Competition Law Reading Room
Australian Competition Policy: Deregulation or Reregulation
Institute of Public Affairs, 1998
A collection of papers regarding Australian Competition Policy.
- From Planning to Regulation: Towards a New Dirigisme? (Deepak Lal)
- Regulating Mergers and Access to Essential Facilities (Alan Moran)
- Taking Dynamics Seriously in Competition Regulation (David Briggs and Richard Scheelings)
- The ACCC's Attitude to Mergers (Allan Fels)
- Natural Monopoly Regulation in New Zealand (Peter Allport)
'For many years I have been a student of what I have elsewhere termed the 'dirigiste dogma' (Lal, 1997a). With the worldwide discrediting of planning after the events of 1989, the dirigiste impulse has not been stifled but merely transformed from planning that sought to supplant the price mechanism to regulation that seeks to supplement it. The intellectual basis for both sorts of dirigisme is the same. Dirigistes spanning the political spectrum have rallied around the banner of bureaucratic regulation to correct various forms of alleged market failure. These relate to externalities, in particular those having to do with the environment and various forms of monopoly. Having dealt with the former elsewhere (see Lal, 1994, 1995) I shall be mainly concerned with the latter.
This new metamorphosis of the dirigiste beast is one which has plagued the US since World War II: bureaucratic regulation of the market.'
First three paragraphs:
'Many areas of government intervention in business decisions have been much reduced over recent years. 'Social' regulation covering standards, pollution and the like has tended to mount; but the 'economic' regulation of businesses through tariffs and subsidies, and directions to offer services has been much reduced.
Two areas where 'economic' regulation has been increased, normally on the grounds that it is necessary to promote competition, are access to monopoly services and control over mergers.
Over the longer term, successful economic performance requires market competition with established property rights. Competition means a ceaseless striving to steal a march on rivals by cost-cutting and better pleasing the customer. Established, secure property and contract rights offer the incentive of personal gain from searching out new and changing needs of consumers and continuously seeking ways to meet these more cheaply. The socialist economies collapsed under the weight of bureaucratic controls and lack of incentives that are the inevitable corollary of attempts to improve upon the outcomes of market processes.'
First paragraph of introduction
'The rhetoric that accompanied the appearance of the Hilmer Report (Hilmer et al., 1993) suggested that the document would herald a new era of efficiency and dynamism through the medium of a national competition policy. Although not a document that expounded privatization of public utilities, the Hilmer Report, along with a renewed emphasis by State and federal governments on economic performance, has encouraged a widespread and serious questioning of the role of government in service delivery and the scope for wealth-improving economic regulation. The policy shifts that have occurred reflect a general awareness on the part of governments and policymakers of the need for greater reliance on market mechanisms, rather than on the traditional statist mechanisms, in the provision of infrastructure and similar services.'
'Over the more than twenty-year life of the Trade Practices Act, mergers have probably received more publicity than most other matters. They have also featured prominently in litigation undertaken by the ACCC and its predecessor, the Trade Practices Commission.
Given the emphasis on mergers in recent years, it is somewhat surprising that early antitrust legislation lacked specific provisions against mergers. In Australia, the Trade Practices Act passed in Australia in 1965, and its 1971 successor, lacked a specific mergers provision. It was not until the 1974 Act was passed that this was rectified. Essentially, early legislation intended to deal with trade practices focused on conduct and did not seek to limit future problems by considering the implications of structural changes resulting from mergers for conduct.'
'In this paper I propose to discuss:
- the role of the Commerce Commission;
- New Zealand's 'light handed' regulatory approach, with specific reference to natural monopoly/utility regulation;
- outcomes of New Zealand's 'light handed' regulatory approach; and
- some of the differences between New Zealand's regime and Australia's. '
A PDF version may be downloaded from the Institute of Public Affairs.