Competition policy isn't that hard

Politicans seem to have been constantly making a hash of competition policy in Australia. The idea behind such policy is to smooth the way of competition, and allow markets to improve the lot of consumers. It's pretty simple stuff, but in many markets in Australia, there's very little competition.

Take, for example, private health insurance. If you earn more than a certain amount, you're effecively forced to have it. So you want to find out which plan suits your needs, but it's almost impossible to work that out. Health insurers use all kinds of sneaky tricks to exclude certain benefits, restrict you to specific care providers and make it difficult to claim. Sneaky tricks like allowing private doctors to decide, case-by-case, whether they'll work with your insurer or not mean it's impossible to make an informed decision when you're choosing a policy.

It doesn't have to be like this. What's needed is for the government to set a common set of criteria that companies operating in the market must disclose to enable direct comparisons. The former government had a half-hearted stab at this with private health insurance, offering a database of available policies. But because it doesn't cover the sneaky tricks, it's virtually useless.

This is an approach that could be taken across industries. I work for a telco and see the marketplace swamped with conflicting offers using sneaky fine print to con consumers into thinking they're getting a good deal, when of course they aren't. The offers change constantly, with some providers offering genuinely good deals to build market share, before switching to sneakier deals that aren't anything like as good.

This means that comparison services like Choice really can't offer simple advice. Instead, consumers are left to try and make up their mind without adequate information.

Common criteria for comparison

The ACCC should be empowered to act in markets that aren't working. They should be able to direct industries to come up with their own common criteria for comparing products, and force them to disclose the information in a machine-readable form with an open-access license, which will enable the data to sliced and diced to help consumers make informed choices. Even better, industries where online billing is the norm should be forced to allow consumers to extract their bill data in a standard format, so they can upload it to comparison sites and be recommended the best offers based on past usage.

Coming up with common criteria would be hard, there's no doubt, and you can just imagine the cries of "stifle innovative offers" from the industries. That's the cry of people scared of competition. With a decent review mechanism, new pricing models could be easioly incorporated into the standards.

Easing the switch

The other are that will improve competition is easing switching between providers. This can be applied in just about every market. Banks are likely to be forced to make switching accounts easier, with direct debits carried across. The big ones are screaming about it, because they like their cosy little lock-in on consumers. If they're screaming, the policy must be doing something right.

Other areas that desperately need work include the telecommunications sector. To switch ADSL1 or ADSL2+ providers can be incredibly complex. To do it smoothly, both providers need to have signed up for the "fast churn" process, and there's a different agreement for ADSL1 and ADSL2+. Telstra, of course, haven't signed up for ADSL2+, which means consumers wishing to transfer from Telstra ADSL2+ can be without their internet connection for weeks when switching providers.

The solution here is simple: force all providers to support a fast churn mechanism. If they don't want to, it's clear they fear competition. What other reason could there be?