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AustraliaDawson Report 2003

About this Review

Involved review of all Part IV and related provisions. Key recommendations that have been implemented included increasing the level of civil penalties, making provision for dual listed companies to be treated in the same way a related companies for purposes of the restrictive trade practices provisions, requiring that merger authorisations proceed directly to the Tribunal, establishing a process of formal notification for mergers and providing a process for notification of collective bargaining by small business. Recommendations for the introduction of criminal penalties was given effect to by the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009.

Key recommendations not implemented include removing the per se prohibition of third line forcing, providing a general competition defence for exclusionary provisions and limiting the class of persons falling within the scope of the exclusionary conduct provision.

The Committee also recommended against any amendment to s 46: that provision has now been significantly amended - see Trade Practices Legislation Amendment Act 2007 and Trade Practices Legislation Amendment Act 2008

Summary of review and developments

In 2002–03, the Review of the Competition Provisions of the Trade Practices Act was undertaken by a committee chaired by Sir Daryl Dawson (hence the abbreviated reference to the 'Dawson Review'). The Report of the Committee (the Dawson Report) was released in April 2003 and recommended some significant changes to existing provisions.

The Howard government supported the majority of the Dawson recommendations and introduced the Trade Practices Legislation Amendment Bill (No. 1) 2005, intended to give effect to many of these. However, pressure from various interest groups led to the Government amending the Bill in relation to third line forcing (the Bill in its original form would have removed the per se prohibition of third line forcing). Despite passing through the House of Representatives, the amended bill failed to pass through the Senate when Nationals Senator Barnaby Joyce crossed the floor due to concerns over the proposed changes to the merger provisions of the Act. The Senate did pass the other elements of the Bill, but the Government indicated they would not accept these changes to the Bill and it subsequently lapsed. In 2006 the Government introduced the Trade Practices Legislation Amendment Bill (No 1) 2006, almost identical in substance to the amended 2005 Bill, which passed through both houses of Parliament and received Royal Assent in November 2006. Most of the amendments came into force on 1 January 2007. The key difference between this Act and the 2005 Bill relates to the ACCC’s role in merger clearance and authorisation which were slightly enhanced in the 2006 version. The most significant amendments brought about by this Act include (1) altering the process for merger clearance and authorisation (2) Increasing civil penalties available for contravention of the competition prohibitions and (3) Providing for collective bargaining notifications.

The Howard Government, while announcing (several times) that it would introduce legislation to criminalise cartel conduct, as recommended by the Dawson Report, never introduced such legislation before losing power. The new Rudd government, following the release of two exposure draft bills, introduced the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 in December 2008. Following minor amendments the bill passed through Parliament in June 2009.

 

Terms of reference

On 15 October 2001 Prime Minister Howard announced an independent review of the competition provisions of the TPA.

Terms of reference were announced by the Treasurer, The Hon Peter Costello MP, on 9 May 2002.

The Review included consideration of Part IV of the Act (which had not been comprehensively reviewed since the Hilmer Report) and associated provisions. Emphasis was given to the need for Australian business to compete in a global environment.

The Review did not include a review of the access regimes, Part XIB (telecommunications), the intellectual property exemptions in s 51 or provisions relating to secondary boycotts.

Full terms of reference area available on the review website.

The report was originally due on 20 November 2002; additional time was allowed and the reporting date extended to 31 January 2003.

Key Recommendations

For all recommendations see the External link web site of the Inquiry

Recommendation 2.1 - Mergers - Reasons for Informal Clearance

ACCC should provide 'adequate' reasons for the informal clearance process (a) when requested by the parties and (b) when a merger is rejected and (c) when undertakings are provided

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 2.2 - Mergers - Voluntary Formal Clearance

A voluntary formal clearance process should be set up for mergers (features detailed in recommendations 2.2.1 - 2.2.4)

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 2.3 - Mergers - Authorisation

Applications for authorisations should proceed directly to Tribunal (features detailed in recommendations 2.3.1 - 2.3.3)

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 3.1 - No Change to Misuse of Market Power

Recommended no change to s 46

Recommendation 5.1 - No cease and desist orders

The ACCC should not be given power to make cease and desist orders or have powers under s 155 extended to apply after commencement of judicial proceedings

Recommendation 6.1 - Authorisation - time limit

A time limit of six months for non-merger authorisations should be introduced - time limit for Tribunal review should be considered.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 6.2 - Authorisation - filing fees

ACCC should be given power to waive filing fees (all or part) for non-merger authorisation applications where the fee would prove unduly burdenous.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 6.3 - Authorisation -consultation

ACCC should develop informal system of consultation with non-merger authorisation applicants, designed to give them guidance about the process and requirements of the TPA.

Recommendation 7.1 - Small business collective bargaining

A notification process should be introduced for collective bargaining by small business in their dealing with large business

Related to this, (a) a transaction limit for definition of small business should be applied - $3m but variable by regulation (Recommendation 7.2), (b) a period of 14 days should be applied before notification effective (Recommendation 7.3) and (c) third parties should be able to make collective bargaining notifications on behalf of a small business group (Recommendation 7.4)

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 8.1 - Exclusionary provision defence

It should be a defence to an exclusionary provision action to prove that the provision did not have the purpose, effect or likely effect of SLC.

[not fully implemented: see [Trade Practices Legislation Amendment Act (No 1) 2006 ] ]

Recommendation 8.2 - Exclusionary provisions

The persons or classes of persons to which a prohibited exclusionary provision relates should be restricted to competitors (actual or potential) of one or more of the parties.

[not implemented]

Recommendation 8.3 - Removal of Per Se Prohibition of Third Line Forcing

Prohibition of third line forcing should be subjected to SLC test

[not implemented]

Recommendation 8.4 - Exclusive dealing and related companies

Related companies should be treated as a single entity for purposes of s 47.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 8.5 - Exclusive dealing authorisation/notification

Section 93(2) should be repealed so that conduct previously authorised can be notified.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 9.1 - Joint venture defence to price fixing

Current price fixing exemption (s 45A(2)) should be substituted for a provision that provides that s 45A(1) 'does not apply to a provision of a contract or arrangement made, or of an understanding arrived at, or of a proposed contract or arrangement ... if it is proved that the provision is for the purposes of a joint venture and the joint venture does not have the purpose, effect or likely effect of' SLC.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 9.2 - Joint Venture Guidelines

ACCC should develop guidelines regarding its approach to joint ventures.

Recommendation 9.3 - Dual Listed Companies

Intra-party transactions in a DLC should be treated on the same bases as related party transactions and the aggregate size of the DLS should be recognised for purposes of assessing market power.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 10.1 - Criminal penalties

Criminal penalties for serious cartel behaviour should be introduced after solutions are found to identified problems

[committee established to look at issues surrounding criminal penalties (their report never released)
Exposure draft bill released January 2008; Bill introduced into parliament December 2008. Awaiting passage through Senate]

Recommendation 10.2 - Increased civil penalties

Act should (a)'increase maximum pecuniary penalty for a corporation to 'the greater of $10 million or three times the gain from the contravention or, where gain cannot be readily ascertained, 10 per cent of the turnover of the body corporate and all of its interconnected bodies corporate (if any)'; (b) that the Court 'be given the option to exclude an individual implicated in a contravention from being a director of a corporation or being involved in its management' and (c) 'corporations be prohibited from indemnifying, directly or indirectly, officers, employees or agents against the imposition of a pecuniary penalty upon an officer, employee or agent'

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 11.1 - Oversight

Should consider establishing Joint Parliamentary Committee to oversee ACCC's administration of TPA

[Government indicated it accepted recommendation and urged Parliament to establish such a C'tee]

Recommendation 11.2 - Consultation

Act should establish a consultative committee to advise ACCC on the Act's administration. The Committee should be convened by an independent chairperson appointed by Treasurer.

Recommendations 11.2 - 11.5

Related to appointment of associate commissioner to handle complaints about the Act's administration, remuneration of commissioners, development of staff resources and review of ACCC service charter

Recommendation 12.1 - Media

Media code of conduct should be developed through proposed consultative committee. Recommendation 12.2 set out principles that should guide the establishment of the media code of conduct.

Recommendation 13.1 - Requests for Information

ACCC should give 'careful consideration to the financial implications of requests for information' made to business

Recommendation 13.2 - Delegation

The conduct of examinations pursuant to s 155(1)(c) notice 'should be delegable to senior staff of the ACCC'

Recommendation 13.3 - Amend s 155

Section 155 should be amended to require ACCC to seek a warrant from Federal Court Judge or Magistrate to exercise powers to enter premises and inspect documents and should provide 'ACCC with the power to search for and seize information'.

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

Recommendation 13.4 - Amend s 155

To extend availability of ACCC's investigatory power to cases in which ACCC is considering revoking an authorisation under ss 91A and 91B.

Recommendation 13.5 - Legal Professional Privilege

The Act should make clear that s 155 does not require production of documents subject to legal professional privilege

[implemented: Trade Practices Legislation Amendment Act (No 1) 2006 ]

 

Key statements

Forthcoming

 

Membership

The Honourable Sir Daryl Dawson AC KBE CB (Chairman)
Former member of the High Court of Australia

Mr Curt Rendall

Ms Jillian Segal

 

Submissions and meetings

212 public submissions were received and are available on the External linkreview website. Dozens of meetings were held with interested parties.

 

Legislative changes

Legislation introducing many of the Dawson recommendations was introduced as follows:

Trade Practices Legislation Amendment Act (No 1) 2006
First set of Dawson Reforms, including increased civil penalties and major changes to merger procedures

It is also proposed to introduce legislation criminalising cartels, as recommended by the Committee.

Changes not introduced

The government initially accepted the recommendation that a competition defence be available for exclusionary provisions (Recommendation 8.1); ultimately only a limited joint venture defence was introduced.

The government also initially agreed to recommendation 8.2 - to limit the class of persons the subject of an exclusionary provision - but the final legislation did not introduce this change.

Similarly, while the government initially proposed removing the per se prohibition of third line forcing (recommendation 8.3), in response to small business pressure plans for this reform were abandoned.

 

Related articles

2003

Julie Clarke, 'The Dawson Report and Merger Regulation' (2003) 8(2) Deakin Law Review 245

Roger Featherston, 'Checks and balances on the ACCC's powers' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 44

Brent Fisse, 'The Dawson Review: Enforcement and Penalties' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 54

Robert Gardini, 'The Dawson Review: A small business perspective' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 27

Lynden Griggs, 'Predatory pricing and Dawson - Protecting the competitive process, not competitors!' (2003) 9(1) University of New South wales Law Journal: Forum - The Dawson Review 36

Deborah Healey, 'The ACCC and the media: Improving the ratings' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 49

Michael Jacobs, 'The Dawson Review and section 46: The good, the bad, and the ugly' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 2

John Kench, 'Collective bargaining: The Dawson Review's assistance package for business cartels' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 21

Mitchell Landrigan, 'Great(er) expectations' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 32

R Ian McEwin, 'Competition law in a Small Open Economy' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 14

Jill McKeough, 'Is intellectual property different, or are all unhappy monopolists similar?' (2003) 9(1) University of New South wales Law Journal: Forum - The Dawson Review 40

Carolyn Oddie, 'Joint ventures - Achieving a balance' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 57

Warren Pengilley, 'Exclusionary provisions: The past and the future' (2003) 9(1) University of New South Wales Law Journal: Forum - The Dawson Review 9

externallinkRay Steinwall, 'The Dawson Committee on Competition, Economic Efficiency, Universality and Public Policy' [2003] UNSWLawJl 12; (2003) 26(1) University of New South Wales Law Journal 226

2002

Ross Jones, 'The Role of the ACCC in Australian Competition Policy' (2002) 35(4) The Australian Economic Review 430 (Policy Forum: Australia's Competition Laws: Business, the ACCC and the Dawson Review)

Steven Kates, 'A Critique of the Role, Powers and Activities of the ACCC: The Business View' (2002) 35(4) The Australian Economic Review 438 (Policy Forum: Australia's Competition Laws: Business, the ACCC and the Dawson Review)

Stephen P King, 'Reviewing the Trade Practices Act: The Dawson Committee Inquiry' (2002) 35(4) The Australian Economic Review 423-9 (Policy Forum: Australia's Competition Laws: Business, the ACCC and the Dawson Review)

Vijaya Nagarajan, 'The Accommodating Act: Reflections on Competition Policy and the Trade Practices Act' (2002) 20(1) Law in Context 34

Rhonda L Smith, 'Possible Implications of the Dawson Inquiry for the ACCC' (2002) 35(4) The Australian Economic Review 446 (Policy Forum: Australia's Competition Laws: Business, the ACCC and the Dawson Review)