The Insurance Council of Australia (ICA) has criticised the Competition Policy Review’s draft recommendation for tougher provisions against anti-competitive conduct.

In its submission to the review’s draft report, ICA warns the addition of an “effects test” to the Competition and Consumer Act 2010 is unnecessary and could prompt a decade of test actions in courts to iron out confusion over its application.

The effects test would aim to ensure a company with market dominance could not engage in conduct that could substantially reduce competition.

It would operate alongside the current “purpose test” – which seeks to show if the purpose of certain conduct is to reduce competition – in section 46 of the Act.

ICA argues the addition would create confusion.

“Rather than clarifying the boundary between anti-competitive and pro-competitive conduct, the proposed reframing of section 46 will create new uncertainly around the wider conduct of dominant firms,” its submission says.

ICA also opposes reversing the evidentiary onus of proof, so a corporation must show its conduct would be considered a “rational business decision” by a hypothetical competitor.

“What is a rational business decision is highly subjective and a matter for commercial judgement that could be very costly to prove in a court.”

ICA warns the effects test and “rational business decision” defence would require extensive testing in the court system.

“Clarification through the courts could take another decade, which would only have a negative impact on the competitive process and add expense to all parties involved.”

It says there is little evidence section 46 has proven inadequate or difficult to apply.

The Competition Policy Review is expected to deliver its final report to the Federal Government in March.