A recent report by the CCIA Research Center has been released, aiming to provide policy guidance on Australia's New Digital Competition Regime. This regime, proposed by the Australian Government, intends to introduce upfront requirements and ex ante regulation for digital platforms considered crucial to the Australian economy. The proposal draws from recommendations by the Australian Competition and Consumer Commission (ACCC) as part of its ongoing inquiry into digital platform services. It is also partly inspired by the European Union's Digital Markets Act (DMA).
The report raises concerns about regulating based on assumptions of harm and consumer benefit without a detailed assessment of competition, market power, and consumer interests. It highlights four potential economic impacts of the proposed regime:
1. A loss in consumer welfare ranging from AUD $4.4 billion to $16.8 billion due to delays in product launches and innovations.
2. A reduction in labor productivity between 0.41 to 1.64 percentage points because of decreased investments in the tech sector.
3. Changes in GDP with direct and indirect effects estimated between AUD $10.6 billion to $21.1 billion due to shifts in economic activity across various sectors.
4. A decline in investments between 5.2% to 17.4% owing to delays in new digital products and services.
Trevor Wagener, Chief Economist and Director of the CCIA Research Center, commented on these findings: "The economic analysis of the proposed Australian New Digital Competition Regime identifies the perils of sweeping ex ante regulation based on assumptions rather than case-by-case assessment of competition, market power, and consumers’ interest."
Wagener further noted that if implemented as suggested, both Australia's GDP and consumer welfare could potentially decline by more than AUD $10 billion each, labor productivity growth might fall by up to 1.64 percentage points, and investment in digital platform services could drop by over one-sixth.
