Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2010 - 2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
competition and consumer amendment bill (NO. 1) 2011
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Parliamentary Secretary to the Treasurer,
the Hon David Bradbury MP)
THIS EXPLANATORY MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE
OF REPRESENTATIVES TO THE BILL AS INTRODUCED
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 Anti-competitive price signalling and information disclosures 5
Chapter 2 Regulation impact statement - anti-competitive price signalling
and information exchange (decision) 35
Chapter 3 Regulation impact statement - anti-competitive price signalling
and information exchange (implementation) 63
Index 79
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|ACCC |Australian Competition and |
| |Consumer Commission |
|Bill |Competition and Consumer |
| |Amendment Bill (No.1) 2011 |
|CC Act |Competition and Consumer Act |
| |2010 |
|COAG |Council of Australian |
| |Governments |
|CPR Act |Competition Policy Reform |
| |(New South Wales) Act 1995 |
|Hilmer Review |National Competition Policy |
| |Review 1993 |
|pricing information |Information that relates to a|
| |price for, or a discount, |
| |allowance, rebate or credit |
| |in relation to, goods or |
| |services acquired or to be |
| |acquired, or supplied or to |
| |be supplied |
|private disclosure |Section 44ZZW of the |
|of pricing |Competition and Consumer |
|information |Amendment Bill (No. 1) 2011 |
|prohibition | |
|substantial |Section 44ZZX of the |
|lessening of |Competition and Consumer |
|competition |Amendment Bill (No. 1) 2011 |
|prohibition | |
|Swanson Committee |Trade Practices Act Review |
| |Committee (1976) |
|Tribunal |Australian Competition |
| |Tribunal |
General outline and financial impact
Anti-competitive price signalling and information disclosures
The Competition and Consumer Amendment Bill (No. 1) 2011 (Bill) amends the
Competition and Consumer Act 2010 (CC Act) to further the objective of the
CC Act by addressing anti-competitive price signalling and information
disclosures.
Anti-competitive price signalling and information disclosures are
communications between competitors which facilitate prices above the
competitive level and can lead to inefficient outcomes for the economy and
reduce wellbeing for consumers. They fall short of cartel behaviour but
can have similar effect. Anti-competitive price signalling and information
disclosures can occur as part of a wider cooperation agreement, or as a
stand-alone practice absent of an explicit cartel arrangement.
The Bill further safeguards competition in Australian markets by
introducing two prohibitions directly targeting anti-competitive price
signalling and information disclosures. The prohibitions will apply to
classes of goods or services that are prescribed by regulations.
The Bill makes corresponding amendments to the version of Part IV which
contains the Competition Code, which applies to all persons in the States
and Territories by virtue of application legislation in those
jurisdictions.
Date of effect: The amendments commence the day after the end of the period
of six months beginning on the day the Act receives the Royal Assent.
Proposal announced: This measure was announced in the
Deputy Prime Minister's Press Release No. 91 of 12 December 2010. This
measure is part of the Government's Competitive and Sustainable Banking
System package.
An exposure draft Bill was publicly released on the same day for
consultation.
Financial impact: The Bill has no significant financial impact on
Commonwealth expenditure or revenue.
Compliance cost impact: Low. There may be ongoing compliance cost impacts
and transitional impacts.
Summary of regulation impact statement
Regulation impact on business
Impact: Low. These measures will only apply to classes of goods and
services that are prescribed by regulations for the purpose of Division 1A.
Main points:
The main benefit is likely to be a decrease in anti-competitive behaviour
in sectors later subject to the new prohibitions by the application of
regulations. Consumers and other businesses will be the main
beneficiaries.
Chapter 1
Anti-competitive price signalling and information disclosures
Outline of chapter
1. Schedule 1 to the Competition and Consumer Amendment Bill (No. 1)
2011 ('the Bill') contains amendments for the introduction of two
prohibitions to address anti-competitive price signalling and
information disclosures within the Competition and Consumer Act
2010 (the CC Act).
Context of amendments
2. The amendments contained in the Bill form part of the Government's
Competitive and Sustainable Banking System package that was
announced by the Deputy Prime Minister on 12 December 2010 (Press
Release No. 91).
3. The object of the CC Act is to enhance the welfare of Australians
through the promotion of competition and fair trading and provision
for consumer protection. Competitive markets improve productivity
and efficiency, leading to increased living standards in the form
of higher real incomes, increased consumer choices, sustainable
economic growth, and lower unemployment rates than would otherwise
be the case.
4. Competition is a process of rivalry amongst businesses within a
market. Effective competition can be reduced by businesses
behaving, either independently or with other businesses, in ways
that reduce rivalry in the market, or prevent or deter the entry of
new businesses. Recognition of these problems gives rise to the
core purpose of the competition rules in Part IV of the CC Act
which seek to restrain conduct that tends to lessen competition,
but to otherwise leave businesses free to act as they see fit.
Likewise, rules on fair trading in the Australian Consumer Law
serve to discourage actions designed to reduce rivalry through
conduct designed to enhance a business practice in a market through
misleading or deception, or false and misleading conduct.
5. Collusive or cartel behaviour is prohibited under the cartel
prohibitions in Part IV, Division 1 of the CC Act. Under the
parallel civil and criminal cartel prohibitions, corporations are
prohibited from making or giving effect to a 'contract, arrangement
or understanding' that contains a cartel provision with a
competitor. A 'cartel provision' is a provision that fixes prices,
restricts outputs in the production or supply chain, allocates
customers, suppliers or territories, or rigs bids. In addition,
section 45 of the CC Act prohibits corporations from making or
giving effect to a 'contract arrangement or understanding' which
contains an exclusionary provision, or has the purpose, effect or
likely effect of substantially lessening competition.
6. These provisions require the presence of a 'contract, arrangement
or understanding' which Australian courts have held requires
evidence of a 'meeting of minds' and a commitment (albeit moral,
not legal) about the subject matter of the arrangement.[1]
7. Information disclosure plays a vital role in any economy and is to
be encouraged. Suppliers communicate to their customers and
potential customers for a variety of reasons including to inform
customers, to advertise their market positioning and to improve
brand awareness in competitive markets. This communication in turn
provides signals to rivals which ultimately encourages competitive
activity. As a general rule, such communications are perfectly
legitimate, pro-competitive and efficiency enhancing. However, in
some cases, the provision and receipt of information between
competitors clearly has the potential to diminish competition.
8. Anti-competitive price signalling and information disclosures to
competitors facilitate prices above the competitive level and can
lead to inefficient outcomes for the economy and lower wellbeing
for consumers (these practices are sometimes referred to as
facilitating, coordinated or concerted practices). However they
fall short of an explicit cartel arrangement because they do not
involve a contract, arrangement or understanding. Anti-competitive
price signalling and information disclosures can occur as part of a
wider cooperation agreement, or as a stand-alone practice absent of
an explicit cartel arrangement.
9. Recent Organisation for Economic Co-operation and Development
(OECD) Roundtables (2007 and 2010) on Facilitating Practices and
Information Exchanges have highlighted the harm to competition and
consumers that can arise from anti-competitive information
disclosures between competitors and the ways in which they are
dealt with in various jurisdictions.
10. Most comparable jurisdictions, including the United Kingdom (UK),
European Union (EU) and United States (US) have laws that are
capable of dealing with anti-competitive price signalling and other
information disclosures (sometimes called 'concerted practices' or
'facilitating practices').
11. In January 2009, as a result of the concerns raised by the
Australian Competition and Consumer Commission (ACCC) in its 2007
Petrol Report, the Department of the Treasury issued a discussion
paper which sought submissions regarding the adequacy of the
current interpretation of the term 'understanding' in section 45 of
the CC Act to capture anti-competitive conduct. That process
identified that anti-competitive price signalling and information
disclosures were not captured by the CC Act and rather than amend
the meaning of understanding, could be directly targeted by new
prohibitions under the CC Act.
12. The amendments contained in the Bill address anti-competitive price
signalling and other information disclosures through amending the
CC Act to introduce two new prohibitions.
Summary of new law
13. The key amendments in the Bill:
insert a new division into Part IV of the CC Act;
prohibit a business from making a private disclosure of pricing information
to a competitor where doing so is not in the ordinary course of business;
prohibit a business from making a disclosure (on a wide range of matters)
if the purpose of the disclosure is to substantially lessen competition in
a market;
provide that the prohibitions in the Bill will only apply to classes of
goods and services that are prescribed by regulations;
provides appropriate exceptions to the prohibitions where necessary; and
extends the existing authorisation and notification regimes within the CC
Act to enable businesses to obtain immunity from the ACCC from the
prohibitions within the CC Act where a net public benefit would result.
Comparison of key features of new law and current law
|New law |Current law |
|Division 1A provides for |No equivalent. Division |
|a regulation making |1 and Division 2 of Part |
|power. The prohibitions |IV of the CC Act apply |
|within Division 1A only |economy-wide. |
|apply to goods and | |
|services (or classes of | |
|goods and services) that | |
|are prescribed by the | |
|regulations. | |
|Division 1A contains |Interpretive provisions |
|interpretive provisions |applying to the |
|that apply either to both|prohibitions are |
|or one of the |generally contained in |
|prohibitions within the |Part IV (or in Part I) of|
|Division. |the CC Act. |
|Division 1A contains two |No direct equivalent. |
|civil prohibitions. The | |
|first prohibition | |
|prohibits outright the | |
|private disclosure of | |
|pricing information to a | |
|competitor where doing so| |
|is not in the ordinary | |
|course of business. The | |
|second prohibition | |
|prohibits the disclosure | |
|of pricing or other | |
|information if made for | |
|the purpose of | |
|substantially lessening | |
|competition. | |
|Division 1A contains |Various exemptions and |
|various exceptions and |defences are included in |
|defences from the |the CC Act. |
|prohibitions within the | |
|Division. | |
|Makes corresponding |Contains provisions |
|amendments to those |corresponding to those |
|outlined above to the |outlined above in the |
|Schedule version of Part |Schedule version of Part |
|IV. |IV. |
|Part VII provides that a |Part VII provides that a |
|business may notify the |business may notify the |
|ACCC of a particular |ACCC of a collective |
|disclosure to which the |bargaining arrangement or|
|private disclosure of |conduct that may breach |
|pricing information |the exclusive dealing |
|prohibition would or |prohibitions within Part |
|might apply. |IV. |
Detailed explanation of new law
Commonwealth power to make laws applying to individuals and corporations
14. The corporations power in section 51 (xx) of the Constitution
provides the primary power for the Commonwealth Government to make
laws with regard to competition. However, subsection 6(2) of the
CC Act provides alternative sources of Commonwealth power, should
the corporations power be found to provide an insufficient source
of power to support a particular provision in Part IV of the CC
Act.
15. The National Competition Policy Review 1993 (the Hilmer Report)
recommended that competition law apply to all businesses in
Australia, rather than limiting the application of the law to those
matters that fell within the scope of the Commonwealth's
constitutional powers. On 11 April 1995, the Council of Australian
Governments (COAG) agreed to the principles of competition policy
contained in the Hilmer Report. This included agreement to achieve
and maintain consistent and complementary competition laws and
policies that would apply to all businesses in Australia regardless
of ownership. This was achieved through various means, including
the enactment of a cooperative scheme to enable the competition law
(as embodied in Part IV of the CC Act) to apply to all businesses
within Australia.
16. In brief, the cooperative scheme operates through the creation, in
Part XIA of the CC Act, of a Competition Code, and that Code being
applied as a law of each State, the Northern Territory and the
Australian Capital Territory, through mirror versions of the
Competition Policy Reform (New South Wales) Act 1995 (CPR Act).
Under section 150C of the CC Act and section 4 of each CPR Act, the
Competition Code consists of:
the Schedule version of Part IV of the CC Act;
the remaining provisions of the CC Act in so far as they would relate to
the Schedule version if it were substituted for Part IV; and
the regulations under the CC Act in so far as they relate to other
components of the Competition Code.
17. The Competition Code is applied by state and territory laws to all
persons in each State and Territory and to the Crown in right of
the State or Territory.
18. Consistent with the 1995 Conduct Code Agreement, the Bill makes
provision for the prohibitions to apply to corporations and
'persons'. [Schedule 1, item 17]
19. This occurs in the following ways.
First, corporations can be found to have contravened a prohibition
contained in the new Division 1A of Part IV.
Second, individuals and bodies corporate can be held liable for
contravening a 'mirror' prohibition in the Schedule version of the CC Act.
These civil prohibitions apply to a 'person'. The mirror prohibitions form
part of the Competition Code and are applied by the CPR Act of each State
or Territory as a law of each of those jurisdictions.
20. The provisions of the CC Act currently apply:
according to its terms, in reliance upon the Commonwealth's power to make
laws with respect to corporations;
to persons other than corporations while engaged in interstate or overseas
trade or commerce, trade or commerce between territories, or with a
territory, or in the supply of goods or services to the Commonwealth or an
authority or instrumentality of the Commonwealth; and
to engaging in conduct to the extent to which the conduct involves use of a
postal, telegraphic, telephonic or other like service.
21. Reflecting the view that the Parliament intended the CC Act to have
the widest application possible subject to constitutional
limitations, the amendments provide for alternative constitutional
sources of power in relation to conduct identified in the private
disclosure of pricing information prohibition (section 44ZZW of the
Bill) and in the substantial lessening of competition prohibition
(section 44ZZX of the Bill). [Schedule 1, item 1]
Revised structure of Part IV of the CC Act
22. Part IV of the CC Act contains competition laws aimed at protecting
and enhancing competition. The Bill creates a new Division 1A in
which the provisions addressing anti-competitive price signalling
and information disclosure are inserted. [Schedule 1, item 2]
Definitions
23. The Bill defines terms relevant to the understanding,
interpretation and application of the provisions within the Bill.
[Schedule 1, item 2, section 44ZZS]
24. These terms are explained in the context of the provisions in which
they are used, as they are discussed in this explanatory
memorandum.
25. 'Disclosure' is defined as a unilateral communication; no degree of
reciprocity or mutuality is required for there to be a disclosure.
26. 'Evidential burden' is defined in the Bill in similar terms to the
evidential burden definition for the cartel provisions in the
existing section 44ZZRB.
Division 1A goods or services
27. The prohibitions contained in the Bill will only apply to goods and
services however described, that are prescribed by regulations for
the purpose of the prohibitions. [Schedule 1, item 2, section
44ZZT]
28. The Governor-General will prescribe by regulation the process which
the Government will follow when making regulations in the future
which extend the application of Division 1A beyond the banking
sector. [Schedule 1, item 2, subsections 44ZZT(3) and 44ZZT(4)]
29. The provision of a regulation-making power allows the prohibitions
to be applied in a manner determined by the Minister and are made
by the Governor-General on the advice of the Federal Executive
Council.
30. The provision of a regulation making power allows an assessment to
be undertaken as to the potential impacts of the new prohibitions
on specific goods or services before they are applied to those
goods or services.
31. Under the Legislative Instruments Act 2003, a regulation made for
the purposes of this new Division 1A may be disallowed by either
House of the Parliament.
Disclosure of information
32. The Bill clarifies the status of disclosures made to persons acting
in various capacities.
Disclosure to a director, employee or agent etc. of another person
33. A disclosure will only occur between a corporation and a body
corporate or person, if the recipient is acting as a representative
of the body corporate or person.
34. If a corporation makes a disclosure and the recipient of that
disclosure is acting in their capacity as a director, employee or
agent of another body corporate, then for the purposes of the new
Division 1A, the disclosure is said to have been made by the
corporation to the body corporate. [Schedule 1, item 2, paragraph
44ZZU(1)(a)]
35. If a corporation makes a disclosure and the recipient of that
disclosure is acting as an employee or agent of another person,
then for the purposes of the new Division 1A, a disclosure is said
to have been made by the corporation to that other person.
[Schedule 1, item 2, paragraph 44ZZU(1)(b)]
Disclosure to discloser's own agent
36. The Bill clarifies the status of a disclosure where there is an
agency arrangement between the discloser and the recipient of
information.
37. If a corporation makes a disclosure to a person who is acting at
the time of the disclosure as an agent of that corporation,
regardless of whether they are also a competitor or potential
competitor of that corporation, then the disclosure is disregarded.
[Schedule 1, item 2, paragraph 44ZZU(2)(a)]
38. If a disclosure is made through an intermediary to the
corporation's own agent then the disclosure is not disregarded and
the prohibitions may apply to the disclosure. [Schedule 1, item 2,
paragraph 44ZZU(2)(b)]
39. A person wishing to rely on this provision bears an evidential
burden of proof of establishing the elements of this provision.
[Schedule 1, item 2, section 44ZZZA]
1. : Disclosure to a corporation's own mortgage broker
A mortgage broker may act as an agent for multiple banks and may also
itself be a provider of mortgage finance. In this circumstance, a
disclosure by a bank to the bank's mortgage broker is disregarded because
it is a disclosure to the corporation's own agent.
Disclosure through intermediary
40. If a corporation makes a disclosure to an intermediary, for the
purpose of the intermediary disclosing (or organising for the
disclosure of) that information to other persons and the
intermediary does in fact disclose that information to those other
persons, then a disclosure is deemed to have been made by the
corporation to those persons. [Schedule 1, item 2, subsection
44ZZU(3)]
41. In this circumstance, the disclosure has been made by the
corporation to those other persons, not to the intermediary.
The corporation's purpose in disclosing to an intermediary
42. It is the corporation's purpose in disclosing the information to
the intermediary that is relevant. A disclosure by a corporation
through an intermediary to a competitor will only occur if the
corporation purposefully discloses the information to the
intermediary for that reason.
43. Current section 4F of the CC Act applies to this provision and
provides that a person shall be deemed to have engaged in conduct
for a particular purpose if the person engaged in the conduct for
purposes that included that purpose and that purpose was a
substantial purpose.
44. If the corporation is reckless or indifferent to the possibility
that the intermediary will pass on the information to a competitor,
a disclosure between the corporation and the competitor will not
have occurred.
1. : Intermediary disclosure to a competitor
Corporation A decides that it wants to disclose future pricing information
to Corporation B, a competitor in the wholesale market for widgets. To
achieve this, Corporation A discloses the pricing information to
Corporation C, a corporation that is set up to facilitate and coordinate
disclosures amongst competitors. Corporation A discloses the future
pricing information to Corporation C with the purpose of Corporation C
passing it on to Corporation B. In this scenario, a disclosure has
occurred from Corporation A to Corporation B.
2. : Disclosure by third party to a competitor
Ms Smith wishes to buy a new car. Corporation A discloses to Ms Smith that
the best price they can sell the car for is $24,000. Ms Smith is
dissatisfied with this quote and goes to a competitor of Corporation A,
Corporation B. Ms Smith discloses to Corporation B that Corporation A's
best price is $24,000, in the hope that Corporation B offers a cheaper
price.
In this scenario, Ms Smith is not an intermediary, and a disclosure has not
occurred by Corporation A to Corporation B. This is because Corporation A
did not disclose the price of the car to Ms Smith for the substantial
purpose of Ms Smith passing it on to Corporation B. The substantial
purpose of Corporation A's disclosure was to inform Ms Smith, a potential
customer.
Accidental disclosure
45. If a corporation makes a disclosure that was an accident, the
disclosure is ignored, and does not breach the prohibitions in the
Bill. [Schedule 1, item 2, paragraph 44ZZU(4)(a)]
46. If a disclosure is made due to the default of a person, outside of
the corporation, the disclosure is ignored, and does not breach the
prohibitions in the Bill. [Schedule 1, item 2, paragraph
44ZZU(4)(b)]
47. If the disclosure is due to some other cause beyond the control of
the corporation, the disclosure is ignored, and does not breach the
prohibitions in the Bill. [Schedule 1, item 2, paragraph
44ZZU(4)(c)]
48. The existing section 84 of the CC Act has the effect that a person
may breach certain provisions of the CC Act in consequence of the
behaviour of one of their employees, agents, or, in the case of a
body corporate, directors.
49. To avoid doubt, the Bill clarifies that the inclusion of the
accidental disclosure provisions should not affect or alter the
interpretation of section 84 of the CC Act. [Schedule 1, item 2,
subsection 44ZZU(5)]
50. A person wishing to rely on this provision bears an evidential
burden of proof of establishing the elements of this provision.
[Schedule 1, item 2, section 44ZZZA]
1. : Accidental disclosure to a competitor
An employee of Corporation F unintentionally sends an email to Corporation
G, a competitor, containing pricing information, by mistakenly typing the
wrong email address. This disclosure is not intended to be captured by the
prohibitions.
Private disclosure to competitors
51. The 'private disclosure to competitors' definition in the Bill
determines when a disclosure is a private disclosure to competitors
for the purposes of the private disclosure of pricing information
prohibition and is intended to limit the circumstances in which the
prohibition can apply.
52. A disclosure is only private if the disclosure was made to one or
more competitors or potential competitors of the corporation in
that market to which the disclosure relates [Schedule 1, item 2,
subsection 44ZZV(1)]. The intermediary provisions (paragraphs 1.40-
1.44) and the anti-avoidance provisions (paragraphs 1.55-1.64) must
be taken into consideration for the purposes of determining whether
a disclosure was a private disclosure to competitors.
53. A corporation which makes a disclosure of information to a
competitor, but also at the same time to one or more non-
competitors (taking into consideration the anti-avoidance and
disclosure through intermediary provisions within the Bill), is not
intended to be subject to the private disclosure of pricing
information prohibition.
54. The term 'competitor' is intended to cover potential competitors as
the disclosure of pricing information could influence a party's
decision as to whether to enter the relevant market and what price
or quantity offering it may provide. However, a disclosure is
disregarded if it is to a corporation not known to be a competitor
at the time. [Schedule 1, item 2, subsection 44ZZZ(2)]
Anti-avoidance
55. Given the nature of the definition of 'private disclosure to
competitors', the Bill deals with foreseeable ways in which a
corporation may seek to circumvent the application of the private
disclosure of pricing information prohibition.
56. The Bill specifies certain instances where a corporation may not
avoid the definition of 'private disclosure to competitors':
because of the corporation's purpose behind making a disclosure; or
if an intermediary is involved, the corporation's or the intermediary's
purpose behind making a disclosure.
Purpose of corporation
57. If a corporation makes a disclosure to a person who is not a
competitor and if, in doing so the corporation's purpose is to
avoid the application of the private disclosure of pricing
information prohibition, the disclosure is still a private
disclosure to competitors. [Schedule 1, item 2, paragraph
44ZZV(2)(a)]
58. It is the corporation's purpose when making the disclosure to the
other person that is relevant.
59. Current section 4F of the CC Act applies to this provision and
provides that a person shall be deemed to have engaged in conduct
for a particular purpose if the person engaged in the conduct for
purposes that included that purpose and that purpose was a
substantial purpose.
1. : Disclosure to non-competitors to avoid the private disclosure of
pricing information prohibition
Corporation X wants to avoid the application of the private disclosure of
pricing information prohibition. Therefore, in disclosing pricing
information via an email to its competitors, Corporation X purposefully
includes an email address of a director's relatives. This disclosure may
still be captured by the prohibition.
60. If a corporation discloses information to an intermediary, and the
corporation's intention is for the intermediary to pass the
information on to competitors but also another person to avoid the
'private disclosure to competitors' definition, then the disclosure
is prohibited by the private disclosure of pricing information
prohibition. [Schedule 1, item 2, subparagraph 44ZZV(2)(b)(i)]
Purpose of intermediary
61. If a disclosure occurs through an intermediary, the intermediary's
purpose for passing on a disclosure to a non-competitor of the
corporation may be relevant.
62. If a corporation makes a disclosure to an intermediary, and the
intermediary discloses that information to a person that is not a
competitor of the corporation for the purpose of avoiding the
'private disclosure to competitors' definition, then the disclosure
is prohibited. [Schedule 1, item 2, subparagraph 44ZZV(2)(b)(ii)]
63. Current section 4F of the CC Act applies to this provision and
provides that a person shall be deemed to have engaged in conduct
for a particular purpose if the person engaged in the conduct for
purposes that included that purpose and that purpose was a
substantial purpose.
64. In circumstances where an intermediary is involved, consideration
of the corporation's purpose may still be taken into consideration.
Information otherwise available
65. The Bill is intended to target the behaviour of private disclosure
of pricing information to competitors. Information disclosed in
private refers to a situation where a corporation discloses
information to a competitor or competitors and not to the world at
large. Private information does not relate to the situation in
which the disclosure occurs, but the nature of the information
itself, for example the information may be private in that it is
commercially sensitive.
66. The Bill clarifies that a disclosure may still be a private
disclosure to competitors, regardless of whether the disclosure is
of private information [Schedule 1, item 2, subsection 44ZZV(3)].
For instance, a disclosure may still be a private disclosure to
competitors if the disclosure relates to pricing information
otherwise in the public domain.
The private disclosure of pricing information prohibition
67. It is a contravention of the private disclosure of pricing
information prohibition for a corporation to privately disclose,
directly or indirectly to a competitor, information that relates to
a price for, or a discount, allowance, rebate or credit in relation
to, goods or services acquired or to be acquired, or supplied or to
be supplied (pricing information), by the corporation in a market
in which it competes with that competitor. [Schedule 1, item 2,
section 44ZZW]
68. Disclosures made in the ordinary course of business will not
contravene the private disclosure of pricing information
prohibition. [Schedule 1, item 2, paragraph 44ZZW(c)]
69. The meaning of 'private disclosure to competitors' is outlined in
the Bill (paragraphs 1.51-1.66).
70. The prohibition covers a disclosure that involves:
a price;
a discount;
an allowance;
a rebate; or
credit.
71. Current section 4 of the CC Act provides that 'price' includes a
charge of any description.
72. The prohibition does not draw a distinction between past, future
and current price information.
73. It is not intended that public statements about pricing issues,
normal advertising activities, or price displays be captured by
this prohibition.
'Market'
74. A disclosure is only prohibited where the corporation and the
recipient are competitors in the market for goods or services about
which the information relates.
75. The definition of 'market' was inserted into the CC Act following
recommendations of the 1976 Trade Practices Act Review Committee
(Swanson Committee). The Swanson Committee remarked (at paragraph
4.20):
... no advantage would be gained by attempting to define exhaustively the
term 'market'. No definition could produce a formula capable of certainty
... Importantly also, the Committee has regard to the fact that persons
involved with particular cases wish the matters in dispute to be judged on
the particular facts, as they may present them, and not by artificial rules
designed to achieve what we would suggest is an illusory certainty.
76. A 'market' is defined in the existing section 4E of the CC Act as a
market in Australia and, when used in relation to any goods or
services, includes a market for those goods or services and other
goods or services that are substitutable for, or otherwise
competitive with, the first-mentioned goods or services. Case law
has further developed the term.
The substantial lessening of competition prohibition
77. It is a contravention of the substantial lessening of competition
prohibition for a corporation to disclosure a wide range of
information if the purpose of the corporation in making that
disclosure is to substantially lessen competition in a market.
[Schedule 1, item 2, section 44ZZX]
78. It is not the intention that as a result of the Bill, corporations
are strictly impeded from communicating to actual and potential
customers about current and future prices.
1. : Disclosure of information via a billboard
A business displays current price information on a billboard outside their
business with the purpose of informing customers. Such a disclosure is not
intended to be captured by the prohibition.
The nature of the information disclosed
79. The prohibition recognises that anti-competitive information
disclosures can occur with respect to a range of information, not
just price related information.
Pricing information
80. The prohibition captures information relating to a price, discount,
allowance, rebate or credit in relation to Division 1A goods or
services that are acquired or supplied, or likely to be acquired or
supplied by the corporation. [Schedule 1, item 2, subparagraph
44ZZX(1)(a)(i)]
81. Current section 4 of the CC Act provides that 'price' includes a
charge of any description.
Supply and acquisition capacity
82. Current sections 4 and 4C define 'supply' and 'acquisition, supply
and re-supply'.
83. Disclosures in relation to supply or acquisition capacity, if made
with the purpose of substantially lessening competition in a
market, are prohibited [Schedule 1, item 2, subparagraph
44ZZX(1)(a)(ii)]. For example:
in relation to supply capacity, a corporation may make a disclosure about
servicing particular sectors of the market by disclosing that they only
intend on selling its service within a thirty kilometre radius; or
in relation to acquisition capacity, a corporation may make a disclosure
about only intending to buy a certain quantity of a key input required to
produce a good.
Commercial strategy
84. The Bill recognises that anti-competitive disclosures may be made
in relation to commercial strategic information that does not fall
within the categories of pricing information or supply or
acquisition capacity. [Schedule 1, item 2, subparagraph
44ZZX(1)(a)(iii)]
Purpose
85. A disclosure will not breach the prohibition unless the corporation
had the purpose of substantially lessening competition. 'Purpose'
is the subjective purpose of the corporation in disclosing the
information. It means the outcome which is sought to be achieved.
86. Current section 4F of the CC Act applies to this provision and
provides that a person shall be deemed to have engaged in conduct
for a particular purpose if the person engaged in the conduct for
purposes that included that purpose and that purpose was a
substantial purpose.
87. Purpose may be established by direct evidence or by inference
[Schedule 1, item 2, subsection 44ZZX(3)]. If a substantive
legitimate purpose can be inferred, inference of an anti-
competitive purpose is unlikely be made.
88. A disclosure made for the purposes of providing a submission to a
government or parliamentary inquiry, as they are given for the
purpose of the relevant inquiry are not intended to breach the
substantial lessening of competition prohibition. A disclosure
made to a parliamentary inquiry would also be covered by
parliamentary privilege.
89. Evidence of the effect or likely effect of a disclosure is not
required to prove a breach of the substantial lessening of
competition prohibition.
Factors determining whether the corporation had the purpose of
substantially lessening competition
90. A list of factors the court may have regard to in determining
whether the corporation had the purpose of substantially lessening
competition when making the disclosure is provided for in the Bill.
[Schedule 1, item 2, subsection 44ZZX(2)]
A private disclosure to a competitor may be more likely to have an anti-
competitive purpose than a disclosure in public. [Schedule 1, item 2,
paragraph 44ZZX(2)(a)]
The greater the level of detail or specificity in the information
disclosed, the more likely it is that it will allow competitors to predict
each others' future conduct and to adjust their behaviour accordingly.
Comprehensive, precise information may be more likely to have an anti-
competitive purpose than generalised, aggregated information. [Schedule 1,
item 2, paragraph 44ZZX(2)(b)]
A disclosure of information relating to future activities may be more
likely to affect competition adversely, and as such, raises greater
concerns than the exchange of information relating to current, and in turn,
historical activities. Disclosing historical information raises concerns
in that the information can provide a meaningful indication of future
intended pricing or other competitively significant factors. [Schedule 1,
item 2, paragraph 44ZZX(2)(c)]
Disclosures of information already in the public domain may be less likely
to have been made for an anti-competitive purpose in contrast to
commercially sensitive, confidential information. [Schedule 1, item 2,
paragraph 44ZZX(2)(d)]
Frequent disclosures allow companies to better (and more quickly) adapt
their commercial policy to their competitors' strategy. This factor is not
intended to imply that a single disclosure cannot be a breach of the
prohibition, merely that multiple disclosures are more likely to imply an
anti-competitive purpose. [Schedule 1, item 2, paragraph 44ZZX(2)(e)]
91. The court may consider any or all of these factors. The list of
factors does not limit the matters to which the court may have
regard.
Substantial lessening of competition
92. 'Substantial lessening of competition' is a well recognised term
within the CC Act. It is here intended to be interpreted and
applied in the same manner as other provisions which rely upon the
term.
93. The incorporation of a competition test is consistent with the
framework of the CC Act, as it is the basis of various Part IV
prohibitions including section 45 (prohibiting contracts that
substantially lessen competition), section 47 (vertical restraints)
and section 50 (mergers).
94. Current section 4G of the CC Act applies to this prohibition.
Section 4G specifies that for the purposes of the CC Act,
references to the lessening of competition shall be read as
including references to preventing or hindering competition.
95. The courts have interpreted the term 'substantial' to mean many
things, including meaning 'real or of substance', 'not merely
discernible but material in a relative sense' and 'meaningful'. In
Stirling Harbour Services Pty Ltd v Bunbury Port Authority [2000]
FCA 38, French J pointed out that:
[T]he concept of 'substantially lessening' is evaluative ... The phrase
sets a standard for judicial intervention in respect of the classes of anti-
competitive conduct to which it applies. It requires, before that
intervention can be invoked, that there be a purpose ... of the impugned
conduct on competition which is substantial in the sense of meaningful or
relevant to the competitive process.
96. The substantial lessening of competition prohibition prohibits a
disclosure made with the purpose of substantially lessening
competition in that market, or another market.
Exceptions that apply to the private disclosure of pricing information
prohibition and the substantial lessening of competition prohibition
97. A number of exceptions from both the private disclosure of pricing
information prohibition and the substantial lessening of
competition prohibition are contained in the Bill for a disclosure:
authorised by law;
between related bodies corporate;
in relation to a collective bargaining notice;
covered by authorisation;
covered by notification under section 93; and
made to comply with the continuous disclosure obligations.
98. The exceptions in part reflect existing exceptions in the CC Act.
Disclosures authorised by law
99. A disclosure that is authorised by or under a law is exempt from
the prohibitions. [Schedule 1, item 2, subsection 44ZZY(1)]
100. A law which requires a person to disclosure information also
relevantly authorises the person to do so.
101. This exception ends on the day after ten years from the day on
which the Act receives the Royal Assent [Schedule 1, item 2,
paragraph 44ZZY(1)(b)]. This time period provides governments with
an opportunity to review the need for, and enact ongoing, specific
exceptions.
Where necessary, the existing subsection 51(1) of the CC Act allows for
governments to specifically authorise conduct under an act or regulation
that would otherwise contravene Part IV of the CC Act.
102. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosures between related bodies corporate
103. Current subsection 4A(5) of the CC Act defines the circumstances in
which corporations will be deemed to be related - where the body
corporate is a holding company or a subsidiary of the other, or
where two bodies are both subsidiaries of the same holding company.
104. A disclosure to a related bodies corporate (including dual-listed
companies), if they are the only parties to the disclosure is
intended to be exempt from the prohibitions in the Bill. [Schedule
1, item 2, subsection 44ZZY(2)]
105. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosures in relation to a collective bargaining notice
106. Notification is an existing process under Part VII of the CC Act
which enables parties who propose to engage in collective
bargaining conduct to obtain immunity from legal action under the
CC Act, if the conduct results in a net public benefit.
107. A disclosure made in relation to a collective bargaining notice
that is in force, if the disclosure is made to one of the
contracting parties, is exempt from the prohibitions. [Schedule 1,
item 2, subsection 44ZZY(3)]
a disclosure that is required by a contract that is formed as a result of
the collective bargaining may be exempt from the prohibition; and
a disclosure that is made that relates to a proposed contract during the
negotiations of the bargaining may be exempt from the prohibition.
108. This exemption allows for parties within a collective bargaining
group to disclose information:
required by the collective bargaining agreement, or in the course of
negotiations for a collective bargaining agreement; and
to a target business if the information is required by the contract, or
relates to a proposed contract during the negotiations.
109. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
1. : Disclosure made in relation to collective bargaining
Vegetable grower A and Vegetable grower B are parties to a valid collective
bargaining arrangement, via the notification regime. Before Vegetable
Grower A and Vegetable Grower B initiate bargaining with a large
supermarket chain they discuss prices at which they wish to sell to the
supermarket. This disclosure is not intended to be captured by the
prohibitions.
Disclosures covered by authorisation
110. Authorisation is a process under Part VII of the CC Act which the
ACCC, in response to an application from a party or parties, can
grant immunity on public benefit grounds against action under the
competition provisions of the CC Act.
111. Authorisation may be sought in relation to any of the competition
provisions under Part IV except for misuse of market power. The
ACCC's Guide to Authorisation (as published on 15 December 2010)
provides information on the authorisation process.
112. A disclosure made in the course of engaging in conduct that is
covered by an authorisation is exempt from the prohibitions.
[Schedule 1, item 2, subsection 44ZZY(4)]
113. A party may have, prior to the enactment of the Bill, obtained
authorisation to engage in certain, specified conduct. The Bill
provides an exception for a disclosure that is made in the course
of engaging in that authorised conduct.
114. The exception does not cover disclosures made in the course of
engaging in conduct that is authorised under the new authorisation
sections of the Bill. [Schedule 1, item 2, paragraph 44ZZY(4)(a)]
115. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosures covered by notification under section 93
116. Current section 93 of the CC Act provides for the granting of
notifications by the ACCC in relation to conduct which may
constitute exclusive dealing under section 47 of the CC Act. The
Bill amends section 93 so that a party may also notify the ACCC of
conduct that may be prohibited under the private disclosure of
pricing information prohibition. [Schedule 1, items 11 to 16]
117. For disclosures in relation to exclusive dealing, if the disclosure
relates to the conduct which has been notified to the ACCC, and if
at the time of the disclosure the notice is in force, the
disclosure is intended to be exempt from both prohibitions.
[Schedule 1, item 2, subsection 44ZZY(5)]
118. For disclosures in relation to the private disclosure of pricing
information prohibition, if the disclosure is the conduct which has
been notified to the ACCC, and if at the time of the disclosure the
notice is in force, the disclosure is intended to be exempt from
both prohibitions. [Schedule 1, item 2, subsection 44ZZY(5)]
119. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosures to comply with the continuous disclosure obligations
120. The Corporations Act 2001 is the principal Act regulating companies
in Australia. It regulates matters such as the construction,
configuration and function of companies. Chapter 6CA of the
Corporations Act 2001 contains provisions that mandate compliance
with the listing rules of a listing market.
121. A disclosure made for the purpose of complying with the continuous
disclosure obligations within Chapter 6CA of the Corporations Act
2001 is exempt from the prohibitions. [Schedule 1, item 2,
subsection 44ZZY(6)]
122. A disclosure made for the purpose of complying with disclosure
requirements of statutory authorities or laws may be exempt by
virtue of the disclosure authorised by law exception.
123. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Exceptions that apply to the private disclosure of pricing information
prohibition
124. A number of exceptions from the private disclosure prohibition are
contained in the Bill for a disclosure:
of information to an acquirer or supplier of goods or services;
to an unknown competitor;
made for the purposes of a joint venture;
relating to provision of loans etc. to same person;
between a credit provider and a provider of credit service;
made in connection with an acquisition of shares or assets; and
if a borrower or a person who has given a guarantee or indemnity in respect
of loans or credit provided to the borrower may be or may become insolvent.
125. A disclosure that is exempt from the private disclosure of pricing
information prohibition by the application of these exceptions is
not exempt from the substantial lessening of competition
prohibition.
Disclosure of information to acquirer or supplier of goods or services
126. Legitimate business transactions between parties are not intended
to be targeted by the prohibition.
127. Current section 4 of the CC Act provides broad definitions for
'goods' and 'services'.
128. A disclosure of information that relates to goods or services:
supplied or likely to be supplied by the corporation to the recipient is
intended to be exempt from the prohibition. [Schedule 1, item 2, paragraph
44ZZZ(1)(a)]
acquired or likely to be acquired by the corporation from the recipient is
intended to be exempt from the prohibition. [Schedule 1, item 2, paragraph
44ZZZ(1)(b)]
129. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosure to unknown competitor
130. If a corporation did not know that the recipient of a disclosure
was a competitor or potential competitor of the corporation in the
relevant market, or could not reasonably be expected to have known
the recipient was a competitor or potential competitor, the
disclosure is intended to be exempt from the prohibition.
[Schedule 1, item 2, subsection 44ZZZ(2)]
131. The exception only operates where both the subjective and objective
test of knowledge is satisfied. If the corporation did not know
that the recipient was a competitor, but a reasonable person in the
same situation would have been expected to have known, then the
exception cannot be relied upon.
1. : Disclosure to a person who was not known to be a competitor
A person telephones a corporation, and asks for the current price at which
the corporation is selling bananas. The person does not inform the
corporation that they are acting for a competing company in the same
market. If the corporation has no reason to suspect that the person
calling is a competitor, then the private disclosure of pricing information
prohibition does not apply to a disclosure of the price information of
bananas.
132. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosure made for the purposes of a joint venture
133. A joint venture is an association of persons formed for the purpose
of pursuing a particular business objective together, and may be
undertaken through a partnership or some other form of
unincorporated association or through an incorporated body. It
involves a level of integration between the participants which is
less than would amount to a merger. Joint venture does not have a
settled common law meaning in Australia, reflecting the fact that
joint ventures can take various forms. Current section 4J of the
CC Act provides a broad definition of joint venture.
134. Joint ventures can be pro-competitive and provide public benefits,
particularly when they are employed as a means of developing new
products or services or producing existing products or services
more efficiently. Because of these potential benefits, the private
disclosure of pricing information prohibition does not apply to
disclosures made for the purposes of a joint venture, but the
substantial lessening of competition prohibition will still apply.
135. A disclosure made for the purpose of a proposed or actual joint
venture for the production and/or supply of goods or services, if
they are the only parties to the communication are exempt from the
private disclosure of pricing information prohibition. [Schedule
1, item 2, subsection 44ZZZ(3)]
Established or proposed joint ventures
136. A disclosure between corporations made for the purpose of
establishing a joint venture between those corporations (but prior
to its formation), if made bona fide, will not be captured by the
prohibition.
137. A disclosure between corporations of an established joint venture,
made for the purposes of that joint venture, will not be captured
by the prohibition.
Production and/or acquisition of goods or services
138. The proposed or actual joint venture must be for the production
and/or supply of goods or services. Current section 4 of the CC
Act provides broad definitions for 'goods' and 'services'.
139. To the extent that a research and development joint venture is
formed and proceeds to produce and supply the result of the
relevant research and development to the parties to the joint
venture, it may be producing a service as defined under section 4
of the CC Act, and therefore qualify under this exception. This is
because, services is defined broadly to include (but is not limited
to) any rights, including rights in relation to, and interests in,
real or personal property. Research and development could
therefore produce or develop intangible rights.
140. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosure relating to provision of loans etc. to same person
1. Disclosures between 2 or more corporations if the information
relates to loans or credit supplied, or likely to be supplied by
one or more of the corporations, and those corporations are
considering, or do provide such loans or credit to the same
borrower are exempt from the prohibition. [Schedule 1, item 2,
subsection 44ZZZ(3A)]
2. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosure between credit provider and provider of credit service
3. A disclosure to another person if one of the persons is a credit
provider, and the other person provides a credit service, within
the meaning of the National Consumer Credit Protection Act 2009,
and the disclosure is made in the course of that relationship is
exempt from the prohibition. [Schedule 1, item 2, subsection
44ZZZ(3B)]
4. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosure made in connection with an acquisition of shares or assets
141. A disclosure made in connection with an actual or proposed
agreement that would provide for the acquisition of shares or
assets from a business are exempt from the prohibition. [Schedule
1, item 2, subsection 44ZZY(4)]
142. Current section 4 of the CC Act provides that 'share' includes
stock.
143. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Disclosure if borrower insolvent etc.
5. Certain disclosures that are for the purpose of considering whether
to take measures to return a borrower to solvency, or to avoid or
reduce the risk of the borrower becoming insolvent are exempt from
the prohibition. [Schedule 1, item 2, subsection 44ZZY(4)]
6. A person wishing to rely on this exception bears an evidential
burden of proof of establishing the elements of this exception.
[Schedule 1, item 2, section 44ZZZA]
Evidentiary burden
144. An evidentiary burden rests with a party wishing to rely on any
exception provided for in the Bill for either the private
disclosure of pricing information prohibition or the substantial
lessening of competition prohibition. [Schedule 1, item 2, section
44ZZZA]
145. The intention for imposing an evidentiary burden is to ensure the
party bringing the action does not have to disprove all imaginable
defences, only those properly supported by sufficient evidence.
146. An evidentiary burden rests also with a party wishing to assert
that the disclosure was to their own agent, or that the disclosure
was accidental. [Schedule 1, item 2, section 44ZZZA]
Mere receipt of information
147. The Bill clarifies the application of the existing paragraph
76(1)(e) to the prohibitions in the Bill. More than the receipt of
information will be required for a recipient of a disclosure that
is in breach of either prohibition to be found to be knowingly
concerned in, or party to that breach. [Schedule 1, item 2,
section 44ZZZB]
1. : Receipt of information
If Corporation A emails a competitor and discloses pricing information, the
recipient of that information in just receiving the information is not
intended to be found to be knowingly concerned in, or party to, the
Corporation A's breach.
Conduct by directors, employees or agents
148. Current section 84 of the CC Act has the effect that a person may
breach certain provisions of the CC Act in consequence of the
behaviour of one of their employees, agents, or, in the case of a
body corporate, directors.
149. Paragraph 84(1)(b) stipulates that to prove state of mind of a body
corporate in relation to conduct engaged in, in relation to various
sections within Part IV, it is sufficient to show that:
a director, employee or agent of the body corporate engaged in that
conduct;
the director, employee or agent was, in engaging in that conduct, acting
within the scope of their authority; and
the director, employee or agent had that state of mind.
150. The Bill amends paragraph 84(1)(b) so that it refers to the new
Division 1A. [Schedule 1, item 3]
151. Paragraph 84(3)(b) stipulates that in an enforcement proceeding in
respect of conduct engaged in by a person other than a body
corporate, being conduct in relation to various sections within
Part IV, it is necessary to establish the state of mind of a
person, it is sufficient to show that:
an employee or agent of the person engaged in that conduct;
the employee or agent was, in engaging in that conduct, acting within the
scope of their authority; and
the employee or agent had that state of mind.
152. The Bill amends paragraph 84(3)(b) so that it refers to the new
Division 1A. [Schedule 1, item 4]
Immunity
153. Immunity from any action for conduct which may breach certain
provisions in Part IV of the CC Act may be granted on a case-by-
case basis through the authorisation and notification processes in
Part VII of the CC Act. The Bill extends these processes (by way
of amendments to Part VII) to apply to actions that may breach the
anti-competitive price signalling and information disclosure
prohibitions in the Bill.
154. Immunity can be available under these provisions where the ACCC
considers that the public benefits of a proposed disclosure:
outweigh any detriment flowing from a lessening of competition (in relation
to the substantial lessening of competition prohibition); or
because the conduct or arrangement would result in such benefits to the
public that immunity should be granted or allowed to continue (in relation
to the private disclosure of pricing information prohibition).
Authorisation
155. Section 88 of the CC Act enables the ACCC to authorise a party to
engage in conduct that would otherwise be considered to breach the
prohibitions in Part IV, except in relation to misuse of market
power (section 46 of the CC Act). The effect of the authorisation
is to provide a corporation with immunity from action under the
relevant provision for the authorised conduct.
156. Broadly, the ACCC can authorise a party to engage in anti-
competitive conduct based on public benefit (as set out in section
90 of the CC Act). Applications for authorisation are considered
within six months of lodgement. For information on the existing
authorisation processes refer to the ACCC's Guide to Authorisation
(as published on 15 December 2010).
157. The Bill enables the ACCC to authorise, under section 88 of the
CC Act, a disclosure a party proposes to make which may breach
either the private disclosure of pricing information prohibition or
the substantial lessening of competition prohibition in the Bill.
If a party engages in conduct other than that authorised, it would
not be immune.
158. Where an authorisation is in force, the party will not be liable
for a breach of the private disclosure of pricing information
provision or the substantial lessening of competition prohibition
(as applicable) constituted by the notified conduct. [Schedule 1,
item 5, subsection 88(6A)]
159. A party is not able to obtain authorisation from the ACCC if the
disclosure has already been made. This is similar to the existing
situation in relation to authorisations and contracts, arrangements
or understandings which have already been made (subsection 88(12)
of the CC Act). [Schedule 1, item 5, subsection 88(6B)]
160. A party may be able to seek authorisation for one disclosure or a
number of similar disclosures of information. This is similar to
the existing situation in relation to authorisation for multiple
contracts (section 88(13) of the CC Act). [Schedule 1, item 5,
subsection 88(6C)]
Authorisation in relation to conduct that relates to the private disclosure
of pricing information prohibition
161. The test the ACCC applies to an authorisation in relation to
conduct that may breach the private disclosure of pricing
information prohibition application is provided for in the Bill.
The ACCC will not grant authorisation unless it is satisfied that
the disclosure would result, or be likely to result in such a
benefit to the public that the disclosure should be allowed to be
made. [Schedule 1, items 6 and 8]
162. This test reflects the test applied to authorisations relating to
other per se prohibitions (see subsection 90(8) of the CC Act).
Authorisation in relation to conduct that relates to the substantial
lessening of competition prohibition
163. The test the ACCC applies to an authorisation in relation to
conduct that may breach the substantial lessening of competition
prohibition application is provided for in the Bill. The ACCC will
not grant authorisation unless it is satisfied that the disclosure
would result or be likely to result in a benefit to the public and
that the benefit would outweigh the detriment to the public.
[Schedule 1, items 6 and 7]
164. This test reflects the test applied to authorisations relating to
other prohibitions based on a substantial lessening of competition
(see subsections 90(5A)-(7) of the CC Act).
The ACCC may revoke an authorisation
165. Current section 91B of the CC Act provides for certain
circumstances in which the ACCC may revoke an authorisation. The
Bill amends section 91B of the CC Act so that it covers revocation
of an authorised disclosure. If the ACCC receives an objection to:
a revocation notice, where the ACCC wishes to revoke authorisation on its
own initiative; or
a revocation application, where the authorised party wishes to revoke
authorisation,
the ACCC may only revoke the authorisation if it is satisfied that
the authorised disclosure no longer satisfies the relevant test for
granting authorisation. [Schedule 1, item 9]
166. Current section 91C of the CC Act provides that a party may apply
to the ACCC for the substitution of a new authorisation for the one
revoked. The Bill amends section 91C of the CC Act so that a party
may apply to the ACCC for a revocation of an authorised disclosure
and the substitution of a new authorisation for the one revoked.
[Schedule 1, item 10]
Review of an application for an authorisation or revocation of an
authorisation by the Australian Competition Tribunal
167. Current section 101 of the Act allows for a party who is
dissatisfied with a determination by the ACCC in relation to an
authorisation to apply to the Australian Competition Tribunal
(Tribunal) for a review of the determination. The Bill amends
section 101 of the CC Act so that the Tribunal can review a
determination by the ACCC in relation to an authorised disclosure
and make a determination by consent of the applicant. [Schedule 1,
item 15]
168. A review by the Tribunal is a re-hearing of the matter. [Schedule
1, item 16]
Notification
169. The existing section 93 of the CC Act provides for the lodgement of
notifications to the ACCC in relation to conduct which may
constitute exclusive dealing under section 47 of the CC Act.
Notification is a process under which parties that propose to
engage in certain proscribed conduct may obtain immunity from legal
action under the CC Act, if the conduct is in the public interest.
170. The Bill amends section 93 so that a party may also notify the ACCC
of conduct that may be prohibited under the private disclosure of
pricing information prohibition. [Schedule 1, items 11 to 14]
Notification requirements to be prescribed by regulations.
171. The specific procedural requirements placed on corporations wishing
to lodge a valid notice will be determined by regulations.
Existing regulations will be amended to establish the requirements
for the new notices.
172. The Government anticipates that the ACCC will issue a guide to
private disclosure of pricing information notifications to assist
parties in notifying proposed disclosures that may breach the CC
Act.
A valid notification in force provides immunity from proceedings in
relation to the notified conduct.
173. Where a valid notification is in effect, the party will not be
liable for a breach of the private disclosure of pricing
information provision constituted by the notified conduct.
[Schedule 1, item 12]
174. Immunity from legal action (either by the ACCC or a private party)
for a breach of the private disclosure of pricing information
prohibition will commence at the end of a period to be specified in
the regulations after a valid notification is lodged (subsection
93(7A)). The current period specified in the regulations for
exclusive dealing, and in subsection 93AD(1) for collective
bargaining, is 14 days after a valid notification is lodged.
175. To the extent that notified conduct is capable of also being caught
by the substantial lessening of competition prohibition, a valid
notice will also provide immunity from the substantial lessening of
competition prohibition. [Schedule 1, item 2, subsection 44ZZY(5)]
176. The immunity provided in relation to the substantial lessening of
competition provision relates only to a situation where notified
conduct (otherwise being a breach of the private disclosure of
pricing information prohibition) in and of itself would also breach
the substantial lessening of competition prohibition.
The ACCC may revoke a notification
177. The ACCC may at any stage remove the immunity provided by a
notification by giving notice only where it is satisfied that the
likely benefit to the public from the notified conduct would not
outweigh the likely detriment to the public resulting from the
conduct. The immunity ceases on the 31st day after the ACCC gives
notice or on such later date as the ACCC specifies (subsection
93(7C) of the CC Act).
Application and transitional provisions
178. The amendments made by Schedule 1 of the Bill commence the day
after the end of the period of 6 months beginning on the day the
Act receives the Royal Assent.
Consequential amendments
179. Nil.
Regulation impact statement - anti-competitive price signalling and
information exchange (decision)
[The Competition and Consumer Act 2010 was formerly known as the Trade
Practices Act 1974.]
1. The objective of Government action is to prohibit anti- competitive
price signalling and information exchange between competitors,
through amendments to the Trade Practices Act 1974 (the TPA). In
doing so, the Government is seeking to advance the objective of the
TPA by strengthening its safeguards against anti-competitive
conduct, recognising that competitive markets enhance the welfare
of Australians.
Problem
Summary
2. Collusive behaviour is detrimental to the economy and consumers and
is prohibited under the long-standing cartel provisions and the new
criminal cartel provisions in Part IV of the TPA.
3. Anti-competitive price signalling and other information exchanges
are communications between competitors which facilitate prices
above the competitive level and can lead to inefficient outcomes
for the economy and lower wellbeing for consumers. The Australian
Competition and Consumer Commission (ACCC) has recently expressed
concerns about this type of conduct and its inability to adequately
address the problem.
4. It is apparent from numerous judicial decisions that these existing
cartel provisions do not effectively address anti-competitive
information exchanges that occur outside of a 'contract,
arrangement or understanding'. Conversely, most comparable
jurisdictions, including the United Kingdom (UK), European Union
(EU) and United States (US) all have laws which are capable of
dealing with anti-competitive price signalling and other
information exchanges.
5. Information exchanges play a vital role in the economy; they
increase transparency in the market to the benefit of consumers and
the competitive process. With the exception of anti-competitive
price signalling and other information exchanges, such
communications are perfectly legitimate, pro-competitive and
efficiency enhancing.
6. Addressing this problem will need to carefully balance the
prohibition of anti-competitive, and continuation of legitimate
information exchanges.
The TPA and anti-competitive conduct
7. The object of the TPA is to enhance the welfare of Australians
through the promotion of competition and fair trading and provision
for consumer protection. Competitiveness of markets improves
productivity and efficiency, leading to rising living standards in
the form of higher incomes in real terms, increased consumer
choices, sustainable economic growth, and lower unemployment rates
than would otherwise be the case.
8. Effective competition can be reduced by businesses behaving, either
independently or with other businesses, in ways that reduce rivalry
in the market, or prevent or deter the entry of new businesses.
Recognition of these problems gives rise to the core purpose of the
competition rules in Part IV of the TPA which seek to restrain
conduct that tends to lessen competition, but to otherwise leave
businesses free to act as they see fit.
9. Collusive behaviour is detrimental to the economy and consumers.
By colluding with one another, competitors are able to distort the
competitive process by, for example, reaching an agreement about
the price to be charged for goods or an agreement about who will
supply particular segments of the market.
10. Collusive or cartel behaviour is prohibited under the long-standing
cartel provisions and the new criminal cartel provisions in Part IV
of the TPA. Under the parallel civil and criminal cartel
prohibitions[2], corporations are prohibited from making or giving
effect to a 'contract, arrangement or understanding' that contains
a cartel provision with a competitor. A 'cartel provision' is a
provision that fixes prices, restricts outputs in the production or
supply chain, allocates customers, suppliers or territories, or
rigs bids. In addition, section 45 prohibits corporations from
making or giving effect to a 'contract, arrangement or
understanding' which contains an exclusionary provision[3], or has
the purpose, effect or likely effect of substantially lessening
competition.
Anti-competitive price signalling and information exchange
11. The cartel provisions capture anti-competitive conduct which
involves one competitor attempting to induce another into collusive
conduct. They require the presence of a 'contract, arrangement or
understanding' which Australian courts have held requires evidence
of a 'meeting of minds' and a commitment (albeit moral, not legal)
about the subject matter of the arrangement.[4] Anti-competitive
price signalling and other information exchanges do not have these
characteristics. It is apparent from numerous judicial
decisions[5] that these existing cartel provisions do not
effectively address anti-competitive information exchanges that
occur outside of a 'contract, arrangement or understanding'.
12. Anti-competitive price signalling and other information exchanges
are communications between competitors which facilitate prices
above the competitive level and can lead to inefficient outcomes
for the economy and lower wellbeing for consumers (these practices
are sometimes referred to as facilitating, coordinated or concerted
practices). The economic literature recognises a broad range of
conduct which may theoretically meet the definition of anti-
competitive price signalling and information exchanges, including
conduct such as price matching guarantees. However, overseas
experience and legal advice indicates that as a practical matter,
disclosures and exchanges of information are the most prevalent and
harmful form of anti-competitive price signalling and information
exchanges, as well as being the most readily distinguished from
benign or pro-competitive forms of conduct. Anti-competitive price
signalling and information exchange can occur as part of a wider
cooperation agreement, or as a stand-alone practice absent of an
explicit cartel arrangement.
13. Anti-competitive price signalling and other information exchanges
can occur in a range of industries and have economy wide impacts.
Depending on the industry in which they occur, the latter could be
material. They most typically arise and have the greatest
detriment in markets which exhibit oligopolistic features and can
be as harmful to competition and consumers as explicit cartel
behaviour.[6] In an oligopolistic market businesses are not
'price takers', as they have a degree of market power and impact on
market outcomes and the decisions of competitors. Accordingly,
oligopolists are able to take advantage of increased transparency
as it enables them to better predict or anticipate the conduct of
their competitors and thus align themselves to it, to the detriment
of consumers and the economy.
14. The market outcome of repeated oligopolistic interaction over time,
at least in circumstances where the only 'communication' between
competitors is market action, can range from the competitive
outcome to the monopoly outcome. Businesses' incentives, and hence
the likely outcome, will depend on how much each business has to
gain from undercutting its rivals now, how likely are other
businesses to cut prices in response, how much the business would
lose from rivals' price cuts in the future, and the discount rate
the business applies to future profits relative to profits today.
15. That is not to say that anti-competitive price signalling and other
information exchanges only occur in oligopolistic markets. For
instance, the European Commission in the UK Agricultural Tractor
Registration Exchange decision[7] did not eliminate the possibility
that there may be instances where communications between
competitors may lead to collusive outcomes even in fragmented or
non oligopolistic markets.
Situation in Australia
16. It is not possible to accurately estimate the current extent of
anti-competitive price signalling and information exchange in
Australian markets. However, there is no available evidence, and
no theoretical basis on which to conclude that the potential
benefits available to Australian businesses from engaging in such
anti-competitive conduct differ materially from those available
overseas.
17. The ACCC's ability to gather evidence through its formal
information gathering powers to highlight the current extent of the
problem is limited. The ACCC's powers can only be used where it
has a reason to believe that a person has information related to a
matter that constitutes a contravention, or possible contravention
of the TPA in its current form. As anti-competitive price
signalling and information exchange do not constitute a
contravention of the existing TPA prohibitions, and are frequently
secretive in nature, widespread evidence of their current
occurrence is difficult to obtain. Once a prohibition has been
implemented, the majority of businesses are likely to comply
voluntarily with the new laws. Consequently, an ex-post assessment
could not accurately take into account the deterrent value of the
prohibition. The extent of any future occurrences will be clearer
once a prohibition has been enacted, and the ACCC has undertaken
specific investigations.
18. Recently, the ACCC has expressed concerns around conduct which
could amount to anti-competitive price signalling and information
exchange.
19. In its decision concerning the proposed acquisition of Mobil retail
assets by Caltex, the ACCC stated that it had regard to the
coordinated behaviour associated with the jump in fuel prices as
part of the weekly price cycle. It noted that it considers that
this coordination is facilitated through the frequent exchange of
pricing information between competitors via the Informed Sources
Oil Pricewatch System. In relation to this, the Chairman of the
ACCC, Mr Graeme Samuel stated:
While the enhancement of coordinated conduct resulting from the proposed
acquisition is likely to substantially lessen competition in contravention
of section 50 of the Trade Practices Act, the ACCC is concerned that the
Act does not appear to adequately cover facilitating practices which
enables such coordinated conduct.[8]
20. The ACCC has also expressed concern regarding the public signalling
of future interest rate pricing intentions between banks. On
18 October 2010, the Chairman of the ACCC indicated that price
signalling by major banks was of concern as, in his view, it
provided businesses who sought to raise their own interest rates
with an amount of comfort that their competitors will not undercut
them.
Australian case examples
21. The ACCC and its predecessor have unsuccessfully sought to take
action against businesses engaging in conduct which can be
described as anti-competitive price signalling and information
exchange. Some of these cases are outlined in detail Box 1.
Box 1: Anti-competitive price signalling and information exchange -
Australian case examples
TPC v Email Ltd & Ors [1980] FCA 86; ATPR 40-172
The two parties involved in this case, Email and Warburton Franki, were at
the time the only manufacturer and suppliers or electricity meters in
Australia. The parties issued identical price lists, submitted identical
tenders, adopted the same price variation clause, sent to each other their
respective price lists which showed the prices as identical, forwarded to
each other new price lists immediately they changed prices or introduced
any new meter or component, and tendered in accordance with their
respective price lists.
The Trade Practices Commission (now known as the ACCC) contended that the
respondent's actions constituted an arrangement or understanding under
section 45 of the TPA and that the requisite meeting of minds was to be
construed from the circumstances. The Commission also alleged that the
communications about price gave rise to mutual expectations that each party
(or at least one) would accept restrictions as to its conduct.
However, the Court found that there was no evidence of commitment, either
to exchange the price lists or to charge particular prices, and hence no
contract, arrangement or understanding, and considered the conduct to be
parallel, explained by 'rational commercial considerations'. The Court
held that the Warburton Franki could readily have found out prices from
sources other than Email and therefore it was not the exchange of price
information which resulted in parallel prices but 'market forces,
competition and the necessity for Warburton Franki to follow Email'.[9]
Apco Service Stations Pty Ltd v ACCC [2005] FCAFC 161
In this case, the Court found evidence that some petrol station owners (in
the Ballarat region of Victoria, Australia) had entered into arrangements
or understandings regarding the retail price of petrol in the area.
However, in relation to Apco, the Court did not find that it had entered a
contract, arrangement or understanding with the other parties to the
agreement, despite receiving information regarding its competitors pricing.
The Court accepted Apco's contentions that it was not a party to any price-
fixing understanding because it did not commit to changing its price based
on the information it received.
The Court affirmed that a mere hope or expectation that a party will act in
a particular way is insufficient to support an arrangement or understanding
in contravention of section 45 of the TPA. In this instance, the Court
held there was no expectation that Apco would match the price increases of
its competitors, which unavoidably led to the conclusion that Apco was not
a party to any understanding to fix prices. As the Court pointed out,
'(u)nilaterally taking advantage of a commercial opportunity presented is
not to arrive at or give effect to an understanding in breach of the
Act'[10] and therefore Apco's actions did not result in a contravention of
section 45 of the TPA.
ACCC v Leahy Petroleum [2007] FCA 794
In this case, it was admitted that a petrol retailer had telephoned a
competitor to advise of its intention to increase prices and the timing of
those increases. However, the Federal Court found this conduct was not
sufficient to constitute a contract, arrangement or understanding and
therefore was not a breach of the TPA because the initiator was not obliged
to provide the information and the recipient was not obliged to act upon
the information. In the Court's view there was no commitment, moral
obligation or obligation binding a party in honour to act in a particular
way.[11]
However, his Honour did note that private communication of intended price
increases, without communication of the intention to potential purchasers,
lent itself readily to price-fixing, but without more did not in itself
constitute price-fixing.[12]
This case considers the words contract, arrangement and understanding to be
distinct legal concepts and finds these concepts, although 'plainly
intended to represent a spectrum of consensual dealings'[13] , all require
one essential element to satisfy their meaning in section 45: that is, the
element of obligation or commitment.[14] Gray J stated:
'The absence of any element of commitment or obligation, from any of the
alleged arrangements or understandings must lead to the conclusion that
none of those arrangements or understandings is capable of amounting to an
arrangement or understanding within the meaning of s.45(2)(a) of the Trade
Practices Act. None of them is capable of containing a provision for the
fixing of prices.'[15]
22. Subsequent to these rulings, there has been considerable debate
around the issue of commitment. It is important to note that the
'success' of facilitating practices such as price signalling and
information exchanges in sustaining supra-competitive prices does
not depend on whether the conduct requires any sort of obligation
or 'commitment' by the parties - moral or otherwise. Rather it
depends on the ability and incentive for participants to maintain
prices above competitive levels and thereby harm consumers. The
issue becomes whether the existence of the practice in question
enhances the ability and/or incentive of participants to coordinate
their conduct and thereby raise or sustain prices above competitive
levels and harm consumers.
Anti-competitive price signalling in international jurisdictions
23. Recent OECD Roundtables (2007 and 2010) on Facilitating Practices
and Information Exchanges have highlighted the harm to competition
and consumers that can arise from these anti-competitive
information exchanges between competitors and the ways in which
they are dealt with in various jurisdictions.
24. Most comparable jurisdictions, including the UK, EU and US all have
laws which are capable of dealing with anti-competitive price
signalling and other information exchanges (sometimes called
'concerted practices' or 'facilitating practices'). Box 2 provides
some specific international examples of where anti-competitive
price signalling or information exchanges have resulted in
penalties being paid.
Box 2: International examples of information exchanges
Case box: Exchange of school fee information between independent fee-paying
schools
On 20 November 2006, the UK Office of Fair Trading (OFT) found
50 independent schools infringed subsection 2(1) of the Competition Act
1998. The case was settled with the OFT.
The OFT found that information was exchanged between the schools on a
regular and systemic basis regarding their future pricing intentions
(intended fees and fee increases). All schools were able to see other
schools' pricing intentions prior to setting their own fee increases for
the next school year (which were then fixed for the next 12 months). At
the time of exchange, the information was highly confidential; the
information was not made available to parents of the pupils or published
more generally.
The OFT decided this arrangement constituted a restriction of competition
whereby the schools knowingly substituted practical cooperation for the
risks of competition - that is, a concerted practice having as its object
the prevention, restriction or distortion of competition.
25. The OFT found the information exchange amounted to an 'agreement'
on two levels:
Each school submitted their pricing information on the understanding and
expectation that they would receive similar information from other schools;
and
There was a 'gentleman's agreement' that the stated fee increases would
accurately reflect actual future fee levels.
26. Given that it was 'obvious' that the conduct had anti-competitive
effects, it was considered to have the object of restricting
competition and it was therefore not necessary for the OFT to prove
actual or likely effects.
Case box: Royal Bank of Scotland
In March 2010, the Royal Bank of Scotland (RBS) agreed to pay a fine of
£28.5 million after admitting competition law breaches. The RBS disclosed
generic and confidential future pricing information to Barclays Bank, which
Barclays took into account in determining its pricing.
It is understood the conduct raised concern as a concerted practice as
distinct from a cartel; that is liability arose because of the price
disclosures to a competitor, not because prices were fixed.
Case box: US Airline Industry
A further example of information exchanges caught by overseas laws occurred
in the US airline industry.[16] This case involved both signalling
proposed price increases and likely punishments. Airline Tariff Publishing
Company (ATP) acted as a central clearing house for distribution of airline
fare change information. ATP essentially allowed rival airlines to engage
in 'cheap talk', signalling and 'negotiating' a collusive outcome before it
was implemented. The United States Department of Justice (DOJ) cited two
types of conduct:
( The airlines used ATP to reach agreements[17] and concerted
actions to fix prices by increasing fares, eliminating discount
fares and setting fare restrictions for domestic tickets; and
( The airlines had reached agreement to operate ATP as a fare
exchange system with the purpose of communicating information
about fares and reducing uncertainty about future price
intentions.
The case was settled in court with penalties by consent order.
27. For the most part, the examples outlined in Box 2 would not be
captured under the TPA. While there is direct evidence of
communication, they generally do not approach the threshold
required by the TPA, that is, evidence of an actual commitment to
act in a certain way.
28. Some matters, such as the UK schools case are more likely to be
able to be captured under the existing TPA prohibitions. As set
out above, anti-competitive price signalling or information
exchange occurring in conjunction with a contract, agreement or
understanding will be captured by existing TPA prohibitions. The
UK OFT found the conduct of the schools at the very least amounted
to a concerted practice, however the UK OFT did not regard it
necessary to arrive at a definitive conclusion whether the
behaviour amounted to an agreement or concerted practice. It
concluded that the information exchange amounted to an agreement
and/or a concerted practice.
The Treasury's consultation on the meaning of 'understanding' in the TPA
29. Previously, the Treasury has consulted on a model proposed by the
ACCC to capture anti-competitive conduct presently not prohibited
by the TPA. In January 2009, as a result of the concerns raised by
the ACCC in its 2007 Petrol Report[18], the Treasury issued a
discussion paper (Treasury Discussion Paper) which sought
submissions regarding the adequacy of the current interpretation of
the term 'understanding' in section 45 of the TPA to capture anti-
competitive conduct. A number of parties submitted that there is
conduct which is anti-competitive, such as the sharing of price
information between competitors, which falls outside the scope of
the TPA.
30. In their submission, Brent Fisse and Caron Beaton-Wells noted that
facilitating practices/concerted practices[19] were legal in
Australia however illegal in Europe and possibly the US:
[pic]
31. Brent Fisse and Caron Beaton-Wells noted[20]:
There is a respectable case for adopting the concept of 'concerted
practice' in the interpretation of an 'understanding' in the civil
prohibitions on cartel conduct in Australia. The concept is recognised in
both EC law (formally) and US law (at least to some extent, albeit
informally). It is consistent with economic theory as to where the line
should be drawn between legal and illegal horizontal coordination, based on
recognition that such practices may have the same anti-competitive effects
as collusive agreements ... Many economists, including George Hay, argue
that facilitating or signalling devices should be illegal, not only because
they produce the same cartel-like effects as explicit agreements, but also
because they are culpable in the sense that they involve a deliberate
attempt to overcome structural impediments to coordination and subvert the
competitive functioning of the market, while having no offsetting business
rationale.
32. Maurice Blackburn Lawyers submitted that:
The recent judicial approach to 'understanding' provides a blue print for
'competitors' to increase prices by sharing price information by being
careful to never commit to doing anything with it ... It facilitates the
avoidance of liability for collusive conduct.
33. Recent media commentary on this issue centres around the need to
carefully address the complexities involved in addressing public
communications, but is otherwise supportive of the need to address
the issue of anti-competitive price signalling and information
exchange. Blake Dawson's Stephen Ridgeway (who is also head of the
Law Council's Trade Practices Committee) has made public statements
agreeing that the ACCC lacks some power, but urged caution in what
is done to the law.[21]
Legitimate communications
34. Information exchanges play a vital role in the economy; they
increase transparency in the market to the benefit of consumers and
the competitive process. Businesses communicate to the public and
stakeholders for a variety of reasons including to inform
customers, to advertise their market positioning, to improve brand
awareness, and to fulfil legal and regulatory obligations.
Industry associations and representative organisations can fulfil
important roles in our economy which require the free flow of
certain types of information amongst their members and to
governments and other businesses.
35. In general, such communications are perfectly legitimate, pro-
competitive and efficiency enhancing. Freedom to communicate with
suppliers and customers is essential to gaining competition and
efficiency benefits in a well-functioning market. However, the
positive benefits of many information exchanges do not imply that
the potential for harm to competition and consumers which may arise
from anti-competitive price signalling and information exchanges
should be disregarded.
36. Accordingly, any proposal to address anti-competitive price
signalling and other information exchanges will need to carefully
balance the potential anti-competitive impacts of particular
information exchanges, with the benign and pro-competitive effects
of other information exchanges. These considerations are further
set out in the impact analysis on particular options which follows.
Objectives
37. The objective of Government action is to prohibit anti-competitive
price signalling and information exchanges between competitors,
through changes to the TPA.
38. This is consistent with the overall objective of the TPA, in
particular the enhancement of the welfare of Australians through
the promotion of competition, without imposing undue compliance
costs on businesses.
Options
39. In considering possible reforms in this area, the 2009 Treasury
Discussion Paper sought the community's views on the case for
reform and in particular on Option 2. The views of a range of
submitters have been considered in developing options for
addressing the problem, as well as the views expressed by business,
Economic Co-operation and Development (OECD) members, economists,
legal scholars and other parties in relation to Australia and
overseas.
40. The Options that are considered in this RIS are:
Option 1: No amendments to the TPA to address anti-competitive price
signalling and other information exchanges.
Option 2: Amend the TPA to expand the meaning of 'understanding' in the
cartel prohibitions (sections 44ZZRF, 44ZZRG, 44ZZRJ, 44ZZRK and 45) to
ensure that activities such as anti-competitive price signalling and
information exchange are captured by these provisions.
Option 3: Amend the TPA to include new, specific provisions to prohibit
anti-competitive price signalling and information exchange, with
consultation to take place on exposure draft legislation.
41. Targeted consultation will be undertaken on exposure draft
legislation to ensure that the provisions introduced to deal with
anti-competitive price signalling and other information exchanges
prevent the most detrimental anti-competitive conduct, while
minimising the risk of unintentionally prohibiting benign conduct
and the regulatory burden on businesses. A decision on the final
form of the legislation will be taken after this consultation
process has been completed.
Impact analysis
Analysis of Option 1
42. Option 1 proposes no change to the law.
43. The benefits of retaining the status quo are that it would avoid
introducing any uncertainties and costs that may potentially arise
in pursuing legislative change. Some stakeholders advocated in
favour of this option in the previous consultation process. For
instance, BP Australia in their submission to the Treasury
Discussion Paper advised:
... the current interpretation of the term 'understanding' in the TPA is
adequate to capture anticompetitive conduct, and does not limit the ability
of the TPA to properly address such anticompetitive practices.
44. However, Option 1 fails to address the problems identified above
and does not meet the objective of prohibiting anti-competitive
price signalling and information exchange. As a result, it will
continue to be the case that businesses, particularly those in
oligopolistic markets, will be able to engage in practices capable
of, or even designed with the purpose of, reducing the competitive
tension between them and thereby increasing prices paid by
consumers.
45. The broader economic impact of reduced competition is likely to
include higher prices and/or reduced quality or choice for
consumers. It may also lead to fewer gains in efficiency and
productivity. In turn, this diminishes the wellbeing of the
Australian people. Option 1 would leave the problem unaddressed,
would not meet the desired policy objective and is therefore not a
feasible option.
Analysis of Option 2
46. Option 2 (canvassed in the Treasury Discussion Paper) proposes to
amend the cartel prohibitions (sections 44ZZRF, 44ZZRG, 44ZZRJ,
44ZZRK and 45) to clarify and expand the meaning of 'understanding'
under the TPA.
47. This option seeks to address the problem by capturing further
conduct which does not currently meet the threshold of
'understanding' as applied by the Courts. It would do so by
modifying the existing 'contract, arrangement or understanding'
test, through alterations to the meaning of 'understanding'.
48. If minor amendments were made to the meaning of 'understanding' to
address the concern that Courts have been insufficiently willing to
infer an understanding from the evidence, this may fail to capture
much of the conduct of concern where no premise of an understanding
can be inferred. In addition, the existing prohibitions were not
drafted to capture such conduct and consequently unforeseen
consequences may result through such an alteration.
49. If, alternatively, the meaning of 'understanding' was substantially
amended so as to include all possible anti-competitive information
exchanges as understandings, this would appear to inappropriately
distort the meaning of 'understanding' and may inadvertently
prohibit some conduct which is benign or even pro-competitive.
This would impose costs on both businesses and consumers by denying
them the possible benefits that may arise from this conduct.
50. In the Treasury Discussion Paper, it was asked whether if the
definition of 'understanding' were to be expanded, would it be an
appropriate means to address any perceived shortfalls of the
current prohibitions. On balance the submissions indicated that
expanding the definition of 'understanding' was not a well targeted
means of capturing this conduct.
51. Ian Wylie (Blackstone Chambers) noted:
The ACCC did not appeal the Geelong Petrol Case, but did lobby the federal
government for legislative action. It remains to be seen where that will
end up ... One possibility is essentially procedural provisions
facilitating easier proof from indirect evidence and use of admissions. A
more effective outcome might result from amendment of the substantive
provision, for example, to adopt the EU approach and in practice catch a
broader range of 'decisions by associations of undertakings and concerted
practices', and/or to incorporate an independent economic self-interest or
other explicit 'Plus Factor' test.
The Law Council of Australia Trade Practices Committee considered the
changes to the meaning of 'understanding' proposed by the ACCC:
... would codify rather than modify the Court's current approach, and as
such are not necessary to address any perceived shortcoming in that
approach.
52. It was also argued by some submitters that such a change would
introduce further uncertainty to the meaning of 'understanding' and
would fail to provide a clear conceptual definition of the conduct
that is, or should, constitute an 'understanding'. This would
increase business compliance costs, as businesses would have to
seek legal advice as to whether their conduct would breach the
prohibition. Further, benign or pro-competitive conduct may be
unduly chilled.
53. Submissions also indicated that it would be unwise to lower the
legal barrier for arriving at an understanding given the recent
criminalisation of cartel conduct. If Option 2 were implemented,
either anti-competitive information exchanges may result in
criminal prosecution[22] or substantial legislative changes to the
cartel prohibitions (recently implemented in 2009) may have to be
made to ensure that anti-competitive information exchanges were not
exposed to criminal prosecution.
54. Taking into account the potential problems and shortcomings of this
option it is considered an inferior option to Option 3.
Analysis of Option 3
55. Option 3 proposes to amend the TPA to include new, specific
provisions to prohibit anti-competitive price signalling and
information exchange, with consultation to take place on exposure
draft legislation.
56. It is evident from the consultations undertaken already, the advice
of the ACCC and the experience of comparable overseas
jurisdictions, that there are a range of anti-competitive
information exchanges which are presently not covered by the TPA.
57. Submitters to the Treasury Discussion Paper considered, on balance,
that amending the meaning of 'understanding' was not a well
targeted means of capturing anti-competitive conduct not presently
captured by the TPA, a number of submitters brought forward
alternative proposals that would address conduct which did not meet
the definition of a cartel, however had anti-competitive impacts.
58. Maurice Blackburn Lawyers submitted that:
We ... generally support the articulation of certain factual matters which
the Court may consider in determining whether a corporation has arrived at
an understanding. This would provide a more apt approach to identification
of collusive conduct, and would be consistent with the approach taken in
other jurisdictions, for example the use of 'plus factors' in the United
States ... the 'concerted practice' concept used in the European Union
might usefully be considered as an alternative to the term 'understanding'
or as a reference point for its further development.
59. Ian Tonking SC advanced for discussion an option of 'radical
surgery':
The proposed prohibition could be added to s 45(2) as para
(c), preserving the present prohibition of a contract,
arrangement or understanding which lessens, or is deemed
to lessen, competition. The statutory wording might read
as follows:
A corporation shall not ... (c) communicate with any
competitor for the purpose, or with the effect, of
inducing or encouraging the competitor (or any other
competitor) to alter or adjust the price (the 'new price')
(including any discount, allowance, rebate or credit in
relation to the price) at which such competitor supplies,
or offers to supply, goods or services, in a manner, or to
an extent, so that the new price differs (materially) from
the price (including any discount, allowance, rebate or
credit in relation to the price) at which such competitor:
(i) before receiving the communication, intended to
supply, or offer to supply, the same goods or service;
(ii) in the absence of becoming aware of the terms of the
communication, would have supplied, or offered to supply,
the same goods or services.[23]
60. Fisse and Beaton-Wells advanced a number of options, drawing on
European and US law in relation to coordination between competitors
and considered the option:
... to insert a definitional provision explaining that 'understanding'
includes a concerted practice and to indicate in the Explanatory Memorandum
that 'concerted practice' is intended to have the same meaning as
'concerted practice' under Article 81(1) of the EC Treaty ... [to be] the
most promising.
61. In response to the views raised by submitters to the Treasury
Discussion Paper, the ACCC has publicly stated that a more direct
approach to targeting anti-competitive price signalling and
information exchange directly may be preferable at this time. The
ACCC Chairman, Mr Graeme Samuel stated:
... suffice to say, I have publicly indicated we have got a problem. We
have a loophole in the law in Australia in relation to cartels and
collusive communications, and I have indicated that we should have a look
at what is done in the US and Europe as a possible means of dealing with
the issue.[24]
62. In terms of the broad direction of reform, amending the TPA to
prevent anti-competitive disclosures may be expected to yield
material wellbeing improvements through the improved operation of
markets. The information available to the Treasury indicates that
it is reasonable to expect that the law can be amended to proscribe
anti-competitive price signalling and information exchange to avoid
stopping behaviour that is benign or pro-competitive and so as to
not impose an inappropriate burden on business.
63. There is a range of activities which could constitute anti-
competitive price signalling or information exchange and some
activities are of greater concern than others. The competitive
concerns arising from the exchange of information also depends on
the nature of the information shared. Other things being equal,
the sharing of information in relation to price, output, costs, or
strategic planning is more likely to raise competitive concern than
the sharing of information about less competitively sensitive
matters.
64. Similarly, other things being equal, the sharing of information on
current operating and future business plans are more likely to
raise concern than the sharing of historical information.
65. The private exchange of pricing information may be readily
distinguished from more benign or pro-competitive information
exchanges. For example, a private discussion of future pricing
intentions between competitors is likely to have little or no
redeeming qualities. This is distinct from public communications,
which may be undertaken for a variety of benign and pro-competitive
reasons. Any prohibition capable of capturing public
communications therefore needs to be capable of filtering between
the various purposes underlying public communications, to ensure
that only anti-competitive communications are prohibited.
66. It is important to recognise that any provision which seeks to
address anti-competitive price signalling and other information
exchanges will be exposed to the difficulty of only capturing anti-
competitive exchanges, whilst not impacting on pro-competitive or
benign information exchanges. Any option must balance these
considerations. The way in which the proposed option does so is
outlined further below.
67. The potential shape of the Australian prohibition to address anti-
competitive price signalling and information exchange draws upon
European competition law where particularly harmful disclosures
between competitors, such as the exchange of future prices, are
dealt with quite strictly.[25]
68. Given the nature of the problem and the option set out below, it is
not possible to precisely quantify its costs and benefits. As
outlined above, it is difficult to accurately assess the extent of
the issue as the ACCC's powers do not currently allow them to
investigate instances of anti-competitive price signalling and
information exchange. This makes it difficult to assess the likely
compliance costs for business and to quantify the benefits (in
terms of improvements to competition) of the proposed changes to
the TPA. Nevertheless, where possible, the likely costs and
benefits of particular elements of the proposed model are explained
below in qualitative terms.
The proposed option
69. Under this option, the Government will release exposure draft
legislation for public consultation, outlining its proposed form of
amendments to the TPA to address anti-competitive price signalling
and information exchange. This proposed model is as follows:
Per Se Prohibition
It would be per se unlawful for a corporation to privately disclose,
directly or indirectly, to an actual or likely competitor, information that
relates to a price for, or a discount, allowance, rebate or credit in
relation to, goods or services acquired or to be acquired, or supplied or
to be supplied, by the corporation in a market in which it competes with
the recipient.
Substantial Lessening of Competition Prohibition
It would be unlawful for a corporation to provide information, directly or
indirectly, to an actual or likely competitor if the information relates
to:
. a price for, or a discount, allowance, rebate or credit in
relation to, goods or services acquired or to be acquired, or
supplied or to be supplied, by the corporation;
. levels of supply capacity or production capacity of the corporation;
or
. any aspect of the commercial strategy of the corporation,
If, in providing the information to the competitor, the corporation has the
purpose of substantially lessening competition (SLC) in that or any other
market.
Per Se Prohibition
70. The per se prohibition is targeted towards the information
disclosures that are the most clearly anti-competitive, namely
private disclosures of pricing information.
71. Private disclosures of price information between competitors is
only likely to occur in circumstances where one or other of the
competitors is seeking to facilitate prices above the competitive
level, and the disclosure gives rise to an increased probability of
such an outcome occurring. This conduct is suitable for
prohibition, even if the competitors are otherwise able to
ascertain each other's prices from the market. That is, it is the
circumstance of private disclosure which creates the high risk of
collusion, and it is therefore considered appropriate that it be
prohibited per se.
72. In this context, 'private' is intended to convey that the
disclosure is directed towards one or more competitors and not to
anyone else, that is, not to the public at large, or to customers
of the business. 'Disclosure' is intended to convey that the
conduct is active, not passive or accidental, that is, it is a
deliberate disclosure of information to one or more competitors.
73. This prohibition would also limit the ability of competitors to
engage in, and maintain more explicit cartel behaviour by
elimination of a key element of communications required for the
purposes of setting and subsequently monitoring adherence to, and
punishing deviations from, agreed prices.
74. The prohibition would have benefits including that it will act as a
deterrent against the most harmful anti-competitive price
signalling and information exchanges or in cases where these
activities continue, provide the ACCC with clearly defined powers
to prosecute the offending parties.
75. Further benefits which may arise from this prohibition relate to
the absence of significant uncertainty from its application.
Avoidance and compliance costs for businesses can consequently be
expected to be low.
76. There may be circumstances in which behaviour otherwise subject to
this prohibition may be commercially justified or required under
other statutory and regulatory obligations. The circumstances are
similar to those in relation to which the cartel provisions do not
apply, and will not apply here through the application of
comparable defences (as outlined below in Defences, exceptions and
authorisation).
Substantial Lessening of Competition prohibition
77. The SLC prohibition would apply to both public and private
disclosures of information (other than those subject to the per se
prohibition).
78. By incorporating a competition test, the SLC prohibition is
consistent with the framework of the TPA as it is the basis of
various Part IV prohibitions including section 45 (exclusionary
provisions), section 47 (vertical restraints) and section 50
(mergers).
79. Caron Beaton-Wells has remarked recently[26]:
Use of the competition test is a welcome suggestion because it is
consistent with the policy and other prohibitions in the Act and prevents
over-reach and capture of pro-competitive conduct.
80. However, she also stated that[27]:
as a matter of practice the competition test is very onerous in law and in
evidence.
81. It is recognised that commercial conduct frequently has more than
one purpose. Conduct that has the purpose of SLC will only be
caught if that purpose was a substantial purpose behind the conduct
engaged in, as reflected in section 4F of the TPA. Ultimately it
will be up to the Courts to consider whether the conduct in
question, if it has multiple purposes, was engaged in for the
substantial purpose of SLC. However, a court would be unlikely to
infer an anti-competitive purpose in the absence of direct evidence
where the conduct is commonplace and commercially justifiable. By
way of example, if a business advertises its prices or erects a
price board then it would be unlikely that the conclusion will be
reached that it was engaged in for a purpose of SLC as the business
has a legitimate purpose for engaging in the conduct - to
communicate to potential customers.
82. It is also expected that the provision would outline a range of non-
exhaustive factors that the Court may take into consideration for
the purposes of ascertaining whether the business had the requisite
purpose of SLC. This would assist in providing guidance to the
Courts and the ACCC and may reduce uncertainty for business in
applying the new provisions. These factors will be incorporated
into the exposure draft legislation, on which further consultation
will be undertaken.
83. The Australian Bankers Association chief executive
Steven Munchenberg has said the law could lead to inadvertent
comments being investigated by the ACCC[28]:
As a consequence, executives will shy away from talking about issues that
are perfectly valid.
84. It is noted that, by only incorporating a purpose test, this
conduct would not come under consideration by the ACCC unless the
communications were made with the purpose of SLC.
85. Relative to the proposed per se prohibition, the purpose SLC
prohibition may be less certain in its initial application,
potentially resulting in increased compliance costs for businesses
in the short term. It may raise concerns for some stakeholders, as
the Australian Bankers Association has stated above, that it could
act to discourage otherwise legitimate commercial comments, such as
public communications to consumers or investors.
86. Any amendment to the TPA will place compliance burdens on business.
Additional resources will be required by businesses to ensure that
their current and any future conduct is not prohibited by the
changes to the law. This may involve businesses devoting resources
to amend their compliance policies and programs and education
initiatives. Any changes to the law will create uncertainty and
risks for businesses, particularly in the short term while case law
develops. This is, however, unavoidable in any change to the law
and can be expected to diminish over time. It can be further
minimised through the consultation process to be undertaken and
guidance from the ACCC on how it will interpret amendments once
enacted.
87. It is considered that the inclusion of an effects test is not
warranted at this time. An effects test may cause undue
uncertainty for businesses in determining whether a particular
disclosure would breach the new prohibition. This is because, at
the time of the information disclosure, it may be necessary for the
corporation to consider the effect of the disclosure on
competition, but this is partly determined by the response of
competitors, which is largely beyond the control of the corporation
disclosing the information.
88. Further, in so far as the SLC test is based on the effect or likely
effect of the public communication, the prohibition may require a
causal relationship between the relevant conduct (the public
communication of information) and the SLC effect. This may place
the ACCC and the Courts in a difficult position in terms of
establishing that the conduct had the requisite anti-competitive
effect.
Defences, exceptions and authorisation
89. In order to ensure that only the conduct of most concern is
prohibited, it is anticipated that provision would be made for
reasonable defences, similar to those available for the cartel
provisions of the TPA so that the per se prohibition would not
apply to disclosures between:
related companies;[29]
joint venture participants or their representatives on a joint venture
management board or committee concerning the prices to be charged by the
joint venture;[30]
a supplier and an acquirer concerning a supply price, where the supplier
and acquirer also compete in respect of the supply of the relevant
product;[31]and
entities that comprise a dual listed company.[32]
90. It is anticipated that provision will be made for justifiable
exchanges of certain price information for the purposes of
confidential merger discussions. Any need to further amend these
defences will be considered through consultation on exposure draft
legislation.
91. There may be circumstances in which behaviour otherwise subject to
this prohibition may be required under separate statutory or
regulatory obligations. Subsection 51(1) of the TPA excepts from
the prohibitions of Part IV conduct that is engaged in and
specifically authorised by statutory or regulatory obligations.
The application of this section can be extended to cover any
circumstances in which statutory or regulatory obligations would
otherwise place businesses in contravention of the new
prohibitions.
92. Further, businesses who wish to continue engaging in conduct in
contravention of the new prohibitions, and can demonstrate that
doing so provides a net public benefit can seek authorisation from
the ACCC. This will incur the costs associated with seeking
authorisation from the ACCC for the activities. The standard fee
for ACCC authorisations is $7,500, however it may be waived in part
or in full where the ACCC considers that it would impose an undue
burden on parties.[33] Additionally, businesses may encounter
costs associated with seeking and obtaining legal advice or
otherwise on authorisation. The costs associated with the
authorisation process varies significantly in accordance with the
complexity of the matter and the independent decisions of
individuals regarding the choices they make in acquiring legal
advice.
93. The time the ACCC will take to assess an application is dependent
on the complexity of the matter. An interim decision can be made
by the ACCC within 28 days and a draft authorisation typically
taking around three to four months. On average, a final decision
is made within five to six months, with a statutory limit of six
months imposed on the ACCC. The decisions of the ACCC can be
reviewed on their merits by the Australian Competition Tribunal.
The managing director and owner of Informed Sources, Alan Cadd, has
recently stated:[34]
... the contention is, if they do this [price signalling laws], then
Informed Sources goes out of business and if Informed Sources goes out of
business then presumably that's because they are trying to stop the petrol
price cycle. If this initiative does away with the petrol price cycle the
people who will be hurt are the working families that the Gillard
government is purporting to be looking after.
94. The availability of the authorisation mechanism ensures that, where
arrangements such as those operated by Informed Sources are
potentially in breach of the new (or existing) prohibitions, they
can continue where they are found to be operating in the net public
interest. It therefore provides an effective mechanism for
avoiding the capturing benign or pro-competitive conduct.
Penalties
95. Consistent with the framework of the TPA, it is proposed that
whatever the final form of the provisions proposed following
consultation, contravention of the provisions would lead to civil
penalties only.
96. It is not anticipated that this option will impose additional costs
to the ACCC as it will be incorporated into its general enforcement
activities.
Conclusion on Option 3
97. Taking into account the substantial benefits, the relatively low
and manageable costs and risks associated with this proposed
approach, Option 3 is considered to be superior to Options 1 and 2
and is the recommended option.
Consultation
98. In January 2009, a Treasury discussion paper was issued on the
'Meaning of "Understanding" in the Trade Practices Act 1974'.
Fifteen public and one confidential submission were received from
interested parties regarding the adequacy of the current
interpretation of the term 'understanding' in the TPA to capture
anti-competitive conduct.
99. Members of the business and legal communities have made public
statements about the issue of price signalling recently in the
media. Their comments support further consultation on the issue,
and call for careful consideration on the final form of any
prohibition. Comments around the possible effects of any
prohibition have been general in nature, do not canvass the
proposed prohibition set out in the preferred Option, and therefore
do not necessarily directly address its impacts. Stakeholders will
have an opportunity to directly express views on the impacts of the
package when consultation is undertaken on exposure draft
legislation.
100. These views have informed the preferred option. The current
practices and legal precedent in Australia have also been
considered, along with the views expressed by business, the ACCC,
economists and legal advisors both in publications and at the OECD
Roundtables on Facilitating Practices and Information Exchange in
2007 and 2010, the statute and case law in jurisdictions including
the US, EU and UK and other interested parties.
101. By engaging in further consultation on exposure draft legislation
and providing an opportunity for key stakeholders to raise any
issues or concerns with the proposed model for addressing anti-
competitive price signalling and information exchange, the
Government will be able to make any necessary changes to the
legislative amendments to the TPA before they are introduced into
Parliament.
Conclusion and recommended option
102. Following careful consideration of this issue, it has been
concluded that there is an identified problem in Australian markets
with respect to anti-competitive price signalling and other
information exchanges. The available evidence, overseas
experience, and consultation in 2009 indicates that these practices
can be effectively addressed by well targeted legislation, but the
TPA as it stands does not deal adequately with this problem. As
such, Option 1 would not be feasible as it would leave the problem
unaddressed.
103. Option 2 (canvassed in Treasury's discussion paper) proposes to
amend the cartel prohibitions (sections 44ZZRF, 44ZZRG, 44ZZRJ,
44ZZRK and 45) to clarify and expand the meaning of 'understanding'
under the TPA. Taking into account the potential problems and
shortcomings of this option as well as the lack of support for it,
it is considered an inferior option to Option 3.
104. By comparison, Option 3 has significant advantages in increasing
the welfare of consumers by promoting competitive markets and
ensuring that anti-competitive price signalling and information
exchanges are targeted explicitly and directly. Undertaking
targeted consultation on the exposure draft legislation for the
model outlined in Option 3 will allow any risks associated with
unintended consequences to be identified and addressed.
105. A decision on the final form of legislation will be taken by
Government after this consultation process has been completed.
This decision will be accompanied by a further Regulation Impact
Statement.
Implementation and review
Changes to the Trade Practices Act
106. These changes to the TPA will need to be implemented by passing
amending legislation through the Commonwealth Parliament.
Enforcement
107. The ACCC would have responsibility for enforcing the amended Act.
Review
108. The effectiveness of the proposed amendments would be monitored by
Treasury, and reviewed after a sufficient period of time has
elapsed.
Regulation impact statement - anti-competitive price signalling and
information exchange (implementation)
[The Competition and Consumer Act 2010 was formerly known as the Trade
Practices Act 1974.]
1. This Regulation Impact Statement (RIS) relates to the
implementation of legislation to address anti-competitive price
signalling.
2. On 21 December 2010, the Office of Best Practice Regulation
published a RIS prepared by the Department of the Treasury
(the Treasury) which provided a detailed description of the problem
of anti-competitive price signalling and information disclosures
and analysed options to address that problem. In that RIS, the
Treasury concluded that the recommended option was to legislate to
address anti-competitive price signalling through amendments to the
Competition and Consumer Act 2010 (CC Act) (formerly known at the
Trade Practices Act 1974). A brief summary of the previous RIS is
provided below and a full copy of that RIS is available at:
http://ris.finance.gov.au/2010/12/21/competitive-and-sustainable-
banking-system-%e2%80%93-anti-competitive-price-signalling-
treasury/
3. The Government subsequently made a decision to amend the CCA to
address anti-competitive price signalling as part of its
Competitive and Sustainable Banking System package. Exposure draft
legislation giving effect to the Government's decision was released
on 12 December 2010, and stakeholders were invited to comment on
the proposed provisions and suggest options for clarification and
amendment.
4. This implementation RIS has been prepared by the Treasury
subsequent to that consultation process. It provides a summary of
stakeholder views on particular provisions of the exposure draft
legislation, and conducts an impact analysis of proceeding with the
option set out in the Government's exposure draft legislation and
an option that refines that legislation to address the views of
stakeholders. The RIS concludes with the Treasury's recommended
option for giving effect to the Government's decision to legislate
to address anti-competitive price signalling.
Summary of previous RIS
Summary of the problem
5. Anti-competitive price signalling and other information exchanges
are communications between competitors which facilitate prices
above the competitive level and can lead to inefficient outcomes
for the economy and lower wellbeing for consumers. The Australian
Competition and Consumer Commission (ACCC) has recently expressed
concerns about this type of conduct and its inability to adequately
address the problem. In addressing this problem there is a need to
carefully balance the prohibition of anti-competitive disclosures,
and continuation of legitimate information exchanges.
Summary of previously considered options
6. The following options for addressing anti-competitive price
signalling and information disclosures were considered and
analysed:
Option 1: No amendments to the CC Act to address anti-competitive price
signalling and other information exchanges.
Option 2: Amend the CC Act to expand the meaning of 'understanding' in the
cartel prohibitions (sections 44ZZRF, 44ZZRG, 44ZZRJ, 44ZZRK and 45) to
ensure that activities such as anti-competitive price signalling and
information exchange are captured by these provisions.
Option 3: Amend the CC Act to include new, specific provisions to prohibit
anti-competitive price signalling and information exchange, with
consultation to take place on exposure draft legislation.
7. It was concluded that Option 1 would leave the problem unaddressed
and would not meet the desired policy objective of addressing anti-
competitive price signalling and information disclosures. It was
not considered to be a feasible option.
8. It was concluded that Option 2 presented potential problems and
shortcomings and that it was considered to be an inferior option to
Option 3.
9. It was concluded that Option 3 provided substantial benefits, with
relatively low and manageable costs and risks. Therefore Option 3
was considered to be superior to Options 1 and 2.
Conclusion
10. Option 3 was recommended by the Treasury.
Implementation RIS
11. The Government subsequently announced its Competitive and
Sustainable Banking System package on 12 December 2010. As part of
that package, the Government announced its decision to address anti-
competitive price signalling and information disclosures through
amendments to the CC Act.
12. As part of this package, the Government released exposure draft
legislation outlining the proposed amendments to the CC Act seeking
stakeholder views on the specific form of legislation to give
effect to its policy intent. Consultation closed on 14 January
2011 and 25 submissions were received from stakeholders. The
majority of submissions were received from law firms, industry
associations, large corporations and legal academics.
13. All submissions are publicly available on the Treasury website at:
http://www.treasury.gov.au/contentitem.asp?ContentID=1941&
NavID=037
Impact analysis
14. The Government has decided to address anti-competitive price
signalling and other information disclosures through amendments to
the CCA. This analysis considers the relative merits of proceeding
with Option 3, as outlined in the RIS published on 21 December
2010, with Option 3A, which incorporates amendments to the exposure
draft legislation to address concerns identified by stakeholders.
Option 3
15. As set out in the previous RIS, Option 3 includes two new core
prohibitions which:
prohibit outright the private disclosure of pricing information between
competitors (the per se prohibition); and
prohibit the disclosure of pricing or other information if the disclosure
is made for the purpose of substantially lessening competition (the SLC
provision).
16. This option also provides for a range of exceptions from the per se
prohibition, and further exceptions from both prohibitions to avoid
prohibiting conduct not of concern.
17. This option also allows businesses to obtain immunity from both
prohibitions by seeking authorisation from the ACCC.
18. This option also provides that breaches of the prohibitions be
subject to civil penalties of up to $10 million, 10 per cent of a
business' annual turnover or three times the benefit of the conduct
- whichever is higher.
19. This option provides for the prohibitions only applying to classes
of goods and services that are prescribed by regulations for the
purpose of the prohibitions.
Stakeholder views on Option 3
20. The Government released exposure draft legislation on 12 December
2010 outlining the proposed amendments to the CC Act giving effect
to Option 3. Consultation closed on 14 January 2011 and
25 submissions were received from stakeholders. The majority of
submissions were received from law firms, industry associations,
large corporations and legal academics.
21. All submissions are publicly available on the Treasury website at:
http://www.treasury.gov.au/contentitem.asp?ContentID=1941&
NavID=037
The views of stakeholders on Option 3 can be summarised as follows:
the exposure draft legislation should not proceed in its current form;
no justification had been offered to support the selective application of
the prohibitions via regulation;
the core prohibitions may have unintended consequences, not adequately
dealt with through the exceptions provided, and may potentially create
significant complexity and uncertainty for business; and
whilst many of the submissions were critical of the proposed changes,
several submissions suggest possible avenues for amending the exposure
draft legislation to effectively address their concerns.
22. More detailed views of stakeholders with respect to particular
provisions are provided in the impact analysis of Option 3A.
Conclusion on Option 3
23. Proceeding with Option 3 would not address the concerns of
stakeholders raised in submissions regarding the operation of
particular provisions of the proposed legislation.
24. This option would therefore place a relatively greater reliance
upon the authorisation process administered by the ACCC to provide
immunity to conduct not of concern, and on businesses deterring
from engaging in legitimate conduct relative to its alternative,
Option 3A. On balance, this is therefore an inferior option to
Option 3A and is not the preferred option.
Option 3A
25. Option 3A addresses concerns raised by stakeholders regarding the
operation of the proposed legislation while maintaining consistency
with the Government's decision to address anti-competitive price
signalling and information disclosures through amendment to the CC
Act.
Option 3A includes two new core prohibitions which:
prohibit outright the private disclosure of pricing information between
competitors (the per se prohibition); and
prohibit the disclosure of pricing or other information if the disclosure
is made for the purpose of substantially lessening competition (the SLC
provision).
26. This option also provides for an extended range of exceptions from
the per se prohibition, and further exceptions from both
prohibitions to avoid prohibiting conduct not of concern.
27. This option also provides arrangements for authorisation and
notification for, and exceptions from the provisions, to avoid the
prohibition of conduct that is not of concern.
28. This option also provides that breaches of the prohibitions be
subject to civil penalties of up to $10 million, 10 per cent of a
business' annual turnover or three times the benefit of the conduct
- whichever is higher.
29. This option provides for the prohibitions only applying to classes
of goods and services that are prescribed by regulations for the
purpose of the prohibitions.
30. The key differences between this option and Option 3 is the
addition of new exceptions, the amendment of some existing
exceptions and the availability of notification arrangements to
obtain immunity from the per se prohibition.
Sector specific application and regulation making power
The prohibitions will only apply to classes of goods and services that are
prescribed by regulations for the purpose of the prohibitions.
The Government has decided that in the first instance, a regulation should
be made to proscribe banks to the prohibitions. There is capacity for
regulations to be made to apply to prohibitions to other sectors after
further review and detailed consideration.
31. The provision of a regulation-making power allows the Government to
target the proposed prohibitions towards sectors where conduct of
concern has been identified, without raising unintended
consequences in other sectors.
32. The majority of submissions considered that selective application
of competition law prohibitions is undesirable, in particular
noting that the case had not been clearly made for limiting the
application to the banking sector. There was concern doing so
would move away from the long-standing approach of applying
competition law across the economy. Submitters indicated that if
the prohibitions are to be introduced, there would be a preference
for economy-wide application.
33. Stakeholders were not supportive of the scope and application of
the prohibitions being determined by regulation, submitting that
the use of regulations, rather than legislation, to determine the
application of the proposed prohibitions does not follow standard
legislative processes, and would reduce the scrutiny and debate
that arises from Parliamentary and democratic processes.
34. In response to the ACCC's concern expressed in relation to specific
anti-competitive price signalling behaviour in the banking sector,
and in the context of the broader banking package, this option
allows for the prohibitions to be targeted towards particular
sectors. The incorporation of a regulation-making power gives
effect to this approach. There is the capacity in the regulation
making power for other sectors to be specified in future, after
further review and detailed consideration.
35. The use of regulations to give effect to the sector specific
application of the prohibitions gives greater flexibility in
applying the prohibitions to other sectors in the future. All
regulations made under the new Division 1A of the CCA will be
disallowable instruments and therefore subject to Parliamentary
oversight.
36. These points were acknowledged by the ACCC, in a recent appearance
before the Senate Inquiry into competition within the Australian
banking sector, when it noted that:[35]
... if there is going to be some sort of phased mechanism for coverage we
think the process of regulation going through both houses of parliament is
a preferable approach because it does give us clarity as to exactly what
the law is and who it applies to at a particular point in time.
The per se prohibition
The per se prohibition will prohibit the private disclosure of pricing
information (information that relates to a price for, or a discount,
allowance, rebate or credit in relation to goods or services to which the
prohibitions relate to) between competitors.
The per se prohibition requires no proof as to the purpose or effect of the
conduct.
37. There was some concern from stakeholders that the case for the
outright (per se) prohibition of the private disclosure of pricing
information between competitors had not clearly been made. In
particular, submitters considered that the private disclosure of
pricing information should be subject to a competition test, such
as a 'substantial lessening of competition test'. They also
expressed concern that any per se prohibition has the potential to
prohibit benign or pro-competitive conduct.
38. Some submissions indicated that if the per se prohibition were to
be introduced, the prohibition should be substantially revised and
narrowed in its coverage. In particular, some submissions
expressed concern in relation to the range of information covered
by the per se prohibition, specifically in relation to the
disclosure of historic and current pricing information.
39. Some submissions provided examples of situations in which
communications of prices to competitors may be legitimate and
either pro-competitive or competitively neutral, and would be
captured by the prohibitions were the draft exceptions and defences
to remain unchanged.
40. In particular, a number of submissions expressed concern that the
prohibitions would cover syndicated loan arrangements. The
Australian Bankers Association and Caltex (among others) also
expressed concern in relation to a number of vertical supply
relationships which may be covered by the prohibitions; including
principal/agent relationships (for example mortgage broking
services).
41. The per se prohibition will have benefits including that it
provides a clear direction to regulated sectors that the private
disclosure of any pricing information to competitors is not
acceptable and will act as a deterrent against these behaviours.
In cases where these activities continue, the prohibition provides
the ACCC with clearly defined powers to prosecute the offending
parties.
42. Further benefits which may arise from this prohibition relate to
the absence of significant uncertainty from its application.
Avoidance and compliance costs for businesses can consequently be
expected to be low.
43. In recognition of the views of stakeholders, particularly in
relation to ensuring that legitimate communications are not
prohibited, amendments have been made to the draft Bill released
for consultation, including in relation to the exceptions for the
per se prohibition and the Bill provides further clarity in
relation to principal/agent relationships. Further, in addition to
authorisations, notification has been made available to allow
businesses to seek timely and cost-effective immunity from the per
se prohibition (see the defences, exceptions and authorisations
section).
44. The per se prohibition clearly addresses the problem of anti-
competitive price signalling and information disclosures, where
these disclosures are in the form of private disclosures of pricing
information between competitors. The inclusion of additional
exceptions for the per se prohibition, as well as the notification
regime, balances the need to prohibit anti-competitive disclosures,
while allowing the continuation of legitimate information
disclosures.
The substantial lessening of competition (SLC) prohibition
The SLC prohibition will prohibit a wide range of disclosures if the
purpose of disclosure is to substantially lessen competition in a market.
In particular the prohibition is designed so that:
( It targets a broader range of information than the per se
prohibition, including supply capacity and any aspect of the
commercial strategy of the corporation.
( It targets both private and public communications of information.
( A corporation's purpose may be inferred from surrounding
circumstances.
45. Some stakeholders expressed a view that the range and type of
information that is capable of being captured by the SLC
prohibition is too broad. There was concern that this may act to
stifle legitimate and pro-competitive flows of information, and may
create complexity and uncertainty for the business community. In
particular, concerns were expressed in relation to the inclusion of
supply capacity and commercial strategy information.
46. It was suggested by some stakeholders that the application of the
SLC prohibition should be limited to confidential and prospective
pricing information.
47. While there is a broader range of information covered by the SLC
prohibition (than the per se prohibition), disclosures will only be
prohibited if a business has the requisite purpose of substantially
lessening competition in making the disclosure. The ACCC has
specifically identified public disclosure as being of concern in
the banking sector, and the SLC prohibition as set out will
prohibit this conduct where it has the requisite SLC purpose.
48. It is recognised that commercial conduct frequently has more than
one purpose. Conduct that has the purpose of SLC will only be
caught if that purpose was a substantial purpose behind the conduct
engaged in, as reflected in section 4F of the CC Act. Ultimately
it will be up to the Courts to consider whether the conduct in
question, if it has multiple purposes, was engaged in for the
substantial purpose of SLC. However, a court would be unlikely to
infer an anti-competitive purpose in the absence of direct evidence
where the conduct is commonplace and commercially justifiable.
49. A number of stakeholders indicated that the prohibition should
include a requirement that the conduct has 'the effect of, or
likely effect of substantially lessening competition'. It should
be noted that these submissions were generally made in conjunction
with recommendations to include some degree of mutuality or
reciprocity.
50. For the reasons set out in the analysis of Option 3 in the decision
RIS and in the context of the decision to proceed with prohibitions
on the unilateral disclosure of information to competitors, it is
considered that the inclusion of an effects test remains
unwarranted at this time.
51. The SLC prohibition clearly addresses the problem of anti-
competitive price signalling and information disclosures, where
these disclosures relate to a broader range of information and
where these communications may occur in the public domain. That
the disclosure must be made for the purpose of SLC recognises that
there may be legitimate and pro-competitive reasons to make such
disclosures.
Defences and exceptions
A number of exceptions from the prohibitions will be made available. In
particular, the following exceptions apply to both the per se and the SLC
prohibition:
( The prohibitions do not apply to the disclosure of information
by a corporation if the disclosure is authorised by or under a
law. This exception will have effect for 10 years after the day
on which the Act receives the Royal Assent. This exception is
unchanged from the exposure draft.
( Communications between related bodies corporate (including dual
listed companies), if they are the only parties to the
communication, will be exempt from the prohibitions. This
exception is unchanged from the exposure draft.
( Disclosures made for the purpose of complying with the
continuous disclosure obligations within the Corporations Act
2001 will be exempt from the prohibitions. This is a new
exception.
( Disclosures made in the course of engaging in conduct that is
covered by an authorisation will be exempt from the
prohibitions. This is a new exception.
( Disclosures made in relation to a collective bargaining notice,
if the disclosure is made to one of the contracting parties,
will be exempt from the prohibitions. This is a new exception.
( If a disclosure was an accident, or caused by something beyond
the control of a business, a business will be exempt from the
prohibitions. This exception is unchanged from the exposure
draft.
The strict nature of the per se prohibition requires certain other
exceptions to be made. In particular:
( Disclosures relating to pricing information regarding goods or
services will be exempt from the per se prohibition if the
information relates to goods or services supplied or likely to
supplied, acquired, or likely to be acquired by the corporation
from the recipient. This exception is amended from the exposure
draft.
( Disclosures that are made to a person, which at the time a
business did not know was a competitor, will be exempt from the
per se prohibition. This exception is unchanged from the
exposure draft.
( Disclosures made for the purposes of proposed or actual joint
venture activities, if they are the only parties to the
communication, will be exempt from the per se prohibition. This
exception is amended form the exposure draft.
( Disclosures made in connection with an actual or proposed
agreement that would provide for the acquisition of shares or
assets from a business will be exempt from the per se
prohibition. This exception is unchanged from the exposure
draft.
( Disclosures that are exempt from the per se prohibition may
still breach the SLC prohibition if it can be established that
the business had the requisite purpose of SLC.
It is also explicitly clarified, by way of a new subsection, that the new
prohibitions will generally not apply to a disclosure by a principal to
their agent.
52. Submitters considered that the available exceptions and defences to
the prohibitions should be expanded and clarified to further limit
the application of the prohibitions to particular conduct.
Expansion and clarifications to the range of exceptions and
defences, relative to Option 3, have been made as follows:
Some stakeholders considered that the joint venture exception was too
narrow, and would not provide an exception for exchanges of price
information necessary to establish a joint venture. In response, the joint
venture exception has been broadened to also include proposed joint
ventures.
Some stakeholders raised concerns over the clarity of the re-supply
exception, and pointed to circumstances in which legitimate supply
arrangements could be inadvertently captured. In response, the supply
exception no longer relies upon the re-supply term, and has been clarified
to cover a broad range of supply arrangements.
Some stakeholders requested a specific and ongoing exception to the
prohibitions for conduct engaged in compliance with the continuous
disclosure obligations of the Corporations Act 2001. These obligations
were already exempt through the operation of the 'authorised by law'
exception, however a specific exception has been incorporated to provide an
ongoing exception for this conduct.
Some stakeholders suggested that further exceptions be provided for conduct
required to be engaged in to give effect to conduct otherwise authorised
by, or notified to the ACCC. These exceptions have been provided.
In response to stakeholders calls for clarity a new provision clarifies
that more than mere receipt of information is required for a recipient of a
disclosure in breach of either the per se or SLC prohibition to be found to
be knowingly concerned in, or party to that breach (section 44ZZZB).
Some stakeholders raised concerns that transactions in the context of a
principal-agent relationship (for example, mortgage brokers in downstream
competition with banks). In order to avoid capturing these relationships,
a new subsection also makes clear that the new prohibitions will generally
not apply to a disclosure by a principal to their agent (subsection
44ZZU(2)). This means that disclosures by parties to their agent will not
be captured if the recipient is acting in their capacity as an agent.
53. The inclusion of these new exceptions addresses concerns raised by
stakeholders and further reduces the prospects for unintended
consequences relative to Option 3, while ensuring that the new
prohibitions will remain effective in addressing anti-competitive
price signalling and information disclosures.
54. It is noted that the inclusion of new and expanded exceptions for
the per se prohibition does not reduce the overall scope of the
prohibitions. Disclosures which are now excepted from the per se
prohibition will still be subject to the SLC prohibition.
Legitimate business justification defence
No legitimate business justification defence will be provided for the
prohibitions.
55. Some submitters suggested that a 'legitimate business
justification' defence be provided as an alternative to specific
exceptions.
56. The existing approach used in the CC Act to provide exceptions is
to make clear, by way of specific exceptions, the full range of
activities which are excepted from the provisions. This provides
clarity to businesses around what conduct is, and is not subject to
particular prohibitions.
57. A legitimate business justification defence is untested in the
CC Act. It would increase upfront uncertainty for businesses
regarding the intended application of the new laws, and would
require case law to develop in the area to provide meaningful
guidance to businesses on the scope of the new prohibitions. Given
these uncertainties, it is not preferred to the current approach of
utilising specific exceptions, including those set out above.
Notification and authorisation
Businesses will be able to obtain immunity from the per se prohibition by
notifying their conduct to the ACCC. Businesses who receive immunity to
the per se prohibition through the notification process will also receive
immunity from the SLC prohibition.
Businesses will be able to obtain immunity from both prohibitions by
seeking authorisation from the ACCC.
58. Some stakeholders raised concerns around the costs and length of
time associated with the authorisation process, particularly for
the processing of immunity claims with respect to matters which may
be subject to the per se prohibition.
59. Option 3A expands the existing notification process to allow
parties to notify for conduct which falls under the per se
prohibition. This process will operate alongside the authorisation
process provided for under either option, which will be available
for conduct potentially in breach of either prohibition.
60. Notification will allow parties to obtain immunity through the
lodgement of a notification of the conduct with the ACCC. The ACCC
will then have 14 days to assess the notice, before the immunity
commences. The immunity will not commence if the ACCC issues a
notice prior to the end of the 14 day period.
61. Notification can provide businesses who wish to continue engaging
in conduct in contravention of the new prohibitions, and can
demonstrate that doing so provides a net public benefit, with
immunity. It is a more cost effective and timely process, relative
to authorisation, to seek immunity and will reduce the compliance
costs on business of the proposed prohibitions. The proposed
notification process is analogous with the third line forcing
notification (a form of exclusive dealing conduct (section 93)
which currently has a lodgement fee of $100 per notification.
Conclusion on Option 3A
62. Option 3A, through amendments to the model proposed in the exposure
draft legislation and as set out in Option 3, clarifies and
addresses concerns raised by stakeholders around the potential for
Option 3 to create unintended consequences. Consequently, Option
3A is considered to be superior to Option 3, and is the preferred
Option.
Implementation RIS - conclusion and recommended option
63. Both options give effect to the Government's decision to address
anti-competitive price signalling and other information exchanges
through amendments to the CC Act.
64. After consideration of the views of stakeholders, it is concluded
that Option 3A is the preferred option to give effect to the
Government's decision to address anti-competitive price signalling
and information disclosures through amendments to the CC Act, and
is therefore the recommended option.
Implementation and review
Changes to the Competition and Consumer Act 2010
65. These changes to the CC Act will need to be implemented by passing
amending legislation through the Commonwealth Parliament.
66. Regulations will need to be made to give effect to these new
prohibitions.
Enforcement
67. The ACCC would have responsibility for enforcing the amended Act.
Review
68. The effectiveness of the proposed amendments would be monitored by
Treasury, and reviewed after a sufficient period of time has
elapsed.
Do not remove section break.
Schedule 1: Amendments
|Bill reference |Paragraph |
| |number |
|Item 1 |1.21 |
|Item 2 |1.22 |
|Item 2, section 44ZZS |1.23 |
|Item 2, section 44ZZT |1.27 |
|Item 2, subsections 44ZZT(3) and 44ZZT(4) |1.28 |
|Item 2, paragraph 44ZZU(1)(a) |1.34 |
|Item 2, paragraph 44ZZU(1)(b) |1.35 |
|Item 2, paragraph 44ZZU(2)(a) |1.37 |
|Item 2, paragraph 44ZZU(2)(b) |1.38 |
|Item 2, section 44ZZZA |1.39, 1.50, |
| |1.102, 1.105, |
| |1.109, 1.115, |
| |1.119, 1.123, |
| |1.129, 1.132, |
| |1.140, 1.142, |
| |1.144, 1.147, |
| |1.149, 1.150, |
| |1.152 |
|Item 2, subsection 44ZZU(3) |1.40 |
|Item 2, paragraph 44ZZU(4)(a) |1.45 |
|Item 2, paragraph 44ZZU(4)(b) |1.46 |
|Item 2, paragraph 44ZZU(4)(c) |1.47 |
|Item 2, subsection 44ZZU(5) |1.49 |
|Item 2, subsection 44ZZV(1) |1.52 |
|Item 2, subsection 44ZZZ(2) |1.54, 1.130 |
|Item 2, paragraph 44ZZV(2)(a) |1.57 |
|Item 2, subparagraph 44ZZV(2)(b)(i) |1.60 |
|Item 2, subparagraph 44ZZV(2)(b)(ii) |1.62 |
|Item 2, subsection 44ZZV(3) |1.66 |
|Item 2, section 44ZZW |1.67 |
|Item 2, paragraph 44ZZW(c) |1.68 |
|Item 2, section 44ZZX |1.77 |
|Item 2, subparagraph 44ZZX(1)(a)(i) |1.80 |
|Item 2, subparagraph 44ZZX(1)(a)(ii) |1.83 |
|Item 2, subparagraph 44ZZX(1)(a)(iii) |1.84 |
|Item 2, subsection 44ZZX(3) |1.87 |
|Item 2, subsection 44ZZX(2) |1.90 |
|Item 2, paragraph 44ZZX(2)(a) |1.90 |
|Item 2, paragraph 44ZZX(2)(b) |1.90 |
|Item 2, paragraph 44ZZX(2)(c) |1.90 |
|Item 2, paragraph 44ZZX(2)(d) |1.90 |
|Item 2, paragraph 44ZZX(2)(e) |1.90 |
|Item 2, subsection 44ZZY(1) |1.99 |
|Item 2, paragraph 44ZZY(1)(b) |1.101 |
|Item 2, subsection 44ZZY(2) |1.104 |
|Item 2, subsection 44ZZY(3) |1.107 |
|Item 2, subsection 44ZZY(4) |1.112, 1.145, |
| |1.148 |
|Item 2, paragraph 44ZZY(4)(a) |1.114 |
|Item 2, subsection 44ZZY(5) |1.117, 1.118, |
| |1.181 |
|Item 2, subsection 44ZZY(6) |1.121 |
|Item 2, paragraph 44ZZZ(1)(a) |1.128 |
|Item 2, paragraph 44ZZZ(1)(b) |1.128 |
|Item 2, subsection 44ZZZ(2) |1.130 |
|Item 2, subsection 44ZZZ(3) |1.135 |
|Item 2, subsection 44ZZZ(3A) |1.141 |
|Item 2, subsection 44ZZZ(3B) |1.143 |
|Item 2, section 44ZZZB |1.153 |
|Item 3 |1.156 |
|Item 4 |1.158 |
|Item 5, subsection 88(6A) |1.164 |
|Item 5, subsection 88(6B) |1.165 |
|Item 5, subsection 88(6C) |1.166 |
|Items 6 and 8 |1.167 |
|Items 6 and 7 |1.169 |
|Item 9 |1.171 |
|Item 10 |1.172 |
|Items 11 to 16 |1.116 |
|Items 11 to 14 |1.176 |
|Item 12 |1.179 |
|Item 15 |1.173 |
|Item 16 |1.174 |
|Item 17 |1.18 |
Do not remove section break.
-----------------------
[1]
[2] Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK.
[3] As defined by section 4D.
[4] See Trade Practices Commission v Nicholas Enterprises Pty Ltd & Ors
(No 2) (1979) 26 ALR 609; Trade Practices Commission v Email Ltd (1980) 43
FLR 383; Australian Competition and Consumer Commission v Amcor Printing
Papers Group Ltd (2000) 169 ALR 344; Apco Service Stations Pty Ltd v
Australian Competition and Consumer Commission (2005) 159 FCR 452,
Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd
(2007) 160 FCR 321.
[5] Ibid.
[6] Beaton-Wells, C and Fisse, B (2009) Submission to Meaning of
'understanding' in the Trade Practices Act 1974 discussion paper at 17.
Cited at http://www.treasury.gov.au/documents/1511/PDF/Beaton-
Wells_and_Fisse.pdf (Last retrieved 3 November 2010).
[7] United Kingdom Agricultural Tractor Registration Exchange [1993] 4
CMLR 358.
[8] ACCC media release, 2 December 2009,
http://www.accc.gov.au/content/index.phtml/itemId/904296 (Last retrieved
16 November 2010).
[9] TPC v Email & Ors (1980) ATPR 40-172 at 42,380.
[10] Apco Service Stations v Australian Competition and Consumer
Commission [2005] FCAFC 161 at [31].
[11] ACCC v Leahy Petroleum Pty Ltd (No 2) [2005] FCA 254.
[12] ACCC v Leahy Petroleum Pty Ltd [2007] FCA 794 at [924]-[925].
[13] Ibid, at [24].
[14] Ibid at [26], [37], [948].
[15] Ibid at [949].
[16] United States v. Airline Tariff Publishing Co., 1994-2 Trade Cas.
(CCH) 70,687 (D.D.C. Aug. 10, 1994).
[17] This illustrates the greater willingness of US courts to infer the
existence of an agreement from the evidence when compared with Australian
courts.
[18] ACCC (2007), Petrol Prices and Australian Consumers, Report of the
ACCC inquiry into the price of unleaded petrol, December.
[19] Fisse and Beaton-Wells described facilitating practices as 'an
activity, generally the provision or exchange of information in the market
power, which makes coordination between competitors easier and more
effective'.
[20] Beaton-Wells, C and Fisse, B (2009) Submission to Meaning of
'understanding' in the Trade Practices Act 1974 discussion paper. Cited at
http://www.treasury.gov.au/documents/1511/PDF/Beaton-Wells_and_Fisse.pdf
(Last retrieved 3 November 2010).
[21] The Australian, 23 October 2010, 'Banks' easy margin gains over'
http://www.theaustralian.com.au/business/opinion/banks-easy-margin-gains-
over/story-e6frg9if-1225942441984 (Last retrieved 18 March 2011).
[22] This would be inconsistent with the widespread view that cartel
offences should be limited to 'serious cartel conduct'.
[23] Note that this paper was written prior to Treasury's Discussion Paper
release which was published in the Australian Journal of Labour Law (2008)
21.
[24] The Australian Financial Review, 2 November 2010, 'ACCC seeks price
signal crackdown', page 8.
[25] The EC notes (Draft guidelines on the applicability of Article 101 of
the Treaty on the functioning of the European Union to horizontal co-
operation agreements) that some forms of information disclosures between
competitors are particularly harmful, such as the exchange of intended
future prices or quantities, and as such are considered to breach European
laws simply by their object. Outside that category, the effect of the
conduct will be considered on a case by case basis.
[26] The Australian Financial Review, 5 November 2010, 'TPA crackdown on
price signals "confusing" ', page 8.
[27] Ibid.
[28] The Australian Financial Review, 3 November 2010, 'Backlash at
signals plan', page 10.
[29] cf sections 44ZZRN and 45(8).
[30] cf sections 44ZZRO, 44ZZRP and 76C.
[31] cf sections 44ZZRS and 45(6).
[32] cf 44ZZRT and 45(6A).
[33] ACCC Guide to Authorisation, March 2007.
http://www.accc.gov.au/content/item.phtml?itemId=788405&nodeId=4bf0ad866bd2a
81832572000977ed0e6&fn=Guide%20to%20Authorisation.pdf. (Last retrieved
18 November 2010).
[34] The Australian Financial Review, 9 November 2010, 'Bank, petrol
chiefs face grilling, page 48.
[35] http://www.aph.gov.au/hansard/senate/commttee/S13468.pdf (Last
retrieved 18 March 2011).
Index]
[Search]
[Download]
[Bill]
[Help]