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Thursday, 15 November 1973

Authorisations may be granted by the Commission in respect of some practices. The effect of an authorisation is to remove the prohibition that would otherwise aply by virtue of this legislation.

Authorisations may be granted in respect of contracts or combinations in restraint of trade, other than those having the purpose or effect of fixing, controlling or maintaining prices of goods; exclusive dealing; and mergers.

The Government has concluded that the impact of the legislation would be greatly lessened if provision was made for authorisations to be granted in respect of agreements fixing the prices of goods. These agreements are now generally recognised in many countries as being undesirable, particularly in times of inflation as we are now experiencing. The Bill I introduced on 27 September drew no distinction in this respect between goods and services. Authorisations could not be granted under it for price fixing agreements relating to either. The present Bill does not rule out the possibility of an authorisation being granted in respect of an agreement fixing the prices of services.

Traditionally in legislation of this kind restrictive practices relating to services have not been felt to merit quite the same degree of control as restrictive practices relating to the supply of goods. There is now an increasing concern with services, and the Organisation for Economic Cooperation and Development in particular has urged member countries to strengthen their legislation in this regard. The Bill has been prepared on the general basis that restrictive practices relating to both goods and services are of concern. However, representations have been made that a number of special considerations may apply to particular kinds of services and the Bill now provides for applications for authorisation of price fixing agreements with respect to services. It is essential that the Commission should be able to deal expeditiously with applications for authorisations. The Bill has been framed with this in mind. The Commission will not be required to hold a public hearing in respect of every application for an authorisation. It will be able to hold such a hearing where it considers it appropriate.

If the Commission deals with an authorisation application without a public hearing, the relevant documents will be available for public inspection, subject to special provisions for the protection of confidential information. In all cases the Commission is to be required to take any submissions into account. The approach to be taken by the Commission in considering whether to grant an authorisation is indicated in sub-clause (5) of clause 90. The Commission is directed by that provision not to grant an authorisation unless it is satisfied that a specific and substantial benefit to the public is likely to result or that the effect on competition is so slight that it can be disregarded. The Commission is also required to be satisfied that, in all the circumstances, the benefit to the public or the slight effect on competition justifies the granting of an authorisation. The position, therefore, is that the onus will be firmly on the applicant to satisfy the Commission that the granting of an authorisation is justified. Unless and until an authorisation is obtained in respect of a practice falling into one of the prohibited classes I have mentioned, such practice will be unlawful. The Bill recognises, however, that there is a need for special transitional provisions for a period immediately following the commencement of the legislation. The prohibitions of contracts in restraint of trade and exclusive dealing will not become effective until 4 months after the commencement date. During that period it will be possible for persons to apply to the Commission for authorisations in respect of those practices. As the Commission may find itself unable to give full consideration to the applications it receives in this period, provision is included to enable the grant of interim authorisations. An interim authorisation, if granted, will have the effect of permitting the practice to continue until the Commission, after full consideration, makes a final determination.

I should make clear that the Commission will not grant interim authorisations as a matter of course. Parties wishing to obtain such an authorisation in the 4-month period would be wise to lodge their applications as soon as possible after the commencement of the legislation. The Commission will not be under any obligation to grant instantaneous interim authorisations to persons lodging applications near the end of the period. The Commission will be able to attach conditions to any authorisations, interim or final. Breach of such a condition will entitle the Commission to revoke the authorisation.

Applications for authorisations for proposed mergers will, as with all other authorisation applications, be placed on a public register as soon as they are received by the Commission. This is necessary if the Commission is to take into account the views of other interested persons. Until there has been an opportunity for such persons to make their views known on a proposed merger, the Commission could not be expected to make a determination authorising the merger. This will not prevent parties to proposed mergers having prior informal and private discussions with the Commission. I would expect such discussions to be of considerable assistance to parties contemplating possible mergers, even though the informal guidance given by the Commission will not be binding upon it.

The Bill also provides for clearances. The purpose of a clearance is to remove uncertainty as to the applicability of certain provisions, in contrast to the purpose of an authorisation, which is to permit a practice to be engaged in notwithstanding that it falls into a prohibited class. The provisions relating to enforcement and remedies in respect of breaches of the restrictive trade practices provisions are to be found in Part VI. The question whether there has been a breach of the law will be a matter for the Court, as is the case with breaches of most other laws. Pending the establishment of the proposed Australian Superior Court the only Court with jurisdiction under the legislation will be the Commonwealth Industrial Court. Under another Bill this Court is to be renamed the Australian Industrial Court. Such matters will not be determined by the Trade Practices Commission or the Trade Practices Tribunal, both of which are administrative bodies.

A breach of a provision in the legislation with respect to restrictive trade practices will render the person liable to a pecuniary penalty, an injunction, or damages. Proceedings for a pecuniary penalty will need to be instituted by the Attorney-General or the Trade Practices Commission. The penalty, when received, will go into Consolidated Revenue. The amount of such a penalty will be a matter for the Court to determine as appropriate in all the circumstances. The circumstances in such matters can be expected to vary considerably from case to case and the penalty determined by the Court can be expected to vary accordingly. The maximum penalty the Court will be able to determine will be $250,000.

Such a penalty and the proceedings to recover it will be civil in character. A breach will not constitute an offence for the purposes of the criminal law and the penalty will not be a fine. The difference may at first appear to be only a matter of form. The important consequence is that such proceedings, involving business dealings to the extent that they do, will not find their way into a criminal court. Proceedings for an injunction will be able to be initiated by the Attorney-General, the Trade Practices Commission or by any other person. Proceedings for damages will be able to be initiated by any person who suffers loss or damage as a result of a contravention.

Provision for certain classes of agreements and practices to be exempt from the legislation I have described is to be found in clause 51. This clause follows closely the corresponding provisions in the existing legislation. In addition there is a power similar to the one in the existing Act to exempt by regulation organisations concerned in the marketing of primary products. There is also power to provide exemptions by regulation for practices related to inter-governmental arrangements.

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