Monopoly Prices Oversight
Monopoly prices oversight is a mechanism that seeks to ensure government monopolies or near monopolies do not charge excessive prices for their products or services. Some government monopolies or near monopolies are able to charge excessively because they are not constrained by their competitors (either because none exist or those that do are not effective).
Through the prices oversight process, the Queensland Competition Authority either investigates the pricing practices of government monopolies or simply monitors the prices charged by them. The Authority can only perform these functions on request from the Premier and Treasurer (the Ministers).
Under certain circumstances, the Authority can mediate or arbitrate disputes with private sector water suppliers.
Criteria for Identification of Government Monopoly Business Activities
In 1998, the Ministers endorsed the criteria developed by the Authority to assist them in declaring government business activities as government monopoly business activities. The term "monopoly" extends to "near monopolies", where a government agency conducting a business activity has substantial market power.
Once government business activities are declared, they may, but need not, be referred by the Ministers to the Authority for prices oversight. The test for identifying government monopoly business activities is based on an assessment of whether these activities have the market power to persistently behave in a manner different to that of a competitive market.
Who does Monopoly Prices Oversight Apply To?
Prices oversight applies to government monopolies or near monopolies which have been referred to the Authority by the Ministers (and in some cases private water suppliers).
The referral process involves two steps:
- the Ministers' declaration of the business activity as a "government monopoly business activity"; and
- referral of a government monopoly business activity to the Authority for prices oversight by the Ministers.
In assessing whether a government business activity is in fact a government monopoly business activity, the Ministers must consider the criteria prepared by the Authority for this purpose. These criteria also highlight other matters which the Ministers may consider when deciding whether to refer a government monopoly business activity to the Authority for prices oversight.
You can also approach the Authority to consider whether it is appropriate that a government business activity be declared as a government monopoly business activity and if so, referred to the Authority for prices oversight. If you want to make such a request, you should consider whether the government business activity satisfies the Criteria for the Declaration of Government Monopoly Business Activities and whether it is an appropriate candidate for prices oversight. You may also request the authority to ask the Ministers to make a referral.
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