Competition and Consumer Act 2010 (Cth)
Section 45AO
Joint Ventures - prosecution
Note: The Harper Reforms came into operation on 6 November 2017. This section has been modified and re-numbered. It was originally numbered s 44ZZRD. This page reflects the changes brought about by the passage of the Competition and Consumer Amendment (Competition Policy Reform) Act 2017. Please visit section 44ZZRO for the provision immediately prior to the commencement of the Harper Reforms.
The provision
Sections 45AF and 45AG do not apply in relation to a contract, arrangement or understanding containing a cartel provision if the defendant proves that:
(a) the cartel provision is:
(i) for the purposes of a joint venture; and
(ii) reasonably necessary for undertaking the 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
(c) the joint venture is not carried on for the purpose of substantially lessening competition; and
(d) in a case where subparagraph 4J(a)(i) applies to the joint venture—the joint venture is carried on jointly by the parties to the contract, arrangement or understanding; and
(e) in a case where subparagraph 4J(a)(ii) applies to the joint venture—the joint venture is carried on by a body corporate formed by the parties to the contract, arrangement or understanding for the purpose of enabling those parties to carry on the activity mentioned in paragraph (b) jointly by means of:
(i) their joint control; or
(ii) their ownership of shares in the capital;
of that body corporate.
Note 1: A defendant bears a legal burden in relation to the matter in this section (see section 13.4 of the Criminal Code).
Note 2: For example, if a joint venture formed for the purpose of research and development provides the results of its research and development to participants in the joint venture, it may be a joint venture for the supply of services.
Legislative history
Amended Competition and Consumer Amendment (Competition Policy Reform) Act 2017 (Act 114 of 2017)
11 Subsection 44ZZRO(1)
Omit “(1)”.
12 Subsection 44ZZRO(1)
Omit “contract containing a cartel provision if”, substitute “contract, arrangement or understanding containing a cartel provision if the defendant proves that”.
13 Paragraphs 44ZZRO(1)(a) and (b)
Repeal the paragraphs, substitute:
(a) the cartel provision is:
(i) for the purposes of a joint venture; and
(ii) reasonably necessary for undertaking the 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
(ba) the joint venture is not carried on for the purpose of substantially lessening competition; and
14 Paragraphs 44ZZRO(1)(c) and (d)
After “the contract”, insert “, arrangement or understanding”.
15 Subsection 44ZZRO(1) (note 1)
Repeal the note, substitute:
Note 1: A defendant bears a legal burden in relation to the matter in this section (see section 13.4 of the Criminal Code).
16 Subsections 44ZZRO(1A) to (4)
Repeal the subsections.
Re-lettered in accordance with s 38(4).
Introduced by Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009
Operative: 24 July 2009
Commentary
Harper modification
The provision was modified as part of the Harper reforms which resulted in the joint venture exemptions being:
- expanded to capture contracts, arrangements or understandings (previously only JV contracts were covered)
- expanded to include joint ventures for the acquisition of goods or services (previously it only covered JV's for production and/or supply)
- restricted to apply only to JV's that are for the purposes of a JV and reasonably necessary for undertaking a JV (there was previously no need to demonstrate that they were reasonably necessary)
- restricted so that they do not apply to JV's carried out for the purpose of substantially lessening competition
Original inclusion
The insertion of this provision was part of the package of reforms introducing criminal penalties for cartel conduct. The reforms also created a parallel civil cartel prohibition, replacing the former s 45A which dealt directly with price-fixing.
The reforms were initially recommend by the Dawson Committee as part of its 2002-2003 inquiry into the Competition Law provisions of the Trade Practices Act.
The scope of the joint venture 'defence' (which replaces the former s 76D which operated in relation to price fixing under s 45A) has been the subject of considerable debate. See, for example:
- Brent Fisse, The Contract Requirement for the Joint Venture Exceptions Under Sections 44ZZRO and 44ZZRP of the Cartel Bill (June 2009)
- Frank Zumbo, Criminalisation of Cartels: A Critique of the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 (Cth), (2009) 17 Trade Practices Law Journal 123 from p 126
See further information and resources on the cartel page.
