Below, we have provided the full transcript of Mr. Marcus Bezzi’s presentation and fireside chat with Prof. Julie Clarke. At this time, Mr. Bezzi shared the work of Australia’s Competition Taskforce, as well as going into how it operates, while sharing updates on key priorities and issues they seek to address.
Welcome, everyone. My name’s Julie Clarke, professor in competition law and director of the Global Competition and Consumer Program here at Melbourne Law School. And I’m very happy to host this morning’s CPI fireside chat on the new Australian Competition Task Force with Marcus Bezzi. Marcus is the Chief advisor to the Competition Task Force, which was established in the Commonwealth Treasury in July this year.
Most of you know Marcus from his work as a lawyer at the Australian Government; solicitor for 15 years and more recently in his roles at the agency, including overseeing enforcement and compliance for 12 years and more recently as head of the Agency Specialist Advice and Services Division, where he didn’t have much to do just overseeing the agency’s legal economists, data and analytics and intelligence teams as well as international engagement.
Thank you very much, Marcus, for joining us today. As I mentioned, the Competition Task Force is a new beast was announced in late August and full membership of the advisory panel was announced only two weeks ago. I want to start by asking you to tell us a little more about the review and the competition task force.
Thanks, Julie. Thanks very much for having me here today. I might start off by acknowledging the traditional custodians of the land that we’re on today and pay my respects to the relatives. I do want to acknowledge that the Competition Taskforce has been around for a few months.
It is a new beast and I will move to a set of slides which I think will give you a bit of a picture of how we’re operating, what we’re doing and what we’ve coming up coming up in the next couple of years. The task force was announced on the 23rd of August by the government, the Treasurer, and the Assistant Minister for Competition, Andrew Leigh.
The focus of the announcement was that we would address new and emerging issues, including some that are not addressed through existing laws. The review is intended to focus on productivity and improving productivity and also dealing with cost of living concerns. The 1993 Human Review illustrates opportunities that are offered by conducting a review. That process was estimated to have boosted Australia’s by two and a half per cent, which is worth around 50 billion or $5,000 per household today.
That was also an annual increase. When we started out, we were told by the Assistant Minister for Competition, our job would be easy; we just had to replicate what the reform processes had already done. It’s always great to start with ambitious aspirations. The taskforce itself is set up within Treasury. We have around 20 ISO, that’s sort of government speak for full time equivalent positions, around 30 people, but we are a bit unusual.
We’re located in five different locations around the country, including in two cities in which Treasury doesn’t have an office, Adelaide and Brisbane. So we’re also located in Melbourne, Canberra and Sydney. The review is intended to harness a range of expertise from within Government and also from outside government on the review team. We’ve got people from the Productivity Commission, people from the Department of Finance, Treasury, and from the Reserve Bank.
We’ve got some of the best data and analysts in the Commonwealth public sector. We’ve got some fantastic lawyers, we’ve got some really experienced economists, including the former chief account to former chief economist from the Department of Prime Minister and Cabinet. So it’s a it’s a great team with a lot of expertise relevant not just to competition law, but also all the questions that might come up in terms of how you might use competition as a tool for boosting productivity.
We are focusing on a few particular issues and our process is going to be one of providing advice on an ongoing basis to government. it’s not your traditional review of the competition law where we get a number of people together to produce a long report which might be submitted to government after a year or a year and a half. That report goes and sits on various ministers’ desks, who perhaps respond to it a year later. Our role is to be much more dynamic and involved in providing the government on an ongoing basis.
I’ll give you some examples of how that’s actually working out in practice and why I personally think it’s a much better model for getting things done and for shifting the dial towards competition as we formulate government policy.
I should say that one of the there’s a few things that we’re going to do as we feel few ways of working that are a bit unusual. We’re going to put a big emphasis on data and gathering evidence and evidence based policy making. We’re also going to do a lot of targeted consultation on various issues and we’re going to tap into expertise wherever we can find it.
So it will be a matter of engaging with academics, with industry experts, and we’ve already done that in some of the areas that we’re engaged in. Some people will say, “Well, hasn’t the Harper review fixed up all the things that the Hilmer review didn’t quite finish off? What actually is there for you to do?” Well, there are quite a few things that that Harper didn’t quite finish and Harper was actually really more focused on competition law than on the broader economy.
Our focus is very much across the broader economy, although we are looking at the law as well. Harper There are a number of things that Harper didn’t quite, or at least the process of. Harper, and I’m not being critical of Harper at all, but the process of Harper didn’t and lead to conclusions on include things like the broader recommendation that made about simplification of the law, new institutional structures that might take the process of competition reform forward in a sort of medium and long term with a medium and long term vision.
They did propose some ideas, but those ideas weren’t taken up. There were also rules about things like pharmacy ownership and location, parallel imports, air cabotaje ideas that are still around. I can tell you are being put to us in various contexts. You may have read press releases, the expert advisory panel is a fantastic resource for us.
It’s an amazing collection of people led by the chair, Kerry Schott, also consisting of two previous agency heads: Rod Sims and Sean Fingleton. John was head of the Irish and the UK competition agencies. Professor John Aska from UCLA. Danny Wood, the incoming chair of the Productivity Commission. Sharon Henrick, a longstanding practitioner for expertise. Also a successful small number of business people, and of course David Gonski.
David and Kerry bring lots of board experience. David actually started off as an M&A lawyer at Freehills, so there’s just amazing expertise within that panel, and we’re using them as a sounding board, as a group of advisors to run ideas, both by specific ideas and at a higher level as well.
Just a couple of words on why it’s important to be focusing on competition issues at this time.
We’ve seen over the last decade declining productivity and competition in Australia. Productivity Commissions done some work on this, but by some estimates we’ve got the lowest productivity in Australia in the last 60 years. We’ve seen living standards falling and there are many commentators who are saying that reduced competition has contributed to the decline. There is evidence of increased market concentration reduction in dynamism across many parts of the economy.
So Treasury’s done some research relying upon data from the Australian Bureau of Statistics and I should say they’ve been most helpful to us. We’re drawing heavily on the data. They applied data for our analysis, but these graphs show the first one shows average market share of the top four firms in each industry sectors are getting as a rule, are getting more concentrated in Australia.
What we’re seeing is that markups are also increasing now markups can be can be good. If you’ve got markups are increasing because people are actually winning competition by producing innovative services or products, that’s fantastic. But if they’re using strategies to create barriers to competition, then they’re going to be a problem, so less competition reduced, investment and innovation.
It all needs to be addressed. When you when you think about that, the leading firms on the ASX today and leading firms on the A6 20 or 30 years ago, it’s a very stable group of firms. If you do a similar comparison with many other advanced economies and firms in those economies, when you do that comparison are often extremely different.
I think that statistic tells you something about the dynamism within our economy: we’re not alone in Australia in thinking that something needs to be done about competition. So there’s quite a lot going on internationally. I was talking to our organizer Alyssa earlier about this. Many of the advanced jurisdictions around the world are doing some form of review or engagement with competition issues, including the United States, the United Kingdom, the European Union, Canada.
I won’t go through them all, but there’s a lot going on internationally in in the region. We’ve got Japan and South Korea focusing on digital markets. But there’s much more going on than just in digital markets. The OECD has highlighted many of the issues that are of interest to agencies and policymakers around the world. They include the importance of improving competition, public procurement, the difficult issue of serial acquisitions.
But what we often think of in Australia as creeping acquisitions and industry roll ups, the fixed issue of intellectual property rights and competition, how you design competition institutions effectively. So that’s very much within our mandate to look at that issue and I should say the other thing that comes out of the OECD is their recently published Economic Survey of Australia in which found that some indicators of competitive intensity and product markets have weakened, unlike in most obesity countries pre-merger notification is not required.
A competition policy review has commenced, they note, and they recommend that consider that we should consider requiring companies to give pre-merger notification to the competition authority for transactions above a defined threshold. So what will we be looking at in the review, we’ve got five current priority areas where most of our resources are going, although I should say almost on a daily basis, we’re getting people raise with us that they think ought to be the subject of our attention.
And we’re looking carefully at all the things that are being raised with us, and if there are issues that we think are likely to help under those headings of productivity or cost of living, then we will be going to government and suggesting that we might have a mandate in those areas. But the five issues that we’re focusing on at the moment are mergers and competition laws generally coordinated national reform discussions that we’ve been having with the states about what might be done on a national basis to improve competition.
Many of the problems in our economy are not just competition issues that the Commonwealth can fix. The issues that need to be dealt with in a whole of government way by all governments. We are looking at labor market issues, so this is a bit unusual. There was some consideration of these issues previously by Harper, but that and I’ll go into some more detail on it later, but non competes are very much an issue in a number of jurisdictions around the world.
Non-compete in employment contracts. The question is whether they stifle labor mobility. In addition, the question of wage fixing and no poach agreements. How what impact do they have on labor markets? So the questions that we’re asking, we’re doing research trying to get to the bottom of the issues. There’s a range of different policy options that are being proposed in jurisdictions overseas.
In Canada, they’ve recently banned no poach agreements and wage fixing agreements. So we’re looking at what’s going on internationally and we’re trying to figure out whether there’s a problem here that needs also to be fixed. The changing economy is very much a focus of what we’re doing. We’re looking issues raised by new technologies, the net zero transition and growth in the care economy.
There’s a lot of reviews going on with within government, around care economy issues. And we’re inserting ourselves into some of those reviews. Aviation is an interesting area. It’s been in the news in Australia in recent times, particularly from the perspective of competition or perhaps lack of competition, and that’s particularly on the domestic aviation side. We’ve been asked to become involved in that issue.
We’re preparing some advice government on that and I’ll go into some more detail on that in a moment. We’re very much about evidence based policy. That’s why we’ve got the data analytic team. But part of our mission is also to build capability to conduct competition policy, reform processes more effectively into the future. So we’re building data sets, we’re building analytical capacity, and we hope to build institutional strength that will enable a better evaluation going forward from a policy perspective of what changes might ultimately be made.
We have a group within the task force, as I mentioned, which is focused on building skills, human capital and building evidence base for policy. They’re getting fantastic cooperation from the Bureau of Statistics from agencies within government, like Bitar, which is the specialist transport economics area within the Department of Infrastructure. And they’re also using private data companies to inform or help create datasets that will help inform policy advice.
We are looking very much at merger reform. It’s very it’s a very important focus of what we’re doing. There are a lot of concerns that have been raised, particularly by the I will say, about the current merger control regime and that they say is it’s a system skewed towards clearance. They’re concerned that the voluntary system of merger notification and assessment is not effective as it needs to be.
They’re concerned that it doesn’t adequately address issues such as creeping acquisitions, which has historically been an issue in sectors such as, for example, the supermarket sector. They’ve proposed major changes. We’re looking carefully at suggestions. We’re looking at a range of other options as well. We’re going to be doing a public consultation on merger reform, detailed public consultation, I should say.
We’re also gathering a lot of data and doing a lot of data analytics work. I my background has as a as a person I will say has really been on competition enforcement rather than mergers, merger control and a bit of merger control in my time. But I’ve been quite amazed at the lack of data there is in Australia about mergers and the impact of mergers.
It just isn’t really there. There’s not much data about the effectiveness of mergers in a commercial sense. There’s not much data about what the impact is more generally, you know, to what extent we know that market concentration is increasing. But is that caused by mergers? It’s very hard to tell from the data. What we do know and this has been a fascinating insight for me, we do know, is that there’s data collected in jurisdictions overseas, particularly in the United States, that raises questions about the efficacy of many mergers.
So it’s it seems that most mergers quarter this US data, most mergers aren’t commercially successful. They may be very successful for CEOs and senior people in firms, but they don’t benefit shareholders. That was something that was a complete revelation to me perhaps been living under a rock, but I had no idea that that was what the data said.
In a way, it illustrates what our process is about. It’s about going and looking available evidence and research, trying to analyze that and bring it to our process of giving to government. I’m going to quickly go through I’ve got some slides that talk about the current merger system. I won’t go through that in detail. I will focus on this slide very briefly.
We’ve been formulating some questions that we’d like to get the answer to in the course of our work. Is there some improvement that can be made in relation to merger timing? So this is an issue that we’ve been told is a problem for practitioners at the moment. Private equity firms, when they come to Australia, want to know how long the process is going to take.
I am often told by the relevant lawyers we were told that it’s very hard to predict and can we improve on that? Can we improve clarity on when to notify merger experience? Practitioners have a sense of when you should go into the trouble, say, but there isn’t. Perhaps the level of clarity that exists in other jurisdictions.
Can merger and foreign investment assessments be streamlined? I do. We really need two agencies looking at the question of competition in relation to the one transaction. Maybe we do. Maybe there are great reasons for doing that, but these questions need to be asked. Should transparency in review processes be informed? Some of the criticisms I’ve heard going around the traps is that people sometimes don’t quite understand why particular decisions are made, even though the actual sale is done quite a bit of work to improve that in recent years.
Should we have a merger clearance product process or is it best to stick with the current, what I’ll call enforcement model with all its I mean, everyone’s familiar with the enforcement model, which is that’s a big advantage in some ways. The fact that people are familiar with it. But there’s a lot of negatives that you could describe in relation to enforcement models.
Well, I’d go through this thought in a lot of detail that will be available afterwards, but they do ventilate some of the questions around when mergers should be notified. We’re looking carefully at what the model should be going forward. As I as I mentioned, the federal court or enforcement model is the one we’re familiar with. And there are certainly advantage and advantages in sticking to what we know.
But the truth is 34 OECD countries out of 37 have mandatory dispensary merger clearance regimes. They might be a great reason for us not to. But the question we are asking is, you know, what is that reason? If and what advice should we give to government about the best system that Australia can have going forward? The process of what tests should there be is a very important question.
Should it be should we be focusing more on the structural elements? Should substantial market power be included in the assessment? Should related agreements? So the agreements don’t strictly relate to the merger? Should they be part of the assessment? So lots to think about. We’re hoping to issue a detailed consultation paper that will go into these questions shortly and start some consultation sessions in the next fortnight or so.
And we’re really working towards making some recommendations to Government about firstly, whether there needs to be a change to our current system and secondly, if there needs to be a change, what the change should look like. Ultimately it will be a matter for Cabinet as to whether there is any change and as to whether our advice, whatever that advice is, is accepted.
Couple of the other issues we’re looking at and I’ll just deal with these very quickly, given the time non-compete clauses, I’ve already mentioned the that there is quite a bit of international research that shows that they are a barrier to labor mobility. Interestingly, that research says even a barrier to labor mobility in jurisdictions where it’s illegal to enforce them.
So that was something that really surprised me. One of the ways we’re working, which I think I’ve really enjoyed, is we’re being a bit innovative about how we find out things. So we put on a sort of invitation only webinar, international webinar a few weeks ago on Non Competes, and we had people from the Federal Trade Commission, some academics, people from the OECD speaking in this webinar, and it really helped to ventilate what’s going on and get clear in our minds what some of the issues are in relation to non-compete and, and restraints have tried.
The agency hasn’t really been able to focus on these issues because there are very clear exemptions in the Competition and Consumer Act. The Canadians have a similar exemption, which meant that they couldn’t focus on wage fixing or no poach agreements. I’m not exemption is one that they say takes the view probably also stops the agency going into that territory as.
Well so is that justified? Is that the right way to set policy in this area? The questions we’re asking, we are looking very actively at aviation. As I mentioned, there’s a green paper, white paper process. Green paper said that we were going to be charged with giving competition advice to government that could be fed into the white paper process.
We’ve been doing a lot of research and data analytics, as I mentioned, using Petra and IBIS data and some private data. We’ve got a lot of engagement with industry stakeholders. Mostly those stakeholders have divergent views. You won’t be surprised by that. We’ve attended the various Green paper that the Department of Infrastructure have organized, and we’re in the process of formulating advice to government.
We’re consulting the expert advisory panel, I should say, with the exception of David Gonski, who’s chair of Sydney Airport and has a conflict of interest in relation to this issue, but the rest of the expert panel have been very good in giving us some great advice and we’re feeding the package of advice into the white paper process.
So we’ll see what comes out at the end of that process. We are also on the changing economy, as I mentioned upfront, the care economy data and digital transition to net zero. But I’ve run out of time so I won’t go into them in a lot of detail. And I think it’s now time for Julie to ask me some questions.
Thanks, Marcus, for that comprehensive presentation. Before I pick up on some of the specific issues you’ve touched on, I do want to plot a little more on the nature of the task force itself. Previous substantial competition reviews that you mentioned have all involved independent panels, consulting and producing a single comprehensive report that the Government’s then responded to, and you’ve explained a bit about some of the challenges with that or potential problems with that being that the time lag associated with the various steps in that process and perhaps why that hasn’t been the approach adopted this time. But I guess I’m interested in knowing a little more about why that was thought not to be appropriate this time around.
Also, one concern with the approach that has been adopted, is that of transparency. Often when Treasury has consultations, submissions and recommendations are not always published and so will in the course of the next the two-year review period submissions, advice, recommendations, particularly those that flow from the formal consultations you mention be made public.
Absolutely. As I mentioned, we’re about to engage a very detailed consultation process in relation to mergers that will be a very transparent process and people will say sort of what we’re thinking from what we publish and be asked to provide input into that work.
I started my career in the Commonwealth as an administrative lawyer, so I believe process actually should drive you to the right result. And that’s very much, I think the way the taskforce is operating. We’re gathering evidence, we’re engaging with people, and by doing so, we’re going to be making our thinking transparent, letting people comment on it. That’ll be very much the way we operate and then we’ll come up with some advice that will go to government and government will be free to accept it or not, but the process from my perspective, is a very important thing to focus on, and transparency is very critical part of that process.
Presumably, your advice isn’t something you would publish open to the public.
Traditionally, advice to Cabinet is kept confidential for a number of years, unless the government chooses to release it, and yes, it will be following those ordinary processes. However, I imagine eventually it’ll come out, though initially so that for all sorts of good reasons, so that the government knows that it’s getting frank advice and getting it in a way that isn’t going to be influenced by what the potential reaction might be at the time the process is going on. What’s a good reasons for giving advice confidentially?
Okay, I’m come back to that a little bit later, but I do want to turn to mergers first. You highlighted some of the questions that are going to be asked around merger reform. I think we’re all pretty familiar with those. We will hopefully see them within the next two weeks. Hopefully that also part is isn’t too long in relation to mergers. It’s widely believed that the agencies push for a mandatory notification regime is going to be adopted by the government. One concern that has been raised is that assuming it is the mooted notification thresholds potentially quite low, and there’s a risk of over capture. Is a preliminary view that a catch all catch everything threshold relying more on notification waivers to reduce administrative burden rather than going the other way and relying more on call-in powers is the government’s preferred approach at this point?
The government has no preferred approach, and I think the assumption that everyone has that the government will legislate in this area is not one that is a fair one to make. It’s certainly an option. It’s an option that’s being pushed strongly by the I would say. But there are other options. We’re looking at a range of options. And I can tell you that the government hasn’t got a position on this. I know that the government hasn’t got a position on this.
If it does decide to go down a mandatory suspect three regime, there’ll be a whole lot of details that’ll need to be worked out, including notification thresholds should there be a call in power, What exactly who should be the decision makers, what the process should be, or what legal changes should be made to to align the what happens in the federal court with what happens in the tribunal?
Lots of questions would need to be resolved, but we’re a long way from that point. We’ve got to figure out what the broad shape of the policy direction should be first, and that hasn’t been done yet. We very much got this process that will determine what the what the direction is.
Okay, Thanks. I think we would prefer that things not be predetermined.
And I can tell you there’s a lot of different views within the taskforce about the extent to which changes needed some. There are some powerful advocates for change. There are other people who are more skeptical. So, you know, I’m being quite open here in saying that there will be a debate that will go on within the taskforce, within the expert advisory panel, and I don’t know where it will come out. I’ve probably got my preference as to where I’d like it to go, but that’s different to saying where the process will take it.
Perhaps turning to substance and again, that’s possibly one that there’s an open view on at this point. But you’ve talked about a structural element potentially being included that might perhaps trigger reverse onus. You mentioned power as a possible trigger, recent US draft guidelines propose concentration of market share based presumptions about competitive effects. We know other jurisdictions have ruled out any sort of triggers that might reverse onus, and we know that the agency has been calling for a broader reversal of owners. Are there preliminary views yet on what a preferred might be?
No, we’re looking at the options. I know that the agency take issue when people describe what they’re asking for as a fiscal bonus, Gina has said that what she’s looking for is a merger clearance process, which is not reversal bonus. I think, strictly speaking, that’s correct. All the great issues, they’re issues that will come up in the context of the consultation and will come to a landing once we’ve heard a range of views from stakeholders and will then give the advice to government, but it’s a complex area, it’s a very technical area and it’s an area where a lot of the detail matters in terms of how you implement things. We’re very conscious of all of that. Having been involved in various legislative changes in the past, I’ve seen what a difference of tweak of wording can make in the way things actually play out.
So we’re very conscious of the fact that detail needs to be worked through very carefully.
I guess on point, you’ve mentioned that a lack of data and including data on merger retrospectives, at least until recently, is potentially problematic. Can you think of instances when you were the ACCC of problematic mergers that may not have been challenged because there aren’t any sort of structural presumptions or the onus is too difficult on the ACCC that might suggest we need some change, even if we don’t know the nature of it.
I know that there’s a strong feeling within the ACCC, I will say that there are mergers that they just don’t have the time to really get to the bottom of because of the current system and the information that they get. When they’re told about it, if they’re told about the merger. I know that it’s I know from personal experience that it’s very hard to get the sort of evidence that you would need to take to the federal court when you’re doing an urgent merger assessment process, and so it’s difficult to answer that question because, in a sense, we’re dealing with a whole lot of unknowns. Although, I do know that there are mergers that people at the ACCC, including former chairs, would highlight as being highly problematic mergers. I think of the Pacific National Orion merger as one example that Rod Sims mentions a lot.
Thanks for that. I want to turn to perhaps my final question for the moment on mergers, and that’s in relation to a public benefit test. Again, the agency has proposed a bit of a change whereby if there was a sort of clearance process now only be able to look at public benefit once it’s to declare a merger, perhaps regardless of the form that takes. We’ve seen recent evidence in the Origin Energy authorization or a willingness of the ACCC to look at environmental benefits in that case, particularly those advancing renewable energy trends transition as a relevant public benefit. This is something that you noted that the taskforce will look at, noted how good competition policy can help to advance environmental objectives. I wonder whether there’s a tension then between promoting competition in this space and environmental concerns, and has there been a role of the public benefit test both in mergers and elsewhere in advancing environmental and other public interest concerns?
The Origin case is a very good example of how the process can play out under the current rules and how environmental can be can be given a lot of weight. In fact, so much weight that they enabled the deal to be cleared.
The public interest is also considered in the context of foreign investment, at the moment. It’s not new to be thinking about these questions either in a competition process, merger authorization process, or foreign investment process. I think the question that we’ve been charged with looking at is whether there can be improvements made to streamline the current processes and to really improve the way in which public interest considerations can be examined, in which evidence can be collected in an efficient way, and in which proper transparency and review rights can be given to parties.
They’re all questions we’re looking at. What I’d love to see in in in a few years is a system that is regarded as efficient and effective in securing the public interest and also in securing competition, whether you’re looking at things through a competition lens, a broader foreign investment, national security, environmental, whatever the heading category of the issues might be. Transit transactions that are sensitive need a efficient process to be analyzed and assessed. And what we are hoping to do is advise government on how that can be achieved.
Could that potentially involve guidance around the public interest, for example? I mean, one of the concerns raised here in terms of predictability obviously, is, well, maybe we want to favor environmental benefits, but how do we wipe them against efficiency in context of competition laws then?
That’s a method that’s being used in other jurisdictions. It may well be a way that helps here. We’d love to hear people’s views on how it’s working in other jurisdictions. I know sometimes guidance can be as unhelpful as it is helpful, so it’s just depends on how detailed it is and on how closely agencies are prepared to stick to the guidance that they give.
To shift slightly just to get a better sense of the scope of things that you’re looking at. You touched briefly towards the end on the sort of the data area you’ll be looking at. I’m thinking of AI and digital markets more generally. Are there specific digital markets that you think need to be prioritized or if there plan prioritization in the review? I’m thinking perhaps most notably of app distribution, Google, Apple duopoly.
I should say that the part of Treasury that’s looking at a response to the ACCC’s digital platforms inquiry was looking at that before we were set up, and they’re continuing to look at that. We expect that there’ll be a government response to the ACCC inquiry at some point, and the government response may well involve referral of some issues to other parts of government, and that may involve getting us involved, but at this stage we’re really focusing on the other areas I’ve been talking about. In a broader sense in the digital economy, there are some specific references that we’ve had that perhaps fit more under the heading of engagement with the states, which where we’ve got ongoing conversations about and I’m not really able to discuss them in any detail, but a point was made to us in one of our consultations recently that it’s very hard to figure out what part of the economy is not the digital economy these days, and that’s very much the perspective that we’re bringing to these things. Digital technologies have the potential to significantly enhance the way competition operates within many markets, and we’ve got that in mind. Our mandate is to be a catalyst for competition, understanding that digital technologies can be used to assist in the delivery of competition and competitive markets right.
I think perhaps you’ve answered my next question here, which is really in relation to AI. Obviously, it’s a new, emerging, very broad area of interest competition, privacy, other areas, the age ACCC received governments direction previously and has intervened. When I was perceived to be causing harm to media companies will the task force have a role in considering perhaps compensation for media companies, for use of content in training large language models, or other areas relating to artificial intelligence?
No. Unless the government changes its direction on these things and decides it wants us to be involved, those issues are being dealt with by another part of Treasury and other parts of government actually looking closely at AI policy.
To the extent though, that you may perceive, just in terms of the working of the task force, is there a role for you to see what’s happening somewhere else and say, “Look, what you’re recommending, what you’re doing is going to harm competition, you shouldn’t do it, and you ought to be directed in that way.”
I think that’s part of a broad aspect of our brief to have the radar going continually and engage with various parts of government that might be doing things that might have an impact on competition, but within Treasury, there are people with expertise in these issues who are looking very closely at them and are engaging with industry science resources on policy in this area, so we’re not going to duplicate things that are being dealt with by all the other areas unless they say to us, look, we think there’s a competition dimension here that we’d like you to give some advice on or have some input on. I haven’t done that. If they do, we’ll get involved. But at this stage, we’re not involved.
I’m going to shift now from digital economy to the non-compete and non-compete clauses you spoke about a bit. It has been an issue that’s been mentioned repeatedly by Minister Lee together with no-poach deals by employers historically, and you mentioned this, the agency has looked at this has been a carve out since the inception of the act. So it’s dealt with by the common law or separate employment laws. Do you have a view at this stage whether non-compete clauses should now be considered under the ACCC under the act as we’ve seen in Canada? Is that where the move is or is it something parallel?
There might be a difference non-compete clauses and no-poach agreements. It might be appropriate to have arrangements between employers not to poach each other’s employees dealt with by the Competition Consumer Act, but non-compete provisions, which are really part of employment contracts, are dealt with by the other parts of the law, which deal with employment law.
I don’t know. That’s just a very initial preliminary perspective that I have, and it may not be shared by other members of the taskforce.
What actually has surprised me since coming into the role is I’m remembering I’ve come from the article, say, where we just didn’t look at those things. I’ve actually been really surprised at the research which indicates how many businesses use non-compete clauses.
In fact, I’ve done sort of a little informal, completely inaccurate, inappropriate survey of my family members. I’ve got a son and a nephew who are both electricians, another nephew who’s a builder, another and his girlfriend who’s in a technology role. They’re all subject to non-compete clauses;, all of them. That really surprised me; firstly, that they all knew that they were subject to non-compete clauses, and secondly, the fact that it was surprising.
It’s consistent with research which indicates that around 20% of employees in Australia are subject to them and in some sectors it’s closer to 60% it’s some.
What’s the impact of that? I don’t know. We haven’t done enough. We need to find out more to really understand what the impact is. There’s some academic research said that speculates that the development of Silicon Valley in California is a result of the fact that a non-compete clauses haven’t been enforceable in California since the 19th century, and so people were able to pop from firm to firm to firm to firm, and that led the creation of digital payments that exist today in in California.
Around that time, there were there was considerable I.T. talent in Massachusetts, which has enforceable non-compete clauses, and the speculation or the academic prognostication is that the difference in the legal framework led to was a factor. I don’t know that anyone puts it much higher than being a factor, but it was a factor in enabling the promotion of the tech sector in California.
There’s more and more research about these issues. We’re trying to tap into it. We’re also trying to generate some data analytics ourselves in Australia using the ABS data, but also using some surveys that the ABS are doing. We’ll be driven by what the data tells us about how big the problem is or firstly whether it’s a problem, how big it is, and then whether it needs to be addressed.
If it does need to be addressed. There are a lot of models around the world that we might be able to draw upon, ranging from the UK where they’re proposing a ban on non-compete for longer than three. The US, which is proposing a total ban. The FTC using its rulemaking powers, proposing a total ban. There’s a range of options that could be considered.
First of all, we’ve got to figure out where there’s a problem and what size the problem is. And government on that. In a way, it’s a good illustration of our process and where we’re going and how we work. I can honestly say that this was an issue that I really had very little visibility of when I was at the ACCC, and no certainly no view about nothing.
Fascinating. As someone who teaches restraints of trade and common law, particularly for the U.S.
I think one final question. I’m conscious we’re pretty much out of time, but you mentioned that part of the remit will include the design of competition institutions. You noted that the Harper committee had recommended some institutional changes that weren’t implemented.
One of those was the introduction of a Council for Competition policy. The way you’ve described the taskforce, it’s similar in some respects to what was proposed for the design of the ACCC, that was independent of the agency. It was designed to be independent from government as well that would provide rolling, ongoing input on a range of policy issues as they arose. The taskforce, for now, is on the standards set up for a two-year review. It’s not clear to me how long the task force itself is set for. Is it anticipated that it or something in a similar form will continue after this two-year period?
We’ve got a mandate to look at and make recommendations to government about what institutions should be that give effect to the need for there to be continuing review of policy from a competition perspective, and to enable data analytics to be done, to enable evidence to be collected, to inform that review process, perhaps to conduct reviews in particular markets from time to time.
In a way, it sounds a bit like what Harper was proposing might be what the government had in mind. The problem with what Harper had in mind was that that body would have had exclusive power to conduct market studies. I think the ACCC has demonstrated that market studies are a tremendous tool for understanding what’s going on in markets and making recommendations to the government.
I think the Productivity Commission also does similar work in a similar way, and that’s also very valuable. You wouldn’t want to just have a single body using those powers in a way that perhaps wasn’t or didn’t appreciate the what ACCC and the Productivity Commission bring to these processes and didn’t bring the value that they are clearly able to bring to these processes.
We’ve really got no predetermined view about what the process should be coming after us. It’s very much an open question. We’re looking at what Harper said. We’re looking at models around the world. We’re very keen for anyone who’s got ideas, including academics that might be present herem to give us suggestions. This very much a project for next year.
We’re focusing on the other things I mentioned, but there is, I think, an opportunity here to make a recommendation to government has the potential to create something that could be very beneficial going forward.
Sounds great. Thanks, Marcus.
Unfortunately, we have reached time, so I want to thank those of you here in person and streaming online for joining us this morning.
On behalf of Competition Policy International and the Melbourne Law School one a sincerely thank you, Marcus, for taking time away from what I know is your extremely busy schedule to be here. As you mentioned, competition policy is certainly having its moment globally and the work of the Competition Taskforce here in Australia is of great interest to all of us.
Thank you Julie, and thank you very much. The Competition Policy International for Melbourne University for giving us the opportunity to showcase our work.