Technology is progressing at an ever increasing speed and a recent report to come out of the ‘root and branch’ Competition Policy Review, or the ‘Harper Review’ has highlighted how the laws in Australia are not keeping pace with technological change.
The ‘root and branch’ Review is the biggest review of Australian Competition Law and Policy in several decades. The final report is due in early 2015, however a preliminary report has highlighted the issue of how our current competition laws are not keeping pace with the new apps and services that are entering the marketplace. Australian’s are passionate about technology and often one of the first markets to see a lot of these services after they launch in their home country.
However the Review has found that Australia isn’t as ready for technological change as we like to think and the uptake of new apps and services occurs far quicker than the laws are put in place to properly regulate them, which leads to disrupted market and a grey area as to the legality of these new apps and services.
Take for instance the high profile app Uber, which essentially operates as a private taxi service, with driver’s operating their own vehicle as a taxi on a private driver’s licence. There has been a lot of noise made in the media by taxi lobbies about how disadvantageous this is to them as traditional taxi drivers must have a special licence and face a lot of regulations. There have been attempts by the various State Government’s to put a halt to the rollout of Uber. Currently it is operating in several States, with each State taking a different view as to its legality.
The review highlighted the Uber case as a prime example of the need for change in Australia’s competition laws, stating “reform of taxi regulation in most jurisdictions is long overdue.”
From the ‘root and branch’ Competition Policy Review:
“Australians eagerly embrace new ideas when they offer us something of value, and this includes innovations from new players entering markets like never before.
Our existing laws and institutions often struggle to keep pace. Sometimes this is the inevitable consequence of an unanticipated shock, but it can also be because existing laws and policies have rightly or wrongly instituted some form of preferment to incumbent market participants.
New entry is a positive discipline on existing market players, encouraging them to be more innovative and responsive to consumer needs. By contrast, locking in long-term preferment risks Australia falling behind other countries, as potential new approaches and innovations pass us by.
Our competition policy, laws and institutions need to be sufficiently adaptable to allow new entry to make innovative and potentially lower-cost products and services available to Australian consumers. Uber ridesharing services…is an example of a new player introducing new technology and a novel concept that challenges existing regulatory frameworks.
A competition policy that is fit for purpose must strike a balance between the long-term benefits to consumers of allowing new entrants to establish themselves in a market and protecting the public interest against dishonest or dangerous practices.”
A solution to this problem though will not occur quickly due to the structure of Australia’s legal system and the clear division between State and Federal Governments. Taxi regulation for instance is clearly a State issue, however the overarching corporate and competition laws are a Federal issue. This is an issue that the final report of the Review will address.