Competition Policy Review

This page discusses the differences between the existing competition laws and those proposed by the Harper Panel. It doesn't cover all recommended changes; however, it does consider the following key proposed changes to the law:

• Cartels
• Anti-competitive agreements and price signalling
• Exclusionary provisions (boycotts)
• Misuse of market power
• Resale Price Maintenance
• Mergers

The Harper panel recommended that the cartel provisions be simplified, that a broad exemption be introduced for joint ventures and that an exemption should be included for trading restrictions imposed by one firm on another in connection with the supply or acquisition of goods and services

Harper Cartel Recommendation | Harper Cartel Discussion | Existing Cartel Provisions | Proposed Cartel Provisions

The prohibitions against cartel conduct in Part IV, Division 1 of the CCA should be simplified and the following specific changes made:

• The provisions should apply to cartel conduct involving persons who compete to supply goods or services to, or acquire goods or services from, persons resident in or carrying on business within Australia.
• The provisions should be confined to conduct involving firms that are actual or likely competitors, where ‘likely’ means on the balance of probabilities.
• A broad exemption should be included for joint ventures, whether for the production, supply, acquisition or marketing of goods or services, recognising that such conduct will be prohibited by section 45 of the CCA if it has the purpose, effect or likely effect of substantially lessening competition.
• An exemption should be included for trading restrictions that are imposed by one firm on another in connection with the supply or acquisition of goods or services (including intellectual property licensing), recognising that such conduct will be prohibited by section 45 of the CCA (or section 47 if retained) if it has the purpose, effect or likely effect of substantially lessening competition.

The Panel discussed cartel conduct in chapter 20.1. It expressed support for the intent of the cartel provisions, noting cartel conduct between competitors is anti-competitive in most cases and should be per se prohibited. However, the Panel also pointed to a number of deficiencies in the current framework - in particular:

• the provisions are 'excessively complex', undermining compliance and enforcement
• the cartel provisions should be confined to cartel conduct 'involving persons who compete to supply goods or services to, or acquire goods or services from, persons resident in or carrying on a business within Australia'
• because of the potential for criminal sanctions the provisions hsould be confined to conduct involving firms that are 'actual competitors' and not those for whom competition is a 'mere possibility'
• Joint ventures should not be subject to the cartel provisions - they should only be prohbited where they substantially lessen competition
• trading restrictions imposed by one firm on another in connection with supply or acquisition of goods and services (such as IP licensing) should not be subject tot he cartel provision - they should only be prohibited where they SLC.

Complex drafting

The Panel noted that while 'drafting criminal conduct provisions must necessarily involve a degree of specificity', the current cartel provisions are 'overly complex and do not provide businesses with sufficient clarity and certainty.' The Panel referred to a recent NZ Bill proposing to introduce criminal sanctions for cartel conduct as a useful illustration of how Australian law might be simplified. The Panel noted the concerns of the ACCC and CDPP regarding simplification but nevertheless considered the provisions could and should be simplified without giving rise to the concerns identified.

The Panel also recommended repealing the separate prohibiton on exclusionary provisions in s 45 and making adjustments to the cartel provisions to cover any resulting gaps (reflected in the model laws).

Modifying the scope of the cartel prohibitions

[page 361]

Section 44ZZRA Simplified Outline

The following is a simplified outline of this Division:

Section 44ZZRB Definitions

In this Division:

annual turnover, of a body corporate during a 12‑month period, means the sum of the values of all the supplies that the body corporate, and any body corporate related to the body corporate, have made, or are likely to make, during the 12‑month period, other than:

(a) supplies made from any of those bodies corporate to any other of those bodies corporate; or

(b) supplies that are input taxed; or

(c) supplies that are not for consideration (and are not taxable supplies under section 72‑5 of the A New Tax System (Goods and Services Tax) Act 1999); or

(d) supplies that are not made in connection with an enterprise that the body corporate carries on; or

(e) supplies that are not connected with Australia.

Expressions used in this definition that are also used in the A New Tax System (Goods and Services Tax) Act 1999 have the same meaning as in that Act.

benefit includes any advantage and is not limited to property.

bid includes:

(a) tender; and

(b) the taking, by a potential bidder or tenderer, of a preliminary step in a bidding or tendering process.

evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.

likely, in relation to any of the following:

(a) a supply of goods or services;

(b) an acquisition of goods or services;

(c) the production of goods;

(d) the capacity to supply services;

includes a possibility that is not remote.

obtaining includes:

(a) obtaining for another person; and

(b) inducing a third person to do something that results in another person obtaining.

party has a meaning affected by section 44ZZRC.

production includes manufacture, processing, treatment, assembly, disassembly, renovation, restoration, growing, raising, mining, extraction, harvesting, fishing, capturing and gathering.

Section 44ZZRC Extended meaning of party

For the purposes of this Division, if a body corporate is a party to a contract, arrangement or understanding (otherwise than because of this section), each body corporate related to that body corporate is taken to be a party to that contract, arrangement or understanding.

Section 44ZZRD Cartel provisions

(1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:

(a) either of the following conditions is satisfied in relation to the provision:

(i) the purpose/effect condition set out in subsection (2);

(ii) the purpose condition set out in subsection (3); and

(b) the competition condition set out in subsection (4) is satisfied in relation to the provision.

Purpose/effect condition

(2) The purpose/effect condition is satisfied if the provision has the purpose, or has or is likely to have the effect, of

(a) fixing, controlling or maintaining; or

(b) providing for the fixing, controlling or maintaining of;

the price for, or a discount, allowance, rebate or credit in relation to:

(c) goods or services supplied, or likely to be supplied, by any or all of the parties to the contract, arrangement or understanding; or

(d) goods or services acquired, or likely to be acquired, by any or all of the parties to the contract, arrangement or understanding; or

(e) goods or services re-supplied, or likely to be re-supplied, by persons or classes of persons to whom those goods or services were supplied by any or all of the parties to the contract, arrangement or understanding; or

(f) goods or services likely to be re-supplied by persons or classes of persons to whom those goods or services are likely to be supplied by any or all of the parties to the contract, arrangement or understanding.

Note 1:The purpose/effect condition can be satisfied when a provision is considered with  (8).

Note 2: Party has an extended meaning—see section 44ZZRC.

Purpose condition

(3) The purpose condition is satisfied if the provision has the purpose of directly or indirectly:

(a) preventing, restricting or limiting:

(i) the production, or likely production, of goods by any or all of the parties to the contract, arrangement or understanding; or

(ii) the capacity, or likely capacity, of any or all of the parties to the contract, arrangement or understanding to supply services; or

(iii) the supply, or likely supply, of goods or services to persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or

(b) allocating between any or all of the parties to the contract, arrangement or understanding:

(i) the persons or classes of persons who have acquired, or who are likely to acquire, goods or services from any or all of the parties to the contract, arrangement or understanding; or

(ii) the persons or classes of persons who have supplied, or who are likely to supply, goods or services to any or all of the parties to the contract, arrangement or understanding; or

(iii) the geographical areas in which goods or services are supplied, or likely to be supplied, by any or all of the parties to the contract, arrangement or understanding; or

(iv) the geographical areas in which goods or services are acquired, or likely to be acquired, by any or all of the parties to the contract, arrangement or understanding; or

(c) ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services:

(i) one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not; or

(ii) 2 or more parties to the contract, arrangement or understanding bid, but at least 2 of them do so on the basis that one of those bids is more likely to be successful than the others; or

(iii) 2 or more parties to the contract, arrangement or understanding bid, but not all of those parties proceed with their bids until the suspension or finalisation of the request for bids process; or

(iv) 2 or more parties to the contract, arrangement or understanding bid and proceed with their bids, but at least 2 of them proceed with their bids on the basis that one of those bids is more likely to be successful than the others; or

(v) 2 or more parties to the contract, arrangement or understanding bid, but a material component of at least one of those bids is worked out in accordance with the contract, arrangement or understanding.

Note 1: For example, subparagraph (3)(a)(iii) will not apply in relation to a roster for the supply of after‑hours medical services if the roster does not prevent, restrict or limit the supply of services.

Note 2: The purpose condition can be satisfied when a provision is considered with related  (9).

Note 3: Party has an extended meaning - see section 44ZZRC.

Competition condition

(4)The competition condition is satisfied if at least 2 of the parties to the contract, arrangement or understanding:

(a) are or are likely to be; or

(b) but for any contract, arrangement or understanding, would be or would be likely to be;

in competition with each other in relation to:

(c) if paragraph (2)(c) or (3)(b) applies in relation to a supply, or likely supply, of goods or services—the supply of those goods or services; or

(d) if paragraph (2)(d) or (3)(b) applies in relation to an acquisition, or likely acquisition, of goods or services—the acquisition of those goods or services; or

(e) if paragraph (2)(e) or (f) applies in relation to a re‑supply, or likely re‑supply, of goods or services—the supply of those goods or services to that re‑supplier; or

(f) if subparagraph (3)(a)(i) applies in relation to preventing, restricting or limiting the production, or likely production, of goods—the production of those goods; or

(g) if subparagraph (3)(a)(ii) applies in relation to preventing, restricting or limiting the capacity, or likely capacity, to supply services—the supply of those services; or

(h) if subparagraph (3)(a)(iii) applies in relation to preventing, restricting or limiting the supply, or likely supply, of goods or services—the supply of those goods or services; or

(i) if paragraph (3)(c) applies in relation to a supply of goods or services—the supply of those goods or services; or

(j) if paragraph (3)(c) applies in relation to an acquisition of goods or services—the acquisition of those goods or services.

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

Immaterial whether identities of persons can be ascertained

(5) It is immaterial whether the identities of the persons referred to in paragraph (2)(e) or (f) or  (3)(a)(iii), (b)(i) or (ii) can be ascertained.

Recommending prices etc.

(6) For the purposes of this Division, a provision of a contract, arrangement or understanding is not taken:

(a) to have the purpose mentioned in subsection (2); or

(b) to have, or be likely to have, the effect mentioned in subsection (2);

by reason only that it recommends, or provides for the recommending of, a price, discount, allowance, rebate or credit.

Immaterial whether particular circumstances or particular conditions

(7) It is immaterial whether:

(a) for the purposes of subsection (2), subparagraph (3)(a)(iii) and paragraphs (3)(b) and (c)—a supply or acquisition happens, or a likely supply or likely acquisition is to happen, in particular circumstances or on particular conditions; and

(b) for the purposes of subparagraph (3)(a)(i)—the production happens, or the likely production is to happen, in particular circumstances or on particular conditions; and

(c) for the purposes of subparagraph (3)(a)(ii)—the capacity exists, or the likely capacity is to exist, in particular circumstances or on particular conditions.

Considering related provisions—purpose/effect condition

(8) For the purposes of this Division, a provision of a contract, arrangement or understanding is taken to have the purpose, or to have or be likely to have the effect, mentioned in subsection (2) if the provision, when considered together with any or all of the following provisions:

(a) the other provisions of the contract, arrangement or understanding;

(b) the provisions of another contract, arrangement or understanding, if the parties to that other contract, arrangement or understanding consist of or include at least one of the parties to the first‑mentioned contract, arrangement or understanding;

has that purpose, or has or is likely to have that effect.

Considering related provisions—purpose condition

(9) For the purposes of this Division, a provision of a contract, arrangement or understanding is taken to have the purpose mentioned in a paragraph of subsection (3) if the provision, when considered together with any or all of the following provisions:

(a) the other provisions of the contract, arrangement or understanding;

(b) the provisions of another contract, arrangement or understanding, if the parties to that other contract, arrangement or understanding consist of or include at least one of the parties to the first‑mentioned contract, arrangement or understanding;

has that purpose.

Purpose/effect of a provision

(10) For the purposes of this Division, a provision of a contract, arrangement or understanding is not to be taken not to have the purpose, or not to have or to be likely to have the effect, mentioned in  (2) by reason only of:

(a) the form of the provision; or

(b) the form of the contract, arrangement or understanding; or

(c) any description given to the provision, or to the contract, arrangement or understanding, by the parties.

Purpose of a provision

(11) For the purposes of this Division, a provision of a contract, arrangement or understanding is not to be taken not to have the  (3) by reason only of:

(a) the form of the provision; or

(b) the form of the contract, arrangement or understanding; or

(c) any description given to the provision, or to the contract, arrangement or understanding, by the parties.

Section 44ZZRE Meaning of expressions in other provisions of this Act

In determining the meaning of an expression used in a provision of this Act (other than this Division, subsection 6(2C), paragraph 76(1A)(aa) or subsection 93AB(1A)), this Division is to be disregarded.

Section 44ZZRF Making a contract etc. containing a cartel provision

Offence

(1) A corporation commits an offence if:

(a) the corporation makes a contract or arrangement, or arrives at an understanding; and

(b) the contract, arrangement or understanding contains a cartel provision.

Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

(2) The fault element for paragraph (1)(b) is knowledge or belief.

Penalty

(3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following:

(a) $10,000,000;

(b) if the court can determine the total value of the benefits that:

(i) have been obtained by one or more persons; and

(ii) are reasonably attributable to the commission

3 times that total value;

(c) if the court cannot determine the total value of those benefits—10% of the corporation’s annual turnover during the 12‑month period ending at the end of the month in which the corporation committed, or began committing, the offence.

Indictable offence

(4) An offence against subsection (1) is an indictable offence.

Section 44ZZRG Giving effect to a cartel provision

Offence

(1) A corporation commits an offence if:

(a) a contract, arrangement or understanding contains a cartel provision; and

(b) the corporation gives effect to the cartel provision.

Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

(2) The fault element for paragraph (1)(a) is knowledge or belief.

Penalty

(3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following:

(a) $10,000,000;

(b) if the court can determine the total value of the benefits that:

(i) have been obtained by one or more persons; and

(ii) are reasonably attributable to the commission of the offence;

3 times that total value;

(c) if the court cannot determine the total value of those benefits—10% of the corporation’s annual turnover during the 12-month period ending at the end of the month in which the corporation committed, or began committing, the offence.

Pre-commencement contracts etc.

(4) Paragraph (1)(a) applies to contracts or arrangements made, or understandings arrived at, before, at or after the

Indictable offence

(5) An offence against subsection (1) is an indictable offence.

Section 44ZZRH Determining Guilt

(1) A corporation may be found guilty of an offence against section 44ZZRF or 44ZZRG even if:

(a) each other party to the contract, arrangement or understanding is a person who is not criminally responsible; or

(b) subject to subsection (2), all other parties to the contract, arrangement or understanding have been acquitted of the offence.

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

(2) A corporation cannot be found guilty of an offence against section 44ZZRF or 44ZZRG if:

(a) all other parties to the contract, arrangement or understanding have been acquitted of such an offence; and

(b) a finding of guilt would be inconsistent with their acquittal.

Section 44ZZRI Court may make related civil orders

If a prosecution against a person for an offence against section 44ZZRF or 44ZZRG is being, or has been, heard by a court, the court may:

(a) grant an injunction under section 80 against the person in relation to:

(i) the conduct that constitutes, or is alleged to constitute, the offence; or

(ii) other conduct of that kind; or

(b) make an order under section 86C, 86D, 86E or 87 in relation to the offence.

Section 44ZZRJ Making a contract etc. containing a cartel provision

A corporation contravenes this section if:

(a) the corporation makes a contract or arrangement, or arrives at an understanding; and

(b) the contract, arrangement or understanding contains a cartel provision.

Note: For enforcement, see Part VI.

Section 44ZZRK Giving effect to a cartel provision

(1) A corporation contravenes this section if:

(a) a contract, arrangement or understanding contains a cartel provision; and

(b) the corporation gives effect to the cartel provision.

Note: For enforcement, see Part VI.

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

Section 44ZZRL Conduct notified

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply to a corporation in relation to a contract, arrangement or understanding containing a cartel provision, in so far as:

(a) the cartel provision:

(i) has the purpose, or has or is likely to have the effect, mentioned in subsection 44ZZRD(2); or

(ii) has the purpose mentioned in a paragraph of subsection 44ZZRD(3) other than paragraph (c); and

(b) the corporation has given the Commission a collective bargaining notice under subsection 93AB(1A) setting out particulars of the contract, arrangement or understanding; and

(c) the notice is in force under section 93AD.

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 burden in relation to that matter.

Section 44ZZRM Cartel provision subject to grant of authorisation

(1) Sections 44ZZRF and 44ZZRJ do not apply in relation to the making of a contract that contains a cartel provision if:

(a) the contract is subject to a condition that the provision will not come into force unless and until the corporation is granted an authorisation to give effect to the provision; and

(b) the corporation applies for the grant of such an authorisation within 14 days after the contract is made.

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 bears an evidential burden in relation to that matter.

Section 44ZZRN Contracts, arrangements or understandings between related bodies corporate

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding if the only parties to the contract, arrangement or understanding are bodies corporate that are related to each other.

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 burden in relation to that matter.

Section 44ZZRO Joint Ventures - prosecution

(1) Sections 44ZZRF and 44ZZRG do not apply in relation to a contract containing a cartel provision if:

(a) the cartel provision is for the purposes of a joint venture; and

(b) the joint venture is for the production and/or supply of goods or services; and

(c) 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; and

(d) 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 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 an evidential burden in relation to the matter in subsection (1) (see subsection 13.3(3) 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.

(1A) Section 44ZZRF does not apply in relation

(a) the arrangement or understanding is not a contract; and

(b) when the arrangement was made, or the understanding was arrived at, each party to the arrangement or understanding:

(i) intended the arrangement or understanding to be a contract; and

(ii) reasonably believed that the arrangement or understanding was a contract; and

(c) the cartel provision is for the purposes of a joint venture; and

(d) the joint venture is for the production and/or supply of goods or services; and

(e) 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 arrangement or understanding; and

(f) 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 arrangement or understanding for the purpose of enabling those parties to carry on the activity mentioned in paragraph (d) 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 an evidential burden in relation to the matter in subsection (1A) (see subsection 13.3(3) 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.

(1B) Section 44ZZRG does not apply in relation to giving effect to a cartel provision contained in an arrangement or

(a) the arrangement or understanding is not a contract; and

(b) when the arrangement was made, or the understanding was arrived at, each party to the arrangement or understanding:

(i) intended the arrangement or understanding to be a contract; and

(ii) reasonably believed that the arrangement or understanding was a contract; and

(c) when the cartel provision was given effect to, each party to the arrangement or understanding reasonably believed that the arrangement or understanding was a contract; and

(d) the cartel provision is for the purposes of a joint venture; and

(e) the joint venture is for the production and/or supply of goods or services; and

(f) 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 arrangement or understanding; and

(g) 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 arrangement or understanding for the purpose of enabling those parties to carry on the activity mentioned in paragraph (e) 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 an evidential burden in relation to the matter in subsection (1B) (see subsection 13.3(3) 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.

Notice to prosecutor

(2) A person is not entitled to rely on subsection (1), (1A) or (1B) in a trial for an offence unless, within 28 days after the day on which the person is committed for trial, the person gives

(a) a written notice setting out:

(i) the facts on which the person proposes to rely for the purpose of discharging the evidential burden borne by the person in relation to the matter in subsection (1), (1A) or (1B), as the case may be; and

(ii) the names and address of any witnesses whom the person proposes to call for the purpose of discharging the evidential burden borne by the person in relation to the matter in subsection (1), (1A) or (1B), as the case may be; and

(b) certified copies of any documents which the person proposes to adduce or point to for the purpose of discharging the evidential burden borne by the person in relation to the matter in subsection (1), (1A) or (1B), as the case may be.

(3) If the trial of a person for an offence is

(a) exempt the person from compliance with subsection (2); or

(b) extend the time within which the person is required to comply with subsection (2).

(4) For the purposes of paragraph (2)(b), a certified copy of a document is a copy of the document certified to be a true copy by:

(a) a Justice of the Peace; or

(b) a commissioner for taking affidavits.

Section 44ZZRP Joint Ventures - civil penalty proceedings

(1) Sections 44ZZRJ and 44ZZRK do not apply in relation to a contract containing a cartel provision if:

(a) the cartel provision is for the purposes of a joint venture; and

(b) the joint venture is for the production and/or supply of goods or services; and

(c) 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; and

(d) 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 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: 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.

(1A) Section 44ZZRJ does not apply in relation to an arrangement or understanding containing a cartel provision if:

(a) the arrangement or understanding is not a contract; and

(b) when the arrangement was made, or the understanding was arrived at, each party to the arrangement or understanding:

(i) intended the arrangement or understanding to be a contract; and

(ii) reasonably believed that the arrangement or understanding was a contract; and

(c) the cartel provision is for the purposes of a joint venture; and

(d) the joint venture is for the production and/or supply of goods or services; and

(e) 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 arrangement or understanding; and

(f) 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 arrangement or understanding for the purpose of enabling those parties to carry on the activity mentioned in paragraph (d) jointly by means of:

(i) their joint control; or

(ii) their ownership of shares in the capital; of that body corporate.

Note: 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.

(1B) Section 44ZZRK does not apply in relation to giving effect to a cartel provision contained in an arrangement or understanding if:

(a) the arrangement or understanding is not a contract; and

(b) when the arrangement was made, or the understanding was arrived at, each party to the arrangement or understanding:

(i) intended the arrangement or understanding to be a contract; and

(ii) reasonably believed that the arrangement or understanding was a contract; and

(c) when the cartel provision was given effect to, each party to the arrangement or understanding reasonably believed that the arrangement or understanding was a contract; and (d) the cartel provision is for the purposes of a joint venture; and

(e) the joint venture is for the production and/or supply of goods or services; and

(f) 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 arrangement or understanding; and

(g) 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 arrangement or understanding for the purpose of enabling those parties to carry on the activity mentioned in paragraph (e) jointly by means of:

(i) their joint control; or

(ii) their ownership of shares in the capital; of that body corporate.

Note: 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.

(2) A person who wishes to rely on subsection (1), (1A) or (1B) bears an evidential burden in relation to that matter.

Section 44ZZRQ Covenants affecting competition

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract containing a cartel provision, in so far as the cartel provision constitutes a covenant to which section 45B applies or, but for subsection 45B(9), would apply.

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 burden in relation to that matter.

Section 44ZZRR Resale Price Maintenance

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as the cartel provision relates to:

(a) conduct that contravenes section 48; or

(b) conduct that would contravene section 48 but for the operation of subsection 88(8A); or

(c) conduct that would contravene section 48 if this Act defined the acts constituting the practice of resale price maintenance by reference to the maximum price at which goods or services are to be sold or supplied or are to be advertised, displayed or offered for sale or supply.

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 burden in relation to that matter.

Section 44ZZRS Exclusive Dealing

(1) Sections 44ZZRF and 44ZZRJ do not apply in relation to the making of a contract, arrangement or understanding that contains a cartel provision, in so far as giving effect to the cartel provision would, or would but for the operation of subsection 47(10) or 88(8) or section 93, constitute a contravention of section 47.

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

(2) Sections 44ZZRG and 44ZZRK do not apply in relation to the giving effect to a cartel provision by way of:

(a) engaging in conduct that contravenes, or would but for the operation of subsection 47(10) or 88(8) or section 93 contravene, section 47; or

(b) doing an act by reason of a breach or threatened breach of a condition referred to in subsection 47(2), (4), (6) or

(i) an authorisation under subsection 88(8) is in

(ii) by reason of subsection 93(7), conduct engaged in by that person on that condition is not to be taken to have the effect of section 47; or

(iii) a notice under subsection 93(1) is in force in relation to conduct engaged in by that person on that condition.

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

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

Section 44ZZRT Dual listed company arrangement

(1) Sections 44ZZRF and 44ZZRJ do not apply in relation to the making of a contract, arrangement or understanding that contains a cartel provision, in so far as:

(a) the contract, arrangement or understanding is a dual listed company arrangement; and

(b) the making of the contract, arrangement or understanding would, or would apart from subsection 88(8B), contravene section 49.

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 (3) of this section).

(2) Sections 44ZZRG and 44ZZRK do not apply in relation to the giving effect to a cartel provision, in so far as:

(a) the cartel provision is a provision of a dual listed company arrangement; and

(b) the giving effect to the cartel provision would, or would apart from subsection 88(8B), contravene section 49.

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

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

Section 44ZZRU Acquisition of shares or assets

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as the cartel provision provides directly or indirectly for the acquisition of:

(a) any shares in the capital of a body corporate; or

(b) any assets of a person.

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 burden in relation to that matter.

Section 44ZZRV Collective acquisition of goods or services by the parties to a contract, arrangement or understanding

(1) Sections  44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as:

(a) the cartel provision has the purpose, or has or is likely to have the effect, mentioned in subsection 44ZZRD(2); and

(b) either:

(i) the cartel provision relates to the price for goods or services to be collectively acquired, whether directly or indirectly, by the parties to the contract, arrangement or understanding; or

(ii) the cartel provision is for the joint advertising of the price for the re­supply of goods or services so acquired.

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 burden in relation to that matter.

45 Simplified outline [currently section 44ZZRA]

The following is a simplified outline of this Division:

45A Definitions [currently section 44ZZRB]

In this Division:

annual turnover, of a body corporate during a 12-month period, means the sum of the values of all the supplies that the body corporate, and any body corporate related to the body corporate, have made, or are likely to make, during the 12-month period, other than:

(a) supplies made from any of those bodies corporate to any other of those bodies corporate; or

(b) supplies that are input taxed; or

(c) supplies that are not for consideration (and are not taxable supplies under section 72-5 of the A New Tax System (Goods and Services Tax) Act 1999); or

(d) supplies that are not made in connection with an enterprise that the body corporate carries on; or

(e) supplies that are not connected with Australia.

Expressions used in this definition that are also used in the A New Tax System (Goods and Services Tax) Act 1999 have the same meaning as in that Act.

benefit includes any advantage and is not limited to property.

evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.

production includes research, development, manufacture, processing, treatment, assembly, disassembly, renovation, restoration, growing, raising, mining, extraction, harvesting, fishing, capturing and gathering.

45B Cartel provisions [currently section 44ZZRD]

(1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:

(a) (price fixing) the provision has the purpose, or has or is likely to have the effect, of fixing, controlling or maintaining the price for, or a discount, allowance, rebate or credit in relation to, goods or services that are supplied or acquired by any party to the contract, arrangement or understanding in competition with any other party;

(b) (restricting output) the provision has the purpose of preventing, restricting or limiting:

(i) the production or the supply by any party to the contract, arrangement or understanding of goods or services that are supplied by that party in competition with any other party;

(ii) the acquisition by any party to the contract, arrangement or understanding of goods or services that are acquired by that party in competition with any other party;

(c) (market allocation) the provision has the purpose of allocating to or from any party to the contract, arrangement or understanding:

(i) the persons or classes of persons to whom that party may supply, or from whom that person may acquire, goods or services in competition with any other party; or

(ii) the geographical areas in which that party may supply or acquire goods or services in competition with any other party;

(d) (bid rigging) the provision has the purpose of restricting whether, or the terms on which, or the extent to which, any party to the contract, arrangement or understanding may bid in competition with any other party in response to a request for bids for the supply or acquisition of goods or services.

Competition

(2) For the purposes of subsection (1), a party to a contract, arrangement or understanding supplies goods or services in competition with another party if and only if:

(a) those parties or any of their respective related bodies corporate are, or are likely to be, in competition with each other; or

(b) but for the provision of any contract, arrangement or understanding, those parties or any of their respective related bodies corporate would be, or would be likely to be, in competition with each other,

in relation to the supply of the goods or services in trade or commerce.

Note: Section 4 defines trade or commerce to mean trade or commerce within Australia or between Australia and places outside Australia.

(3) For the purposes of subsection (1), a party to a contract, arrangement or understanding acquires goods or services in competition with another party if and only if:

(a) those parties or any of their respective related bodies corporate are, or are likely to be, in competition with each other; or

(b) but for the provision of any contract, arrangement or understanding, those parties or any of their respective related bodies corporate would be, or would be likely to be, in competition with each other,

in relation to the acquisition of the goods or services in trade or commerce.

Note: Section 4 defines trade or commerce to mean trade or commerce within Australia or between Australia and places outside Australia.

(4) For the purposes of subsection (1), a party to a contract, arrangement or understanding does not supply or acquire goods or services in competition with another party if those parties are related bodies corporate.

Immaterial whether particular circumstances or particular conditions

(5) It is immaterial whether the cartel provision only applies in particular circumstances or on particular conditions.

Considering related provisions

(6) For the purposes of this Division, a provision of a contract, arrangement or understanding is taken to have the purpose, effect or likely effect mentioned in subsection (1) if the provision, when considered together with:

(a) the other provisions of the contract, arrangement or understanding; or

(b) the provisions of another contract, arrangement or understanding to which at least one of the parties to the first-mentioned parties is a party,

has that purpose, effect or likely effect.

45C Making a contract etc. containing a cartel provision [currently section 44ZZRF]

Offence

(1) A corporation commits an offence if:

(a) the corporation makes a contract or arrangement, or arrives at an understanding; and

(b) the contract, arrangement or understanding contains a cartel provision.

Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

(2) The fault element for paragraph (1)(b) is knowledge or belief.

Penalty

(3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following:

(a) $10,000,000;

(b) if the court can determine the total value of the benefits that:

(i) have been obtained by one or more persons; and

(ii) are reasonably attributable to the commission of the offence;

3 times that total value;

(c) if the court cannot determine the total value of those benefits - 10% of the corporation’s annual turnover during the 12-month period ending at the end of the month in which the corporation committed, or began committing, the offence.

Indictable offence

(4) An offence against subsection (1) is an indictable offence.

45D Giving effect to a cartel provision [currently section 44ZZRG]

Offence

(1) A corporation commits an offence if:

(a) a contract, arrangement or understanding contains a cartel provision; and

(b) the corporation gives effect to the cartel provision.

Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

(2) The fault element for paragraph (1)(a) is knowledge or belief.

Penalty

(3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following:

(a) $10,000,000;

(b) if the court can determine the total value of the benefits that:

(i) have been obtained by one or more persons; and

(ii) are reasonably attributable to the commission of the offence;

3 times that total value;

(c) if the court cannot determine the total value of those benefits - 10% of the corporation’s annual turnover during the 12-month period ending at the end of the month in which the corporation committed, or began committing, the offence.

Pre-commencement contracts etc.

(4) Paragraph (1)(a) applies to contracts or arrangements made, or understandings arrived at, before, at or after the commencement of this section.

Indictable offence

(5) An offence against subsection (1) is an indictable offence.

45E Determining guilt [currently section 44ZZRH]

(1) A corporation may be found guilty of an offence against section 45C or 45D even if:

(a) each other party to the contract, arrangement or understanding is a person who is not criminally responsible; or

(b) subject to subsection (2), all other parties to the contract, arrangement or understanding have been acquitted of the offence.

(2) A corporation cannot be found guilty of an offence against section 45C or 45D if:

(a) all other parties to the contract, arrangement or understanding have been acquitted of such an offence; and

(b) a finding of guilt would be inconsistent with their acquittal.

45F Court may make related civil orders [currently section 44ZZRI]

If a prosecution against a person for an offence against section 45C or 45D is being, or has been, heard by a court, the court may:

(a) grant an injunction under section 80 against the person in relation to:

(i) the conduct that constitutes, or is alleged to constitute, the offence; or

(ii) other conduct of that kind; or

(b) make an order under section 86C, 86D, 86E or 87 in relation to the offence.

45G Making a contract etc. containing a cartel provision [currently section 44ZZRJ]

A corporation contravenes this section if:

(a) the corporation makes a contract or arrangement, or arrives at an understanding; and

(b) the contract, arrangement or understanding contains a cartel provision.

Note: For enforcement, see Part VI.

45H Giving effect to a cartel provision [currently section 44ZZRK]

(1) A corporation contravenes this section if:

(a) a contract, arrangement or understanding contains a cartel provision; and

(b) the corporation gives effect to the cartel provision.

Note: For enforcement, see Part VI.

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

45I Joint ventures [currently section 44ZZRO]

(1) Sections 45C, 45D, 45G, and 45H do not apply in relation to a contract, arrangement or understanding containing a cartel provision if:

(a) the parties to the contract, arrangement or understanding are in a joint venture for the production, supply, acquisition or marketing of goods or services; and

(b) the cartel provision:

(i) relates to goods or services that are acquired, produced, supplied or marketed by or for the purposes of the joint venture;

(ii) is reasonably necessary for undertaking the joint venture; or

(iii) is for the purpose of the joint venture.

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 45G or 45H bears an evidential burden in relation to that matter.

45J Restrictions in supply and acquisition agreements [currently section 44ZZRS]

(1) Sections 45C, 45D, 45G and 45H do not apply in relation to a contract, arrangement or understanding containing a cartel provision in so far as the cartel provision:

(a) is imposed by a person (the supplier) in connection with the supply of goods or services to another person (the acquirer) and relates to:

(i) the supply of the goods or services by the acquirer to the acquirer;

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

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

(b) is imposed by a person (the acquirer) in connection with the acquisition of goods or services from another person (the supplier) and relates to:

(i) the acquisition of the goods or services from the supplier; or

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

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 45G or 45H bears an evidential burden in relation to that matter.

45K Collective supply or acquisition of goods or services by the parties to a contract, arrangement or understanding [currently section 44ZZRV]

(1) Sections 45C, 45D, 45G and 45H do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as:

(a) the cartel provision has the purpose, or has or is likely to have the effect, mentioned in paragraph 45B(1)(a); and

(b) either:

(i) the cartel provision relates to the price for goods or services to be collectively acquired, whether directly or indirectly, by the parties to the contract, arrangement or understanding; or

(ii) the cartel provision is for the joint advertising of the price for the re-supply of goods or services so acquired.

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 45G or 45H bears an evidential burden in relation to that matter.

45L Acquisition of shares or assets [currently section 44ZZRU]

(1) Sections 45C, 45D, 45G and 45H do not apply in relation to a contract, arrangement or understanding containing a cartel provision, in so far as the cartel provision provides directly or indirectly for the acquisition of:

(a) any shares in the capital of a body corporate; or

(b) any assets of a person.

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 45G or 45H bears an evidential burden in relation to that matter.

Section 45 should be expanded to include engaging in a concerted practice with one or more other persons, having the purpose, effect or likely effect of substantially lessening competition.

Harper Discussion | Existing Provisions | Proposed Provisions

Forthcoming

Section 45 Contracts, arrangements or understandings that restrict dealings or affect competition

(1) If a provision of a contract made before the commencement of the Trade Practices Amendment Act 1977:

(a) is an exclusionary provision; or

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

that provision is unenforceable in so far as it confers rights or benefits or imposes duties or obligations on a corporation.

(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.

(3) For the purposes of this section, competition, in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which 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 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.

(4) For the purposes of the application of this section in relation to a particular corporation, a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding shall be deemed to have or to be likely to have the effect of substantially lessening competition if that provision and any one or more of the following provisions, namely:

(a) the other provisions of that contract, arrangement or understanding or proposed contract, arrangement or understanding; and

(b) the provisions of any other contract, arrangement or understanding or proposed contract, arrangement or understanding to which the corporation or a body corporate related to the corporation is or would be a party;

together have or are likely to have that effect.

(5) This section does not apply to or in relation to:

(a) a provision of a contract where the provision constitutes a covenant to which section 45B applies or, but for subsection 45B(9), would apply;

(b) a provision of a proposed contract where the provision would constitute a covenant to which section 45B would apply or, but for subsection 45B(9), would apply; or

(c) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding in so far as the provision relates to:

(i) conduct that contravenes section 48; or

(ii) conduct that would contravene section 48 but for the operation of subsection 88(8A); or

(iii) conduct that would contravene section 48 if this Act defined the acts constituting the practice of resale price maintenance by reference to the maximum price at which goods or services are to be sold or supplied or are to be advertised, displayed or offered for sale or supply.

(6) The making of a contract, arrangement or understanding does not constitute a contravention of this section by reason that the contract, arrangement or understanding contains a provision the giving effect to which would, or would but for the operation of subsection 47(10) or 88(8) or section 93, constitute a contravention of section 47 and this section does not apply to or in relation to the giving effect to a provision of a contract, arrangement or understanding by way of:

(a) engaging in conduct that contravenes, or would but for the operation of subsection 47(10) or 88(8) or section 93 contravene, section 47; or

(b)doing an act by reason of a breach or threatened breach of a condition referred to in subsection 47(2), (4), (6) or (8), being an act done by a person at a time when:

(i) an authorization under subsection 88(8) is in force in relation to conduct engaged in by that person on that condition; or

(ii) by reason of subsection 93(7) conduct engaged in by that person on that condition is not to be taken to have the effect of substantially lessening competition within the meaning of section 47; or

(iii) a notice under subsection 93(1) is in force in relation to conduct engaged in by that person on that condition.

(6A) The following conduct:

(a) the making of a dual listed company arrangement;

(b) the giving effect to a provision of a dual listed company arrangement;

does not contravene this section if the conduct would, or would apart from subsection 88(8B), contravene section 49.

(7) This section does not apply to or in relation to a contract, arrangement or understanding in so far as the contract, arrangement or understanding provides, or to or in relation to a proposed contract, arrangement or understanding in so far as the proposed contract, arrangement or understanding would provide, directly or indirectly for the acquisition of any shares in the capital of a body corporate or any assets of a person.

(8) This section does not apply to or in relation to a contract, arrangement or understanding, or a proposed contract, arrangement or understanding, the only parties to which are or would be bodies corporate that are related to each other.

(8A) Subsection (2) does not apply to a corporation engaging in conduct described in that subsection if:

(a) the corporation has given the Commission a collective bargaining notice under subsection 93AB(1) describing the conduct; and

(b) the notice is in force under section 93AD.

(9) The making by a corporation of a contract that contains a provision in relation to which subsection 88(1) applies is not a contravention of subsection (2) of this section if:

(a) the contract is subject to a condition that the provision will not come into force unless and until the corporation is granted an authorization to give effect to the provision; and

(b) the corporation applies for the grant of such an authorization within 14 days after the contract is made;

but nothing in this subsection prevents the giving effect by a corporation to such a provision from constituting a contravention of subsection (2).

Section 45E Prohibition of contracts, arrangements or understandings affecting the supply or acquisition of goods or services

Situations to which section applies

(1) This section applies in the following situations:

(a) a supply situation—in this situation, a person (the first person) has been accustomed, or is under an obligation, to supply goods or services to another person (the second person); or

(b) an acquisition situation—in this situation, a person (the first person) has been accustomed, or is under an obligation, to acquire goods or services from another person (the second person).

Despite paragraphs (a) and (b), this section does not apply unless the first or second person is a corporation or both of them are corporations.

Note : For the meanings of accustomed to supply and accustomed to acquire, see subsections (5) and (7).

Prohibition in a supply situation

(2) In a supply situation, the first person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:

(a) preventing or hindering the first person from supplying or continuing to supply such goods or services to the second person; or

(b) preventing or hindering the first person from supplying or continuing to supply such goods or services to the second person, except subject to a condition:

(i) that is not a condition to which the supply of such goods or services by the first person to the second person has previously been subject because of a provision in a contract between those persons; and

(ii) that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services.

Prohibition in an acquisition situation

(3) In an acquisition situation, the first person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:

(a) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person; or

(b) preventing or hindering the first person from acquiring or continuing to acquire such goods or services from the second person, except subject to a condition:

(i) that is not a condition to which the acquisition of such goods or services by the first person from the second person has previously been subject because of a provision in a contract between those persons; and

(ii) that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services.

No contravention if second person gives written consent to written contract etc.

(4) Subsections (2) and (3) do not apply to a contract, arrangement or understanding if it is in writing and was made or arrived at with the written consent of the second person.

Meaning of accustomed to supply

(5) In this section, a reference to a person who has been accustomed to supply goods or services to a second person includes (subject to subsection (6)):

(a) a regular supplier of such goods or services to the second person; or

(b) the latest supplier of such goods or services to the second person; or

(c) a person who, at any time during the immediately preceding 3 months, supplied such goods or services to the second person.

Exception to subsection (5)

(6) If:

(a) goods or services have been supplied by a person to a second person under a contract between them that required the first person to supply such goods or services over a period; and

(b) the period has ended; and

(c) after the end of the period, the second person has been supplied with such goods or services by another person and has not also been supplied with such goods or services by the first person;

then, for the purposes of the application of this section in relation to anything done after the second person has been supplied with goods or services as mentioned in paragraph (c), the first person is not to be taken to be a person who has been accustomed to supply such goods or services to the second person.

Meaning of accustomed to acquire

(7) In this section, a reference to a person who has been accustomed to acquire goods or services from a second person includes (subject to subsection (8)):

(a) a regular acquirer of such goods or services from the second person; or

(b) a person who, when last acquiring such goods or services, acquired them from the second person; or

(c) a person who, at any time during the immediately preceding 3 months, acquired such goods or services from the second person.

Exception to subsection (7)

(8) If:

(a) goods or services have been acquired by a person from a second person under a contract between them that required the first person to acquire such goods or services over a period; and

(b) the period has ended; and

(c) after the end of the period, the second person has refused to supply such goods or services to the first person;

then, for the purposes of the application of this section in relation to anything done after the second person has refused to supply goods or services as mentioned in paragraph (c), the first person is not to be taken to be a person who has been accustomed to acquire such goods or services from the second person.

Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(7A).

Section 45EA Provisions contravening section 45E not to be given effect

Provisions contravening section 45E not to be given effect A person must not give effect to a provision of a contract, arrangement or understanding if, because of the provision, the making of the contract or arrangement, or the arriving at the understanding, by the person:

(a) contravened subsection 45E(2) or (3); or

(b) would have contravened subsection 45E(2) or (3) if:

(i) section 45E had been in force when the contract or arrangement was made, or the understanding was arrived at; and

(ii) the words "is in writing and" and " written" were not included in subsection 45E(4).

Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(7A).

45M Prohibited conduct [currently section 45]

(1) A corporation shall 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;

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

(2) For the purposes of paragraphs (1)(a) and (b), competition means competition in any market in which 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 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 of the contract, arrangement or understanding or the proposed contract, arrangement or understanding, supply or acquire, or be likely to supply or acquire, goods or services.

(3) For the purposes of the application of paragraphs (1)(a) and (b) in relation to a particular corporation, a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding shall be deemed to have or to be likely to have the effect of substantially lessening competition if that provision and any one or more of the following provisions, namely:

(a) the other provisions of that contract, arrangement or understanding or proposed contract, arrangement or understanding; and

(b) the provisions of any other contract, arrangement or understanding or proposed contract, arrangement or understanding to which the corporation or a related body corporate is or would be a party;

together have or are likely to have that effect.

(4) For the purposes of paragraph (1)(c), competition means competition in any market in which a corporation that is a party to the concerted practice, or any body corporate related to the 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.

(5) This section does not apply to or in relation to a contract, arrangement or understanding in so far as the contract, arrangement or understanding provides, or to or in relation to a proposed contract, arrangement or understanding in so far as the proposed contract, arrangement or understanding would provide, directly or indirectly for the acquisition of any shares in the capital of a body corporate or any assets of a person.

(6) This section does not apply to or in relation to a contract, arrangement or understanding, or a proposed contract, arrangement or understanding, or a concerted practice, the only parties to which are or would be bodies corporate that are related to each other.

45X Prohibition of contracts, arrangements or understandings affecting the supply or acquisition of goods or services [currently section 45E]

Prohibition in a supply situation

(1) A person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:

(a) preventing or hindering the person from supplying goods or services to a second person; or

(b) preventing or hindering the person from supplying goods or services to a second person, except subject to a condition:

(i) that is not a condition to which the supply of such goods or services by the person to the second person has previously been subject because of a provision in a contract between those persons; and

(ii) that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services.

Prohibition in an acquisition situation

(2) A person must not make a contract or arrangement, or arrive at an understanding, with an organisation of employees, an officer of such an organisation or a person acting for and on behalf of such an officer or organisation, if the proposed contract, arrangement or understanding contains a provision included for the purpose, or for purposes including the purpose, of:

(a) preventing or hindering the person from acquiring goods or services from a second person; or

(b) preventing or hindering the person from acquiring goods or services from a second person, except subject to a condition:

(i) that is not a condition to which the acquisition of such goods or services by the person from the second person has previously been subject because of a provision in a contract between those persons; and

(ii) that is about the persons to whom, the manner in which or the terms on which the second person may supply any goods or services.

Situations to which section applies

(3) This section does not apply unless the first or second person is a corporation or both of them are corporations.

No contravention if the other person gives written consent to written contract etc.

(4) Subsections (1) and (2) do not apply to a contract, arrangement or understanding if it is in writing and was made or arrived at with the written consent of the second person.

Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(7A).

45Y Provisions contravening section 45X not to be given effect [currently section 45EA]

A person must not give effect to a provision of a contract, arrangement or understanding if, because of the provision, the making of the contract or arrangement, or the arriving at the understanding, by the person:

(a) contravened subsection 45X(1) or (2); or

(b) would have contravened subsection 45X(1) or (2) if:

(i) section 45X had been in force when the contract or arrangement was made, or the understanding was arrived at; and

(ii) the words “is in writing and” and “written” were not included in subsection 45X(4).

Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(7A).

The Harper panel recommended that the separate prohibition on exclusionary provisions in s 45 (defined in 4D) should be repealed and modifications made to the cartel provisions to cover any resulting gaps in the law.

Harper Boycott Recommendation | Harper Boycott Discussion | Existing Boycott Provisions

"The CCA should be amended to remove the prohibition of exclusionary provisions in subparagraphs 45(2)(a)(i) and 45(2)(b)(i), with an amendment to the definition of cartel conduct to address any resulting gap in the law."

The Panel also considered that 'the prohibition of exclusionary provisions, separately from cartel conduct, is unnecessary and increases the complexity of the law', noting that the definition of exclusionary provisions 'overlaps substantially with the definition of market sharing' in relation to cartels. The overlap is, however, nmot complete, so the Panel recommended that adjustments be made to the cartel provisions to cover any resulting gaps.

Section 45 Contracts, arrangements or understandings that restrict dealings or affect competition

...

(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

...

(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:

...

....

Section 4D Exclusionary Provisions

(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b) the provision has the purpose of preventing, restricting or limiting:

(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.

(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the
first‑mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.

Section 44ZZRD Cartel provisions

(1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:

(a) either of the following conditions is satisfied in relation to the provision:

(i) the purpose/effect condition set out in subsection (2);

(ii) the purpose condition set out in subsection (3); and

(b) the competition condition set out in subsection (4) is satisfied in relation to the provision.

...

Purpose condition

(3) The purpose condition is satisfied if the provision has the purpose of directly or indirectly:

(a) preventing, restricting or limiting:

(i) the production, or likely production, of goods by any or all of the parties to the contract, arrangement or understanding; or

(ii) the capacity, or likely capacity, of any or all of the parties to the contract, arrangement or understanding to supply services; or

(iii) the supply, or likely supply, of goods or services to persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or

...

Section 45M (replacing the existing section 45) no longer prohibits exclusionary provisions

45B Cartel provisions [currently section 44ZZRD]

(1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:

...

(b) (restricting output) the provision has the purpose of preventing, restricting or limiting:

(i) the production or the supply by any party to the contract, arrangement or understanding of goods or services that are supplied by that party in competition with any other party;

(ii) the acquisition by any party to the contract, arrangement or understanding of goods or services that are acquired by that party in competition with any other party;

...

The Harper panel recommended an effects test be introduced into the misuse of market power provision and repeal of the various amendments made post-2007

Download PDF summary of proposed changes relating to misuse of market power

"The primary prohibition in section 46 of the CCA should be re-framed to prohibit a corporation that has a substantial degree of power in a market from engaging in conduct if the proposed conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market.

To mitigate concerns about inadvertently capturing pro-competitive conduct, the legislation should direct the court, when determining whether conduct has the purpose, effect or likely effect, of substantially lessening competition in a market, to have regard to:

• the extent to which the conduct has the purpose, effect or likely effect of increasing competition in the market, including by enhancing efficiency, innovation, product quality or price competitiveness; and
• the extent to which the conduct has the purpose, effect or likely effect of lessening competition in the market, including by preventing, restricting or deterring the potential for competitive conduct in the market or new entry into the market.

Such a re-framing would allow the provision to be simplified. Amendments introduced since 2007 would be unnecessary and could be repealed. These include specific provisions prohibiting predatory pricing, and amendments clarifying the meaning of ‘take advantage’ and how the causal link between the substantial degree of market power and anti-competitive purpose may be determined.

Authorisation should be available in relation to section 46, and the ACCC should issue guidelines regarding its approach to the provision. "

Chapter 19 of the Report discusses Unilateral Conduct (from page 334) with a focus on Misuse of Market Power (ch 19.1). The Report notes that most industrialised countries have enacted prohibitions against abuse of market dominance and that, common to those laws is the -

principle that firms are entitled, and indeed are encouraged, to succeed through competition - by developing better products and becoming more efficient - even if they achieve a position of market dominance through their success. Those laws only prevent firms with substantial market power from engaging in conduct that damages competition.

Also notes that while an 'imbalance in bargaining power is a normal feature of commercial transactions', policy concerns arise where strong bargaining power is 'exploited through imposing unreasonable obligations on suppliers and business customers' which can 'traverse beyond accepted norms of commercial behaviour and damage efficiency and investment'. Any laws must, however, strike a balance - the 'bargaining process underpins the competitive market process that serves consumers and the welfare of Australians'.

Notes that opinions presented in the numerous submissions on s 46 were divided on whether the provision is effective. Most seeking revision propose inclusion of an 'effects' test, with two main arguments advanced in favour of such a test:

Those opposing such a test raise concerns that it would 'chill' competitive behaviour and therefore be harmful to consumer welfare.

Panel notes that whether s 46 should be purpose and/or effects based is 'one of the enduring controversies of competition policy in Australia' and notes the large number of independent reviews and parliamentary inquiries into section 46, noting only one in 11 inquiries recommended an effects test (the 1984 Green Paper).

The Panel notes that, internationally, competition laws have been framed to examine effects as well as purpose and points to provisions in Australia doing the same, but also notes that competition laws have been framed so as to minimise the risk that the law might 'chill' competitive behaviour.

The challenge is to frame a law that captures anti-competitive unilateral behaviour but does not constrain vigorous competitive conduct. Such a law must be written in clear language and state a legal test that can be reliably applied by the courts to distinguish between competitive and anti-competitive conduct.

Difficulties with current form of section 46

Substantial market power

Panel noted that the threshold that a firm have substantial market power before section 46 could be contravened enjoyed broad support and there was no case for change.

Taking advantage

Noted the meaning of take advantage 'is subtle and difficult to apply in practice'.

The difficulty with the expression lies in the fact that market power is not a physical asset (such as an airport) or a commercial instrument (such as a lease), the use of which can be observed. Market power is an economic concept, describing the state or condition of a market. A firm possesses market power when it has a degree of freedom from competitive constraint.

Noted that in Qld Wire the High Court concluded taking advantage meant 'engaging in conduct that would not be undertaken in a competitive market' - but difficulties in interpretation and application since Qld Wire have 'become apparent' - various cases set out to support this statement (pp 337-338). The Panel noted that the important issue was whether the 'take advantage' limb was 'sufficiently clear and predictable in interpretation and application to distinguish between anti-competitive and pro-competitive conduct.'

The Panel also acknowledged economic concerns that 'take advantage' was not appropriate for distinguishing lawful and unlawful business conduct, because the same conduct may be competitively harmful or competitively benign depending upon whether the firm engaging in the conduct has substantial market power. The panel concluded:

... the ‘take advantage’ limb of section 46 is not a useful test by which to distinguish competitive from anti-competitive unilateral conduct. The test has given rise to substantial difficulties of interpretation, revealed in the decided cases, undermining confidence in the effectiveness of the law.

In particular, the panel accepted that business conduct 'should not be immunised merely because it is often undertaken by firms without market power' because the competitive effect in many cases will depend upon the market power of the firm engaging in that conduct.

Purpose of eliminating or substantially damaging a competitor, preventing the entry of a person into a market, or deterring or preventing a person from engaging in competitive conduct

Noted that compared with the 'take advantage' test the purpose test was 'at least clear and capable of reliable application by the courts'. The key debate has been whether a purpose and/or effects test should apply - however:

The debate over whether section 46 should include a subjective purpose test or an objective effects test tends to obscure a more significant issue. Presently, the purpose test in section 46 focuses on harm to individual competitors — conduct will be prohibited if it has the purpose of eliminating or substantially damaging a competitor, preventing the entry of a person into a market, or deterring or preventing a person from engaging in competitive conduct.

Ordinarily, competition law is not concerned with harm to individual competitors. Indeed, harm to competitors is an expected outcome of vigorous competition. Competition law is concerned with harm to competition itself — that is, the competitive process.

Given the existing focus of the purpose test in section 46, resistance to changing the word ‘purpose’ to ‘effect’ is understandable. It would not be sound policy to prohibit unilateral conduct that had the effect of damaging individual competitors. However, an important question arises whether section 46 ought to be directed at conduct that has the purpose of harming individual competitors (under the existing purpose test) or whether it ought to be directed at conduct that has the purpose or effect of harming the competitive process (consistent with the other main prohibitions in sections 45, 47 and 50 of the CCA).

Many submissions to the Draft Report express both strong support for539 and strong opposition to540 changes to the existing focus of section 46, viz, on ‘purpose’. Other submissions canvass other

The Panel noted there were many submissions both offering 'strong support for' and 'strong opposition to' changes to the current purpose test.

The Panel noted the current test was inconsistent with equivalent provisions overseas (set out the US, Canadian and European approaches) and concluded that the current form of section 46 'is misdirected as a matter of policy and out of step with equivalent international approaches.

The prohibition ought to be directed to conduct that has the purpose or effect of harming the competitive process.

Re-framing section 46

The Panel proposed that section 46 be re-framed to prohibit a corporation with substantial market power from engaging in conduct having the purpose, effect or likely effect of substantially lessening competition in a market. This involves two significant amendments:

1. Removal of the take advantage element

2. Altering the purpose test to the standards Australian 'purpose, effect or likely effect of substantially lessening competition' test.

The Panel noted that that much of the opposition to the proposed changes in the draft report related to the originally proposed defence (whereby the prohibition would not apply if the conduct would be a rational business decision by a corporation without substantial market power and would be likely to have the effect of advancing the long-term interests of consumers). The Panel noted that the proposed defence was not generally supported and set out the concerns raised. The Panel accepted the proposed defence was 'not the best means of addressing potential concerns that the revised prohibition may inadvertently catch pro-competitive conduct' and would be consistent with the approach adopted elsewhere int he Act.

After reviewing a number of submissions and looking at the position internationally the Panel concluded that the:

These would act as mandatory, but non-exhaustive, considerations.

Simplification

The Panel further observed that these changes would allow for simplification of the provision; in particular, amendments since 2007 dealing with predatory pricing and the meaning of take advantage could be mitigated.

Authorisation

The Panel further noted that concerns about business uncertainty may be mitigated by the separate recommendation that authorisation should be available for section 46.

ACCC Guidance

The Panel recommended the ACCC issue 'guidelines on its approach to enforcing section 46, prepared in consultation with business stakeholders, legal experts and consumer groups, and issued in advance of the commencement of the revised prohibition.'

Telecommunications

The panel further noted that the proposed amendments would obviate the need for the telecommunications industry-specific anti-competitive conduct provisions and exemption order regime in Part XIB

Divestiture remedy to address market power concerns

The Panel noted that the introduction of a divestiture remedy option for s 46 contraventions was raised in a number of submissions to the Agricultural Competitiveness Green Paper, as well as in submissions to this review. The Panel also noted that the previous independent Hilmer and Dawson Reviews had previously considered and rejected this proposal 'because of the potentially broad nature of such a remedy and difficulties in targeting the conduct of concern'. The Panel observed:

Providing a general divestiture provision within the CCA for Part IV offences could, if exercised, see matters of market conduct dealt with through a structural remedy. Although reducing the size of a firm may limit its ability to misuse its market power, divestiture is likely to have broader impacts on the firm’s general efficiency. Such changes could also have negative flow-on effects to consumer welfare. It is also possible that divested parts of a business might be unviable. Further, it would leave the redesign of a firm or industry in the hands of the court, which is generally not well positioned to make decisions about industry policy. [footnote omitted]

The Panel concluded the current range of penalties was sufficient for deterrence and compensation.

The Panel's view

The Panel concluded section 46 was deficient in current form. The take advantage limb was not a useful way to distinguish competitive from anti-competitive conduct and a purpose test directed at harming competitors is 'misdirected as a matter of policy and out of step with international approaches'.

The provision should be directed to conduct having the purpose, effect or likely effect of substantially lessening competition and should include guidance 'directing courts and firms to weight the pro-competitive and anti-competitive impact of the conduct'.

Misuse of market power in a Trans-Tasman context

The Panel notes the background of section 46A and observes that the 'principal circumstance in which the section has potential additional operation is if a firm with substantial market power in a New Zealand market (but not an Australian market) takes advantage of that power to harm a competitor in an Australian market involving the supply of goods.'

The Panel noted, however, there had only been one case invoking this provision (an unsuccessful 1991 case) and observed that it is 'doubtful that the section is able to achieve its original aim' of prohibiting 'predatory pricing an an Australian goods market by a firm with market power in New Zealand' because this would typically require possession of market power in an Australian market (because the 'predation could not be successful without market power in the Australian market').

The Panel therefore questioned the continued utility of the section, but because it was enacted as part of agreed reforms between Australia and New Zealand its reconsideration 'should formally engage both jurisdictions to determine appropriate simplifications, amendments or removal of the provisions in each jurisdiction.'

 (1) A corporation that has a substantial degree of power in a market shall not take advantage of that power in that or any other market for the purpose of:

(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;

(b) preventing the entry of a person into that or any other market; or

(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.

(1AAA) If a corporation supplies goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying the goods or services, the corporation may contravene subsection (1) even if the corporation cannot, and might not ever be able to, recoup losses incurred by supplying the goods or services.

(1AA) A corporation that has a substantial share of a market must not supply, or offer to supply, goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying such goods or services, for the purpose of:

(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; or

(b) preventing the entry of a person into that or any other market; or

(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.

(1AB) For the purposes of subsection (1AA), without limiting the matters to which the Court may have regard for the purpose of determining whether a corporation has a substantial share of a market, the Court may have regard to the number and size of the competitors of the corporation in the market.

(1A) For the purposes of subsections (1) and (1AA):

(a) the reference in paragraphs (1)(a) and (1AA)(a) to a competitor includes a reference to competitors generally, or to a particular class or classes of competitors; and

(b) the reference in paragraphs (1)(b) and (c) and (1AA)(b) and (c) to a person includes a reference to persons generally, or to a particular class or classes of persons.

(2) If:

(a) a body corporate that is related to a corporation has, or 2 or more bodies corporate each of which is related to the one corporation together have, a substantial degree of power in a market; or

(b) a corporation and a body corporate that is, or a corporation and 2 or more bodies corporate each of which is, related to that corporation, together have a substantial degree of power in a market;

the corporation shall be taken for the purposes of this section to have a substantial degree of power in that market.

(3) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of:

(a) competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or

(b) persons to whom or from whom the body corporate or any of those bodies corporate supplies or acquires goods or services in that market.

(3A) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the court may have regard to the power the body corporate or bodies corporate has or have in that market that results from:

(a) any contracts, arrangements or understandings, or proposed contracts, arrangements or understandings, that the body corporate or bodies corporate has or have, or may have, with another party or other parties; and

(b) any covenants, or proposed covenants, that the body corporate or bodies corporate is or are, or would be, bound by or entitled to the benefit of.

(3B) Subsections (3) and (3A) do not, by implication, limit the matters to which regard may be had in determining, for the purposes of this section, the degree of power that a body corporate or bodies corporate has or have in a market.

(3C) For the purposes of this section, without limiting the matters to which the court may have regard for the purpose of determining whether a body corporate has a substantial degree of power in a market, a body corporate may have a substantial degree of power in a market even though:

(a) the body corporate does not substantially control the market; or

(b) the body corporate does not have absolute freedom from constraint by the conduct of:

(i) competitors, or potential competitors, of the body corporate in that market; or

(ii) persons to whom or from whom the body corporate supplies or acquires goods or services in that market.

(3D) To avoid doubt, for the purposes of this section, more than 1 corporation may have a substantial degree of power in a market.

(4) In this section:

(a) a reference to power is a reference to market power;

(b) a reference to a market is a reference to a market for goods or services; and

(c) a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.

(4A) Without limiting the matters to which the court may have regard for the purpose of determining whether a corporation has contravened subsection (1), the court may have regard to:

(a) any conduct of the corporation that consisted of supplying goods or services for a sustained period at a price that was less than the relevant cost to the corporation of supplying such goods or services; and

(b) the reasons for that conduct.

(5) Without extending by implication the meaning of subsection (1), a corporation shall not be taken to contravene that subsection by reason only that it acquires plant or equipment.

(6) This section does not prevent a corporation from engaging in conduct that does not constitute a contravention of any of the following sections, namely, sections 45, 45B, 47, 49 and 50, by reason that an authorization or clearance is in force or by reason of the operation of subsection 45(8A) or section 93.

(6A) In determining for the purposes of this section whether, by engaging in conduct, a corporation has taken advantage of its substantial degree of power in a market, the court may have regard to any or all of the following:

(a) whether the conduct was materially facilitated by the corporation’s substantial degree of power in the market;

(b) whether the corporation engaged in the conduct in reliance on its substantial degree of power in the market;

(c) whether it is likely that the corporation would have engaged in the conduct if it did not have a substantial degree of power in the market;

(d) whether the conduct is otherwise related to the corporation’s substantial degree of power in the market.

This subsection does not limit the matters to which the court may have regard.

(7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in subsection (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.

46 Misuse of market power

(1) A corporation that has a substantial degree of power in a market shall not engage in conduct if the conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market.

(2) Without limiting the matters that may be taken into account for the purposes of subsection (1), in determining whether conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in a market, the court must have regard to:

(a) the extent to which the conduct has the purpose, or would have or be likely to have the effect, of increasing competition in the market including by enhancing efficiency, innovation, product quality or price competitiveness in the market; and

(b) the extent to which the conduct has the purpose, or would have or be likely to have the effect, of lessening competition in the market including by preventing, restricting or deterring the potential for competitive conduct in the market or new entry into the market.

(3) If:

(a) a body corporate that is related to a corporation has, or 2 or more bodies corporate each of which is related to the one corporation together have, a substantial degree of power in a market; or

(b) a corporation and a body corporate that is, or a corporation and 2 or more bodies corporate each of which is, related to that corporation, together have a substantial degree of power in a market;

the corporation shall be taken for the purposes of this section to have a substantial degree of power in that market.

(4) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of:

(a) competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or

(b) persons to whom or from whom the body corporate or any of those bodies corporate supplies or acquires goods or services in that market.

(5) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the court may have regard to the power the body corporate or bodies corporate has or have in that market that results from any contracts, arrangements or understandings, or proposed contracts, arrangements or understandings, that the body corporate or bodies corporate has or have, or may have, with another party or other parties.

(6) Subsections (4) and (5) do not limit the matters to which regard may be had in determining, for the purposes of this section, the degree of power that a body corporate or bodies corporate has or have in a market.

(7) For the purposes of this section, a body corporate may have a substantial degree of power in a market even though:

(a) the body corporate does not substantially control the market;

(b) the body corporate does not have absolute freedom from constraint by the conduct of:

(i) competitors, or potential competitors, of the body corporate in that market; or

(ii) persons to whom or from whom the body corporate supplies or acquires goods or services in that market;

(c) one or more other bodies corporate have a substantial degree of power in that market.

(8) In this section:

(a) a reference to power is a reference to market power;

(b) a reference to a market is a reference to a market for goods or services; and

(c) a reference to power, or to conduct, in a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.

The Harper panel recommended no substantive change to the RPM law; in particular, it recommended retention of the per se ban on minimum RPM. However, it did recommend the introduction of a 'notification' option for RPM.

Download PDF summary of proposed changes relating to resale price maintenance

"The prohibition on resale price maintenance (RPM) in section 48 of the CCA should be retained in its current form as a per se prohibition, but notification should be available for RPM conduct.

This recommendation is reflected in the model legislative provisions in Appendix A.

The prohibition should also be amended to include an exemption for RPM conduct between related bodies corporate, as is the case under sections 45 and 47."

Forthcoming

There are no proposed changes to the RPM provisions in the Report other than the inclusion of an exemption for conduct between related body corporates; no model provision is provided for this amendment. There is currently no notification option available for RPM.

93 Notification of exclusive dealing or resale price maintenance

(1) Subject to subsection (2), a corporation that engages, or proposes to engage, in conduct of a kind referred to in sections 47 or 48 or both may give to the Commission a notice setting out particulars of the conduct or proposed conduct.

(2) Where a corporation has given notice under subsection (1), section 47 or section 48 (as the case may be) does not prevent the corporation from engaging in the conduct referred to in the notice, unless:

(a) the Commission has given notice under subsection (3) and the conduct takes place more than 30 days (or such longer period as the Commission by writing permits) after the day on which the Commission gave the notice; or

(b) the notice has been withdrawn and the conduct takes place after the notice was withdrawn.

(3) If the Commission is satisfied in all the circumstances that a corporation engaging in conduct of a kind described in section 47 and referred to in a notice given by the corporation under subsection (1):

(a) has, or would have or be likely to have, the effect of substantially lessening competition; and

(b) would not result, or is not likely to result, in a benefit to the public that would outweigh the detriment to the public constituted by any lessening of competition that has resulted, or is likely to result, from engaging in the conduct,

the Commission may at any time give notice in writing to the corporation stating that the Commission is so satisfied including a statement setting out its reasons for being so satisfied.

(4) If the Commission is satisfied in all the circumstances that a corporation engaging in conduct of a kind:

(a) described in section 48; or

(b) described in both section 47 and 48,

and referred to in a notice given by the corporation under subsection (1) would not result, or is not likely to result, in a benefit to the public that would outweigh the detriment to the public from engaging in the conduct, the Commission may at any time give notice in writing to the corporation stating that the Commission is so satisfied including a statement setting out its reasons for being so satisfied.

The Harper panel recommended no substantive change to Australia's merger laws. However, it recommended changes to the notification and authorisation processes.

Download PDF summary of proposed changes relating to mergers

"There should be further consultation between the ACCC and business representatives with the objective of delivering more timely decisions in the informal merger review process.

The formal merger exemption processes (i.e., the formal merger clearance process and the merger authorisation process) should be combined and reformed to remove unnecessary restrictions and requirements that may have deterred their use. The specific features of the review process should be settled in consultation with business, competition law practitioners and the ACCC.

However, the general framework should contain the following elements:

• The ACCC should be the decision-maker at first instance.
• The ACCC should be empowered to authorise a merger if it is satisfied that the merger does not substantially lessen competition or that the merger would result, or would be likely to result, in a benefit to the public that would outweigh any detriment.
• The formal process should not be subject to any prescriptive information requirements, but the ACCC should be empowered to require the production of business and market information.
• The formal process should be subject to strict timelines that cannot be extended except with the consent of the merger parties.
• Decisions of the ACCC should be subject to review by the Australian Competition Tribunal under a process that is also governed by strict timelines.
• The review by the Australian Competition Tribunal should be based upon the material that was before the ACCC, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied that there is sufficient reason.

Merger review processes and analysis would also be improved by implementing a program of post-merger evaluations, looking back on a number of past merger decisions to determine whether the ACCC’s processes were effective and its assessments borne out by events. This function could be performed by the Australian Council for Competition Policy (see Recommendation 44)."

Forthcoming

Section 88 Power of Commission to grant authorisations

The ACCC currently has power to grant authorisations under section 88, but this does not extend to mergers (The Australian Competition Tribunal has this power).

Part VII Division 3 Merger clearances and authorisations

Currently an extensive number of provisions set out the powers and processes of the ACCC and Tribunal in relation to formal merger clearance applications and merger authorisation applications. It is proposed that these be consolidated into a single authorisation process, with the ACCC hearing the claim at first instance and the opportunity for appeal to the Tribunal.

87ZP Definitions

In this Division:

merger authorisation means an authorisation under subsection 88(1) to a person to:

(a) acquire shares in the capital of a body corporate or to acquire assets of a person to which section 50 would or might apply; or

(b) acquire a controlling interest in a body corporate within the meaning of section 50A,

but does not include an authorisation where the conduct specified in the application includes conduct to which one or more provisions other than section 50 or 50A would apply.

88 Power of Commission to grant authorisations

(1) Subject to this Part, the Commission may, upon application by or on behalf of a person, grant an authorisation to the person to engage in conduct specified in the application to which one or more provisions of Part IV would or might apply.

Effect of authorisation

(2) While an authorisation under subsection (1) remains in force the provisions of Part IV do not apply to the applicant and any person referred to in subsections (8) and (9) engaging in the conduct specified in and in accordance with the authorisation.

Note: The references to conduct and engaging in conduct in subsection 89(1) include the actions set out in subsection 4(2).

Authorisation test

(3) Subject to subsections (4) and (5), the Commission must not make a determination granting an authorisation under subsection (1) to engage in conduct specified in the application unless the Commission is satisfied in all the circumstances:

(a) that the conduct would not have the effect, or be likely to have the effect, of substantially lessening competition; or

(b) that the conduct would result, or be likely to result, in a benefit to the public and that the benefit would outweigh the detriment to the public that would result, or be likely to result, from engaging in the conduct.

(4) Paragraph 3(a) does not apply to an application for authorisation for conduct to which [the cartel provisions], [the secondary boycott provisions] and the [resale price maintenance provisions] would apply.

(5) In respect of a merger authorisation, in determining what amounts to a benefit to the public for the purposes of paragraph (3)(b):

(a) the Commission must regard the following as benefits to the public (in addition to any other benefits to the public that may exist apart from this paragraph):

(i) a significant increase in the real value of exports;

(ii) a significant substitution of domestic products for imported goods; and

(b) without limiting the matters that may be taken into account, the Commission must take into account all other relevant matters that relate to the international competitiveness of any Australian industry.

Single application may deal with more than one type of conduct

(6) The Commission may grant a single authorisation in respect of all conduct specified in an application for authorisation or may grant separate authorisations in respect of any of the conduct.

Conditions

(7) The Commission may grant an authorisation subject to such conditions as are specified in the authorisation.

Other and future parties

(8) An authorisation granted by the Commission to a person to engage in conduct has effect as an authorisation in the same terms to every other person named or referred to in the application for authorisation as a party or proposed party to the conduct.

(9) An authorisation may be expressed so as to apply to particular persons or classes of persons who become a party to the conduct as specified in the authorisation.

Past conduct

(10) The Commission does not have power to:

(a) grant an authorisation to a person in respect of any conduct undertaken before the Commission makes a determination in respect of the application; and

(b) in respect of a merger authorisation, grant authorisation in respect of an acquisition that has occurred.

Withdrawal of application

(11) An applicant for authorisation may at any time, by writing to the Commission, withdraw the application.