Overview of Australia's Competition Law

 

Australia's core competition law provisions are contained in Part IV of the Trade Practices Act 1974 (Cth). In addition, separate prohibitions have been created in relation to anti-competitive conduct in the telecommunications industry and a regime for access to essential facilities has been created. The following provides a brief overview of the core elements of Australia's competition policy - in each case more detailed information is available by following the relevant link.

 

Anti-competitive agreements

 

Section 45 of the Trade Practices Act (TPA) prohibits contracts, arrangements or understandings containing a provision which has the purpose, effect or likely effect of substantially lessening competition. These arrangements will genearlly be horizontal in nature, but this is not a requirement of s 45 (and as a number of anti-competitive vertical arrangements are caught by other more specific provisions in Part IV, anti-overlap provisions will give those specific provisions priority over s 45). Legislation introduced in 2006 (Trade Practices Legislation Amendment Act (No 1) 2006) permits certain collective bargaining arrangements. A joint venture exemption is also available where the joint venture itself does not have an anti-competitive purpose or effect.

The conduct of dual listed companies is now assessed under s 49 which prohibits parties making (or giving effect to) a dual listed company arrangement if a provision fo the proposed arrangement would have the purpose, effect or likely effect of substantially lessening competition.

Section 45 also prohibits price fixing - by virtue of the operation of s 45A price fixing is prohibited per se - that is, without the need to prove a substantial lessening of competition.

Section 45 also prohibits exclusionary provisions (boycotts) per se. Exclusionary provisions are defined broadly in s 4D. A limited defence is available in relation to joint venture agreements that do not substantially lessen competition.

For more information about cartels in Australia click here

 

Misuse of Market Power

 

Section 46(1) prohibits a corporation with substantial market power taking advantage of that market power for a prohibited anti-competitive purpose.

Recently a new s 46(1AA) was introduced to specifically target predatory pricing. Under this provision predatory pricing is prohibited where a corporation having substantial market share supplies goods or services below cost for a sustained period for one of the three prohibited anti-competitive purposes.

Some modifications to the misuse of market power provisions will be introduced by the Trade Practices Legislation Amendment Bill 2008.

For more information about misuse of market power in Australia click here

 

Exclusive Dealing

 

Section 47 of the TPA prohibits various forms of exclusive dealing. Broadly, it captures two types of anti-competitive vertical transactions:

(1) the conditional supply (or acquisition) of goods or services (conditions may relate to the ability to re-supply, exclusivity, limits on ability to acquire from competitors etc)

(2) refusing to supply for specified reasons (eg, because purchaser refuses to agree to a conditional supply).

Most forms of exclusive dealing (including full line forcing) are captured only if it can be demonstrated that they substantially lessen competition (s 47(10)). However, third line forcing is captured regardless of its anti-competitive effect.

Recognising potential benefits associated with exclusive dealing, a system of notification and authorisation is available. Authorisation may be provided on public benefit grounds. More commonly, parties will notify the ACCC of conduct that might fall within the various definitions of exclusive dealing and, while the notification stands, they will not be held in breach of s 47. The ACCC can only remove the notification if they consider the conduct substantially lessens competition and that there are no benefits to the public that would outweigh the anti-competitive detriment.

For more information about exclusive dealing in Australia click here

 

Resale Price Maintenance

 

Section 48 of the TPA prohibits a corporation from engaging in the practice of resale price maintenance. Resale price maintenance is defined in Part VIII. It captures various forms of minimum RPM, both in relation to goods and services (including withholding supply as a result of failure to agree to or adhere to a RPM requirement). Maximum RPM is not prohibited (even if it substantially lessens competition!) A person does not engage in RPM merely by providing a statement of recommended prices (s 97).

For more information about resale price maintenance in Australia click here

 

Mergers

 

In Australia mergers are prohibited if it can be demonstrated that they will have the effect or likely effect of substantially lessening competition in a market (section 50 TPA). It is possible to obtain clearance (formal or informal) or authorisation for proposed mergers, but there is no mandatory notification process.

Clearance will be granted only if the ACCC does not believe the merger will SLC (s 95AN). Authorisation, on the other hand, may be granted by the Australian Competition Tribunal even where the merger will SLC if it can be demonstrated that the merger would lead to such a benefit to the public that it should be allowed to occur (s 95AZH).

Section 50A deals with mergers occurring outside Australia.

For more information about mergers in Australia click here

 

Authorisation and Notification

 

Authorisation is available for all forms of conduct prohibited by Part IV of the TPA, save for misuse of market power. Authorisation is granted either where public benefit can be demonstrated to outweigh any anti-competitive detriment or where the public benefit is such that the conduct should be permitted (although different tests apply to different conduct, in practice they seem to apply in the same way).

Notification is available for small business collective bargaining and for exclusive dealing.

For more information about authorisation and notification in Australia click here

 

Access to Essential Services

 

The Competition Policy Reform Act 1995, following recommendations of the Hilmer Committee in 1993, introduced a formal system of access to essential facilities. This is provided for in Part IIIA of the TPA and more recently a separate system of access to telecommunications facilities has been established. In relation to Part IIIA, access is available when the relevant minister declares a particular facility.

For more information about access in Australia click here

 

Administration

 

Australian Competition and Consumer Commission

Although individuals may commence actions for damages and other remedies, the ACCC is the primary enforcer of Part IV of the TPA. If it believes there has been a contravention of the TPA it may commence procedings for pecuniary penalties, injunctions, divestiture in the case of mergers and it may accept andertakings (s 87B) designed to alleviate competition concerns. It has powers to obtain evidence pursuant to s 155 and, subject to obtaining a search warrant, has search and seizure powers to assist in its investigations.

The ACCC also provides a semi-judicial role, having the power to grant 'authorisation' of conduct that would otherwise contravene Part IV (other than for mergers in which it plays an advisory role) on public benefit grounds (appeal is available to the ACT). . It also has the power to revoke notifications made in respect of exclusive dealing or collective bargaining, again on public benefit grounds (appeal is available to the ACT).

The ACCC also has a role in relation to the access regime; in particular, it is involved in the arbitration of access disputres, the registratin of access contracts and may assess and accept undertakings from providers of decleared services.

More generally the ACCC has the function of disseminating information about the TPA, including the provision of guidelines, and has a research and reporting role.

For more information about administration by the ACCC in Australia click here

 

Australian Competition Tribunal (ACT)

The Tribunal’s main function is to hear appeals from decisions of the ACCC relating to authorisation and notification.  There is also a review function in relation to the access regime. Since the passage of the 2006 Amendment Act the Tribunal now hears merger authorisations applications directly and they may hear appeals from formal merger clearance decisions of the ACCC. The President and Deputy Presidents must be judges of the Federal Court and other members must be experienced in industry, commerce, economics or public administration.

For more information about administration by the ACT in Australia click here

 

National Competition Council (NCC)

The Council was established as a result of the Hilmer Reforms in 1995.  It is composed of a President and three other members, having the primary roles of advising about competition law matters and making recommendations in relation to access declarations.

For more information about administration by the NCC in Australia click here

 

Federal Court of Australia

The Federal Court of Australia has primary jurisdiction in relation to competition law matters (to the exclusion of other courts).  The Federal Court is also given exclusive jurisdictions under the state and territory Competition Codes.

For more information about the Federal Court's role click here

 

Remedies

 

Currently only civil remedies are available for contraventions of Part IV of the TPA. THey include:

(1) pecuniary penalties (s 76)

(2) damages (s 82)

(3) injunctions (s 80)

(4) divestiture (in relation to mergers) (s 81)

(5) non-punitive orders (eg, community service) (s 86C)

(6) punitive orders - adverse publicity orders (86D)

(7) disqualification from directorship (86E)

(8) other orders (s 87)

For more information about remedies in Australia click here