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ABSTRACT
This article examines how contestable market theory (contestability) has come to reconfigure the economic and regulatory concept of competition in order to enhance the compatibility of Australia’s economy with international trade and investment agreements. Australia has recently negotiated and signed a raft of bilateral, plurilateral and regional agreements, including the Trans-Pacific Partnership Agreement and the Australia–China Free Trade Agreement. In order to ensure that Australia meets its obligations and commitments to these agreements, two key advisory bodies—the Harper Panel on Competition Policy Review and the Financial System Inquiry—made recommendations, the majority of which were accepted by the government, to ready Australia’s competition governance and economic policy for greater global integration. Such impact is dependent on, among other things, how domestic competition policy meshes with the free market ideology underpinning such international agreements, which favours the breakdown of barriers to markets. Less well known is the role of contestability in radicalising ideology as it countenances monopolisation and privatisation in the guise of market access by justifying the substitution of actual competition with the mere threat of competition. The article concludes that the monopoly power of transnational corporations will be enhanced through the acquiescence of governments to the new governance regime of the Trans-Pacific Partnership Agreement, which, supported by domestic policy, is set to redraw competition policy in the light of contestability theory.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes on contributor
Caroline Colton is a PhD candidate at the University of Wollongong researching contestable market theory and its impacts.
Notes
1. Barring transaction taxes represents a considerable loss of potential income for government given that the Australian financial market’s total annual turnover (over the counter and exchange traded) is AU$135 trillion. This figure is 84 times the size of Australia’s nominal GDP (Australian Trade Commission Citation2016, 56).
2. As of June 2015, the financial sector’s asset holdings were AU$7 trillion, four times Australia’s nominal GDP (Austrade Citation2015, 54).
3. National treatment accords a WTO member ‘treatment no less favorable than that it accords to its own like services and service suppliers’ and most-favoured-nation treatment accords ‘treatment no less favourable than that it accords to like services and service suppliers of any other country’ (World Trade Organization Citation2016b, Article XVII[1], Article II).