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Competition and Consumer Amendment (Competition Policy Review) Bill 2017

See also Competition and Consumer Amendment (Misuse of Market Power) Bill 2016

 

Overview of bill

In brief

The Government introduced the Competition and Consumer Amendment (Competition Policy Review ) Bill 2017 into the House of Representatives, two days after the House passed the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 (currently in the Senate).

The Bill, if passed, will implement key Harper recommendations in relation to competition law, including those relating to cartels, price signalling and concerted practices, exclusionary provisions, secondary boycotts, third line forcing, resale price maintenance, authorisations notifications and class exemptions, access and evidentiary provisions.

The changes appear largely in line with the Exposure Draft Bill released last year; there has been some modification in response to consultation on the Exposure Draft Bill (details to follow).

See the Treasurer's media release, 'Strengthening Competition - Harper Review Legislation Introduced' (30 March 2017)

Quick links to changes (to be added progressively)

Debate in the House

Second reading of the Bill was moved on 30 March 2017 and the Treasurer's second reading speech was delivered. Debate was then adjourned until the next sitting of parliament.

 

Overview of changes

Details of the proposed changes will follow shortly. Briefly, the Explanatory Memorandum contains the following overview of the propsed changes to the law:

Definition of competition

Schedule 1 to this Bill amends the definition of ‘competition’ in section 4 of the Act, to clarify that competition includes competition from goods and services that are capable of importation, in addition to those actually imported.

...

Cartels

Schedule 2 to this Bill makes a number of amendments to the Act to simplify the provisions on cartel conduct and better target anti-competitive conduct, including:

  • confining the application of the provisions to cartel conduct affecting competition in Australian markets; and
  • changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures.

...

Price signalling and concerted practices

Schedule 3 to this Bill repeals Division 1A of Part IV of the Act, the price signalling provisions.

Schedule 3 also extends section 45 to prohibit a corporation from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition, and inserts an exception for where the only parties to a concerted practice are the Crown and one or more government authorities.

Schedule 3 also repeals the separate prohibition on exclusionary provisions from the Act.

...

Exclusionary provisions

Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by Schedule 3.

As detailed in Chapter 2, a related amendment is made by Schedule 2 to the provisions on cartel conduct, to ensure there is no gap following the repeal of the prohibition on exclusionary provisions.

...

Secondary boycotts

Schedule 6 amends the Act to increase the maximum penalty applying to breaches of the secondary boycott provisions. This aligns the penalty with penalties for other breaches of the competition law.

...

Third line forcing

Schedule 7 to this Bill amends the Act to prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition.

...

Resale price maintenance

Schedule 8 to this Bill amends the resale price maintenance (RPM) and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct.

Schedule 8 also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

...

Authorisations, notifications and class exemptions

Schedule 9 to this Bill amends Part VII and Part IX of the Act to:

  • consolidate the various authorisation provisions, including those relating to mergers, into a single authorisation process;
  • grant the Commission a ‘class exemption’ power;
  • allow the Commission to impose conditions on notifications for resale price maintenance and collective bargaining that involves collective boycott conduct;
  • grant the Commission a power to issue a ‘stop notice’ requiring notified collective boycott conduct that is the subject of a notification to cease; and
  • provide for Tribunal review of Commission merger authorisation determinations.

...

Admissions of fact

Schedule 10 to this Bill extends section 83 of the Act so that a party bringing certain proceedings may rely on both admissions of fact and findings of fact made in certain other proceedings.

...

Power to obtain information, documents and evidence

Schedule 11 to this Bill extends the Commission’s power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

Schedule 11 also introduces a ‘reasonable search’ defence to the offence of refusing or failing to comply with section 155, and increases the fine for non-compliance with section 155.

...

Access to services

Schedule 12 amends Part IIIA of the Act, which contains the National Access Regime (Regime), to ensure that it better addresses the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

...

Other amendments

Schedule 14 to this Bill makes various amendments to streamline the administration of the Act, to reduce compliance burdens for business, individuals and within Government, while preserving the protections available under the Act.

 

Details of changes

Competition

Comparison of new and current law (from EM)

New law Current law
Competition expressly includes goods and services that are capable of being imported, in addition to goods and services that are imported. Competition includes goods and services that are imported.

 

Proposed change

Subsection 4(1) definition fo competition will be repealed and the following substituted:

competition includes:

(a) competition from goods that are, or are capable of being, imported into Australia; and

(b) competition from services that are rendered, or are capable of being rendered, in Australia by persons not resident or not carrying on business in Australia.

Existing provision

competition includes competition from imported goods or from services rendered by persons not resident or not carrying on business in Australia

Change from 2016 Exposure Draft Bill

No change

Explanatory Memorandum

Para 1.6: the 'Harper Review found that although the current definition of market appropriately focuses on Australian markets, the definition of competition should be amended so there is no doubt it includes competition from potential imports of goods and services, not just actual imports.'

Para 1.7: 'Schedule 1 amends the definition of ‘competition’ to clarify that it includes potential imports of goods and services and is not limited to actual imports of goods and services'

Para 1.9: 'The express inclusion of goods and services that are ‘capable’ ofbeing imported does not require consideration of every product and service that could conceivably be imported into Australia. Rather, this change clarifies that a credible threat of import competition is a relevant component of competition analysis.'

Para 1.10: 'Where there is only a remote possibility of importation, for example because importation would not be commercially viable, this possibility would not constitute a credible threat of import competition and should not form part of a competition analysis as the goods or services are not ‘capable’ of being imported.

 

Cartels

Comparison of new and current law (from EM)

New law Current law
The cartel conduct provisions apply to conduct ‘in trade or commerce’, i.e. conduct occurring within Australia, or between Australia and places outside Australia. The cartel conduct provisions are not expressly confined to conduct ‘in trade or commerce’.
The joint venture exceptions apply to contracts, arrangements or understandings. The joint venture exceptions apply only to contracts or intended contracts.
The joint venture exceptions apply to joint ventures for the acquisition of goods, in addition to joint ventures for the production and/or supply of goods or services. The joint venture exceptions apply to joint ventures for the production and/or supply of goods or services.
The joint venture exceptions apply to cartel provisions that are for the purposes of a joint venture and reasonably necessary for undertaking a joint venture. The joint venture exceptions apply to cartel provisions that are for the purposes of a joint venture.
The joint venture exceptions do not apply to joint ventures that are carried on for the purpose of substantially lessening competition. The joint venture exceptions are available to any joint venture within the definition of section 4J of the Act.
The defendant bears a legal burden of proof, in establishing the joint venture exceptions. The defendant bears an evidential burden of proof, in establishing the joint venture exceptions.
The ‘output restriction’ purpose condition refers to production, capacity, supply and acquisition. The ‘output restriction’ purpose condition refers to production, capacity and supply.

 

Proposed changes

Subsection 6(2C)

Omit “likely and production have”, substitute “production has”.

Section 44ZZRB (definition of likely)

Repeal the definition.

At the end of paragraph 44ZZRD(3)(a)

Add:

(iv) the acquisition, or likely acquisition, of goods or 10 services from persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or

Paragraphs 44ZZRD(4)(c) to (e)

After “services” (last occurring), insert “in trade or commerce”.

After paragraph 44ZZRD(4)(h)

Insert:

(ha) if subparagraph (3)(a)(iv) applies in relation to preventing, restricting or limiting the acquisition, or likely acquisition, of goods or services—the acquisition of those goods or services in trade or commerce; or

Paragraphs 44ZZRD(4)(i) and (j)

After “services” (last occurring), insert “in trade or commerce”.

Subsection 44ZZRD(4) (note)

Repeal the note, substitute:

Note 1: Party has an extended meaning—see section 44ZZRC.

Note 2: Trade or commerce is defined in section 4 to mean trade or commerce within Australia or between Australia and places outside Australia.

Subsection 44ZZRD(5)

Omit “subparagraph (3)(a)(iii),”, substitute “subparagraph (3)(a)(iii) or 9 (iv) or”.

Paragraph 44ZZRD(7)(a)

Omit “subparagraph (3)(a)(iii)”, substitute “subparagraphs (3)(a)(iii) 12 and (iv)”.

Subsection 44ZZRO(1)

After “a contract”, insert “, arrangement or understanding”.

Paragraphs 44ZZRO(1)(a) and (b)

Repeal the paragraphs, substitute:

(a) the cartel provision is:

(i) for the purposes of a joint venture; or

(ii) reasonably necessary for undertaking a joint venture; and

(b) the joint venture is for any one or more of the following:

(i) production of goods;

(ii) supply of goods or services;

(iii) acquisition of goods or services; and

Paragraphs 44ZZRO(1)(c) and (d)

After “the contract”, insert “, arrangement or understanding”.

Subsections 44ZZRO(1A) and (1B)

Repeal the subsections.

Subsection 44ZZRO(2)

Omit “, (1A) or (1B)” (first occurring).

Subparagraphs 44ZZRO(2)(a)(i) and (ii)

Omit “, (1A) or (1B), as the case may be”.

Paragraph 44ZZRO(2)(b)

Omit “, (1A) or (1B), as the case may be”.

Subsection 44ZZRP(1)

After “a contract”, insert “, arrangement or understanding”.

Paragraphs 44ZZRP(1)(a) and (b)

Repeal the paragraphs, substitute:

(a) the cartel provision is:

(i) for the purposes of a joint venture; or

(ii) reasonably necessary for undertaking a joint venture; and

(b) the joint venture is for any one or more of the following:

(i) production of goods;

(ii) supply of goods or services;

(iii) acquisition of goods or services; and

Paragraphs 44ZZRP(1)(c) and (d)

After “the contract”, insert “, arrangement or understanding”.

Subsections 44ZZRP(1A) and (1B)

Repeal the subsections.

Subsection 44ZZRP(2)

Omit “, (1A) or (1B)”.

Section 44ZZRS

Repeal the section, substitute:

44ZZRS Restrictions on supplies and acquisitions

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to making, or giving effect to, a contract, arrangement or understanding that contains a cartel provision to the extent that the cartel provision:

(a) imposes, on a party to the contract, arrangement or understanding (the acquirer) acquiring goods or services from another party to the contract, arrangement or understanding, an obligation that relates to:

(i) the acquisition by the acquirer of the goods or services; or

(ii) the acquisition by the acquirer, from any person, of other goods or services that are substitutable for, or otherwise competitive with, the goods or services; or

(iii) the supply by the acquirer of the goods or services or of other goods or services that are substitutable for, or otherwise competitive with, the goods or services; or

(b) imposes, on a party to the contract, arrangement or understanding (the supplier) supplying goods or services to another party to the contract, arrangement or understanding, an obligation that relates to:

(i) the supply by the supplier of the goods or services; or

(ii) the supply by the supplier, to any person, of other goods or services that are substitutable for, or otherwise competitive with, the goods or services.

Note: A defendant bears an evidential burden in relation to the matter in subsection (1) (see subsection 13.3(3) of the Criminal Code and subsection (2) of this section).

(2) A person who wishes to rely on subsection (1) in relation to a contravention of section 44ZZRJ or 44ZZRK bears an evidential 30 burden in relation to that matter.

(3) This section does not affect the operation of section 45 or 47.

[Equivalent changes are made to Schedule 1]

 

Renumbering Division 1 of Part IV of the Competition and 4 Consumer Act 2010

(1) In this item:

Division 1 means Division 1 of Part IV of the Competition and Consumer Act 2010.

(2) The sections of Division 1 are renumbered in a single series so that each section referred to in column 1 of an item in the following table has the number stated in column 2 of that item:

Renumbering Division 1 of Part IV
Item Column 1
Current section number
Column 2
New section number
1 44ZZRA 45AA
2 44ZZRB 45AB
3 44ZZRC 45AC
4 44ZZRD 45AD
5 44ZZRE 45AE
6 44ZZRF 45AF
7 44ZZRG 45AG
8 44ZZRH 45AH
9 44ZZRI 45AI
10 44ZZRJ 45AJ
11 44ZZRK 45AK
12 44ZZRL 45AL
13 44ZZRM 45AM
14 44ZZRN 45AN
15 44ZZRO 45AO
16 44ZZRP 45AP
17 44ZZRR 45AQ
18 44ZZRS 45AR
19 44ZZRT 45AS
20 44ZZRU 45AT
21 44ZZRV 45AU

 

(3) The subsections of each section of Division 1 that has more than one subsection are renumbered so that they bear consecutive Arabic numerals enclosed in parentheses starting with “(1)”.

(4) The paragraphs of each section or subsection, or of each definition, of Division 1 are relettered so that they bear lower-case letters in alphabetical order enclosed in parentheses starting with “(a)”.

(5) The subparagraphs of each paragraph of each section or subsection, or of each paragraph of each definition, of Division 1 are renumbered so that they bear consecutive lower-case Roman numerals enclosed in parentheses starting with “(i)”.

(6) Subject to subitem (7), each provision of the Competition and Consumer Act 2010 that refers to a provision that has been renumbered or relettered under this item is amended by omitting the reference and substituting a reference to the last-mentioned provision as renumbered or relettered.

(7) Subitem (6) does not apply to a reference that is expressed as a reference to a provision as in force at a time that is before the commencement of this item.

Explanatory Memorandum

Para 2.1: 'Schedule 2 to this Bill makes a number of amendments to the Act to simplify the provisions on cartel conduct and better target anti-competitive conduct, including:

  • confining the application of the provisions to cartel conduct affecting competition in Australian markets; and
  • changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures.

Para 2.5: 'A number of specific changes were recommended by the Harper Review, which were intended to simplify the cartel conduct provisions and better target them at anti-competitive conduct. These included broadening the exceptions for joint ventures, which the Harper Review considered were too narrow and potentially captured pro-competitive conduct.'

Trade or commerce

Para 2.7: 'The defined term ‘trade or commerce’ is incorporated into various provisions within Division 1 of Part IV, to expressly confine the application of the provisions to cartel conduct affecting competition in Australia or between Australia and other places.'

Para 2.12: 'The Harper Review was of the view that, for cartel conduct to be an offence within Australia, it should have an effect on trade or commerce within, to or from Australia, consistent with the treatment of cartel conduct in comparable overseas jurisdictions.'

Para 2.13: 'Schedule 2 amends a number of provisions in Division 1 of Part IV to include a specific requirement that cartel conduct must be ‘in trade or commerce’. Trade or commerce is defined in section 4 to mean trade or commerce within Australia, or between Australia and places outside Australia. ...

Parr 2.14: 'The intention of this amendment is to expressly confine the application of the provisions to cartel conduct that affects businesses or consumers in Australia.'

Para 2.15: 'This amendment aligns the cartel conduct provisions with the Act’s objective of enhancing the welfare of Australians.'

Joint venture exemption

Para 2.16: 'The Harper Review’s view was that the narrow framing of the joint venture exceptions to the cartel provisions may have the effect of limiting legitimate commercial transactions and increasing business compliance costs.'

Para 2.17: 'The Harper Review also noted that broadening the joint venture exception for cartel conduct will not put joint ventures beyond the reach of the competition law, as section 45 prohibits joint venture arrangements that have the purpose, effect or likely effect of substantially lessening competition.'

Para 2.8: 'The joint venture exceptions are broadened to apply to:

  • arrangements or understandings (in addition to contracts); and
  • joint ventures for the acquisition of goods and services (in addition to the production or supply of goods and services).'

Para 2.19: 'Firstly, the amended joint venture exceptions apply to arrangements and understandings containing cartel provisions, in addition to contracts containing such provisions. This recognises that not all features of a joint venture will be contained in a formal written contract. ...'

Para 2.20: 'Secondly, the amended joint venture exceptions are extended to 2.20apply to joint ventures for the acquisition of goods or services. The amended exceptions apply to one or more of the production, supply or acquisition of goods or services. ...'

Par 2.21: 'Joint ventures for the acquisition of goods or services are common, and may encourage pro-competitive economic activity, for example by allowing smaller businesses to increase their bargaining power, decrease their cost base and become more price-competitive.'

Para 2.9: 'The joint venture exceptions are also amended so that they only apply to:

  • cartel provisions that are for the purposes of, and reasonably necessary for, undertaking the joint venture; and
  • joint ventures that are not carried on for the purpose of substantially lessening competition.

Para 2.22: 'Thirdly, the amended joint venture exceptions only apply to 2.22cartel provisions that are both for the purposes of the joint venture and reasonably necessary for undertaking the joint venture (where the reference to ‘purpose’ should be read in the context of section 4F of the Act). ...'

Para 2.23: 'The addition of the ‘reasonably necessary’ element tightens the exceptions to ensure that they exclude cartel provisions that are not reasonably necessary for the joint venture.'

Para 2.24: 'For example, a provision that specified the price at which outputs of a mining joint venture should be sold may be reasonably necessary for undertaking a mining joint venture. However a provision that similarly specified that output from mines not part of the joint venture must be sold at the same price may be for the purposes of, but is unlikely to be reasonably necessary for, the joint venture.'

Para 2.25: 'Fourthly, the amended joint venture exceptions only apply to joint ventures that are not carried on for the purpose of substantially lessening competition. This amendment confines the exceptions to joint ventures established for genuine commercial purposes.'

Para 2.27: 'The reference to ‘purpose’ should also be read in the context of section 4F of the Act, such that a defendant will be unable to rely on the joint venture exceptions if the purpose of substantially lessening competition is a substantial purpose, even if it is not the only purpose or the primary purpose.'

Standard of proof re: joint ventures

Para 2.10: 'The burdens of proof for the joint venture exceptions are also amended to require the defendant to prove the elements of the relevant exception on the balance of probabilities.'

Para 2.28: 'Finally, the joint venture exceptions are amended to increase the standard of proof that a defendant must discharge in raising the relevant exception. To raise the joint venture exception in a civil action (section 44ZZRP), the defendant must prove the relevant matters on the ‘balance of probabilities’. To raise the joint venture exception in a criminal action (section 44ZZRO), the defendant is under a ‘legal burden’ and this must also be discharged on the balance of probabilities.'

Para 2.29: 'In either case, the defendant must meet the standard of a ‘balance of probabilities’ to raise the relevant joint venture exception, as opposed to the standard of proof for the current evidential burden (‘a reasonable possibility’). Given this practical similarity, the two exceptions are discussed together below.'

Para 2.30: 'The increase in the burden of proof on the defendant is appropriate and justifiable in light of the extension of the exceptions to arrangements or understandings containing a cartel provision.'

Para 2.31: 'Currently, for either of the exceptions to apply, the relevant cartel provision must be contained in a contract and the defendant must satisfy an evidential burden – that is, the defendant must produce evidence suggesting a reasonable possibility that the matters in section 44ZZRO or 44ZZRP exist. It is likely that the production of the contract, which should be readily available to the defendant if it exists, would satisfy this evidential burden. It would then fall to the prosecution to prove on the balance of probabilities (in a civil action) or beyond reasonable doubt (in a criminal action), that the evidence produced does not establish the relevant exception – for example, by proving that the cartel provision is not for the purposes of the joint venture. Under the current exceptions, an evidential burden on the defendant is reasonable as the primary evidence as to the nature of the claimed joint venture would be before the court.'

Para 2.32: 'In contrast, under the amended joint venture exceptions which extend to arrangements or understandings, the relevant element of the joint venture may be contained across several documents of greater or lesser formality, and may not be contained in any form of written documentation (for example, it may have been established through a series of conversations or agreed in a meeting). In this circumstance, it is likely to be relatively easy and inexpensive for a defendant to produce evidence suggesting a reasonable possibility that their joint venture falls within the relevant exception, even if this were not the case.'

Para 2.33: 'However, it would be extremely difficult and expensive for the prosecution to obtain sufficient evidence to prove in the first instance, to the applicable standard, that the relevant exception did not apply, as the evidence needed to do this may be known only to, and be held by, the defendant. This practical difficulty may create scope for abuse of the joint venture exceptions by parties who are not genuinely engaged in a joint venture to which the exceptions apply.'

Para 2.34: 'Increasing the standard of proof which the defendant must meet improves this situation as, in practice, the defendant is required to provide stronger evidence to the court in order to prove on the balance of probabilities that the relevant exception applies. The defendant will be in a unique position to easily and cheaply produce such evidence, having ready access to the full range of formal and informal correspondence between the parties.'

Para 2.35: 'With the additional information before the court, the prosecution would then have sufficient information to determine whether to make a case in reply and thereby seek to prove to the requisite standard that the exception does not apply (for example, to argue based on that evidence that the joint venture was, in fact, carried on for the purpose of substantially lessening competition).'

Para 2.36: 'Widening the application of the exceptions will decrease the ongoing business compliance costs for genuine commercial joint venture undertakings, by increasing certainty that genuine joint venture activities will not contravene the cartel conduct prohibition. However, without the higher burden of proof on the defendant, it is likely that the practical difficulties for the prosecutor would be such that anti-competitive, collusive conduct would be able to avoid the cartel conduct prohibitions. The higher burden is therefore necessary in order to broaden exceptions in the manner described above.'

Output restriction - Exclusionary provisions

Para 2.11: 'The ‘output restriction’ purpose condition in paragraph 44ZZRD(3)(a) is broadened to include restrictions on acquisitions of goods or services, to address any gap resulting from the repeal of the separate prohibition on exclusionary provisions.'

Para 2.37: 'The ‘output restriction’ purpose condition is amended to prohibit cartel provisions with the purpose of directly or indirectly preventing, restricting or limiting production, capacity, supply or acquisition. The inclusion of acquisition is achieved by adding a fourth subparagraph to paragraph 44ZZRD(3)(a). ...'

Para 2.38: 'This change is made as a result of the repeal of the separate prohibition on exclusionary provisions, as detailed in Chapters 3 and 4, and addresses a possible gap in the law following that repeal.'

 

Price signalling and concerted practices

Comparison of new and current law (from EM p 27)

New law Current law
The anti-competitive disclosure of pricing and other information is dealt with under the more general prohibitions in the competition law The anti-competitive disclosure of pricing and other information is separately and specifically prohibited.
A corporation is prohibited from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition. No equivalent.
An exemption from the prohibition on concerted practices is added where the only parties are a government and one or more authorities of that government. No equivalent.
There is no separate prohibition on contracts, arrangements or understandings containing exclusionary provisions. There is a separate prohibition on contracts, arrangements or understandings containing exclusionary provisions.
Section 51 provides a range of additional exceptions related to specific contracts, arrangements, understandings and concerted practices. Section 51 provides a range of additional exceptions related to specific contracts, arrangements and understandings.

 

Proposed change

  • Repeal Division 1A of Part IV (the price signalling provisions)
  • Extend s 45 to 'prohibit a corporation 3.2from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition' while allowing an exception where the only parties are the 'Crown and one or more government authorities' (EM para 3.2; new ss 45(8AA))
  • Repeal separate prohibition on exclusionary provisions (primary boycotts)

Existing provision (s 45(2))

A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if:

(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or

(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:

(i) is an exclusionary provision; or

(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.

Proposed new provision

Subsections 45(1)-(3) will be repealed and replaced with the following:

(1) A corporation must not:

(a) make a contract or arrangement, or arrive at an understanding, if a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b) give effect to a provision of a contract, arrangement or understanding, if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

(c) engage with one or more persons in a concerted practice that has the purpose, or has or is likely to have the effect, of substantially lessening competition.

(2) Paragraph (1)(b) applies in relation to contracts or arrangements made, or understandings arrived at, before or after the commencement of this section.

(3) For the purposes of this section, competition means:

(a) in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding—competition in any market in which:

(i) a corporation that is a party to the contract, arrangement or understanding, or would be a party to the proposed contract, arrangement or understanding; or

(ii) any body corporate related to such a corporation;

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services; or

(b) in relation to a concerted practice—competition in any market in which:

(i) a corporation that is a party to the practice; or

(ii) any body corporate related to such a corporation;

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the practice, supply or acquire, or be likely to supply or acquire, goods or services.

Change from 2016 Exposure Draft Bill

TBA

Explanatory Memorandum

Price signalling

Observes that it only applies to banking and no cases have been brought for contravention since it was added in 2012. The provisions are complex and public disclosure of pricing information is unlikely to harm competition. Private disclosures may facilitate anti-competitive collusion, but may also be pro-competitive in some cases, such as joint ventures or similar collaborations (para 3.5). To the extent such conduct is anti-competitive it should be dealt with by s 45, if that provision was expanded to include a prohibition on anti-competitive concerted practices (para 3.6 and 3.8).

Concerted practices

[Para 3.16]: Schedule 3 amends section 45 to prohibit corporations from engaging in a ‘concerted practice’ that has the purpose, effect or likely effect of substantially lessening competition.

[Para 3.18] The concept of a ‘concerted practice’ under section 45 is to be distinguished from the concept of ‘acting in concert’ as it appears in section 45D. The concept of a ‘concerted practice’ is to be read and applied in the context of section 45 and with reference to the explanatory material that follows, and not in the context of section 45D or any case authority or explanatory material on section 45D. The following is intended to guide the interpretation of the term while retaining a flexible and principled application of the concept.

Characteristics of a concerted practice

[Para 3.19] A concerted practice is any form of cooperation between two or more firms (or people) or conduct that would be likely to establish such cooperation, where this conduct substitutes, or would be likely to substitute, cooperation in place of the uncertainty of competition.

[Para 3.20] It is not necessary that any (or all) of the parties to a concerted practice should act:

  • in the same manner;
  • in the same market; or
  • at the same time.

[Para 3.21] It is intended that the concept of a ‘concerted practice’ should capture conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45.

[Para 3.22] A concerted practice does not require, but may involve:

  • the formality or legally enforceable obligations characteristic of a contract;
  • the express communication characteristic of an arrangement. A concerted practice may be established in the absence of any direct contact between the firms, for example where firms communicate indirectly through an intermediary such as a peak industry body; or
  • the commitment characteristic of an understanding. A concerted practice may exist even if none of the parties is obliged, either legally or morally, to act in any particular way.

Example 3.1 – Concerted practice

In a small country town, there are three petrol stations: X, Y and Z. Immediately before adjusting its prices, X sends an email to Y and Z with a price. After several emails, it becomes clear to Y and Z that immediately after sending the email with the price, X changes its price to match the email. Y and Z join in, and each emails their own proposed price adjustments to the other two. A practice develops so that, with a few exceptions, where one petrol station emails their prices, the three stations all change their prices to match the price in the email.

At no point do any of them expressly or implicitly agree to reciprocate the communication or to change their prices accordingly. On some occasions after one of the stations announces a price rise, one of the other stations chooses not to match the price, and thereby gains extra customers on that occasion by increasing their price by less than the other two stations and having the lowest price. There are no consequences of this occasional divergence from the usual practice.

X, Y and Z are each likely to have contravened section 45 by engaging in a concerted practice with the purpose, effect or likely effect of substantially lessening competition. Even though none of the parties committed to communicate or change their prices, and even though there were some occasions where a petrol station did not change its prices in accordance with the email, the effect of the overall practice was that the petrol stations could increase their prices safe in the knowledge that this would be unlikely to result in a loss of customers as the others would most likely reciprocate. This practice has substantially reduced price competition for petrol in the town.

[Para 3.23] A concerted practice may exist in addition to, or ancillary to, a contract, arrangement or understanding.

[Para 3.24] It is not necessary that a concerted practice have an anti-competitive ‘provision’, as it is the practice itself which has the anti-competitive purpose, effect or likely effect.

[Para 3.25] The concept of a concerted practice is not intended to capture mere innocent parallel conduct, for example where two firms who are determining their prices independently happen to charge similar prices for the same product (see Example 3.4).

[Para 3.26] Similarly, it is not intended to capture conduct such as the public disclosure of pricing information which facilitates price comparison by consumers, as this conduct will increase rather than substantially lessen competition.

[Para 3.27] The following examples illustrate that a concerted practice:

  • does not necessarily involve regular or repeated conduct - a single instance of conduct may constitute a concerted practice (Example 3.2);
  • will typically, but not necessarily, involve the communication of commercial information either by one party to another, or between the parties, generally to reduce or eliminate uncertainty as to the future conduct of the firm making the communication; and
  • does not require that any (or all) of the parties to the practice reciprocate the actions of the first party or in any way change their conduct as a result of the first party’s actions – the actions of the first party will be sufficient to establish the concerted practice, and the culpability of each other party to the concerted practice will depend on the nature of their involvement and their subsequent action.

[Para 3.28] Once conduct has been found to be a concerted practice, the central issue, and the determinant of whether the relevant conduct is prohibited under section 45, is whether the concerted practice has the purpose, effect or likely effect of substantially lessening competition.

Example 3.2 – Concerted practice as a single instance of conduct

Salmon fishers in a small geographic region form an industry association that meets regularly, usually to discuss general industry issues. At one meeting, one fisher (X) states that they will restrict their output to a certain quantity for the next three months, in order to increase the price of salmon in the region. X shares this information in the hope that the other fishers will similarly restrict their output, so that X can adopt the strategy without fearing it will lose customers to the other fishers.

X has shared commercially sensitive information which reduces uncertainty as to X’s likely output over the next three months. X is likely to have contravened section 45, by engaging in a concerted practice with the purpose or likely effect of substantially lessening competition, even if X was unable to convince all of the other salmon fishers to adopt a similar strategy and even some or all of the others did not adopt such a strategy (that is, even if the ultimate effect was not a substantial lessening of competition).

Example 3.3 – Concerted practice as communication of commercial information, reciprocity not required

Bank X and Bank Y are two competing banks. A week before banks are expected to announce their respective interest rates for the next quarter, X sends Y a document setting out the interest rate it will announce the following week. Y did not ask for this information, and does not act on this information by either reciprocating with information about its own intended interest rate or changing its strategy to match X’s interest rate.

The different actions of X and Y will have different implications under section 45.

X is likely to have contravened section 45, by engaging in a concerted practice with the purpose or likely effect of substantially lessening competition, even if this was not the actual effect because Y did not act on the information.

X’s communication to Y has made Y a party to a concerted practice. However, Y is not likely to have contravened section 45, as Y did not use the information to inform a decision or change strategy, and this conduct did not have the purpose, effect or likely effect of substantially lessening competition. Y could further ensure it did not breach section 45 by expressly rejecting X’s approaches and requesting that X not communicate any further information of this nature.

Example 3.4 – Mere parallel conduct

Company X manufactures and distributes the most popular budget television, which is stocked by all major television retailers and two smaller retailers. X supplies the televisions to large retailers for $300 each, and charges the smaller retailers $320 each due to the lower quantity ordered.

The major retailers are able to sell the televisions for $320 and make a commercial profit. However, the two smaller retailers independently determine that they cannot sell the televisions for any less than $340 and still make a commercial profit.

The conduct of the two smaller retailers is unlikely to constitute a concerted practice. The two smaller retailers have a similar cost base, and have taken this cost base into account in independently determining the prices they will charge for the television. This is merely innocent parallel conduct, which the concerted practices prohibition in section 45 is not intended to capture.

Crown exemption

[Para 3.29] An exemption is inserted at subsection 45(8AA), so that section 45 does not apply to a concerted practice where the only persons engaging in it are, or would be:

  • the Crown in right of the Commonwealth, and one or more authorities of the Commonwealth; or
  • the Crown in right of a State or Territory, and one or more authorities of that State or Territory. ...

[Para 3.30] This exemption is similar to the exemption for related bodies corporate in subsection 45(8), and recognises that although the Crown can engage in market activities through government authorities, the Crown and its authorities cannot benefit from the exemption for related bodies corporate.

[Para 3.31] This exemption ensures that the prohibition against concerted practices does not unnecessarily hinder the social policy objectives that the Commonwealth, a State or a Territory may pursue through market activities. In particular, the exemption exists to ensure that cooperation by authorities to fulfil community service obligations is not hindered.

Example 3.5 – Exemption for related bodies corporate

A State government is responsible for the governance of two State-owned electricity corporations. Each year, the State government asks the providers to coordinate which geographical areas each corporation will agree to service over the next year. This information allows the State government to ensure that community service obligations are met and there is no area left without an electricity provider if no private provider is available.

While this conduct may constitute a concerted practice, this would not contravene section 45 due to the exemption in subsection 45(8AA). Although the two electricity corporations have shared what would ordinarily be commercially sensitive information, the only parties to this concerted practice are a State government and two authorities of that State government.

Operation of section 45

[Para 3.32] The following is intended to clarify the operation of section 45 as amended. Where provisions are amended for simplification, their operation is not intended to change except as described in this Chapter.

[Para 3.33] Paragraphs 45(1)(a) and 45(1)(b) set out that a corporation must not enter into or give effect to a contract, arrangement or understanding, if the contract, arrangement or understanding (or a provision thereof) has the purpose, or would have or be likely to have the effect, of substantially lessening competition. ...

[Para 3.34] Paragraph 45(1)(c) sets out that a corporation must not engage with one or more persons in a concerted practice that has the purpose, or has or is likely to have the effect, of substantially lessening competition. ...

[Para 3.35] Subsection 45(2) makes it clear that a corporation must not give effect to a prohibited provision of a contract, arrangement or understanding that was made or arrived at before the commencement of section 45 as amended. ...

[Para 3.36] Subsection 45(3) contains a specific definition of ‘competition’ for the purposes of section 45, which focuses on the relevant markets in which competition is to be considered. When considering whether conduct substantially lessens competition for the purposes of section 45, the appropriate markets in which competition is to be assessed include any market in which a corporation (or related body corporate) that is party to the contract, arrangement or understanding containing the prohibited provision supplies or acquires goods or services (or would supply or acquire goods or services, but for the anti-competitive provision).

[Para 3.37] With the introduction of the concept of a concerted practice, the definition of competition is further extended, for the purposes of section 45, in relation to a concerted practice. This ensures that there is a consistent approach to determining the markets for analysis of any potential anti-competitive effects. ...

[Para 3.38] Subsection 45(5A) is inserted to prevent the application of section 45 to conduct which would also contravene section 47, or would do so aside from subsection 47(10), an authorisation under section 88 or a notification under section 93. This applies only to contracts, arrangements and understandings, and not to concerted practices. This provision replaces the former subsection 45(6) insofar as it referred to conduct under section 47.

[Para 3.39] In addition to the new exception in subsection 45(8AA), section 45 contains a number of existing exceptions, which are amended to incorporate concerted practices:

  • an anti-overlap provision which prevents section 45 capturing conduct which would contravene more specific prohibitions (subsection 45(6));
  • an exception for the acquisition of shares in the capital of a body corporate or any assets of a person (subsection 45(7)); and
  • an exception where the only parties to the contract, arrangement, understanding or concerted practice are related bodies corporate (subsection 45(8)). ...

[Para 3.40] Similarly, the exception in subsection 51(2) is amended to extend the exception to concerted practices. This means that in determining whether a contravention of Part IV (other than sections 45D, 45DA, 45DB, 45E, 45EA or 48) has been committed, regard shall not be had to concerted practices which meet the applicable requirements of subsection 51(2) as amended. ...

Exclusionary provisions

Repeal separate prohibition.

 

Exclusionary provisions

Comparison of new and current law (from EM)

As the separate prohibition on exclusionary provisions is removed, consequential amendments to remove references to the definition of exclusionary provisions (currently in 4D) have been made.

New law Current law
‘Exclusionary provision’ is not defined in the Act. ‘Exclusionary provision’ is defined in the Act.
There is no defence as there is no longer a separate prohibition on exclusionary provisions. There is a defence to the prohibition against exclusionary provisions.

 

Proposed change and further details

Forthcoming

 

Covenants affecting competition

Comparison of new and current law (from EM)

New law Current law
Competition expressly includes goods and services that are capable of being imported, in addition to goods and services that are imported. Competition includes goods and services that are imported.

 

Proposed change and further details

Forthcoming

 

Secondary boycotts

Comparison of new and current law (from EM)

New law Current law
Contract is defined, to include a covenant. Contract is not defined.
Party to a contract that is a covenant, is defined to include a person bound by or entitled to the benefit of a covenant. Party is not defined.
Covenants are dealt with under the provisions of the Act referring to contracts. Throughout the Act, contracts and covenants are dealt with under separate provisions.

 

Proposed change and further details

Forthcoming

 

Third line forcing

Comparison of new and current law (from EM)

New law Current law
Third line forcing is prohibited only where it has the purpose, effect or likely effect of substantially lessening competition. Third line forcing is prohibited on a per se basis.

 

Proposed change and further details

Forthcoming

 

Resale price maintenance

Comparison of new and current law (from EM)

New law Current law
A corporation or other person may notify the Commission of RPM conduct. Notification is not available for RPM conduct.
Actions between related bodies corporate do not constitute engaging in RPM conduct. Acts between related bodies corporate may constitute engaging in RPM conduct.

 

Proposed change and further details

Forthcoming

 

Authorisations, notifications and class exemptions

Comparison of new and current law (from EM)

New law Current law
The Commission can grant an authorisation if it is satisfied that conduct:
- will not (or is not likely to) substantially lessen competition or
- is likely to result in a net public benefit.
The Commission can grant an authorisation only if it is satisfied the conduct is likely to result in a net public benefit.
There is a single authorisation provision for all types of authorisations, with some procedural differences between merger and non-merger authorisations. There are separate authorisation provisions applying to mergers and other types of authorisations.
The decision-maker at first instance for merger authorisations is the Commission. The decision-maker at first instance for merger authorisations is the Tribunal.
No separate merger clearance provision. The Commission can grant a merger clearance if it is satisfied the merger will not (or is not likely to) substantially lessen competition.
The Commission’s determination on a merger authorisation is subject to merits review by the Tribunal. The Tribunal’s determination on a merger authorisation is not subject to merits review.
The Commission may impose conditions on collective boycott and RPM notifications. The Commission can only approve or reject collective boycott notifications. Notification is not available for RPM conduct.
A collective boycott must cease when the Commission gives a ‘stop notice’. There is no provision for a ‘stop notice’.

 

Proposed change and further details

Forthcoming

 

Admissions of fact

Comparison of new and current law (from EM)

New law Current law
Admissions of fact made by a person, and findings of fact made by a court, in certain proceedings against a person may be used in certain other proceedings against that person under the Act. Findings of fact made by a court in certain proceedings against a person may be used in certain other proceedings against that person under the Act.

 

Proposed change and further details

Forthcoming

 

Power to obtain information, documents and evidence

Comparison of new and current law (from EM)

New law Current law
If a person has refused or failed to comply with a notice to produce documents it is a defence if, after a reasonable search, the person is not aware of the documents. No equivalent.
A section 155 notice may be issued in relation to alleged contraventions of court-enforceable undertakings given under section 87B of the Act or section 218 of the Australian Consumer Law, and in relation to a merger authorisation decision. A section 155 notice may not be issued in relation to alleged contraventions of court-enforceable undertakings.
The maximum penalty for non-compliance with a section 155 notice is 100 penalty units or 2 years imprisonment (for an individual). The maximum penalty for non-compliance with a section 155 notice is 20 penalty units or 12 months imprisonment (for an individual).

 

Proposed change and further details

Forthcoming

 

Access to services

Comparison of new and current law (from EM)

New law Current law
Declaration criteria
The declaration criteria that must be considered by the Council and Minister are contained in a single section. The declaration criteria that must be considered by the Council and Minister are replicated across multiple sections.
The decision maker must consider whether access (or increased access) on reasonable terms and conditions as a result of declaration would promote a material increase in competition. Declaration criterion (a) requires the decision maker to consider whether access (or increased access) would promote a material increase in competition.
The decision maker must consider whether total foreseeable market demand could be met by the facility over the declaration period at least cost when compared to two or more facilities. The decision maker must consider whether it is uneconomical for anyone to develop another facility to provide the service.
No change. The decision maker must consider whether the facility is of national significance, having regard to its size, importance to constitutional trade or commerce and to the national economy.
The decision maker must consider whether access (or increased access) would promote the public interest. The decision maker must consider whether access (or increased access) would not be contrary to the public interest.
The decision maker cannot declare a service if it is subject to an effective access regime. (No longer a criterion – now a threshold question). The decision maker must consider whether the service is subject to an effective access regime as part of the declaration criteria.
Power of the Minister and the Commission
The Minister may revoke the certification on recommendation by the Council, if the regime ceases to be effective. The Council may make a recommendation on its own initiative or on application. No equivalent.
The Commission’s power to make a determination requiring a facility operator to extend or expand the facility, and the safeguards on that power, are clarified to include capacity and geographical expansions. The Commission’s power to make a determination requiring a facility operator to extend the facility, and the safeguards on that power, has been interpreted to include the power to order ‘expansions’.
Default declaration decision
The Minister is taken to have accepted the Council’s recommendation if he or she does not publish a decision on a declaration within the 60 day time limit The Minister is taken to have not made a declaration if they have not published a decision within the 60 day time limit.

 

Proposed change and further details

Forthcoming

 

Application and transitional provisions

Comparison of new and current law (from EM)

New law Current law
A new Division 3 is inserted into Part XIII of the Act, containing transitional provisions related to amendments made by other Schedules to this Bill. Transitional provisions are not required.

 

Proposed change and further details

Forthcoming

 

Other amendments

Comparison of new and current law (from EM)

New law Current law
Removes the requirement for private litigants to seek Ministerial consent to bring action for a breach of the Act that takes place overseas. The Act requires Ministerial consent to bring action for a breach of the Act that takes place overseas.
Extends the jurisdiction of State and Territory courts to hear actions under the Act for pyramid selling and unsafe goods liability. State and Territory courts cannot hear actions for pyramid selling and unsafe goods liability.
Removes the requirement for the ACCC to keep a register of records of proceedings at certain conferences or recommendations under the product safety requirements. Paragraphs 95(1)(h) and (j) require the ACCC to maintain certain records, that relate to sections of the Act that have been repealed and superseded by Div 3 of Part XI of the Act.
Permits the disclosure of certain confidential information by the ACCC to specific agencies where it is reasonably necessary to protect public safety. Section 132A of the ACL permits the ACCC to provide certain confidential information to any other person only in limited circumstances.
Rectifies a drafting error so that the offence of conspiracy is carved out of the Act, ensuring there is no overlap with the Criminal Code Act 1995. Both the Act and subsection 11.5 of the Criminal Code Act 1995 apply to a relevant offence against the cartel offence provisions in the Act.
Clarifies that the cooling-off period for unsolicited consumer agreements begin on the day the agreement is entered into. The current drafting of subsection 86(1) of the ACL may inadvertently raise confusion about whether traders can supply unsolicited goods or services and accept or require payment after an unsolicited consumer agreement is entered into but before the ten business days commence for the cooling-off period.
Rectifies a drafting error by extending to any person the application of the ACL, as a law of the Commonwealth, regarding conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods. Section 131 of the Act provides that section 33 of the ACL applies only to the conduct of corporations in trade or commerce, as a law of the Commonwealth, regarding conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods.
Permit the ACCC to seek a court order directing a person to comply with a notice given under section 155 of the Act to furnish information, produce documents or give evidence. Section 155 of the Act does not permit the ACCC to seek a court order to compel a person to comply with a notice given under that section to furnish information, produce documents or give evidence.

 

Proposed change and further details

Forthcoming

 

Changes from Exposure Draft Legislation

TBA

 

Explanatory memorandum

The explanatory memorandum runs to 180 pages and is divided into the following chapters:

Chapter 1 Definition of competition

Chapter 2 Cartels

Chapter 3 Price signalling and concerted practices

Chapter 4 Exclusionary provisions

Chapter 5 Covenants affecting competition

Chapter 6 Secondary boycotts

Chapter 7 Third line forcing

Chapter 8 Resale price maintenance

Chapter 9 Authorisations, notifications and class exemptions

Chapter 10 Admissions of fact

Chapter 11 Power to obtain information, documents and evidence

Chapter 12 Access to services

Chapter 13 Application and transitional provisions

Chapter 14 Other amendments

Chapter 15 Regulation impact statement

Chapter 16 Statement of Compatibility with Human Rights

Relevant extracts are set out above in relation to each issue.

 

Second reading speeches (House)

Scott Morrison MP (Treasurer) (30 March 2017)

Mr MORRISON (Cook—Treasurer) (09:32): I move:

That this bill be now read a second time.

This bill contains a significant package of reforms to the Competition and Consumer Act 2010. These reforms are designed to simplify the law and better deal with anticompetitive conduct while supporting procompetitive behaviour. They will strengthen Australia's competition law to improve the long term welfare of consumers, businesses and the economy.

In 2014, the government commissioned an independent 'root and branch' review into Australia's competition framework: the Harper Competition Policy Review. Professor Ian Harper and the review panel consulted extensively with businesses, consumers, regulators and legal experts and found that, while our competition laws have served Australia well, they should be reformed to enhance their effectiveness. This bill implements a significant number of the competition law reforms recommended by the Harper review and agreed to by the government in its response. It also implements the recommendations made by the Productivity Commission in its 2013 inquiry into the National Access Regime, which the government accepted in its response to the Harper review.

Schedule 1 to this bill amends the definition of 'competition' in section 4 of the act to confirm that competition includes competition from goods and services that are capable of importation, as well as those actually imported. This change clarifies that a credible threat of import competition is relevant to competition analysis.

Schedule 2 to this bill amends the act to simplify and better target the provisions on cartel conduct. This includes changes to confine the application of the provisions to cartel conduct affecting competition in Australian markets and to change the scope of the joint venture exceptions to ensure that they do not limit legitimate commercial transactions or increase business compliance costs.

Schedule 3 to this bill repeals the price signalling provisions. Since their introduction in 2012, no cases have been brought under these provisions.

The price signalling provisions are replaced with a general prohibition on corporations engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition.

This prohibition will capture anticompetitive conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45. An exception is provided where the only parties to a concerted practice are the Crown and one or more government authorities.

Schedule 3 also repeals the separate prohibition on exclusionary provisions from the act, which substantially overlaps with the cartel prohibitions in the act.

Schedule 4 to this bill repeals the definition of 'exclusionary provision' and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by schedule 3.

Schedule 5 to this bill simplifies the provisions of the act by removing separate, complex prohibitions on covenants that substantially lessen competition and expanding the general prohibition on contracts that substantially lessen competition to include covenants.

Schedule 6 amends the act to increase the maximum penalty for breaching the secondary boycott provisions so that it aligns with penalties for other breaches of the competition law. As secondary boycotts are harmful to trading freedom and therefore harmful to competition, they warrant a significant penalty.

Schedule 7 to this bill amends the act to prohibit third-line forcing only where it has the purpose, effect or likely effect of substantially lessening competition. This will bring the prohibition on third-line forcing in line with the similar prohibition on second-line forcing and with other comparable jurisdictions, including the United States, Canada, the European Union and New Zealand.

Schedule 8 to this bill amends the act to allow a corporation or person to notify the Australian Competition and Consumer Commission of resale price maintenance conduct as an alternative to seeking authorisation from the commission for such conduct. It is appropriate to make notification available for resale price maintenance conduct because this conduct may in some circumstances be procompetitive, and notification is a quicker and less expensive means of obtaining an exemption than authorisation.

Schedule 8 also provides an exemption from the resale price maintenance prohibition for conduct between related bodies corporate, reflecting that companies within a corporate group are not considered to be competitors.

Schedule 9 to this bill makes a number of amendments to the act. It simplifies the complex provisions governing the authorisation process. It makes the commission the decision maker at first instance for merger authorisations, as it is best suited to make these decisions. It also grants the commission the power to issue a 'class exemption' for business practices that are unlikely to raise competition concerns or are likely to generate a net public benefit.

This will remove the need for individual applications for authorisation by creating 'safe harbours' for business and thereby reduce compliance and administration costs and increase certainty.

Schedule 9 also allows the commission to impose conditions on notifications for collective bargaining that involves collective boycott conduct, and grants the commission a power to issue a 'stop notice' requiring notified collective boycott conduct to cease.

These reforms will introduce greater flexibility into the collective bargaining notification process to ensure that it is more widely used. This is likely to be of particular benefit to small businesses, given their lack of bargaining power relative to larger suppliers. The commission may also impose conditions on notifications for resale price maintenance.

Schedule 10 to this bill extends section 83 of the act so that a party bringing certain proceedings may rely on admissions of fact as well as findings of fact made in certain other proceedings. This will help to reduce the cost of private actions, as a person relying on a previous admission of fact as prima facie evidence will not need to establish that fact.

Schedule 11 to this bill extends the commission's power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

Schedule 11 also introduces a 'reasonable search' defence to the offence of refusing or failing to comply with section 155. This reflects the increasing cost of documentary searches as businesses retain many more documents, such as emails, than in the past.

Schedule 11 also increases the fine for noncompliance with section 155 to bring it into line with penalties for similar notice-based investigative powers.

Schedule 12 amends part IIIA of the act, which contains the National Access Regime, to implement the recommendations made by the Productivity Commission in its inquiry into the regime. This will ensure that the regime better targets the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services. Schedule 12 amends and clarifies the declaration criteria that must be used by the National Competition Council and the designated minister in determining whether a service should be declared. Notably, the current 'private profitability' test is replaced by a 'natural monopoly' test. Schedule 12 also introduces a new power for the minister to revoke certification of a state access regime.

Schedule 13 to this bill deals with the transitional application of amendments made by the bill.

Schedule 14 to this bill makes various amendments to streamline the administration of the act, to reduce compliance burdens for business, individuals and government, while preserving the protections available under the act. These amendments focus on the requirements of the Australian Consumer Law.

Together, these reforms contained in the bill will strengthen, simplify and modernise our competition laws. The reforms will support the enforcement role of our national competition regulator and facilitate pro-competitive conduct to the long-term benefit of Australian businesses, consumers and the economy.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.

Link to Mr Morrison second reading speech in Hansard

 

Second reading speeches (Senate)

Not yet introduced into the Senate

 

Press release

Treasurer

Strengthening Competition – Harper Review legislation introduced

Today the Turnbull Government has introduced a significant package of legislation to simplify and strengthen Australia’s competition law. These reforms are designed to better target anti‑competitive conduct while supporting pro-competitive behaviour.

Together with reforms to the misuse of market power provision, which are already before the Parliament, this package moves towards the Turnbull Government’s aim of stronger competition in our markets, to improve the long-term welfare of consumers, businesses and ultimately the economy.

This legislation is also a major step towards implementing the competition law recommendations of the Harper Competition Policy Review which include:

  • replacing the never-used and unworkable price-signalling provisions with a general prohibition on concerted practices with the purpose, effect or likely effect of substantially lessening competition;
  • folding the merger clearance and authorisation processes into the general authorisation process. This means the ACCC will now hear applications for merger authorisation, and its decisions will be reviewable by the Australian Competition Tribunal;
  • enabling the ACCC to issue class exemptions, which will provide safe harbours for conduct that does not raise competition concerns. Where a class exemption has been issued, businesses will not need to make individual applications to the ACCC for authorisation or notification;
  • simplifying complex provisions relating to authorisations;
  • broadening the joint venture exemptions to the cartel conduct prohibitions, to better reflect the reality of how joint ventures operate, while strengthening the safeguards around the exemptions; and
  • changing declaration criteria to make the National Access Regime more effective.

Consumers will benefit from greater choice and the availability of the best quality goods and services at the lowest prices. Businesses will benefit from a competitive environment in which new and innovative firms can enter existing markets, and new markets are created. The Australian economy will benefit from the introduction of new technologies into Australia, and more agile local firms which are better able to compete in international markets.

The Bill is a key step towards ensuring strong competition, which drives businesses to operate more efficiently, improve quality, lower prices, innovate and invest in new technology.

Source: Treasurer's media release, 'Strengthening Competition - Harper Review Legislation Introduced' (30 March 2017)

 

Media and commentary

Firm commentary

Opinion

Forthcoming

Media