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1998-1999-2000
THE PARLIAMENT OF
THE COMMONWEALTH OF AUSTRALIA
EXPLANATORY
MEMORANDUM
(Circulated by
authority of the Minister for Transport and Regional Services,
the
Honourable John Anderson, MP)
ISBN: 0642 436614
TRADE PRACTICES AMENDMENT (INTERNATIONAL LINER CARGO SHIPPING) BILL 2000
Part X of the Trade Practices Act 1974 (TPA) regulates the market conduct of international liner cargo shipping companies that collaborate as conferences to coordinate joint services, share capacity and agree on freight rates. Liner shipping comprises scheduled services for non-bulk cargo, most of which is carried in containers.
The following is a summary of the Bill to amend Part X:
• Part X exemptions will be limited to liner shipping activities covering ocean transport and loading and discharge operations at cargo terminals, including inland terminals used for assembling export cargo for delivery to a port, or delivering cargo to importers;
• the existing practice of allowing shipping conferences to negotiate collectively with stevedores will be confirmed;
• S.10.05 prohibiting discrimination between shippers is to be repealed. The Productivity Commission recommended this on the grounds that the provision served no useful purpose., and could be harmful if it discourages efficient price discrimination;
• a national interest test is to be included in assessing conduct by parties to an outwards liner shipping agreement that might unreasonably hinder Australian flag shipping;
• the Minister and ACCC will be empowered to accept court enforceable undertakings, given by shipping lines, aimed at ensuring a net public benefit;
• as far as practicable, the protection afforded to exporters under Part X will be extended to importers. This will include requirements that parties to an inwards conference agreement register their agreements and negotiate with the relevant designated body representing importers in respect of charges for land based services in Australia (eg THCs), and for other matters in cases where the contract for shipping the cargo is made in Australia (eg an FOB type arrangement);
- a procedure for avoiding conflicts of jurisdiction with the country of export will be provided through a system of Ministerial Exemption Orders to deal with problems that may arise from overlapping jurisdictions. These exemption orders will be disallowable instruments by Parliament;
• the Minister for Transport and Regional Services (the Minister) and the Australian Competition and Consumer Commission (ACCC) will have increased powers to deal with conduct likely to result in an unreasonable increase in freight rates and/or an unreasonable decrease in services;
- the increased powers are to be used only in exceptional circumstances such as those where an agreement covers most carriers or capacity on a trade route;
- actions taken under the additional powers will be appealable to the
Australian Competition Tribunal, which is headed up by a Federal Court Judge;
and
• conferences will not be permitted to unreasonably restrict entry
of new parties;
In addition, s.10.01, which sets out the objects of Part X, is to be amended as a consequence of the amendments proposed in this Bill covering inwards liner cargo shipping services and Australian flag shipping.
FINANCIAL IMPACT STATEMENT
While the amendments will enhance the
operation of Part X, they will have no significant impact on Commonwealth
revenues or outgoings. There will be some relatively minor increases in the
costs of administering Part X because of the addition of inward conference
agreements to most of the conditions applying to outward conference agreements.
However there will also be some offsetting revenues from fees for registering
inward conference agreements.
REGULATION IMPACT STATEMENT
BACKGROUND
Part X has its origins in the late 1920s and resulted from concerns that Australian exporters should have access to adequate and efficient liner shipping services at reasonable freight rates.
The legislation sets out conditions for granting limited, but assured exemptions from s45 and s47 of the TPA to allow liner shipping companies to collaborate as conferences. The conditions include requirements to negotiate with exporters on standards of service and freight rates to be provided under registered agreements. If exporters are dissatisfied with the negotiations, the Minister for Transport and Regional Services (the Minister) can refer the matter to the Australian Competition and Consumer Commission (ACCC) for investigation. This can lead to the Minister removing the exemptions.
Part X provides a legislative framework within which shipping conferences and their exporting customers can resolve problems through commercial negotiations, with only minimal government involvement.
Australia's major trading partners (USA, Japan, Korea, European Union and New Zealand) have arrangements broadly similar to Part X for regulating international liner shipping.
In addition to conference shipping, there has been a significant increase
over the past decade in competing services offered by non-conference carriers,
which currently carry about 45% by value, and 55% by weight of our liner
exports. This follows an overall increase in global capacity which has led to a
steady decline in real freight rates to the point where liner shipping company
profits are, in general, well below normal levels for industrial
investments.
Part X is administered by the Department of Transport and
Regional Services, with conference agreements being registered by the Registrar
of Liner Shipping.
Due to its relevance to competition policy, Part X was included in the Commonwealth Legislation Review Schedule for review in 1998/99.
On 12 March 1999 the Government, through the Assistant Treasurer – Senator the Hon Rod Kemp, referred Part X to the Productivity Commission (PC) for inquiry and report. The Terms of Reference for the PC’s inquiry were agreed with the Office of Regulation Review. The PC submitted its final report on 15 September 1999 in which it recommended retention of Part X with a number of amendments.
Australian exporters require access to adequate and efficient liner cargo shipping services with reasonable freight rates if they are to be internationally competitive. Such services are provided by groups of shipping lines collaborating as conferences and by independent lines operating in competition with conferences.
The problem to be addressed concerns establishing the most appropriate arrangements for controlling the anti-competitive features of liner shipping conference agreements. Shipping conferences operate under agreements between otherwise competing companies, and cover matters such as coordination of service schedules, sharing of cargo space on each others’ ships, ports to be covered, frequency of sailings, cargo capacity to be provided, and freight rates to be charged.
Both the liner shipping industry and exporters consider that predicability of
outcome and legal certainty provided by the Part X exemptions from general
competition law, are of major importance to the continued provision of reliable
shipping services of adequate frequency and capacity for Australia’s
international trade.
The Government needs to be involved in controlling the
conduct of shipping conferences because normal market forces are insufficient to
ensure that conferences do not abuse their market power to the detriment of the
public interest.
B. OBJECTIVES
The Government’s objective is to ensure that Australian shippers (ie. exporters and importers) have ongoing, stable access to international liner cargo shipping services of adequate capacity (including refrigerated capacity), frequency and reliability, at freight rates which are internationally competitive. The means by which this objective is achieved must reflect the Government’s commitment to effective and efficient regulation.
The main options available to the Government are described below.
Option 1 Accept the recommendations of the PC (ie. retain Part X with several amendments).
The PC recommended the retention of Part X, but considered its operation could be improved with the following amendments:
• clarify that the exemption relating to rate setting extends to land based charges that normally form part of a 'terminal to terminal' shipping contract, and that the definition of terminal be widened to include terminals located away from ports, but within metropolitan areas of port cities;
• confirm existing practice allowing members of shipping conferences to negotiate collectively with stevedores;
• remove the exemption that presently allows conferences to collectively set door-to-door freight rates and replace with a provision restricting collective rate setting to 'terminal to terminal' rates;
• repeal section 10.05 that prohibits price discrimination in certain circumstances, which the PC considers serves no useful purpose, and could be harmful if it discourages efficient price discrimination;
• add a 'national interest' test to sections 10.45(a)(v) and 10.53 that
deal with restrictions on actions that hinder an efficient Australian carrier;
and
• provide for more effective enforcement of undertakings given by
conference carriers.
Option 2 Accept the main recommendation of the PC to retain Part X, but
reject the amendments (ie. no policy change).
This option simply retains
the status-quo.
Option 3 Accept the PC’s recommendations to retain Part X, but announce several further changes to improve the application of National Competition Policy to international liner shipping.
Countervailing powers for importers
Option 3 also envisages
providing importers with similar countervailing powers to those provided to
exporters under Part X. This means extending the conditions in Part X applying
to outward liner shipping conferences, to inward conferences.
Additional powers for Minister and ACCC
This option is the same as
option 1 except that it involves granting the Minister for Transport and
Regional Services and the ACCC increased powers to deal with certain types of
agreement where there is a likelihood that, by a substantial reduction in
competition, such agreements will produce an unreasonable reduction in shipping
services or an unreasonable increase in liner shipping freight rates.
It is proposed that the Minister for Transport and Regional Services in
consultation with the Treasurer, issue guidelines on what constitutes
‘exceptional circumstances’ for the purpose of exercising the
increased powers mentioned above. These circumstances would cover situations
where an agreement covers a substantial majority of shipping lines and capacity
in a trade, and where the conduct of those shipping lines has led to, or is
likely to lead to, an unreasonable increase in freight rates and/or an
unreasonable reduction in services; with the result that the public benefit from
the operation of the agreement is outweighed by an anti-competitive detriment.
Under s29 of the TPA, Ministers with responsibility for various parts of the
TPA may be empowered to give directions to the ACCC in relation to the
Commission’s performance of its powers or the exercise of its powers. .
In 1995 and 1997 these powers were removed from the Treasury portfolio
Ministers in respect of Parts IIIA, IV, and the Communications portfolio
Ministers in respect of Parts XIB and XIC. Consistent with these amendments, we
propose that the power to direct also be removed from the Transport portfolio
Ministers. This does not affect the Minister’s ability to refer matters
to the ACCC under Part X. Consistent with these amendments, the joint Cabinet
Submission proposes that this power also be removed from the Minister for
Transport and Regional Services. This does not affect the Minister’s
ability to refer matters to the ACCC under Part X.
Open Conferences
The Joint Cabinet Submission recommends that
conferences be permitted to continue their practice of restricting new entrants.
However, where this is considered to be contrary to the interests of Australian
exporters and importers, the Minister and the ACCC would be empowered to
investigate and, if necessary, seek an undertaking from the conference to accept
the new entrant.
It is anomalous for the Australian Competition Tribunal to have investigative
powers under Part X, as occurs in s10.50 and s10.63. The 1993 Brazil Review
recommended that these powers be transferred to the ACCC, but the PC did not
comment on the anomaly. The primary role of the Tribunal is as a review body
for the ACCC’s adjudication decisions made under the TPA. It would
therefore be appropriate for the Tribunal’s investigative powers to be
transferred to the ACCC.
At present decisions taken under Part X are not reviewable by the Australian
Competition Tribunal as is the case with decisions taken under Part VII of the
TPA.
Bringing the review mechanism in Part X into line with other parts
of the TPA has merit. This is particularly important in the consideration of
increased powers for the Minister and the ACCC to make decisions. All decisions
taken by the Minister or the ACCC should be reviewable by the Tribunal.
Option 1 Accept the recommendations of the PC (ie. retain Part X with several amendments).
Benefits
While some submissions to the PC inquiry stated the view
that there is no clear reason for liner shipping to operate under a regulatory
regime different to other sectors of the Australian economy, in reality the
compatibility of Australia’s regime for international liner shipping with
those adopted by our major trading partners is of particular importance.
Liner shipping conferences have to conduct their business in accordance
with the rules adopted by the many countries to which they provide services. It
is clearly to the benefit of all parties to contracts for the carriage of goods
by sea, to operate under similar competition rules. Part X, which provides
conditional but assured exemptions, provides that benefit. Australia’s
major trading partners including the USA, European Union, Japan, Korea and New
Zealand provide exemptions for international liner shipping on a similar
basis.
The alternative procedures under Part VII of the TPA, that apply
to other sectors of the Australian economy, differ from Part X in that
exemptions can only be provided if the shipping lines concerned can demonstrate,
to the satisfaction of the ACCC, that such exemptions are justified on public
benefit grounds. Accordingly, the Part VII authorisation procedures would
introduce a significant degree of uncertainty into the operations of liner
shipping companies.
The PC found that Part X involves minimal – but
adequate – regulation and promotes commercial relationships and commercial
dispute resolution. It also found that repeal of Part X and its replacement by
the general provisions of the TPA is unlikely to produce outcomes as good or
better than Part X, or do so more efficiently.
Option 1 will not result
in any significant increase in compliance burden provided that shipping lines
abide by the rules. Several of the amendments recommended by the PC are
directed to clarifying the extent of conference exemptions from the TPA.
Adoption of the PC’s Recommendation 8.1A and 8.2 would
limit exemptions under Part X to the maritime component of international trade
carried by sea. The PC found no justification for the Part X exemptions
extending to inland haulage services associated with the transport of cargo to
or from the premises of importers or exporters. The PC noted that although it
did not believe that serious economic harm would arise from the ability of
conferences to quote (collectively) door-to-door rates, the logic of competition
policy requires that the exemption be removed. The issue of compatibility with
the conference shipping regimes applied by our major trading partners does not
apply to inland haulage.
Adoption of the PC’s Recommendation
8.1B would confirm the legitimacy of current practice by clarifying what may
be some uncertainty in the interpretation of ss.10.14 and 10.22 of Part
X.
Adoption of the PC’s Recommendation 8.3 to repeal section
10.05, which prohibits price discrimination (as between different shippers) in
certain circumstances will benefit some shippers. For example, carriers would
be able to offer shippers (and potential shippers) of low value products lower
freight rates than currently, once the link between freight rate differences and
costs of servicing different categories of shippers is broken. This will
increase economic efficiency and facilitate increased trade
flows.
Adoption of the PC’s Recommendation 8.4 to add a
national interest test to the Australian flag shipping provisions would benefit
Australian shippers by ensuring that any action taken in the interests of
comparatively high cost Australian flag carriers will not result in increased
freight rates.
Adoption of the PC’s Recommendation 8.5 to
provide for more effective and flexible enforcement of undertakings given by
ocean carriers, will provide a powerful inducement for carriers to comply
strictly with any undertakings they may give as the basis for resolving a
problem raised by shippers. This amendment would also minimise the need for the
Minister to use the more draconian enforcement powers available in the form of
de-registration of conference agreements.
Costs
These amendments will not result in any significant increase
in the cost of administering Part X nor to the costs of compliance by liner
shipping operators.
However, removal of restrictions on price
discrimination (Rec. 8.3) may adversely affect some shippers, depending on the
pricing policies adopted by shipping companies. For example, shippers of small
numbers of containers might have to pay relatively higher freight rates compared
to shippers of large numbers of containers than currently. But this is a
commercial issue that does not warrant government regulation.
Option 2 Accept the main recommendation of the PC to retain Part X, but
reject the amendments (ie. no policy change).
In the short term, leaving
Part X in its present form would not result in any additional benefits or costs
to Australia’s shippers (exporters and importers) or liner shipping
operators.
However, in the longer term the issues mentioned under
options 1 and 3 could lead to Australian shippers being disadvantaged through
not making the amendments to Part X referred to in those options.
Option 3 Accept the PC’s recommendations to retain Part X, but announce several further changes to improve the application of National Competition Policy to international liner shipping.
The PC report concentrated mostly on the case for and against retaining Part X rather than on improving the application of competition policy to Part X in the case that it was retained. Hence, this option was not explicitly considered in the PC’s report.
Countervailing Powers for Importers
The case for retaining Part X
is premised on the basis that it is in the interest of Australian shippers
(currently only exporting shippers), and therefore the public interest, to grant
them countervailing powers to negotiate with conferences. However, this
argument applies equally to importers as it does to exporters, and therefore as
far as practicable, inward conferences should be subject to the same provisions
as outward conferences.
The PC noted that the Attorney-General’s
Department advised the 1993 Brazil Review that, given the direct effect of
inward liner shipping on Australia there was, in principle, no reason why
Australia could not assert jurisdiction over such shipping in a manner
consistent with international legal principles. In relation to the actual
enforcement of such jurisdiction, it is recognised that certain practical
constraints would exist and that the question of possible conflict with foreign
jurisdictions, with equally valid jurisdiction claims, could arise. In this
respect it pointed out the need for a conflict avoidance mechanism. Such a
mechanism could be based on principles developed by the OECD's Maritime
Transport Committee.
The OECD principles concerning the regulation of
international liner shipping include ones aimed at avoiding problems from
overlapping jurisdictions. Provided these principles are followed, unnecessary
conflicts of jurisdiction, and additional costs to industry, will be avoided.
Basically, the OECD principles call for bilateral or multilateral
consultations between the countries concerned when changes made, or
contemplated, by a country to competition laws affecting shipping may affect the
interests of another country. In implementing these principles, full use should
be made of existing OECD fora including the Maritime Transport
Committee.
The USA and European Union have exercised jurisdiction over
inward and outward conferences for some time without creating difficulties from
overlapping jurisdictions.
The PC’s report notes on page 153 that
the Importers Association of Australia argued that it was desirable to require
inward conferences to negotiate with importers on land based charges as well as
ocean based components of conference charges.
The Importers Association
noted that that it is now becoming more common for importers to purchase goods
overseas on a free on board (FOB) basis. Under FOB contracts of carriage, the
importer nominates the ship on which the cargo is to be carried and pays the
freight charges covering both ocean based charges as well as land based charges
at ports of loading and discharge.
Consultation with industry sources
have revealed that in the Japanese trade the proportion of FOB contracts has
increased from about 5% to 35% over the past 5 years. Also, a freight forwarder
in Sydney handling large quantities of imports has advised that over half the
imports it handles are on an FOB basis, and this is the result of importers
entering the market to control shipping services for imports into
Australia.
In light of the foregoing it is apparent that the current
practice of providing inward liner shipping lines with a blanket exemption to
collaborate as conferences, without any of the obligations imposed on outward
shipping conferences, exposes importers to possible abuse of market power by
inward conferences. This situation is not considered to be in the public
interest and, as far as practicable, the arrangements applying to outward
conferences should also apply to inward conferences.
Benefits
The proposed change would extend the general Part X
safeguards to importers in the interests of reducing the costs of
Australia’s imports. It will ensure that Australian importers have
countervailing power against inward conferences. It will give our importers
rights to require negotiations with conferences on freight rates, surcharges,
and other conditions of carriage, and to receive information about carrier costs
on a similar basis to our exporters.
The Part X exemptions that carriers
receive will then be on a basis of similar conditions in relation to outwards as
for inwards liner cargo shipping services.
The increased coverage
would be especially valuable if the current oversupply of containership capacity
were to be absorbed by increasing world trade, and upward pressures on freight
rates were to become apparent.
The benefits to importers from having
countervailing powers to prevent or reduce arbitrary increases in freight rates
on imports far outweigh the relatively small costs associated with this increase
in regulation. For example, for every 1% that freight rates on imports can be
kept below what they otherwise would be, the savings to importers would be over
$10 million per year. This figure is calculated on the basis of a conservative
estimate of the current number of containers imported into Australia per year
(around 1 million) at an average freight rate of $1,000 per
container.
Given the competitive forces in the domestic economy, the
potential savings are likely to flow through to consumers in Australia,
including those that use imported goods as inputs to the production of
Australian exports.
Costs
Liner Shipping Services Ltd (the Secretariat to the
conference lines) indicated to the PC that there would not be any significant
problems in extending to inward conferences the conditions in Part X applying to
outward conferences. The membership of outward and inward conferences are very
similar, or exactly the same.
The cost to industry of registering inward
liner shipping conference agreements would be about $35,000 in the first year.
After this the costs are likely to be in the order of about $15,000 pa to cover
the registration of new agreements and variations to existing
agreements.
From the Government’s side there would only be a
marginal increase in workload and administrative costs. It has been estimated
that about an additional one half of a staff
year would be required to
handle the registration and other processes associated with applying Part X to
inward liner shipping conferences.
While there would be some increased
costs for carriers, Part X is fundamentally a low cost, light-handed regime.
These increased costs may be passed forward to Australian shippers, but the
benefits of lower freight rates and surcharges are likely to vastly outweigh
these costs.
The reason for the proposed additional powers is to guard against the
possibility that future cooperative agreements between shipping lines may result
in significant reductions in previous levels of non-conference competition and
that this may lead to conduct that is not in the public interest.
The PC
flagged the possibility that the current situation of strong competition in the
liner shipping industry may change and that an appropriate regulatory regime
will need to be able to adapt to future developments in international liner
shipping markets (Overview page XXX). The PC also noted on page XXVIII that
“...evidence available to the Commission consistently suggests that
conferences are subject to effective competition from independent (ie.
non-conference) operators”.
There is a possibility that discussion
agreements, (ie. those that cover conference and non-conference carriers as well
as different conferences in particular trades) will become more widespread than
at present and result in freight rates being increased to unreasonable levels,
or capacity offered curtailed to create a shortage of shipping space and hence
put upward pressure on freight rates.
The Brazil Review of Part X contains, at Appendix D, advice from Legal Counsel Mr CP Comans, that states among other things, that the current Ministerial enforcement powers under s.10.45(a)(iv) of Part X could give rise to some uncertainty about the Minister’s powers. S.10.45(a)(iv) provides the main grounds on which the Minister may de-register a conference agreement. These grounds are:
• “that parties to an agreement have given effect to or applied, or propose to give effect to or apply, the agreement without due regard to the need for outwards liner cargo shipping services provided under the agreement to be :
− efficient and economical; and
− provided at the capacity and
frequency reasonably required to meet the needs of shippers who use, and
shippers who may reasonably be expected to use, the services.”
Mr
Comans noted that there could be considerable debate concerning the
interpretation of the words “without due regard” and
“efficient and economical” used in s.10.45(a)(iv).
In light
of Mr Comans’ opinion and submissions, the Brazil review recommended
additional regulation in Part X to deal with accords and discussion agreements,
because of their potential to reduce the normal levels of competition that exist
between conference and non-conference carriers.
Under the proposed
increased powers the ACCC will be empowered to undertake an investigation on its
own initiative into such agreements and make recommendations to the Minister.
The Minister will have the power to suspend the operation of such agreements if,
after consultations with affected parties (ie conference lines and shippers),
the conference lines do not give a court-enforceable undertaking that would make
suspension unnecessary.
The Government recognises that shipping lines
need to have confidence that the Part X exemptions will stand so long as they
conduct their business in accordance with the objects of Part X, and do not
engage in conduct that is, or is likely to be, against the public
benefit.
With this in mind the following guidelines have been developed covering the exercise of the increased powers granted to the Minister and ACCC:
‘As a guideline for exercising the additional powers, exceptional circumstances will be taken to apply where:
• an agreement has the effect of giving its parties a substantial degree of market power;
• the conduct of the parties to the agreement has led to, or is likely
to lead to, an unreasonable increase in freight rates or an unreasonable
reduction in services; and
• the anti-competitive detriment of the
agreement outweighs the benefit to shippers flowing from the agreement.
Exceptional circumstances will also be taken to apply where the
agreement in question is substantially similar to one that has previously been
deregistered pursuant to section 10.44 of Part X.’
Decisions made under the increased powers will be reviewable by the
Australian Competition Tribunal in line with arrangements applying to
authorisations and notifications under Part VII of the TPA.
The relevant
industry parties have been consulted in the preparation of the guidelines.
If shipping conferences conduct their business in accordance with the
objects and rules in Part X (which they are most likely to do), there would be
no need to invoke these additional powers and hence it is likely that there
would not be any significant additional cost attached to this option, nor would
there be increased uncertainty for business.
This option essentially
provides a form of reserve power to deal with situations where conferences might
act in a manner contrary to the national interest. The very existence of such a
reserve power is likely to induce conferences to behave in accordance with the
objects to Part X. Most issues between shippers and carriers would continue to
be resolved commercially.
Benefits
The increased powers proposed under this option improve
the application of National Competition Policy to Part X and make it more
consistent with the general provisions of the TPA. It also introduces the
concepts of ‘substantial lessening of competition’ and ‘the
public benefit’ into Part X. These concepts also provide a guide to
those circumstances in which the general exemptions granted under Part X should
be reconsidered.
Under these arrangements, the Minister for Transport
and Regional Services and the ACCC will be empowered in exceptional
circumstances to examine agreements, such as discussion agreements, where it is
considered the agreement may result in a substantial lessening of competition
likely not to result in a public benefit. In these circumstances, the ACCC
would conduct a public inquiry to determine whether the public benefit arising
from the collusive behaviour outweighs the competitive detriment. This public
benefit test is consistent with the objectives in Part X as well as the broad
thrust of competition policy.
The benefits flowing from the increased
powers are difficult to assess, but if the availability and/or exercise of the
increased powers resulted in keeping freight rates only 1% below what they would
otherwise be, this could result in savings of about $10 million per year. This
figure is calculated on the basis of the current number of export containers
(around 1 million) at an average freight rate of $1,000 per container.
Costs
The PC found (Finding 8.3) that it was unable to identify
clear benefits to offset the costs (including problems of definition) that would
be created by denying discussion agreements the exemptions currently provided
under Part X. It concluded that current safeguards exist to protect shippers
against exploitative practices under discussion agreements.
The Cabinet
Submission notes that notwithstanding the views of the PC, some stronger powers
need to be available to deal with exceptional circumstances that may arise.
The costs of the ACCC undertaking an inquiry would be similar to the
costs associated with an application for authorisation under Part VII of the
TPA. The cost includes a fee of $7,500 charged by the ACCC and payable by the
applicant for authorisation. The PC noted on page 130 that this is well below
the costs to the ACCC and that the total resource cost to the ACCC of the
authorisation process averages about $45,000 per case.
In addition, the
parties to the conference agreement under investigation would incur costs in
preparing and submitting its case to the ACCC. These could be of a similar
order to those of the ACCC.
Against these costs, it is important to
consider the potential benefits to users of shipping services (see comments
under Benefits above).
The PC’s report (pages 160 to 161 and Appendix B pages 7 and 8) notes
arguments for and against closed conferences and that there has been
considerable debate on this matter.
The problem with the current
provisions under Part X is that while cooperation and rationalisation by means
of closed conferences may provide desirable outcomes for shippers, it is also
possible that under certain circumstance closed conferences may be able to
exploit shippers by charging monopolistic prices (see PC report page
160).
Benefits
The proposed change would provide a degree of
“openness” to conferences that are now able to be closed to new
members, while avoiding the risk of over-capacity and rising costs that the PC
concluded was associated with open conferences. Also, given the possibility
that closed conferences may result in conduct that is not to the public benefit,
the hybrid option recommended in the Cabinet Submission would provide a better
outcome than strictly adopting one system or the other.
While shipping
lines would be able to continue with closed conference arrangement, they would
not be permitted to refuse admission to an independent line that wanted to join
a conference and was prepared to abide by the rules of the conference agreement.
Informal discussions with representatives of conference lines indicates
that, in practice, conferences would have no problems with admitting new
entrants provided they were prepared to abide by the conference rules. In fact
it would be in the interest of the conference concerned to accept a new entrant
under such conditions, as it would ensure that the aspirations of the new
entrant could be negotiated, and accommodated in a manner that was consistent
with providing appropriated levels of capacity in a trade and well coordinated
high levels of service.
As opposed to the free for all of open
conferences, the arrangement recommended in the Cabinet Submission would avoid
situations where any shipping line could join a conference with whatever
capacity they wished, leave the conference at any time without reasonable notice
and generally disrupt the operation of a conference.
Costs
Provided shipping conferences observed the rules in respect
of the proposed new conditions for admitting new entrants to conferences, there
would be no additional compliance costs.
On the other hand if a conference unreasonably refused admittance to a new applicant for conference membership, this could result in an ACCC inquiry and action by the Minister to require the conference in question to admit the new applicant. The consequences of such actions could be:
− the ACCC having to undertake an inquiry at some cost. While this
could be significant, it should be considerably less than the $45,000 for an
authorisation inquiry;
− the conference in question having to expend a
similar amount in responding to the ACCC’s inquiry.
The PC encourages maximum public participation in its inquiries. In this
case, a call for submissions was advertised and an issues paper was released in
late March to assist interested parties in preparing submission. The PC held
informal discussions with several organisations and individuals and also
conducted public hearings in both Sydney and Melbourne after the release of its
interim position paper.
Shipper and carrier interests, business, farming,
and legal lobby groups, academics, and Commonwealth and State Government
departments and agencies were among the parties that made a total of around
forty submissions to the PC. A full list of participants in the consultation
process and a summary of their views are available in Appendix A of the
PC’s report.
The retention of Part X is supported by the Australian
Peak Shippers Association, the Australian Chamber of Commerce and Industry, the
Australian Dairy Industry Council, the Australia Wool Industries Secretariat,
Interlaine (representing importers of wool in the European Union), the State
Governments of South Australia, Tasmania and Queensland, the Department of
Infrastructure in Victoria, and the Sea Freight Council of Western Australia
(includes State Government representatives).
There are several
associations representing parties not directly involved in exporting goods which
consider Part X should be repealed, and international liner shipping made
subject to the same competition policy regime as Australian industry generally.
These include the Business Council of Australia (BCA), the Law Council of
Australia, the Australian Consumers Association, and the National Farmers
Federation (NFF). However, the NFF recommends the progressive withdrawal of the
exemptions provided by Part X, starting with a particular trade so that the
results could be tested before proceeding further.
Liner Shipping
Services Ltd (representing conference shipping) informed the Department of
Transport and Regional Services on 30 September 1999 that it would be surprised
if the views expressed by the BCA in its submission to the PC had the support of
all the BCA members. P&O Nedlloyd and BHP are members of the BCA and both
put in submissions to the PC which were supportive of the arrangements in Part
X.
The Government has decided to adopt Option 3. This option accepts the
PC’s threshold recommendation to retain Part X with some relatively minor
amendments, but also adds a number of other changes to improve the application
of competition policy to international liner shipping. A media announcement to
this effect was made on 23 December 1999.
Under Option 3, Part X would be
retained but the Minister for Transport and Regional Services and the ACCC,
would be granted increased powers to identify and address concerns about
anti-competitive behaviour. As noted above, some collusive activities in
international shipping have more potential than others to result in an
unreasonable reduction in competitive forces in some market segments,
particularly discussion agreements and accords which cover both conference and
non-conference carriers.
The Passage of the Trade Practices Amendment (International Liner cargo
Shipping) Bill 2000 will implement the Government’s decision referred to
above.
As international liner cargo shipping is a dynamic industry, the PC
recommended that Part X should be reviewed again in 2005, in order to ascertain
whether technological or institutional changes have substantially altered the
conclusions of its report. The Government has agreed to this approach.
TRADE PRACTICES AMENDMENT (INTERNATIONAL LINER CARGO SHIPPING) BILL 2000
Clause 1 Short Title
Clause 1 provides that the Bill may be cited
as the Trade Practices Amendment (International Liner Cargo Shipping) Act
2000.
Clause 2 Commencement
Clause 2 specifies that the Act will commence
on the 28th day after Royal Assent, except that Part 2, and Division 2 of Part
3, of Schedule 1 will commence four months (or a longer period up to 6 months if
specified in regulations) after Royal Assent. The reason for this is to allow a
reasonable transitional period for the relevant parties to make the necessary
arrangements to comply with the new provisions concerning inward liner shipping
conferences.
Clause 3 Schedule(s)
Clause 3 provides for the amendment of the
Trade Practices Act 1974 as specified under the applicable items in the
relevant Schedule.
Schedule 1 – Amendment of the Trade Practices
Act 1974
Item 1 Paragraph 29(1A)(a) – (Ministerial directions to
Commission)
This item adds Part X to the list of parts of the Trade
Practices Act (TPA) to which the relevant Minister must not give directions to
the Australian Competition and Consumer Commission. This brings Part X into
line with other parts of the TPA.
Item 2 Subsection 40(3) – (Inquiries by Tribunal)
This
subsection is being repealed as it only has application in respect of inquiries
by the tribunal under Part X. As the Tribunal’s inquiry role under Part X
is to be transferred to the ACCC, subsection 40(3) is no longer
necessary.
Item 3 Paragraph 10.01(1)(a) – (Objects of Part
X)
This is just an editorial amendment that makes it clear that all
the paragraphs (a), (b), (c) and (d) apply in interpreting the principal objects
of Part X. (See item 4 for new paragraph (d)).
Item 4 Subsection 10.01(1) – (Objects of Part
X)
This item adds a new paragraph (d) to cover the objects of Part X in
respect of protecting the interests of importers (paragraph (a) already covers
exporters). The reason for having the qualification of ‘as far as
practicable’ is that inwards liner shipping services provided for
Australian importers may also be subject to competition rules in the country of
export, and it is important to try and avoid conflicts that may arise from
overlapping jurisdictions.
Our major trading partners including the USA,
European Union, and Japan, have conditional exemptions from competition rules
broadly similar to Part X, and it is a generally accepted practice of
international comity that the country of export has the major interest in
respect exemptions from competition rules. These considerations have been taken
into account in drafting the amendments in the Bill covering the controls on
inward liner shipping conferences.
Item 5 Paragraph 10.01(2)(a) – (Objects of Part
X)
This item changes the reference to ‘outwards liner cargo
shipping services’ to ‘international liner cargo shipping
services’ so that the subsection applies to both inwards and outwards
liner shipping services (see existing definition of ‘international liner
cargo shipping service’).
Item 6 After section 10.01 – (Objects of Part
X)
This item inserts a simplified outline of Part X under a new section
10.01A to help give a broad understanding of the principal features of Part
X.
Item 7 Subsection 10.02(1) (Interpretation of Part X)
This item
provides a definition of ancillary cargo service to cover the
ancillary services that can form part of a terminal to terminal service provided
by, or on behalf of, a liner shipping company. For the purposes of Part X,
ancillary cargo services can consist of an inter-terminal
transport service, a stevedoring service, an on-wharf service, or any other
service that is also a part of a terminal-to-terminal service and is provided
by, or on behalf of, a liner shipping company.
Item 8 Subsection 10.02(1) – (Interpretation of Part X)
Item
8 adds the definition of Australian importer as a person
who imports goods into Australia. This complements the existing definition of
‘Australian exporter’.
Item 9 Subsection 10.02(1) – (Interpretation of Part X)
This
item amends a reference to liner cargo shipping services to include both an
outwards and an inwards liner cargo shipping service.
Item 10 Subsection 10.02(1) – (Interpretation of Part X)
In
item 10 the definition of conference agreement has been extended
to include both outwards (as at present) and inwards conference
agreements.
Items 11 and 12 Subsection 10.02(1) – (Interpretation of Part
X)
Item 11 defines designated inwards peak shipper body as
an association declared to be so by the Minister under a new subsection
10.03(2A). Item 12 similarly defines designated inwards secondary shipper
body, but as an association described in the new subsection 10.03(2B)
(see item 52). A shipper body is an organisation that represents the users
of liner shipping services (generally exporters and importers or parties acting
on their behalf in arranging the carriage of cargo by ships).
Item 13 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines a designated inwards shipper body as either a
designated inwards peak or secondary shipper body (see items 11 and 12).
Items 14 and 15 Subsection 10.02(1) – (Interpretation of Part
X)
Item 14 defines designated outwards peak shipper body as
an association specified in subsection 10.03(1). Item 15 defines
designated outwards secondary shipper body as an association
described in subsection 10.03(2).
Item 16 Subsection 10.02(1) – (Interpretation of Part X)
Item
16 defines designated outwards shipper body to mean either a
designated outwards peak shipper body or a designated outwards secondary shipper
body.
Item 17 Subsection 10.02(1) – (Definition of designated peak shipper
body)
The existing definition of designated peak shipper body is
repealed under item 17, as it has been included in new definitions under items
11 and 14).
Item 18 Subsection 10.02(1) – (Interpretation of Part X)
Item
18 defines a designated port area (a term used in subsequent
amendments) as an area within the limits of a port appointed under section 15 of
the Customs Act 1901.
Items 19 and 20 Subsection 10.02(1) – (Interpretation of Part
X)
Item 19 extends the definition of designated secondary shipper
body to mean either a designated outwards (as at present) or designated
inwards secondary shipper body. Similarly item 20 extends the definition
of designated shipper body to include both designated outwards and
inwards designated shipper bodies.
Item 21 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines an exemption order as an order under section 10.72A
(see item 141 which covers exemption orders in respect of inwards liner shipping
conferences).
Item 22 Subsection 10.02(1) – (Interpretation of Part X)
This
item extends the definition of freight rate charges to cover both
outwards (as at present) as well as an inwards liner cargo shipping
service.
Item 23 Subsection 10.02(1) - (Interpretation of Part X
This item
defines handling cargo as including a service that is related to
handling of cargo.
Item 24 Subsection 10.02(1) – (Interpretation of Part X)
Item
24 defines inland terminal as having the meaning given in section
10.02A (see item 49).
Item 25 Subsection 10.02(1) (Interpretation of Part X)
This item
defines international liner cargo shipping service to mean an
outwards or an inwards liner cargo shipping service.
Item 26 Subsection 10.02(1) – (Interpretation of Part X)
This
item introduces a new definition to cover inter- terminal transport
service, which is a term used in subsequent amendments.
Items 27, 28, and 29 Subsection 10.02(1) – (Interpretation of Part
X)
Items 27, 28 and 29 define inwards conference
agreement, inwards liner cargo shipping service, and
inwards loyalty agreement .
Item 30 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines inwards scheduled cargo shipping service as meaning a
scheduled cargo shipping service (defined under item 41) where the transport of
cargo by sea commences from a place outside Australia and ends at a place in
Australia.
Item 31 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines inwards varying conference agreement to
mean an agreement that varies an inwards conference agreement.
Item 32 Subsection 10.02(1) – (Interpretation of Part X)
This
item repeals the existing definition of liner cargo shipping service,
as it is replaced by new definitions of inwards and outwards liner cargo
shipping services (see items 28 and 35).
Item 33 Subsection 10.02(1) – (Interpretation of Part X)
Item
33 extends the definition of loyalty agreement to cover both
outwards (as at present) as well as inwards conference agreements.
Items 34, 35, 36 and 37 Subsection 10.02(1) – (Interpretation of
Part X)
These items define outwards conference
agreement, outwards liner cargo shipping service, outwards loyalty
agreement and outwards scheduled cargo shipping service in
relation to outwards liner cargo shipping arrangements.
Item 38 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines outwards varying conference agreement to mean an
agreement that varies an inwards conference agreement.
Item 39 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines port terminal as being the area within a wharf
appointed under section 15 of the Customs Act 1901.
Item 40 Subsection 10.02(1) – (Definition of pricing
practice)
This item replaces ‘liner cargo shipping services’
with ‘outwards liner cargo shipping services’ in the definition of
‘pricing practice’.
Item 41 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines scheduled cargo shipping service as meaning a
scheduled service for the transport of cargo by sea, generally by containers and
at predetermined freight rates.
Item 42 Subsection 10.02(1) – (Interpretation of Part X)
Item
42 inserts a definition of stevedoring service to include the
loading or unloading of cargo into or from a ship, or the handling of cargo
within a port terminal.
Item 43 Subsection 10.02(1) – (Interpretation of Part X)
This
item defines terminal-to-terminal service as meaning an outwards
or an inwards scheduled cargo shipping service, together with any ancillary
service that relates to the outwards or inwards scheduled cargo shipping
service. It has the effect of defining a terminal-to-terminal service
as meaning a service that includes sea transport, handling
of cargo at a port terminal and an inland terminal, and inter-terminal transport
services. The definitions of ancillary service, handling cargo,
inter-terminal transport service and stevedoring service
are relevant to interpreting a terminal-to-terminal
service.
Item 44 Subsection 10.02(1) – (Interpretation of Part X)
This
item extends the definition of varying conference agreement
to cover both an outwards (as at present) as well as an inwards conference
agreement.
Item 45 Subsection 10.02(2) – (Interpretation of Part X)
This
item confines the interpretation in Subsection 10.02(2) concerning the
interpretation of minimum levels of service, to ‘outwards liner cargo
shipping services’. Item 46 provides an interpretation in respect
of ‘inwards liner cargo shipping services’.
Item 46 After subsection 10.02(2) – (Interpretation of Part
X)
This item introduces a new subsection 10.02(2A) that provides an
interpretation of minimum levels of service in respect of ‘inwards liner
cargo shipping services’, that is similar to the definition in subsection
10.02(2).
Item 47 Subsection 10.02(3) – (Interpretation of Part X)
This
item is to clarify that subsection 10.02(3) concerning agreements that vary
existing agreements, applies only to outward conference agreements (see item 48
for inward agreements).
Item 48 At the end of Section 10.02 – (Interpretation of Part
X)
This item introduces a new subsection 10.02(4) that provides a similar
definition to the existing subsection 10.02(3) concerning varying conference
agreements, but applies it to inwards conference agreements. This item also
introduces a new subsection 10.02(5), which provides that where an ancillary
service (eg. stevedoring) is provided on behalf of a shipping company, that
service is taken to be provided by the shipping company for the purposes of Part
X.
Item 49 After section 10.02 – (Interpretation of Part X)
This
item introduces a new section 10.02A that gives the Minister the power to
declare that a specified facility is an inland terminal for the
purpose of Part X. The amendment provides criteria for making such
declarations, which will be disallowable instruments. The criteria includes a
requirement that the facility be used by ocean carriers for assembling export
cargoes for transport to a port or delivering imported cargoes to importers or
their representatives.
This amendment is needed because the exemptions
granted under this Bill for liner shipping companies to collaborate as
conferences are limited to ‘terminal to terminal’ type shipping
arrangements, but with the term ‘terminal’ including a port terminal
as well as an inland terminal.
The Attorney-General’s Department
has advised that, as drafted, the new section 10.02A will ensure that any
declarations made by the Minister would not breach section 99 of the
Constitution by giving preference to one State over another State.
Items 50 and 51 Subsections 10.03(1) and (2)– (Designated outward
shipper bodies)
These items confine the interpretation of subsections
10.03(1) and (2) to outwards liner cargo shipping services. An interpretation
in respect of inwards liner cargo shipping services is given under item
52.
Item 52 After subsection 10.03(2)
This item introduces new
subsections 10.03(2A) and (B) that allow the Minister to declare that certain
bodies may be designated as representing the interests of users of inwards liner
cargo shipping services (similar to provisions relating to users of
‘outwards liner cargo shipping services’).
Such associations
are known as a ‘peak shipper body’ or ‘secondary shipper
bodies’ and are given legislated rights under Part X to negotiate with
shipping conferences on matters such as freight rates and levels of services
provided under registered conference agreements. The existing subsections
10.03(1) and (2), as amended under items 50 and 51, cover the provisions in
relation to outwards liner cargo shipping services.
Items 53 and 54 Section 10.03(3) and (4) – (Designated inward
shipper bodies)
These items extend the existing provision for registering
designated shipper bodies to both an outwards (as at present) and an inwards
shipper bodies.
Item 55 Subsection 10.03(7) (Designated shipper bodies)
This item
adds references to the new subsections (2A) and (2B), provided under item 52, to
the ones in subsection 10.03(7) that are already subject to guidelines provided
in regulations.
Item 56 Section 10.05 – (Discrimination between shippers prohibited)
This item repeals section 10.05 that prohibits price discrimination as
between shippers in certain circumstances. The Government has agreed with the
Productivity Commission’s view that the price discrimination provisions of
Part X serve no useful purpose and indeed are potentially harmful if they
discourage efficient price discrimination. In addition, they would be extremely
difficult to implement.
Section 49 in Part IV of the Trade Practices Act
contained a similar provision to section 10.05, and was repealed in 1995 as not
being effective or efficient.
Items 57 and 58 Sections 10.06 and 10.07 – (Minimum standards for
conference agreements)
These items clarify that the current provisions in
sections 10.06 and 10.07 will apply only to an outwards conference agreement.
The application of section 10.07 to an inwards conference agreement is covered
under item 59.
Item 59 After section 10.07 – (Minimum levels of shipping services
to be specified in conference agreements)
This item adds a new subsection
(2) requiring that an inward conference agreement specify minimum levels of
service, as provided in the existing section 10.07. However, this provision is
qualified under paragraph 10.33(1)(b), in which the application of section 10.07
covering minimum levels of service does not apply to existing inwards conference
agreements, or where an exemption order has been issued under section 10.72A in
respect of a new inwards conference agreement (see note).
The new
subsection (3) is a provision that states that subsection (2) does not apply to
inwards liner shipping services that commenced before the end of the four-month
transitional period, allowed before the provisions applying to inward liner
shipping conference agreements come into force.
Item 60 Paragraph 10.08(1)(d) – (Conference agreements may include
only certain restrictive trade practice provisions)
This item provides
that the existing paragraph 10.08(1)(d), which states that matters covered in
conference agreements must be necessary for the effective operation of the
agreement and of overall benefit to Australian exporters, apply to both outward
(as at present) and to inward conference agreements.
Item 61 Subsection 10.08(2) – (Conference agreements may include
only certain restrictive trade practice provisions)
This item provides
that the existing subsection 10.08(2) which states that any provisions in a
conference agreement concerning exclusive dealing cover Australian exporters (as
at present) and also Australian importers.
This item also includes a note
to the effect that paragraph 10.33(1)(ba) and section 10.72A qualify the
provisions in subsection 10.08(2), to the extent that this subsection does not
apply in relation to an inwards conference agreement because of an exemption
order, or because the agreement was an existing agreement at the time of the new
provision coming into force.
Item 62 At the end of section 10.08 – (Conference agreements may
include only certain restrictive trade practice provisions – new
subsection 10.08(4))
This item is a provision covering the transitional
four month period allowed before requirements covering inwards conference
agreements come into force. This provision will be repealed after the
transitional period has passed (see Part 2 of Schedule 1).
Item 63 At the end of paragraphs 10.11(1)(a), (b) and (c) – (What
registers are to be kept by the Registrar?)
This is a minor editorial
amendment to clarify that the Registrar is to keep a separate register for each
of the matters referred to in the paragraphs under subsection 10.11(1).
Item 64 At the end of subsection 10.11(1) – (Register of Exemption
Orders)
This item requires that a new register be kept by the Registrar
which is to contain details of any exemption orders issued by the Minister
concerning the application of conditions to inward liner shipping conferences,
and referred to under item 141.
Items 65 and 66 Paragraphs 10.13(2)(a) and (b) – (Register to be
kept by the Commission)
This amendment expands the matters that must be
included in the register of investigations kept by the Commission, as a
consequence of the transfer of inquiry functions from the Australian Competition
Tribunal to the Australian Competition and Consumer Commission (ACCC).
Item 67 Section 10.14 – (Exemptions relating to conference agreements)
This item repeals the existing Section 10.14 and replaces it with new provisions applying to both outward and inward liner shipping conference agreements. These provisions specify the extent of exemptions granted to parties to registered liner shipping conference agreements, and cover the following activities:
• transport of cargo by sea;
• stevedoring services;
• activities that take place outside Australia;
• fixing of charges for inter-terminal transport services;
and
• fixing of charges for inland terminal services provided to liner
shipping conferences.
Subsection (3) provides for the exemptions to also
extend to the determination of common terms and conditions for bills of lading
(these are evidence of a contract of carriage by sea) in respect of both outward
shipping conferences (as at present) and inward shipping conferences (as
previously provided under paragraph 10.22(2)(b)).
The present
unconditional exemptions granted to inward liner shipping conferences in
Subdivision C of Division 5 are to be repealed under Part 2 of Schedule 1 (see
item 159).
The new provisions include a new subsection (4) that makes it
clear that the exemptions in Subdivision A of Division 5 do not extend to
allowing parties to a liner shipping conference agreement to negotiate
collectively with providers of ancillary cargo services. An exemption to allow
parties to a liner shipping conference agreement to negotiate collectively with
stevedores is provided in Subdivision D of Division 5 (see item 78).
In
recent years shipping lines have been making increasing use of facilities beyond
the traditional wharf location. Cargo handling operations may take place at
terminals on the waterfront as well as at some inland terminal facility used for
assembling export cargo for delivery to a port, or delivering cargo to
importers. In some port approaches (eg Sydney) where there is considerable
traffic congestion, shipping lines are developing a practice of placing
containers on rail wagons and sending them to some inland facility before
delivery to an importer takes place. A reverse operation in respect of exports
can also occur. The new section 10.14 facilitates these multi-modal
operations.
Item 68 Section 10.15 – (When do exemptions commence to apply in
relation to registered conference agreements?)
This item provides that
the existing section 10.15, concerning the 30 day period before the Part X
exemptions for finally registered conference agreements come into effect,
applies only to outward cargo shipping services. The mirror provision applying
to inward agreements is covered under item 69.
Item 69 After the end of Section 10.15 – (When do exemptions
commence to apply in relation to registered conference agreements?)
This
item adds inwards liner cargo shipping services to the provisions covering the
30 day period allowed for conference agreements to come into effect, after they
have been finally registered.
Items 70 After Section 10.15 – (When do exemptions commence to apply in relation to registered conference agreements?)
This item is a transitional provision that suspends the application of the exemptions relating to an inwards conference agreement in Subdivision A of Division 5,
- during the four month transitional period allowed before the provisions
applying to an inwards conference agreement come into force; or
- the end of
the 30 day time period allowed between a conference agreement being finally
registered and the agreement taking affect,
whichever is the later
time.
Items 71 to 73 Subsections 10.17(2), 10.18(1), 10.19(2) –
(Exemptions from sections 45 and 47)
These items provide that subsections
10.17(2), (10.18(1), 10.19(2), apply to an inwards liner cargo shipping
service as well as an outward service (as at present).
Item 74 Subsection 10.20(1) – (Exemptions from sections 47 and
10.05)
This is a consequential change resulting from the amendment under
item 56 that repeals section 10.05.
Item 75 Subsection 10.20(1) – (Exemptions from section 47)
This item provides that subsection 10.20(1) applies to an inwards
liner cargo shipping service as well as an outwards service (as at present).
Section 10.05 referred to in the present subsection 10.20(1) is to be repealed
(see item 56).
Item 76 After section 10.21 – (Transitional
arrangements)
This is a transitional arrangement covering the four month
transition period allowed for the provisions applying to an inwards conference
agreement to come into force.
Item 77 At the end of section 10.24 – (Transitional
arrangements)
This is a transitional arrangement to allow for the four
month transition period allowed for the provisions applying to an inwards
conference agreement to come into force.
Item 78 After section 10.24 (New section 10.24A – Exemptions from
sections 45 & 47 in relation to stevedoring contracts)
This amendment
is a consequence of the need to clarify the fact that stevedoring operations are
part of the normal terminal to terminal services provided by shipping conference
lines, and as such are part of the conditional exemptions granted to shipping
conferences under Part X.
At present there is some uncertainty as to
whether Part X provides exemptions for conference lines to negotiate
collectively with stevedores for the provision of stevedoring services to member
lines of conferences. This has been a common practice for many years.
Accordingly, this item confirms approval for the existing practice
whereby members of shipping conferences negotiate collectively with stevedores.
The reason for this is that where a group of shipping lines act collectively
through a conference agreement when negotiating with stevedores, the conference
lines are able to offer a much larger volume of cargo. This can give the
conference lines considerable leverage in negotiating a more favourable
stevedoring rate than would be the case if shipping lines were to negotiate
individually with stevedores. It should be noted than in Australia the vast
majority of stevedoring services are under the control of only two companies
(P&O Ports and Patrick), and as such these companies are in a strong
bargaining position.
Item 79 Subsection 10.27(1) – (Application for provisional
registration of conference agreements)
At present section 10.27(1) does
not require that minimum levels of service be included in an outwards shipping
conference agreement when submitted for provisional registration (the minimum
levels of service are only required to be stated before final registration).
The amendment under this item extends this provision to an inwards conference
agreement.
Item 80 After section 10.27 – (Copies of conference agreements to be
sent to shipper bodies)
This item introduces a new section 27A that
requires parties to an outwards and inwards conference agreement to send copies
of such agreements to the designated outwards peak shipper body or the
designated inwards peak shipper body as appropriate, when parties to a
conference agreements apply for provisional registration of such
agreements.
Item 81 At the end of paragraph 10.28(1)(a) – (Provisional
registration)
This item is of an editorial nature to make clear that the
Registrar must be satisfied in respect of all the matters in paragraphs in 10.28
(1) (a), (aa), (ab), (b) and (c).
Item 82 After paragraph 10.28(1)(a) – (Provisional
registration)
This item provides that the requirement that applications
for provisional registration of conference agreements have been properly made,
apply to inward agreements as well as outward agreements (as at
present).
Items 83 and 84 Paragraph 10.28(1)(b) – (Provisional
registration)
These items provide that section 10.06 only apply to an
outward conference agreement. This is because section 10.06 provides that
disputes between parties to an outwards conference agreement are to be
determined in accordance with Australian law. This is reasonable because
outward conference agreements are entered into in Australia. However, this is
not the case with an inward conference agreement because they are entered into
in another country, and for this reason parties to an inwards conference
agreement are not being required to comply with section 10.06.
Item 85 After paragraph 10.28(1)(b) – (Provisional
registration)
This item inserts a new paragraph (ba) into subsection
10.28(1) as a facility to enable the Registrar to deal with any existing
inwards conference agreement, which may appear to him/her to contain provisions
that are totally unacceptable in terms of the objects of
Part X.
If
such a situation should arise the Registrar would be in a position to refer the
matter to the Minister for approval under a regulation preventing an inwards
conference agreement from being registered with such unacceptable provisions.
It is intended that such a regulation will be made prior to the amendments
concerning inward conferences coming into force.
Item 86 At the end of section 10.28 – (Provisional
registration)
This item inserts a specific legal requirement for the
Registrar to provide the ACCC with copies of documents submitted as part of the
processes for provisionally registering conference agreements. This has been
common practice in the past, but it is considered appropriate to formalise
it.
Items 87 and 88 Subsection 10.29(1) – (Parties to conference
agreements to negotiate minimum level of shipping services after provisional
registration of agreement)
These items confine the existing Subsection
10.29(1), concerning the requirement for parties to a provisionally registered
conference agreement to negotiate on minimum levels of service, to outward
conferences. A mirror provision applying to an inward s conference agreement is
provided under item 89.
Item 89 After subsection 10.29(1) (Minimum
levels of service)
This item extends the requirements to negotiate
minimum levels of service during the provisional registration period to inward
conference agreements.
It is important to note that under the item
covering amendments to paragraph 10.33(1)(b), the requirement to
negotiate minimum levels of service under section 10.07, will not apply to
existing inward conference agreements. However, in respect of new inward
agreements, section 10.07 may be made not to apply because of an exemption order
made pursuant to the new section 10.72A referred to under item 141.
Item 90 Before subsection 10.29(2) – (Parties to conference
agreements to negotiate minimum level of shipping services after provisional
registration of agreement)
This item introduces a new subsection
10.29(1B), which states that the requirements to negotiate minimum levels of
service will not apply unless, within 14 days after provisional registration,
the relevant shipper body notifies the Registrar that it does wish to have such
negotiations.
The effect of this provision is that shipper bodies will
no longer have to send a written notification (duly witnessed by a JP) if they
do not wish to negotiate minimum levels of service. This will automatically be
assumed if they do not respond within the 14 day period. However, as at present
the designated peak shipper bodies will be able to call for negotiations on
minimum levels of service any time during the 14 days following provisional
registration.
Item 91 Subsection 10.29(2) – (Parties to conference agreements to
negotiate minimum level of shipping services after provisional registration of
agreement)
This is a consequential change resulting from the introduction
of a new subsection 10.29(1A) concerning negotiating requirements in respect of
minimum levels of service. It has the effect of making the current subsection
10.29(2) apply to both the existing subsection 10.29(1) as well as the
new subsection 10.29(1A).
Item 92 At the end of paragraph 10.33(1)(a) – (Decision on
application for final registration)
This item is of an editorial nature
to make clear that the Registrar must be satisfied in respect of all the matters
in paragraphs 10.33 (1) (a), (b), (ba) and (c), concerning criteria to be
satisfied before finally registering a conference agreement.
Item 93 Paragraph 10.33(1)(b) – (Decision on application for final
registration)
The effect of this amendment is to change the current
matters that the Registrar must take into account before finally registering a
conference agreement. The changes provide new provisions in paragraphs 10.33
(1) (b) and (ba) that may exempt an existing inwards conference agreement from
complying with sections 10.07 (concerning minimum levels of service) and 10.08
(concerning matters that may be included in an agreement).
Item 94 Paragraph 10.33(1)(c) – (Decision on application for final
registration)
This item extends the current matters that the Registrar
must take into account before finally registering a conference agreement, so
that the requirement covering the negotiation of minimum levels of service under
subsection 10.29 (1) applies to both outward and inward conference agreements,
unless such requirements do not apply in respect of a particular agreement.
Item 95 At the end of section 10.33 – (Decision on application for
final registration)
This item inserts a specific legal requirement for
the Registrar of Liner Shipping to provide the Australian Competition and
Consumer Commission (ACCC) with copies of finally registered conference
agreements. This has been common practice in the past, but it is considered
appropriate to formalise it.
Items 96 and 97 Subparagraph 10.37(1)(c)(i) – (Decision on request
for confidentiality)
These items provide that the confidentiality
provision currently in subparagraph 10.37(1)(c)(i) will apply to both an outward
(as at present) and an inward conference agreement.
Item 98 Subparagraphs 10.40(1)(b)(i) and (ii) – (Notification of
happening of affecting events prior to final registration)
This item
extends the provisions currently in subparagraph 10.40(1)(b)(i) and (ii),
concerning notification of the happening of an event affecting a provisionally
registered conference agreement, to both an outwards (as at present) and an
inwards conference agreement.
Item 99 Subsection 10.41(3) – (Requirements for conferences to
negotiate with designated shipper bodies)
This item repeals the existing
subsection 10.41(3) that identifies those shipping arrangements on which parties
to outward conference agreements have to negotiate with the relevant designated
shipper body. In its place a new subsection 10.41(2A) has been included as a
transitional arrangement. This has the effect of delaying the application of
the negotiating requirements, in respect of inward liner shipping conferences,
until after the four month transitional period allowed for inward conferences to
register their agreements has expired.
There are also two new provisions. The first one in subsection 10.41(3 ) covers:
• a definition of an eligible Australian contract to mean a contract entered into in Australia or a contract where questions arising under the contract are to be determined in accordance with Australian law. The term ‘eligible Australian contract’ is used in relation to the ‘negotiable shipping arrangements’ on which inward shipping conferences are required to negotiation with designated importer bodies and referred to in subparagraph 10.41(3) (b)(i);
• a definition of freight rates to include base freight
rates, surcharges, rebates and allowances; and
• outward agreements,
which is the same as the present provision except that charges for
inter-terminal transport services, have been added to the examples of
negotiable shipping arrangements.
The second new provision
in paragraph 10.41(3) (b) covers an inwards conference agreement. The matters
subject to negotiation are the same as for an outwards agreement, except that
the provisions in subparagraph 10.41(3) (b) (i) only apply in cases where the
contract for the inwards shipping service was made in a market in Australia.
The provisions in subparagraph 10.41(3) (b) (ii) require that land based
activities in Australia that are part of the inwards shipping service (eg.
terminal handling charges, and charges for inter-terminal transport services),
are subject to the negotiating requirements in Part X.
Also, the
provisions in subsection 10.41(3) that define the meaning of relevant
designated shipper body, have been expanded to cover outwards (as at
present) and inwards peak (and secondary, if nominated by the Registrar) shipper
bodies. The new subsection 10.41(2A) is a transitional provision that will be
repealed after the four month period allowed for an inwards conference agreement
to be registered has expired.
Item 100 Paragraphs 10.43(1)(a) and (b) – (Parties to registered
conference agreement to notify happening of affecting events)
This item
extends the provisions currently in paragraphs 10.43(1)(a) and (b) concerning
notification of the happening of an event that affects a registered conference
agreement, to both an outwards (as at present) and an inwards conference
agreement.
Item 101 At the end of section 10.43 – (Parties to registered
conference agreement to notify of affecting events)
The new subsection
10.43(5) is a transitional provision that will be repealed after the four month
period allowed for an inwards conference agreement to be registered has expired.
Item 102 At the end of section 10.44 – (Powers of Minister in
relation to registered conference agreements)
This amendment requires the
Minister to table in Parliament a statement of his/her decision concerning
enforcement action against parties to a registered conference agreement, and the
related ACCC report. This is related to the amendments under items 106
and 108 concerning the additional enforcement powers to be given to the
Minister to deal with exceptional circumstances.
Guidance on
interpreting the term ‘exceptional circumstances’ is provided in the
Second Reading Speech. The following is the relevant extract:
‘As a guideline for exercising the additional powers, exceptional circumstances will be taken to apply where:
• an agreement has the effect of giving its parties a substantial degree of market power;
• the conduct of the parties to the agreement has led to, or is likely
to lead to, an unreasonable increase in freight rates or an unreasonable
reduction in services; and
• the anti-competitive detriment of the
agreement outweighs the benefit to shippers flowing from the agreement.
Exceptional circumstances will also be taken to apply where the
agreement in question is substantially similar to one that has previously been
deregistered pursuant to section 10.44 of Part X.’
Item 103 Sub paragraphs 10.45(1)(a)(i) and (ii) – (Circumstances in
which Minister may exercise enforcement powers)
This item amends sub
paragraphs 10.45(1)(a)(i) and (ii) concerning details in conference agreements
that are subject to Australian law in the case of disputes between parties to
the agreement, so that they only apply to outward conference agreements.
Item 104 Sub paragraph 10.45(a)(iv) – (Circumstances in which
Minister may exercise enforcement powers)
This item extends the
provisions currently in paragraphs 10.45(1)(a)(iv) concerning the main grounds
on which the Minister may deregister a conference agreement to both an outwards
(as at present) and inwards conference agreement.
Item 105 Sub paragraph 10.45(a)(v) – (Circumstances in which
Minister may exercise enforcement powers)
This item amends sub paragraphs
10.45(1)(a)(v) concerning the hindering of Australian flag shipping from
engaging efficiently in the provision of liner shipping services, so that it
continues to apply to an outwards conference agreements (as at present), but
will not apply to an inward agreement.
Item 106 After sub paragraph 10.45(a)(vii) – (Circumstances in which
Minister may exercise enforcement powers)
This item adds two
sub-paragraphs - (viii) and (ix) – which provide the Minister with two
additional grounds for deregistering a conference agreement. The first is
covered by a new subsection 10.45 (3) that relates to the additional powers to
deal with exceptional circumstance that may arise in respect of the operation of
registered conference agreements. The second is covered in a new subsection
10.45 (4) and relates to a conference unreasonably refusing to admit a new
shipping line to a shipping agreement. Item 108 covers both these
situations.
Item 107 After paragraph 10.45(a) – (Notice of intention to
deregister a conference agreement)
This amendment requires the Minister
to give 21 days notice to the parties of a registered agreement if he/she
intends to deregister that agreement under the new provisions referred to under
item 106. These relate to the increased powers to be granted to the Minister
under the amendments referred to in item 108.
Item 108 At the end of section 10.45 – (Minister’s powers in relation to registered conference agreements)
The proposed new subsection 10.45 (2) requires that the Minister have regard to the national interest in deciding whether to exercise his/her powers in cases where, parties to a registered agreement, may have taken actions that prevent or hinder an Australian flag shipping operator from engaging efficiently in the provision of outward liner shipping services.
The new subsection 10.45(3) provides the Minister with the additional powers to suspend conference agreements where all of the following situations exist:
(a) the agreement substantially lessens competition;
(b) the parties to the agreement have actually engaged in conduct that
substantially lessens competition;
(c) the conduct has or is likely to
result in detriment to the public interest that outweighs the public benefits of
the agreement; and
(d) there are exceptional circumstances as referred to
under item 102.
The new subsection 10.45(4) allows the Minister to
exercise his/her powers to suspend a conference agreement in cases where the
parties to such an agreement unreasonably attempt to prevent a new shipping line
from joining the conference. The reason for this amendment is to ensure that
shipping conferences are reasonably open to new entrants who are prepared to
abide by the rules of the conference, and provide the standards of service to
which the conference in question has committed itself.
Items 109 and 110 Subsections 10.46(1) and 10.46(3) – (Action to be
taken where powers exercised by Minister without first obtaining Commission
report)
This is a consequential amendment arising from the introduction
of more than one subsection in section 10.45.
Item 111 Subsection 10.46(7) – (Action to be taken where powers
exercised by Minister without first obtaining Commission report)
This
item makes it a legal requirement for the Registrar to inform the parties where
the Minister decides to revoke a decision he/she took to deregister an agreement
prior to receiving a report from the Australian Competition and Consumer
Commission (ACCC).
The reason for this amendment is that after receiving
a report from the ACCC, the Minister might decide that deregistration of the
agreement in question is not appropriate.
Item 112 At the end of section 10.46 – (Action to be taken where
powers exercised by Minister without first obtaining Commission
report)
This amendment is required as a consequence of the fact that
decisions by the Minister under Part X concerning parties to a registered
conference agreement, and that affect relevant industry parties, will be
reviewable by the Australian Competition Tribunal. The processes under this
amendment will require the Minister to table in the Parliament his/her reasons
for taking enforcement action against a conference and to also table the
ACCC’s report on the matter in question.
Items 113 and 114 Subsections 10.47(1) and 10.48(1) – (Investigation
and report by Commission and reference by Minister)
As for items 109 and
110, these are consequential amendments arising from the introduction of more
than one subsection in section 10.45.
Item 115 Subsection 10.48(2) – (Investigation and report by
Commission on application by affected person)
The purpose of this
amendment is to distinguish between how the ACCC responds to requests for an
investigation by an affected party as provided under subsection 10.48(2), and
action to investigate a situation on its own initiative, which is to be provided
under the new subsection 10.48(2A), referred to under item 116.
Item 116 Subsection 10.48(2) – (Investigation and report by
Commission on application by affected person)
This amendment gives the
ACCC powers to undertake investigations on its own initiative into shipping
conference activity that falls under the category of ‘exceptional
circumstance’ as referred to under item 102.
Item 117 Paragraph 10.48(5)(c) – (Investigation and report by Commission on application by affected person)
This item amends sub paragraph 10.48(5)(c) concerning persons that may apply to the ACCC for an investigation into the conduct of parties to a registered conference agreement so that it continues to apply to users of Australian flag shipping (as at present).
This amendment is needed because some of the amendments to paragraph 10.45(a)
will apply only to an outwards liner shipping conference (as at present) and
others to both an outwards and an inwards shipping conference. The amended
subparagraph 10.45 (a)(v), concerning Australian flag shipping, will continue to
apply to outward liner shipping services.
The Government has decided that as
far as practicable the protection afforded to exporters under Part X should be
extended to importers. As subparagraph 10.48(5)(c) does not affect the rights
afforded to importers under Part X, there is no need to extend it to cover
inward conference agreements.
Item 118 Paragraph 10.48(5)(d) – (Investigation and report by
Commission on application by affected person)
This item extends the
provisions currently in paragraphs 10.48(5)(d) concerning persons that may apply
to the Australian Competition and Consumer Commission (ACCC) for an
investigation into the conduct of parties to a registered conference agreement,
so that it applies to both an outwards (as at present) and an inwards conference
agreement.
Item 119 After section 10.49 – (Undertakings by parties to a registered conference agreement)
This amendment makes provision for more effective and flexible enforcement of
undertakings given by conference lines in return for the Minister not
deregistering, or suspending, a conference agreement for breaches of the
conditions in Part X.
While the enforcement provisions in Part X have been
resorted to only very infrequently, a greater range of sanctions would be
useful, and will further encourage conference members to abide by the rules, and
facilitate the commercial resolution of disputes between conferences and
shippers.
Items 120 and 121 Subsection 10.50(1) – (Inquiries into market power
of non-conference ocean carriers)
These items change references to the
Australian Competition Tribunal to mean the Australian Competition and Consumer
Commission. This is a consequence of the transfer of inquiry functions from the
Tribunal to the ACCC.
Item 122 Subsection 10.50 (1) – (Inquiries into market power
of non-conference ocean carriers)
This item extends the provisions
currently in subsection 10.50 (1) concerning inquiries as to whether a
non-conference carrier has substantial market power, so that it applies to both
outward (as at present) and an inwards liner cargo shipping service.
Items 123 and 124 Subsections 10.50 (2) and (3) – (Inquiries into
market power of non-conference ocean carriers)
These items change
references to the Australian Competition Tribunal to mean the Australian
Competition and Consumer Commission (ACCC). This is a consequence of the
transfer of inquiry functions from the Tribunal to the ACCC.
Item 125 Paragraph 10.51(1)(a) – (Determination by Minister of
market power of ocean carriers)
This item changes references to the
Australian Competition Tribunal to mean the Australian Competition and Consumer
Commission (ACCC). This is a consequence of the transfer of inquiry functions
from the Tribunal to the ACCC.
Item 126 Paragraph 10.51(1)(a) – (Determination by Minister of
market power of ocean carriers)
This item extends the provisions
currently in paragraph 10.51 (1)(a) concerning a determination by the Minister
that a non-conference carrier has substantial market power, so that it applies
to both outward (as at present) and inward liner cargo shipping
services.
Item 127 After subsection 10.52(2) – (Non-conference ocean carriers
with substantial market power to negotiate with certain designated shipper
bodies)
The new subsection 10.52(2A) is a transitional provision that
delays the implementation of amendments concerning the requirements for a
non-conference carrier with substantial market power to negotiate with the
relevant designated shipper body, until after the four month period allowed for
an inwards conference agreement to be registered. This provision will be
repealed after the transitional period has expired.
Item 128 Subsection 10.52(3) – (Non-conference ocean carriers with
substantial market power to negotiate with certain designated shipper
bodies)
This item adds a definition of eligible Australian
contract to the provisions covering the obligation of a non-conference
carrier with substantial market power to negotiate with certain designated
shipper bodies. The definition of an eligible Australian contract
means a contract entered into in Australia or a contract where questions arising
under the contract are to be determined in accordance with Australian law. The
term ‘eligible Australian contract’ is used in the amended
subsection 10.52(3) and is similar to the amendment to subparagraph 10.41(3)
(b)(i).
Item 129 Subsection 10.52(3) – (Non-conference ocean carriers with
substantial market power to negotiate with certain designated shipper
bodies)
Item 129 states that freight rates include
base freight rates, surcharges, rebates and allowances.
Items 130 and 131 Subsection 10.52(3) – (Non-conference ocean
carriers with substantial market power to negotiate with certain designated
shipper bodies)
These items are basically mirrors of the provisions
referred to under item 99 concerning definitions of negotiable shipping
arrangements and relevant designated shipper body, so
that they apply to the obligations for non-conference carriers with
substantial market power to negotiate with shippers.
Item
132 At the end of section 10.53 – (Non-conference ocean carrier with
substantial market power not to hinder Australian flag shipping
operators)
This amendment requires that the Minister have regard to the national
interest in deciding whether to exercise his/her powers in situations where a
registered non-conference carrier with substantial market power, may have taken
actions which prevent or hinder an Australian flag shipping operator from
engaging efficiently in the provision of outward liner shipping services.
The
amendment is similar to the one referred to under item 108 in respect of the
proposed new subsection 10.45 (2), except that in section 10.53 it applies to
ocean carriers with substantial market power instead of parties to a conference
agreement.
Items 133 Paragraph 10.55 (a) – (Circumstances in which the Minister
may exercise powers)
This item is needed because the amendments to
sections 10.52 and 10.53 differentiate between an outwards and an inwards
conference, in respect of the circumstances in which the Minister may exercise
his or her enforcement powers in relation to non-conference ocean carriers with
substantial market power.
Item 134 Subsection 10.56(6) – (Action where powers exercised by
Minister without Commission report)
At present there is no legislated
requirement for the Registrar to send a copy of any directions the Minister may
make in respect of the conduct of a non-conference ocean carrier with
substantial market power, to the carrier concerned. This amendment rectifies
this situation by requiring the Registrar to send a copy of the direction to the
ocean carrier concerned.
Item 135 Paragraph 10.58(5)(b) – (Investigation and report by
Commission on application by affected person)
This item amends sub
paragraph 10.58(5)(b) concerning persons that may apply to the Australian
Competition and Consumer Commission (ACCC) for an investigation into the conduct
of a non-conference carrier with substantial market power, so that it continues
to apply to operators of Australian flag shipping (as at present). The reasons
for this amendment are similar to the ones given in respect of the amendment to
subparagraph 10.48(5)(c) concerning conference carriers.
Item 136 Paragraph 10.58(5)(c) – (Investigation and report by
Commission on application by affected person)
This item extends the
provisions currently in paragraphs 10.58(5)(c) concerning persons that may apply
to the ACCC for an investigation into the conduct of a non-conference carrier
with substantial market power, so that it applies to both an outwards (as at
present) and an inwards conference agreement.
Item 137 Paragraph 10.62(c) – (Circumstances in which Minister may
exercise powers)
This item changes the reference to the Australian
Competition Tribunal to mean the Australian Competition and Consumer Commission
(ACCC), as a consequence of the transfer of inquiry functions from the Tribunal
to the Commission.
Items 138 and 139 Section 10.63 – (Inquiry and report by
Tribunal)
These items change references to the Australian Competition
Tribunal to mean the Australian Competition and Consumer Commission as a
consequence of the transfer of inquiry functions from the Tribunal to the
Commission.
Item 140 Paragraph 10.64(3)(a) – (Undertakings not to engage in
pricing practices)
This item changes the reference to the Australian
Competition Tribunal to mean the Australian Competition and Consumer Commission
as a consequence of the transfer of inquiry functions from the Tribunal to the
Commission.
Item 141 After Division 12 (new sections 10.72A to D) – (Exemption
orders)
This item introduces new sections 10.72A, B, C, and D that allow
the Minister to make exemption orders under specified criteria in respect of
matters relating to an inwards conference agreement. The reason for these
provisions is to enable the Minister to deal with conflicts of jurisdiction that
may arise in relation to an inwards conference agreement that operate under
exemptions (or anti-trust immunities) granted in the country of export.
Our major trading partners including USA, Japan, European Union (EU) and
New Zealand grant exemptions to allow liner shipping companies to collaborate as
conferences under specified conditions. It is a generally accepted principle of
international comity that the country of export has a greater interest in
regulating liner shipping conferences than the country of import. Nevertheless,
countries also have a legitimate interest in exercising an appropriate level of
control over inward liner shipping conferences. The USA and EU exercise
jurisdiction over inward and outward liner shipping conferences.
While
Australia also has a legitimate interest in ensuring that the conduct of an
inwards liner shipping conference provides adequate benefits to Australian
importers, care will need to be taken in the application of the new provisions
in Part X covering inward conferences. This will be necessary so that, to the
extent consistent with Australia’s trading interests, international
obligations, and relevant principles of international law, possible conflicts
between the relevant laws in the country of export and Australia’s laws
can be effectively and efficiently dealt with, without the need for expensive
litigation.
The exemption provisions have been limited to the minimum needed to deal with possible conflicts of jurisdiction, and under section 10.72A are as follows:
(a) Subsection 10.07(2) concerning minimum levels of service. This exemption is needed to deal with situations such as where the levels of service are acceptable in the country of export, but Australian importers seek different service levels that could not reasonably be accommodated taking into account the impact on costs and service levels for exporters.
(b) Section 10.08 concerning matters that may be included in conference agreements. This exemption is needed to deal with situations such as where the content of an agreement is acceptable in the country of export, but this falls outside the matters allowed in section 10.08.
(c) Paragraph 10.28(1)(ba) concerning the responsibility given to the Registrar to hold up the registration of an existing (eg. one approved in the country of export) inwards shipping conference agreement in cases where he/she considers that a particular agreement may contains provisions that are unacceptable to Australia. Where such a situation arises, the Registrar is required to refer the matter to the Minister for decision under a regulation to be made to prevent such an agreement being registered.
(d) Subsection 10.29(1A) concerning the requirement for parties to an inwards conference agreement to negotiate on minimum levels of service before such an agreement is finally registered. This exemption is needed for the same reason as given for subsection 10.07(2).
(e) Section 10.40 concerning the requirement for parties to an inward conference agreement to notify the Registrar of the happening of an event affecting a particular inwards agreement prior to its final registration. This is to cover situations such as where a foreign country may prohibit the disclosure of relevant shipping information to another country.
(f) Section 10.41 (as amended) concerning the requirement that parties to a conference agreement negotiate with the relevant designated inwards shipper body whenever reasonably requested to do so by that body. This exemption is needed to deal with situations such as where negotiations would not be reasonable, because these have already taken place in the country of export and an acceptable agreement has been reached.
(g) Section 10.43 concerning the requirement for parties to an inward conference agreement to notify the Registrar of the happening of an event affecting a particular registered inwards agreement. This is to cover situations such as where a foreign country may prohibit the disclosure of relevant shipping information to another country.
(h) Subparagraph 10.45(1)(a)(iv) (as amended) concerning the main grounds on which the Minister may deregister an inwards conference agreement (ie. services not being efficient, economical and adequate, or there are exceptional circumstances). This exemption is needed to deal with situations such as where it would be in the interest of Australia’s international trading considerations, for an issue concerning the deregistration of an inwards conference agreement to be negotiated with the country of export.
The aim of such negotiations would be to find a mutually acceptable way of dealing with conduct by parties to an inwards conference agreement that Australia may not consider appropriate. For Australia to act alone in such a situation could well lead to retaliatory action by the country of export that could harm the interests of Australian exporters. Any actions that could be interpreted (reasonably or unreasonably) as interfering in another country’s export trades, could be regarded as an unwarranted barrier to international trade.
(i) Subsection 10.45(3) –(a new subsection) concerning the Minister’s additional powers to deregister a conference agreement. Conflicts of jurisdiction could arise if the country of export continues authorise the agreement in question.
(j) Subsection 10.45(4) –(a new subsection) concerning the
conditions applying to the admission of new shipping lines to a shipping
conference. The country of export could well have different rules governing
such situations.
(k) Section 10.52 (as amended) concerning the
requirement that non-conference carriers with substantial market power to
negotiate with the relevant designated inwards shipper body whenever reasonably
requested to do so by that body. The reasons for this exemption are the same as
the ones stated in respect of section 10.41.
The provision covering
exemption orders can be disallowable by Parliament and is subject to the
criteria listed in the new section 10.72B. The main criterion is that the
exemption order must be in the national interest. In this regard, a list of
factors the Minister is required to have regard to is given in subsection
10.72B(2).
Section 10.72C allows for a time limit to be placed on an
exemption order and new section 10.72D allows for conditions to be imposed in
respect of exemption orders.
Item 142 Section 10.81 – (Delegation by Minister)
This item
adds to the list of powers the Minister cannot delegate, the new section 10.02A
concerning a declaration of an inland terminal facility (see item 49).
Item 143 Section 10.81 – (Delegations by Minister)
This item
adds the new section 10.72A (Exemption Orders) to the list of Ministerial powers
that cannot be delegated.
Item 144 After section 10.82 – (New sections covering reviews of
decisions)
This item brings the review mechanism in Part X into line with
other parts of the Trade Practices Act. It introduces Divisions 14A and 14B
covering decisions of the Commission and the Minister that are to be reviewable
by the Tribunal, and the functions and powers of the Tribunal in relation to
reviewable decisions.
Under the new section 10.82A, a decision by the Commission not to hold an
investigation into a matter referred to it by an affected party under sections
10.48(2) and 10.58(2), and decisions under section 10.88 concerning the
exclusion of documents or particulars of a submission from the register of
Commission investigations, will become reviewable.
Under the new section
10.82B, the Tribunal may affirm, set aside or vary a decision of the Commission.
The new section 10.82C is being introduced to remove any doubt that some
parts of Division 1 of Part IX of the Trade Practices Act 1974 might
apply under Part X. The provisions in Part X relating to reviews by the
Tribunal are self-contained.
Under the new section 10.82D decisions by the Minister that affect the
interests of conference shipping lines, and/or users of their services, will be
reviewable by the Tribunal. The major reviewable decisions will be those
relevant to deregistering or suspending the operation of a registered conference
agreement. Such decisions have the effect of removing the conditional Part X
exemptions granted to liner shipping companies to allow them to collaborate as
conferences in providing joint services to shippers (ie exporters and importers
or their representatives).
Under the new section 10.82E the Tribunal may
affirm, set aside or vary a decision of the Minister. The new section 10.82F
provides the mechanism by which the Minister directs the Registrar to give
effect to decisions of the Tribunal.
The new section 10.82G is being
introduced to remove any doubt that some parts of Division 1 of Part IX of the
Trade Practices Act 1974 might apply under Part X. The provisions in
Part X relating to reviews by the Tribunal are self-contained.
Item
145 Paragraph 10.87(a) – (Notification of Commission’s
investigations)
This amendment is required as a consequence of the
transfer of investigation powers of the Australian Competition Tribunal under
sections 10.50 and 10.63, to the Australian Competition and Consumer Commission
(ACCC). It increases the scope of references for investigations that the
Commission may make public.
Item 146 Paragraph 10.87(b) – (Notification of Commission’s
investigations)
This amendment takes account of the fact that the ACCC
will be empowered under the new sections 10.48(2) and 10.48(2A) to undertake
investigations on its own initiative. This will apply in situations where
exceptional circumstances may arise in relation to anti-competitive conduct on
the part of parties to a conference agreement or to non-conference carriers with
substantial market power.
Item 147 Subsection 10.88(7) –
(Exclusion of documents from register of Commission
investigations)
This amendment is required as a consequence of the
transfer of the investigation powers of the Australian Competition Tribunal
under 10.50 and 10.63 to the Australian Competition and Consumer Commission
(ACCC). It expands the list of documents and submissions that the Commission
may exclude from its register of investigations, due to the confidential nature
of matters contained in those documents or submissions.
Items 148 to 151 Paragraphs 10.90 (a), (b), (c) and (ca), and (d) –
(Fees)
These items increase the maximum levels that may be charged for
functions relating to registering agreements to take account of higher costs
that may occur over the next ten years. The current limits were set under the
1989 amendments to Part X and current fees are only just under these limits.
Changes in fees up to the permitted level are given effect through
regulations.
Item 152 Section 10.92 – (Constitution of Tribunal for inquiries
under Part X)
Details of the constitution (ie. membership) of the
Tribunal for inquiries under Part X are repealed by this item. These details are
redundant as a consequence of the transfer of inquiry functions from the
Tribunal to the Australian Competition and Consumer Commission (ACCC).
Item 153 Section 10.93 – (Participation in inquiries by Tribunal
under Part X)
This item repeals section 10.93 covering inquiries by the
Tribunal under Part X. This section is redundant as a consequence of the
transfer of inquiry functions from the Tribunal to the ACCC.
Part 2,
Schedule 1
Item 154 Subsection 10.02(1) – (Interpretation of Part
X)
This item extends the definition of pricing practice to
apply to both an outwards and inwards liner cargo shipping service.
Items 155 to 158 (Repeal of Transitional provisions)
These items
repeal the various transitional provisions that delay the implementation of
amendments concerning an inwards conference agreement, until after the
four month period allowed for an inwards conference agreement to be registered,
has expired.
Item 159 Repeal of Subdivision C of Division 5 of Part X –
(Exemption relating too inward liner cargo shipping services)
This item
repeals the current unconditional exemptions granted to an inwards liner
shipping conference. Under other amendments in the Bill, these provisions have
been incorporated into sections 10.14, 10.17, and 10.18. The result of theses
changes is that the exemptions granted to an inwards liner shipping conference
will be subject to similar conditions (eg. obligations to negotiate with shipper
bodies) as apply to an outwards liner shipping conference.
Items160 to 164 (Repeal of Transitional provisions)
These items
repeal the various transitional provisions that delay the implementation of
amendments concerning inward conference agreements, until after the four
month period allowed for inward conference agreements to be registered has
expired. This will remove from Part X those transitional provisions that will
become unnecessary.
Items 165 to 169 Division 11 – (Unfair pricing)
These items
provide that amendments covering unfair pricing practices in Division 11 of Part
X will not apply to inward liner cargo shipping conferences until after the four
months allowed for registering the agreements covering those
conferences.
Item 170 At the end of subsection 10.72A(4)– (Circumstances in which
Minister may exercise powers)
This item adds subparagraph 10.62(a)(i),
concerning unfair pricing practices by parties to an inwards conference
agreement, to the list of provisions subject to exemption orders under the new
section 10.72A. These will not come into force until after the four month
period allowed for inward conferences to register their agreements.
Items 171 and 172 Subsections 10.03(1) and (2) – (Designation of a
shipper body)
These are transitional provisions of a purely technical
nature to ensure that declarations under subsections 10. 03(1) and (2) of a
designated peak shipper (DPSB) body, or a designated secondary shipper body
(DSSB), that are in force in respect of outward liner shipping services
immediately before the new provisions covering negotiating rights for importers,
remain in force.
The reason for this is that, at present, the name
given to a DPSB and a DSSB does not state specifically that the designation is
in respect of an outwards liner cargo shipping service; this is taken to be the
case from the wording in sections 10.03. However, with the amendments to those
sections referred to under items 11 to 16, a DPSB or a DSSB will be designated
for the purpose of provisions covering an outwards liner cargo shipping service
or inwards liner cargo shipping service.
Items 173 and 174 Sections 10.29 and 10.41 – (Nominations by
Registrar)
The reason for these items is similar to the ones given in
respect of items 171 and 172, except that it applies to notices under section
10.29 and subsection 10.41(3), concerning the nomination by the Registrar of a
designated shipper body for the purpose of negotiations with parties to a
conference agreement.
Item175 Section 10.44 – (Directions by Minister)
The reason
for these items is similar to the one given in respect of items 171 and 172,
except that it applies to directions the Minister may give under section 10.44
concerning the deregistration of conference agreements.
Item 176 Section 10.52 – (Non-conference ocean carrier with
substantial market power to negotiate with certain designated shipper
bodies)
The reason for this item is also similar to the one given in
respect of items 171 and 172, except that it applies to directions the Minister
may give under section 10.52, concerning the requirement for a non-conference
carrier with substantial market power to negotiate with the relevant designated
shipper body.
ACT’s
inquiry role to the ACCC, remain valid until the inquiry is completed.
Items 178 and 179
These are transitional provisions to make clear
that the provisions covering the review of decisions by the ACCC and the
Minister apply after the new Divisions 14A and 14B come into force, that is 28
days after Royal Assent (see item 152 above).
Part 3 of Schedule 1
Division 2
Item 180
This is a transitional provision relating to Part 2 of
Schedule 1, and makes clear that the items to be repealed under items 155 to 164
do not remove the exemptions applying in respect of voyages by ships providing
an inwards liner cargo shipping service, that are only partly completed at the
time the repeals come into effect. For such ships the repeals come into effect
once the voyage commenced prior to the repeals come into effect, has
ended.