The Taskforce has been established within the Markets Division of Treasury to conduct the review over the next two years.  This will involve targeted consultations.  It is assumed that, following each consultation, the Taskforce will report to the Government on recommended reforms.  The approach to be adopted is to be contrasted with prior independent formal competition reviews such as the 1993 National Competition Policy Review (Hilmer Review), the 2003 Review of the Competition Provisions of the Trade Practices Act (Dawson Review) and the 2015 Competition Policy Review (Harper Review) where, in each case, focused consultation occurred and only one report, listing comprehensive recommendations, was ultimately provided to Government.

The Taskforce is to be supported by an expert panel with members including the CEO of the Grattan Institute, Ms. Danielle Wood and immediate past Chair of the Australian Competition & Consumer Commission (ACCC), Prof. Rod Sims AO.  Ms. Wood has also previously worked at the ACCC.

The media release indicated that initial issues to be considered by the Taskforce will include:

The Treasurer noted that the Government’s Intergenerational Report, released on 24 August 2023, highlights the critical role of competition for revitalising productivity growth in Australia.

Will merger reform be an early area of focus?

While two years seems to be a long period for the review, it is anticipated that the Taskforce will prioritise specific areas of reform, where action will be taken quickly.  Merger reform, a key concern raised by Prof. Sims when he was ACCC Chair, will most likely be at the top of the list.

Many commentators have focused on the ACCC’s proposed low thresholds for compulsory notification of mergers.  The proposed thresholds are an acquirer or target turnover threshold of $400 million or a global transaction value threshold of the significantly lower amount of $35 million.  It is important to recognise that the proposed mandatory merger notification regime will focus on “turnover”, that is, revenue, and transaction value, and will not look to whether the transaction has a competition impact in a market.  While the ACCC say that there will be a waiver process for non-controversial mergers, inevitably the ACCC will wish to review a transaction first, which will create a cost to prepare an ACCC filing, as well as requiring payment of the associated filing fee.  Such reform is therefore hardly conducive to increased productivity, instead pointing to increased red tape for small transactions, such as pure play property transactions and minor transactions that do not on their face involve any competition issues.  If the proposed thresholds are adopted, Australia will be out of sync with the more pragmatic regimes adopted elsewhere and this may be viewed negatively for foreign investment.

In addition, notwithstanding the proposed low thresholds, the ACCC is also seeking a call-in power for proposed transactions below the mandatory notification threshold based on the ACCC’s “discretion”.

However, it is perhaps the much more conceptual issue that business should be concerned about, which is the ACCC’s proposed changes to the substantive merger test from a policy perspective.  The ACCC is proposing that the substantive merger test be changed for all mergers to align with the current merger authorisation test.  This will mean that merger parties will have to prove to the ACCC (and the Australian Competition Tribunal on review) that mergers do not lessen competition substantially.  In other words, the burden of proof would be on the merger parties.  As merger parties in the recent ACCC authorisation matters in Telstra/TPG and ANZ/Suncorp have found, the authorisation merger test is hard to satisfy, particularly in concentrated industries where the ACCC must be satisfied that the merger does not substantially lessen competition or that public benefits outweigh any substantial lessening of competition.

If the test proposed by the ACCC is adopted, where there is any doubt as to whether the merger is reasonably likely to substantially lessen competition, it will not be able to proceed.

It is a philosophical/conceptual debate whether policy settings in an economy should be that businesses need to satisfy a competition regulator in order to be allowed to proceed with a merger, rather than the competition regulator being required to prove that a merger substantially lessens competition in order for it to be blocked.  The ACCC’s proposals seem particularly problematic when combined with the low merger threshold and where it is acknowledged, even by the ACCC, that it is only very few mergers (around 5%) that occur in Australia which are problematic.

Digital platform regulation likely overdue

In terms of other priorities, it is not clear whether the Taskforce will take forward the Government’s response to Treasury’s consultation on proposed Codes of Conduct for digital platforms.  It would be difficult for the Government to justify that even further consultation on such Codes of Conduct, or the other digital platform specific regulation proposed by the ACCC, is required given those proposals have already been extensively consulted on by the ACCC and Treasury.

The Taskforce may have a role in relation to AI, including the “hot topic” of compensation for media companies and other Australian creatives for use of their content in training the models that underpin generative AI.  Given the work done in relation to digital platforms by the ACCC under former ACCC Chair Prof. Rod Sims, including its world-leading work on the News Media Bargaining Code, it may well be the case that another early recommendation of the Taskforce is that the News Media Bargaining Code should be expanded in scope to tackle this new issue.

While some commentators have suggested that the Taskforce may be kicking competition issues down the road to after the next Federal election, it is hoped that the Taskforce leaders Mr. Marcus Bezzi and Mr. Jason McDonald, working collaboratively with the Government’s appointed experts, will take the lead from the Australian Matilda’s soccer team and kick some competition goals for productivity improvements to Australia’s economy.