06 December 2018

Key takeouts from the RBB Economics Conference keynote speech

Caroline Coops delivered the keynote speech at the recent RBB Economics Conference. Here are some key insights from the address. Alternatively you can download the full speech transcript.

What private practitioners in this area actually do, and the changes I have seen to that practice over the past few years

Most conduct we see as competition lawyers falls into the following categories:

  • Conduct that is clearly a breach of law and should be.
  • Conduct that is a breach but should be permitted.  In other words, it triggers the main prohibition, but should properly or perhaps artfully fall within an exception.  Advice of this nature can be torturous and it is a result of the codified and formulaic nature of our competition laws.
  • The third - conduct that is clearly no breach of the law at all - is actually taking up more and more time.

Many people think we spend most of our time of the first category of conduct – conduct that is clearly a breach and should be –but in my experience this is actually fairly rare.  For example, I can count on two hands the number of times I’ve been asked to advise on what is, on any measure, hard-core cartel conduct.  And certainly, I can count on one hand how often I have been asked to advise on that conduct before it occurred.  

In theory, we are in a new era of competition law as a result of the Harper amendments.  But are we really? 

The over reliance on transparency as a solution to perceived market failures

Increasingly, the ACCC is seeking or being asked to deliver increased transparency to consumers of pricing or other matters.  The most recent example is the Commission’s advocacy of a standard energy rate against which customers can compare market offers.  Other examples include the ACCC’s residential mortgage and foreign exchange inquiries, which have the express aims of bringing transparency to the way in which banks set and change interest and FX rates.[1] 

The perception of transparency as a solution to competition issues is evident in the resolution of the Informed Sources matter where, as part of the withdrawal of those proceedings, the ACCC accepted undertakings from Informed Sources to provide data on petrol prices to the public.[2]

All of these transparency measures are aimed at arming consumers with the information they purportedly need to make informed choices in their best interests and compare their options.  And that, in turn, is intended to facilitate greater competition, as customers can choose to change providers if they are not getting the price or service they now know they can get from someone else. 

What will consumers actually do in the face of all this transparency?

The increasing expansion of the ACCC's role beyond its bailiwick

It is well established that there is a clear link between the need to protect consumers and the operation of functioning competitive markets.  Yet the ACCC’s role as the consumer protection regulator does not mean that all things consumer related should be within its purview.

Again, the digital platforms inquiry is a fascinating example.  Of the six key issues that are being looked at, only two have a strong connection to competition policy.  They are:

  • whether the digital platforms have an unfair competitive advantage as a result of unequal treatment and regulation; and
  • whether they have substantial market power in their dealings with media content creators and advertisers and the implications of this for competition.[3] 

The other four issues include:

  • how digital platforms have changed media markets and the ability to produce quality news and journalistic content for Australians; and
  • how the use of algorithms affect the curation of news for digital platform users.

As part of the Inquiry to date, the ACCC has thrown up issues of real significance for this country, such as:

  • whether Facebook’s algorithmic selection of news in the news feed is creating an echo chamber and whether Apple News and other digital content aggregators create a filter bubble; and   
  • whether consumers think this is a problem or conversely is it something they value?[4]

But is the ACCC the right body to be answering these rich and complicated questions?  Is it really best placed to be analysing, assessing and making recommendations on matters like the quality of news and journalism.  On what basis is it credentialed to assess what is or is not “quality journalism” and the risks, benefits and impacts of filter bubbles?

Has the ACCC burst its banks?

For Caroline's full insights, download the full transcript.

[1] As summarised by Rod Sims in his Address to the Law Council of Australia Annual General meeting, 3 August 2018, available at https://www.accc.gov.au/speech/address-to-the-law-council-of-australia-annual-general-meeting.

[2] Regulating for competition: stepping up for platforms & stepping back from media?” speech by Rod Sims to International Institute of Communications - Telecommunications and Media Forum, 3 July 2018.

[3]  See Ministerial Direction to ACCC to conduct a price inquiry into residential mortgage products dated 9 May 2017 and ACCC Issues Paper for the Inquiry into Foreign Currency Conversion Services dated 2 October 2018, page 15.

[4] Section 87B undertaking provided to the ACCC by Informed Sources (Australia) Pty Ltd dated 21 December 2015, paragraph 4(b).

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