Hilmer Report 1993
National Competition Policy
Report by the Independent Committee of Inquiry
Length: 385 pages
Click here for full (PDF) report from the NCC's National Competition Policy web site (4MB file) (updated link)
Report recommended the implementation of a national competition policy.
The Inquiry found that there was 'strong and widespread community support' for the implementation of a national competition policy and the benefits such a policy could have for improving international competitiveness.
In October 1992 Prime Minister Keating established the National Competition Policy Review.
The Terms of Reference were set out in Annex A of the Final Report:
1. I, Paul John Keating, Prime Minister of the Commonwealth of Australia, having regard to the agreement between myself and the Premiers of the States of New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia and the Chief Ministers of the Australian Capital Territory and the Northern Territory that national competition policy and law should give effect to the following principles:
(a) no participant in the market should be able to engage in anticompetitive conduct against the public interest;
(b) as far as possible, universal and uniformly applied rules of market conduct should apply to all market participants regardless of the form of business ownership;
(c) conduct with anti-competitive potential said to be in the public interest should be assessed by an appropriate transparent assessment process, with provision for review, to demonstrate the nature and incidence of the public costs and benefits claimed;
(d) any changes to the coverage or nature of competition policy should be consistent with, and support, the general thrust of reforms:
(i) to develop an open, integrated domestic market for goods and services by removing unnecessary barriers to trade and competition; and
(ii) in recognition of the increasingly national operation of markets, to reduce complexity and eliminate administrative duplication;
appoint Professor Fred Hilmer to Chair the Committee of Review of the Application of the Trade Practices Act 1974, and Mr Geoff Taperell and Mr Mark Rayner as the other two Committee members,
2. The Committee is to inquire into, and advise on appropriate changes to legislation and other measures in relation to:
(a) whether the scope of the Trade Practices Act 1974 should be expanded to deal effectively with anti-competitive conduct of persons or enterprises in areas of business currently outside the scope of the Act;
(b) alternative means for addressing market behaviour and structure currently outside the scope of the Trade Practices Act 1974; and
(c) other matters directly related to the application of the principles above.
3. In conducting the review the Committee should consider, against the background of the nature of markets in Australia and influences upon them:
(a) whether the authorisation and exemption provisions of the Trade Practices Act 1974 have sufficient scope, flexibility and transparency;
(b) the need for, and approaches to, the transition of government regulatory arrangements - including any associated revenue impact on States - to more competitive and nationally consistent structures;
(c) the best structure for regulation including price regulation, in support of:
(i) pro-competitive conduct by government business and trading enterprises and in areas currently outside the scope of the Trade Practices Act 1974; and
(ii) the interests of consumers and users of goods and services; and
(d) the past and present justification for the current exemptions from application of the Trade Practices Act.
4. In performing its functions, the Committee is to:
(a) take into account:
(i) the principles stated in paragraphs 1(a) to (d) inclusive;
(ii) legislation other than the Trade Practices Act and other arrangements that affect market behaviour and structure; and
(iii) the fact that some government, business and trading enterprises may operate in industries having aspects, including pricing, of natural monopoly; and
(iv) current moves to reform government trading enterprises; and
(v) overseas experience.
(b) take written submissions; and
(c) consult interested parties where necessary; and
5. The Committee is to report to me by May 1993.*
* Note, in May 1993 the Inquiry was extended until August 1993 to facilitate further consultations with States and Territories
On Part IV
(1) the prohibition on price fixing should be strengthened 'by removing the distinction between goods and services, which potentially allows agreements relating to services to be authorised, thus sending an unambiguous signal about the undesirability of collusive price-fixing' (Report p xxiii)
[not implemented - authorisation in fact extended to capture all forms of PF]
(2) removing the per se prohibition on third line forcing and subjecting it to a competition test
[not implemented; the same recommendation by the Dawson Committee ten years later also not implemented]
(3) permitting authorisation of resale price maintenance where it offers net public benefits
(4) repealing specific prohibition on price discrimination (any anti-competitive conduct could be addressed by the misuse of market power provisions]
(5) remove 'unjustified distinctions between goods and services'
On national competition policy
See recommendations 9.1-9.4 regarding implementation of a national competition policy and the role of the NCC.
Exemptions and authorisation
The 'general conduct rules of a national competition policy should, in principle, apply to all business activity in Australia, with exemptions for any particular conduct only permitted when a clear public benefit has been demonstrated through an appropriate and transparent process.' [Report p xxiv] The primary method for granting such exemptions should be the authorisation process with some limited specific exemptions in the TPA (eg, export contracts and certain intellectual property issues) [Report p xxiv] .
Shield of Crown
Should be removed 'to ensure that the Act applies to State and Territory businesses to the same extent it applies to Commonwealth businesses.' [Report p xxvii]
A new access to essential facilities regime should be implemented to operate by 'specific declaration' [Report page xxxii and Chapter 11 - from p 239]
National Competition Council
A new 'National Competition Council' should 'be established jointly by the Commonwealth, State and Territory Governments to play a key role in policy decisions relating to the additional policy elements ... the objective is to provide a high level and independent analytical and advisory body in which all governments would have confidence.'
[implemented - see NCC]
Australian Competition Commission
A new Australian Competition 'should be established to administer relevant aspects of the proposed competition policy.' [Report p xxxvii]
[partial implementation; Trade Practices Commission re-named Australian Competition and Consumer Commission and given wider responsibilities in relation to competition regulation]
Australian Competition Tribunal
Trade Practices Tribunal should be re-named Australian Competition Tribunal [Report p xxxvii]
On competition policy
'Competition policy is not about the pursuit of competition per se. Rather, it seeks to facilitate effective competition to promote efficiency and economic growth while accommodating situations where competition does not achieve efficiency or conflicts with other social objectives. These accommodations are reflected in the content and breadth of application of pro-competitive policies, as well as the sanctioning of anti-competitive arrangements on public benefit grounds.' (p xvi report)
Mark R Rayner
Geoffrey Q Taperell
Nearly 150 written submissions were made.
Legislation introducing many of the Hilmer Committee recommendations was introduced as follows:
National competition code