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Authorisation, notification and class exemptions

 

About

Authorisation imageParties wishing to engage in conduct that may infringe the competition law provisions of the Act may seek advanced authorisation on an individual basis. The ACCC may authorise the conduct on competition and/or public benefit grounds (depending on the conduct) and, while authorised, that conduct will not contravene the Act. The party seeking authorisation bares the onus of proving the conduct satisfies the authorisation criteria.

In the case of exclusive dealing, resale price maintenance and small business collective bargaining, parties may instead 'notify' the conduct to the ACCC. This prevents the conduct contravening the Act unless the ACCC revokes the authorisation on competition/public benefit grounds. In the case of notification it is the ACCC that must be satisfied the conduct does not meet the competition/public benefit criteria.

Since November 2017 the ACCC has also been given the power to create class exemptions for particular types of conduct. No such exemptions have yet been granted.

 

Authorisations

Until November 2017 separate applications needed to be made for different forms of conduct that might contravene multiple provisions. Different tests also applied to different provisions. The 2017 Harper Reforms simplified this process so that there are now only two tests that apply, with the different depending on whether the conduct is prohibited 'per se' or is subject to a competiton test.

The Harper Reforms also extended the conduct to apply to misuse of market power (previously not capable of being authorised directly). Merger authorisations, previously dealt with separately, are now considered under the same substantive test as other authorisations.

Authorisation (for conduct prohibited with a competition-test)

The ACCC may authorise conduct prohibited by way of a competition test if either:

  • the conduct would not substantially lessen competition; or
  • the conduct would result in a public benefit likely to outweigh the detriment that would be likely to result from the conduct

The forms of conduct that may be authorised in this way include:

  • anti-competitive agreements (s 45)
  • misuse of market power (s 46)
  • exclusive dealing (s 47)
  • mergers (s 50)

Authorisation (for conduct prohibited per se)

For conduct that otherwise constitutes a per se contravention, the first limb of the authorisation test does not apply. As a result, authorisation for

  • cartels
  • secondary boycotts and
  • resale price maintenance

require demonstration that the conduct would produce a net public benefit.

 

Class exemptions

The ACCC has been given powers to create ‘class exemptions’ for particular types of conduct. Class exemptions can be granted where conduct of that ‘kind’ would not have the likely effect of substantially lessening competition or would result in a public benefit likely to outweigh the detriment that would be likely to result from the conduct.

The ability to provide class exemptions followed recommendations made in the Harper Report (2015) the ACCC has been given power to create class exemptions for particular types of conduct. No such exemptions have yet been granted.

Determining a class exemption

Seciton 95AA provides that the ACCC may determine (by legislative instrument) that one or more of the competition provisions do not apply to a particular kind of conduct, provided the ACCC is satisfied that:

  • conduct of that kind would not have, or be likely to have, the effect of substantially lessening comeptition; or
  • conduct of that kind would result, or be likely to result, in a public benefit that would outweigh the detriment likely to result from the conduct

The ACCC may apply various limitations to the exemption.

The determination must also specify its period of operation and cannot run for more than 10 years from the date made.

Withdrawing the benefit of a class exemption

The ACCC may give a person written notice if a class exemption determination applies to them but the ACCC is satisfied that the conduct engaged in by that person would be likely to substantially lessen competition and would not result in a net public benefit. The ACCC must give reasons for such notice and while in force the determination does not apply to the person to whom notice has been given.

 

Notifications

In the case of exclusive dealing, resale price maintenance and small business collective bargaining, parties may instead 'notify' the conduct to the ACCC. This prevents the conduct contravening the Act unless the ACCC revokes the authorisation on competition/public benefit grounds. In the case of notification it is the ACCC that must be satisfied the conduct does not meet the competition/public benefit criteria.

 

Legislation

Competition and Consumer Act 2010

 

Cases

Authorisation

Tribunal

Re Medicines Australia Inc [2007] ACompT 4 (27 June 2007)
Imposition of conditions for authorisation. Discretion of ACCC.

External link imageQantas Airways [2004] ACompT 9

Re Queensland Independent Wholesalers Limited (1995) 132 ALR 225; (1995) ATPR 41-439
Merger authorisation case

Re Queensland Co-Op Milling Association Limited and Defiance Holdings Limited (QCMA) (1976) 8 ALR 481; (1976) ATPR 40–012
Merger authorisation case

ACCC

External link imageMyer Pty Ltd - Revocation & Substitution - A91091 (2008)
"Myer sought ... authorisation to allow Myer to be able to continue to invite concession businesses operating within Myer Stores to participate in storewide and category wide discount promotions, bonus MYER one points offers, Myer Card and Myer Visa Card promotions, a Discount Price Matching Policy and other agreed bonuses."

Notification

External link imageApplication by Co-operative Bulk Handling Limited (No 3) [2013] ACompT 3
Appeal against revocation of exclusive dealing notification - public benefit v SLC

 

Further resources

Reading