Competition & Consumer Law Journal (2018) Volume 25 Part 3

Competitive neutrality: At the crossroads of reform – by Ray Steinwall

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Two comprehensive reviews of Australia’s competition law, almost 20 years apart, have each reached the same conclusion on the importance of an effective competitive neutrality policy for the efficient functioning of markets.

Competitive neutrality in Australia: Opportunity for policy development – by Deborah Healy & Rhonda L Smith

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For competition to be effective in markets where government businesses compete with privately owned businesses, there must be a level playing field. A policy of competitive neutrality aims to ensure this. The article begins by briefly discussing the approach to competitive neutrality in the United States and the European Union to provide context for, and as a contrast to, the Australian approach. Then the origins and implementation of Australia’s competitive neutrality arrangements and the experience to date are explained and discussed. Using a real-life example, the utility of the current policy is considered, raising several issues of concern, and suggestions are made to address these. Finally, some conclusions are drawn about the current state of competitive neutrality policy in Australia.

Competitive neutrality and the challenge of social enterprise — by Bronwen Morgan, Sophia Bai and Jyotsana Bhasker

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Globally, the past decade has seen many countries, including the United Kingdom, United States and Canada, introducing legislation that creates distinctive hybrid legal models for social enterprise. Although Australia has no dedicated legal model for social enterprise, its growing salience poses a challenge to competitive neutrality policy regimes. The challenge posed by social enterprise is both conceptual and practical. At the conceptual level, we argue that the underlying analytical framework of competitive neutrality sits uneasily with the premises of social enterprise. At the practical level, we show how the qualitative cost-benefit balancing flowing from the public interest test embedded in the Australian competitive neutrality regime is quite different from the way social enterprises achieve their social objectives, despite some apparent initial similarities. This challenge arises from the implicit baseline of competitive neutrality, which tends to generate analyses that place efficiency values in competition with social, environmental or other ‘non-economic’ values. Articulating and responding to this challenge is important for the enhancement of opportunities for social enterprise to grow and strengthen, and thereby contributes to rising political and consumer demand for more sustainable business models.

Competitive neutrality in industry equilibrium — by Richard Holden

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Even in circumstances where a government enterprise enjoys no special advantages over private sector competitors, the very fact that some
economic transactions have been organised by government changes the nature of the market. That, in turn, has an impact on both government and private enterprises. This impact varies with the nature and size of the transactions that come under government control. That is, the impact of government involvement in a market depends on the underlying characteristics of that market and the type of government involvement in it. This article provides a framework for analysing these issues and considers the legal implications of these changes to the market. In informationally efficient markets a policy that creates a rebuttable presumption against the involvement of a GE may well be welfare increasing.

A new competitive neutrality — by Ed Willett and Deborah Cope

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Competitive neutrality, as implemented under the National Competition Policy, is now an accepted part of public policy culture. NCP focused on neutrality in competition between public and private businesses and on legislated restrictions on competition. There were, however, gaps in its application and as markets and government policy have changed, these gaps are more significant. This article focuses on governments’ non-regulatory market interventions. It discusses how government privatisation processes, procurement and contracting out, subsidies, market design, and concessions and taxes would all benefit from more consistent application of competitive neutrality principles.

There should be a presumption in favour of applying competitive neutrality consistent with a broad definition. That is, competitive neutrality occurs where no entity operating in an economic market is subject to substantial competitive advantages or disadvantages arising as a consequence of government non-legislative interventions in markets. The policy should recognise, however, that when a clear net public interest case to the contrary is established, this should modify how competitive neutrality is applied.

Making the dual model work: Competitive neutrality and net neutrality issues facing the Australian Broadcasting Corporation — by Rob Nicholls

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In an environment where ‘good debt’ is incurred by the Commonwealth to invest in state-owned infrastructure businesses, this article reviews some of the competitive neutrality challenges faced by businesses owned by the Commonwealth of Australia. It uses the unusual history of public service broadcasting in Australia. The creation of the Australian Broadcasting Corporation as a national broadcaster and a state-owned enterprise was one that corrected a failed licensing system. It created a broadcaster which was never a monopoly provider of services and which has always competed with commercial broadcasters. The state-owned enterprise has, since 1932, faced the challenge of being a national (but not state) public broadcaster.

This article examines more recent issues facing the ABC as one of Australia’s national broadcasters and a state-owned enterprise. It considers two issues. The first is the process for providing an Australian international television channel and its eventual cessation. The second is the move by the ABC to provide online ‘catch-up’ services and applications for mobile devices. These issues were chosen to provide a case study of competitive neutrality problem facing state-owned enterprises.