael Schaper, had trumpeted that the appointment “guarantees … that there is a permanent voice for small business at the ACCC.”

The Harper panel said “the expectation that these commissioners represent a particular sector is not congruent with the actual role commissioners perform”. They also made the obvious point that “the presence of sectoral commissioners could let other commissioners ‘off the hook’ from having to consider the interests of small business and consumers in their decision making”.

The Act requires (section 7(3)) that persons appointed to the ACCC should have “knowledge of, or experience in, industry, commerce, economics, law, public administration or consumer protection.” Further, the government must also consider whether the potential appointee “has knowledge of, or experience in, small business matters.”

The Harper panel said these requirements “are sufficient to represent [small business and consumer protection] interests in ACCC decision-making”. The panel therefore recommended that the further requirements in the Act for individual commissioners and deputy chairs with expertise in consumer protection and small business matters (i.e. sections 7(4) and 10(1B)) should be repealed.

The recommendation was opposed by the ACCC in its final submission on the draft Harper Report. Perhaps that’s not surprising given that the existing “sectoral commissioners” would have been involved in authoring the ACCC’s submission.

This raises the interesting issue of whether such sectoral commissioners should have full decision-making powers on the ACCC, given the possibility of a perceived conflict of interest, and particularly whether they should be allowed to sit on the commission’s enforcement committee.

This recommendation of the Harper panel was rejected by the federal government when it announced its response in November. Given the government had already announced there will be yet another sectoral commissioner, there was little chance of the government accepting the recommendation.

In doing so, however, the government has ignored the long-term damage it is doing to the reputation of the ACCC by allowing it to become perceived as a collection of special interest groups rather than reinforcing it as an impartial and disinterested competition regulator.

The courts have consistently held that the ACCC’s role is to protect competition; not to protect particular competitors. These sectoral appointments send the opposite message: that the protection of consumers may, on occasions, run second to the protection of small businesses and farmers (and whatever other special interest groups are also to be favoured with a sectoral appointment).

The Mandarin reached out to the Treasurer’s office over several days for a response and an update on the commissioner appointment progress. There was no reply.

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