Competition and efficiency effects in Europe, North America and Australia

The prohibition of misuse of market power in Australia is undergoing a major change as the federal government proposes amendments to s 46 of the Competition and Consumer Act to implement the ‘effects test’ proposed by the Harper Review. The Harper Review drew upon experience of ‘effects tests’ in Europe and North America in proposing Australia’s new law, which extends the present ‘purpose test’ to proscribe conduct having the purpose, effect or likely effect of substantially lessening competition. The Harper proposal requires that in assessing ‘competition effects’ the courts must consider ‘efficiency effects’ (though this requirement has subsequently been rejected by Parliament). It has generally been thought that public interest considerations such as ‘efficiency’ are not appropriate for judicial determination, but should be the province of the Competition Tribunal. This article examines the differing approaches in Europe, North America and Australia to assessing ‘competition effects’ and the differing extent to which ‘efficiency effects’ may be taken into account and balanced against any anti-competitive effect. It is argued that there is no uniformity in approaches internationally, and while the Harper Review’s focus on efficiency should be welcomed, the proposed new Australian law will raise issues for courts concerning ‘efficiency effects’ which are regarded overseas as controversial. This article analyses those issues and anticipates developments in our law and institutional arrangements which may become necessary to more effectually implement the new law.