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Stronger principles bases competition agreements could benefit Australia



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“ : „ y media release Embargoed until 1.00am Thursday 5th September 1996 STRONGER PRINCIPLES BASED COMPETITION AGREEMENTS _ COULD BENEFIT AUSTRALIA

Stronger principles based competition agreements could avoid the use of anti-competitive industry and trade policies within Australia and could also reduce the adverse effects on the domestic economy of anli-compctitive policies maintained by our trading partners, according to a report released today by the Productivity Commission.*

The report, International Cooperation on Competition Policy: An Australian Perspective, critically examines the growing interest in international cooperation on laws restraining anti-competitive firm behaviour.

The report finds that there are few international rules restraining anti-competitive behaviour by private firms whereas restrictions on anti-competitive actions by governments already exist in trade agreements administered by the W orld Trade Organisation. This, combined with significant differences in competition laws and the strength o f their enforcement between countries, has led to competition related disputes between countries.

Strengthened international cooperation on competition policy could reduce the scope for competition related disputes. However, such cooperation is unlikely to succeed between countries which disagree about the relative importance o f the various goals assigned to competition policy and while uncertainty about the likely net impact of competition law remains.

The report argues that the harmonisation of competition rules or the use of an international competition enforcement agency should not occur at a global level until there is a broad consensus on the issues involved. This, if it ever occurs, will be the result of a long period o f research, debate, and experience at the bilateral and regional level.

In the short term, Australia’s existing principles based competition agreements with the United States and New Zealand could be updated and new agreements established with other major trading partners. According to the report, around half o f Australian exports are sold in economies that have less stringent competition enforcement than that

faced by firms in the Australian market. Moreover, these trading partners often restrict competition by imposing trade barriers and restraints on foreign investment. Recent analysis indicates that a greater commitment to competition principles by APEC economics through the removal o f tariffs and subsidies, effective competition law,

liberalisation o f government procurement, implementation o f trade facilitation measures and deregulation could raise Australian real income by over 6 per cent in the long term.

Media copies o f this publication arc available from Clair Angel (06) 240 3239. Other interested parties can obtain copies o f the report from Commonwealth Government bookshops.

C A N B E R R A C ontact: G reg M urtough D r D on G unasekera

(06) 276 1196 (06) 276 2340

"Forming Ihc Productivity Commission

Hie Commonwealth Government, as part of ils broader microeconomic refonn agenda, is merging the Bureau of Industry Hconomics (B1E), the Economic Planning Advisory Commission (EPAC) and the Industry Commission (1C) to form the Productivity Commission. The three agencies arc now co-located in the Treasurer’s portfolio and amalgamation has begun on an administrative basis. While appropriate arrangements arc being finalised, the work program of each of the agencies will continue. The relevant legislation w ill be introduced soon. This report has been produced by officers of the former Bureau of Industry Economics