What to expect from the new Labor Government on competition policy? Part 2

Plans and priorities 5 min read

As promised in Part 1, Allens has been keeping its ear to the ground and we have further intelligence on the new Government's position on competition policy.

On 18 August 2022, Dr Andrew Leigh, Labor's Assistant Minister for Competition, Charities and Treasury released Exposure Draft legislation which will increase the penalties for competition and consumer law breaches under the Competition and Consumer Act 2010 (Cth) (CCA). Further, in an interview with Laurel Henning from MLex on 8 August 2022, and in an article published in the Australian Financial Review (AFR) on 10 August 2022, Dr Andrew Leigh shared further insights into the Government's plans and priorities when it comes to competition policy.

Increasing penalties for competition law breaches

As outlined in our previous Insight: What to expect from the new Labor Government on competition policy, the Government foreshadowed its intention to strengthen the CCA by increasing maximum penalties for anti-competitive behaviour. On 18 August 2022, the Government confirmed by media release that the Exposure Draft and Explanatory Memorandum reflecting the increase to anti-competitive behaviour and Australian Consumer Law (ACL) contraventions has been published and is open to public consultation until 25 August 2022.

Currently, the maximum fine or pecuniary penalty for each criminal or civil cartel offence and ACL breach a corporation commits is the greater of:

• $10 million;
• three times the total value of the benefit the organisation received from the breach; or
• 10% of annual turnover of the business in the preceding 12 months if the benefit cannot be determined.

Under the Exposure Draft, $10 million has been increased to $50 million as previously indicated by Dr Leigh, however 10% of annual turnover has also been replaced by 30% of the corporation's turnover during the breach period.
For individuals, the maximum fine or pecuniary penalty has increased from $500,000 to $2.5 million.

Merger reform

In his former role as Labor's Shadow Assistant Treasury spokesperson, Dr Leigh suggested that there may be a need to take a fresh approach to merger laws. However, the Labor Government's current position on the merger law reforms first proposed by former ACCC Chair Rod Sims in August 2021 is unknown. When asked by MLex, Dr Leigh said he wouldn't take a concrete view until he'd received a response from the ACCC on its updated views on mergers following the appointment of new Chair, Gina Cass-Gottlieb.

In a subsequent AFR article published on 10 August 2022 titled 'Labor toughens stance on 'dominant monopolists'', the AFR reporter detailed interactions with Dr Leigh in which Dr Leigh indicated the Government may have to rethink its competition policies in light of the approach to competition taken by the United States under the Biden administration.

Possible interim measures in digital services inquiry

On 10 February 2020, the former Government directed the ACCC to conduct an inquiry into the market for digital platform services, analysing the intensity of competition in this market. As part of the inquiry, the ACCC is required to provide the Treasurer with an interim report every six months up until 2025 with publication of the next report expected at the end of October (see Allens' coverage below).

When asked by MLex whether the Government will implement any interim measures before the end of the inquiry in 2025, Dr Leigh stated that a final timeline had not been determined, but that the Government would put 'energy into making sure that the market is as dynamic as it can be', and suggested this was particularly important for reducing barriers for start-ups in Australia.

ACCC approach to digital payments

In a speech to the Australian Financial Review Banking Summit on 31 May 2022, ACCC Chair Ms Cass-Gottlieb said that competition in digital payments markets would be a focus for the ACCC. This was seen in the ACCC's recent proceedings filed in the Federal Court against Mastercard for alleged misuse of market power in relation to card payments. However, Dr Leigh raised concerns with MLex that the 'regulators can't keep up with the pace of technology in the digital payment industry'. Looking at the cost of transacting, Dr Leigh reasoned that in light of the rate of technological development, transacting costs should be reducing and, if they are not, 'we should be worrying about the potential effect of market concentration'.

Cheaper child care

Reforms are also expected in relation to child care services as indicated by the Labor Party's pre-election campaign, 'Cheaper Child Care', published on 31 March 2022. The policy outline proposes that under a Labor Government:

• the maximum child care subsidy rate will be lifted to 90% for a family's first child in care;
• child care subsidy rates for every family with one child in care earning less than $530,000 in household income will be increased;
• child care subsidy rates for the second and additional children in care will be kept high; and
• the increased subsidies will be extended to outside school hours care when many parents are still working.

As part of this overhaul, the Labor Party said the ACCC will be engaged to design 'a price regulation mechanism' to drive out-of-pocket costs down, and the Productivity Commission will be used to conduct a comprehensive review of the sector with the aim of realising a universal 90% subsidy for all families. Although the policy outline indicates that investment in reducing prices will start later in July 2023, a speech delivered to the Senate by Governor-General David Hurley on 26 July 2022 confirmed cheaper child care is a key priority for the Government.

Allens will issue further updates as more information becomes available.