WORLD TRADE
ORGANIZATIONWT/WGTCP/W/98
21 September 1998
(98-3597)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM AUSTRALIA
The following communication, dated 27 July 1998, has been received from the Permanent
Mission of Australia with the request that it be circulated to Members.
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Replies to Questions put by Members
Following are the answers to questions put by Members of the WTO Working Group on the
Interaction between Trade and Competition Policy to the Delegation of Australia at the Meeting of
11-13 March 1998.
(a) Should anti-dumping measures be a legitimate area of concern for regulatory
authorities or competition authorities?
We understand that most countries which apply anti-dumping measures have allocated
responsibility for such measures to regulatory author ities rather than competition authorities.  This is
presumably at least in part a reflection of the fact that competition authorities have tended to focus on
the domestic market factors and (apart from New Zealand under the Australian New Zealand Closer
Economic Relations Trade Agreement) are not extra-territorial.  It is difficult to see how normalcompetition law and remedies could deal with the factors leading to injurious dumping from other
countries.  In Australia's case, responsibility for anti-dumping investigations rests with the Australian
Customs Service, but decisions on imposin g duties lie with the Customs Minister.
However, having commented that in Australia's experience responsibility for anti-dumping
measures should reside with regulatory authorities separate from the competition authority,
experience has highlighted that anti-dumping and competition matters can intersect.  Conceptually,
anti-dumping matters can be of concern to competition authorities.
For example, in Australia mergers are prohibited if they have the effect, or likely effect, of
substantially lessening competition in a market for goods or services.  The Australian Competition
and Consumer Commission (ACCC - Au stralia's competition authority) has adopted the approach that
it will not prevent a merger in a market where imports exceed 10% of the market over a sustained
period, on the basis that imports, or the threat of imports, will restrict the conduct of the merged
entity.
However, there have been cases where companies, after receiving no opposition from the
ACCC, have merged and then sought to have anti-dumping measures imposed.  This action has
effectively limited the positive effects of import competition on the relevant market/s in Australia and
reduced the restraint on the merged firm's conduct (albeit a restraint which necessitated that itcompete at a price level influenced by dumped product).   The ACCC does have the power to seekWT/WGTCP/W/98
Page 2
divestiture of assets after the fact, but a resolution of this kind can be a second best outcome and may
not in the end be deemed plausible.
This experience has highlighted the complexities of dealing with competition factors in a
market.  It does not, however, negate the fact that anti-dumping measures are an importantcomplement to policies dealing with price discrimination in the domestic sector.
(b) Could a competition body be seen as a regulator?
We understand that competition and economic regulatory functions have been entrusted to the
one agency in a number of countries.  In Australia, the competition body also has some regulatory
functions in some industry sectors.  Fo llowing is a summary of Australia's views.
Australia's general regulatory framework
Australia has a general competition law, the Trade Practices Act 1974 (TPA), that applies
across all industries and is administered by a single competition authority, the Australian Competitionand Consumer Commission (ACCC).  The Australian  Competition Tribunal is an appellate body able
to review certain adjudication and market access decisions made by the ACCC.
The ACCC and the National Competition Council (NCC) also perform several important
economic regulatory functions.  For example, the ACCC has various responsibilities in relation to theterms and conditions of access to certain essential monopoly or near monopoly infrastructure facilities
such as telecommunications, gas and electricity and in monitoring prices in industries where
competition is weak.  It also has a quality of service monitoring role in respect of airports.  These
responsibilities reflect a government view that  there are advantages in placing these economic
regulatory functions with the general competition agency.  In the case of the NCC, the mainregulatory function is in relation to establishing rights of access to the services of certain essential
monopoly or near monopoly infrastructure facilities.  Other significant aspects of economic
regulation, such as the granting of licences, are typically administered by industry-specific regulators
or by more general government regulators.  Technical regulatory issues that do not have a significant
competition element are typically administered by industry-specific regulators or may be subject to
goods and services standards set by Australia's principal standards organisation, Standards Australia.
Under the general or "economy wide" access regime for essential monopoly or near
monopoly infrastructure facilities established in Part IIIA of the TPA, the NCC advises the
Government as to rights of access and, where these are established, the ACCC acts as an "arbitrator of
last resort".  That is, the ACCC has the power to arbitrate access disputes and determine the final
terms of access (including price) if access seekers and owners of essential facilities fail to reach acommercially negotiated settlement.
More specific "economic regulatory" functions are performed by the ACCC under the access
regimes for telecommunications and for gas transmission pipelines (with the exception of those in the
State of Western Australia).  The gas role includes monitoring compliance with ring fencingobligations and approving access arrangements (covering services, reference tariffs, trading and
expansions) in accordance with an industry code.  In addition, from 1999 the ACCC will assume the
role of transmission regulator for the electricity i ndustry.  This will involve setting a revenue cap for
use of the services of electricity transmission networks.WT/WGTCP/W/98
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(c) Difficulties or problems that might be en countered during the process of transformation
from a narrow competition regime to a wider one
One of the main requirements for moving to a wider competition regime is obtaining support
for the key elements and principles which would support such a regime.  The principles underlyingAustralia's wider competition regime have been outlined in paragraphs 15 and 22 of
WT/WGTCP/W/60.
One of the key challenges in taking this path, in Australia's experience, is reaching agreement
on the boundaries of a wide competition regime and obtaining a commitment to ongoing support for
reform - at all levels of government.  One of the main issues for Australia was to design frameworks
and changes so that effective competition and competitive market structures could be introduced andencouraged across all sectors of the economy.  The outcomes of this task for other countries would
obviously be affected by the characteristics of each economy (including the stage of economic
development, political system and geographic circumstances).
Other challenges include deciding on a framework for competition regulation. The split
between competition, technical and economic regulation can be controversial and following are some
comments on Australia's circumstances:
Integrated vs separate administration of economic, technical and competition regulation
Technical regulation and some significant aspects of economic regulation are administered in
Australia by industry specific bodies or more general government regulators.  This recognises that the
national competition authority should focus on anti-competitive conduct and not become embroiled in
overly detailed or complex regulatory matters unless they have a clear connection with competition
issues in, for example, network industries.
However, the separation of regulatory duties between competition, technical and economic
regulators does entail the risk that competition regulators will not always have the same level of
technical knowledge that can be achieved by an integrated industry regulator. This has not been a
serious problem to date in Australia and the risks are less in industries where the ACCC has both an
economic regulatory role as well as its normal competition role. In addition, various mechanisms are
in place to improve coordination between regulators.
Addressing regulatory uncertainty
With the "division of labour" between various regulators, there is potential for some degree of
overlap of functions between the ACCC, which administers competition regulation across all sectorsof the economy, and those technical and economic regulators that operate within specific industries or
within certain States across a number of industries.  For this reason, a number of steps have been
taken to minimise uncertainty regarding the jurisdiction of particular regulators and avoid confusion
for consumers and the business community.
For example, the ACCC has frequent information exchanges with a variety of economic and
technical regulators through regular liaison meetings and the exchange of publications and other
information.  The ACCC also has a significant public and business education role. In addition,
chairpersons of various Commonwealth and State economic regulators (such as the Australian
Broadcasting Authority, the New South Wales Inde pendent Pricing and Regulatory Tribunal and the
Victorian Office of the Regulator General) are associate members of the ACCC; and certain members
of the ACCC are appointed as associate members of the Australian Communications Authority and
the Australian Broadcasting Authority.  This helps to bridge the "knowledge gap" that can arise when
competition, economic and technical regulators are separate bodies.WT/WGTCP/W/98
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Some of the arguments that arise in the context of integrated versus separate regulation
follow.  Arguments for integrated regulation include:
• Regulation has significant effects on competition, so efficiencies and synergies can be
realised when regulatory activity is linked with competition regulation.
• Integrated regulation provides a framework for a competition culture to pervade
regulatory decision making.
• General regulation is more suitable for industries undergoing convergence (e.g.
energy, communications, financial services).
• Regulation on its own can be anticompetitiv e or downplay competition at the expense
of other values.
• Encourages consistency of regulation requirements across the economy.
• Resource saving and economy.
• In theory at least, general regulators are less likely to be captured by industry, and
specific regulators can be susceptible to adopting industry-specific perspectives.
• Integrated regulation reduces the need for business to deal with a multitude of
regulators.
Arguments for separate regulation include:
• Avoids confusing the competition regulator's role.
• Competition regulator does not become distracted with industry specific/technical
regulatory details.
• Specific regulators may have better technical expertise and can more easily deal  with
detailed technical regulation.
• Ensures some diversity in regulation to meet requirements of specific sectors (if
appropriately coordinated, inconsistent regulations can be avoided).
• In terms of providing checks and balances for market activity, separate regulation
ensures that there is more than one perspective brought to bear on market issues.
Is there an institutional framework that co uld facilitate such a transformation?
Institutional frameworks will vary from country to country depending on the circumstances in
individual economies.  One important element of an effective institutional framework would be an
effective forum for governments at all levels to discuss and coordinate policy reform.  Other
important elements would include an effective legal system and transparency in the development of
policy, to counter pressures for policy to be captured by particular interests or manipulated by
bureaucracy.WT/WGTCP/W/98
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(d) What concrete measures have been taken in the context of the agreement
between Australia and New Zealand relating to the free movement of persons?
Essentially, there has been a free flow of  people between Australia and New Zealand
under various arrangements sin ce the 1920s, reflecting the histor ically close bilateral social
linkages.
• The 1973 Trans-Tasman Travel Arrangement has allowed Australian and New
Zealand citizens without criminal convictions to enter each other's country to visit,
live and work exempt from the need to apply for authority to enter the other country.
• The 1983 Australia New Zealand Closer Economic Relations Trade Agreement
which established CER formally recognised the role of the movement of people in
strengthening the long-standing and close bilateral relationship.
• The Trans-Tasman Mutual Recognition Arrangement (TTMRA), signed in 1996 and
brought into operation on 1 May 1998, facilitates the movement of service-providersbetween Australia and New Zealand.   With the exception of medical practitioners,
the TTMRA provides that a person registered to practice an occupation in onecountry may practice an equivalent occupation in the other country.
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