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National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008

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2008

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

National Fuelwatch (Empowering consumers) bill 2008



National Fuelwatch (Empowering consumers) (consequential Amendments) bill 2008

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

(Circulated by the authority of the Assistant Treasurer

and Minister for Competition Policy and Consumer Affairs,

the Hon Chris Bowen MP)

 



T able of contents

General outline and financial impact............................................................ 1

Glossary.............................................................................................................. 3

Background      Benefits and Costs of the National Fuelwatch Scheme 5

Chapter 1           Elements of the National Fuelwatch Scheme............. 11

Chapter 2            Civil penalty regime under the National Fuelwatch Scheme        19

Chapter 3            Consequential amendments to the Trade Practices Act 1974       25

 

 



A National Fuelwatch Scheme

The National Fuelwatch (Empowering Consumers) Bill 2008 (the Bill) establishes a National Fuelwatch Scheme (National Fuelwatch).

The Bill introduces requirements that, under National Fuelwatch:

•        specified petrol retailers notify the Australian Competition and Consumer Commission (ACCC) of their next day’s fuel prices by 2.00 pm each day;

•        specified petrol retailers must sell at their notified prices from 6.00 am the next day and maintain these notified prices for a 24-hour period;

•        failure to notify or maintain the notified prices by petrol retailers is a civil penalty.

The ACCC is responsible for implementing and administering National Fuelwatch, as well as investigating and bring civil proceedings for the breaches of the Bill.

The objectives of National Fuelwatch are to:

•        empower consumers to make informed decisions and purchase fuel at the lowest possible price;

•        increase reliability and certainty of fuel price information available to consumers;

•        reduce consumer search costs;

•        address consumer anxiety by eliminating intraday price volatility;

•        address the existing information imbalance between petrol retailers and consumers; and

•        promote competition in the retail fuel market. 

Date of effect :  The Bill commences the day after it receives Royal Assent.  The civil penalty for failure to register with the ACCC by petrol retailers commences on 30 November 2008, and all other breaches commence on 15 December 2008.

Proposal announced This measure was announced in a Joint Press Conference between the Prime Minister and the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs on 15 April 2008.

Financial impact The estimated cost to revenue is $20.9 million over four years from 2008-09 to 2011-12.

Compliance cost impact The estimated compliance cost for business is zero.

Summary of regulation impact statement

Impact The estimated compliance cost for business is zero.

Main points :   Refer to Background of this explanatory memorandum.



The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

98 RON

98 Research Octane Number

ABN

Australian Business Number

ACCC

Australian Competition and Consumer Commission

LPG

Liquefied petroleum gas

PULP

Premium unleaded petrol

National Fuelwatch

National Fuelwatch Scheme

The Bill

National Fuelwatch (Empowering Consumers) Bill 2008

The Consequential Amendments Bill

National Fuelwatch (Empowering Consumers)(Consequential Amendments) Bill 2008

TPA

Trade Practices Act 1974

ULP

Unleaded petrol



B ackground

Benefits and Costs of the National Fuelwatch Scheme

Problem

The Australian market for fuel is characterised by a lack of price transparency between sellers and consumers at the retail level.  Current arrangements allow sellers to react more quickly than consumers to movements in retail fuel prices.  This information imbalance results in consumer detriment due to the negative effects on competition and consumers.

In December 2007, the Australian Government (the Government) received the Australian Competition and Consumer Commission (ACCC), Petrol Prices and Australian Consumers: Report of the ACCC inquiry into the price of unleaded petrol, (December 2007) (the ACCC report).

The ACCC report contained a series of recommendations relating to competition in Australian refining/importing, wholesale and distribution petrol markets and the Trade Practices Act 1974 .  It also recommended that the existing information imbalance between buyers and sellers in the retail fuel market be addressed.

•        The ACCC found that an imbalance in fuel pricing information between petrol retailers and consumers exists at the retail level.

•        The capacity of consumers to take advantage of the most competitive, lowest prices in their local area is limited by intraday fuel price movements (sometimes as often as three or four times per day) and the amount of effort and search costs they are willing to incur.

Objectives

The objectives of Government action are to:

•        empower consumers to make informed decisions and purchase fuel at the lowest possible price;

•        increase reliability and certainty of fuel price information available to consumers;

•        reduce consumer search costs;

•        address consumer anxiety by eliminating intraday fuel price volatility;

•        address the existing information imbalance between petrol retailers and consumers; and

•        promote competition in the retail fuel market.

Introduction of fuel price transparency and commitment rules

The National Fuelwatch (Empowering Consumers) Bill 2008 (the Bill) proposes the introduction of retail fuel price transparency and commitment rules to meet all of the Government’s objectives.

The specific benefits and costs associated with the National Fuelwatch scheme are set out below.

Consumer benefits

The introduction of a National Fuelwatch scheme will provide the foll owing consumer benefits, in accordance with the Government’s objecti ves:

•        It will empower consumers to make informed decisions and purchase fuel at the lowest possible price.

•        It will increase reliability and certainty of fuel price information available to consumers.

•        It will reduce consumer search costs.

•        It will address consumer anxiety by eliminating intraday fuel price volatility.

•        It will address the existing information imbalance between petrol retailers and consumers.

•        It will promote competition in the retail fuel market.

These are unquantifiable benefits designed to empower consumers and allay consumer perceptions and anxiety surrounding intraday fuel price volatility.

The publication of petrol prices on a national website and the reporting of prices in the media will serve to increase fuel price transparency for retail consumers.  The National Fuelwatch scheme will allow consumers to more readily identify when and where to buy fuel at the lowest price.  This is particularly beneficial to consumers when a significant disparity, sometimes as much as 10 cents to 15 cents per litre, between the lowest and most expensive fuel price may occur within the course of any given day.

Econometric analysis undertaken by the ACCC as part of its inquiry considered relative price levels between Perth and the eastern capitals before and after the introduction of the Western Australian Fuelwatch scheme.  The ACCC concluded that the average price margin was around 1.9 cents per litre less on average for the period from January 2001 to June 2007 than for the period from August 1998 to December 2000 for Perth relative to the eastern metropolitan markets.  The Western Australian FuelWatch scheme was introduced in 2001.

Consumer costs

T he National Fuelwatch scheme presents no cost to consumers.  Under the scheme, fuel price information will be made freely available to consumers.  Possible communication chan nels include the internet, telephone and messaging services.

Scheme administration costs

The introduction of National Fuelwatch presents upfront capital and ongoing administrative costs for Government.  The Government has allocated $20.9 million over four years for this purpose.  This includes:

•        $7.1 million in 2008-09;

•        $4.6 million in 2009-10;

•        $4.6 million in 2010-11; and

•        $4.6 million in 2011-12.

The Bill provides that the ACCC is responsible for the establishment of National Fuelwatch and the ongoing administration of fuel price transparency and commitment rules.

Enforcement costs

The effectiveness of National Fuelwatch depends upon price commitment rules.  Application of these rules presents a range of compliance and enforcement activities by the ACCC.  Possible breaches of the price commitment rules will require investigation, civil proceedings and the imposition of sanctions as needed.

Enforcement costs are a subset of the administrative costs outlined above and the estimated total enforcement cost from 2008-09 to 2011-12 is $1.575 million.  Establishment of the regulatory framework, and ongoing compliance activities by the ACCC are estimated as follows:

•        $562,500 in 2008-09;

•        $375,000 in 2009-10;

•        $318,750 in 2010-11; and

•        $318,750 in 2011-12.

Business compliance costs

The estimated net compliance cost to petrol retailers associated with the establishment and ongoing operation of National Fuelwatch is negligible.

The Bill provides that petrol retailers must provide retail fuel price information to the ACCC by 2.00 pm each day.  This information may be relayed to the ACCC via a toll-free telephone number, email or a file download/transfer (this is most relevant for larger retail networks where pricing information is centrally collated).  Whilst retail businesses will need to communicate this pricing information to the ACCC upon a daily basis, it is anticipated that the degree of effort or time required to communicate this information will be negligible.  Some petrol retailers may even find a reduction in their overall costs as these activities replace their existing, and often extensive, price setting activities.

Under the proposed Bill, petrol retailers will incur no compliance costs associated with record keeping.  Once a petrol retailer has provided fuel price information to the ACCC each day, a receipt will be issued to the retail business setting out the relevant information.  The information set out on this receipt will allow retail businesses to confirm that the ACCC has accurately received and recorded the price data.

•        Retail businesses will need to maintain records in relation to the actual price charged for fuel that has been sold.  However, petrol retailers already record much of this same information for accounting purposes.  No extraordinary or additional record keeping obligations will be imposed upon fuel retailers to ensure compliance with the Bill.

The Bill confers compliance and enforcement powers upon the ACCC.  The ACCC will be responsible for administering these powers in accordance with the Bill and will absorb all costs associated with the administration of these proposed regulatory powers.   The exercise of these discretionary powers will not impose additional compliance costs upon petrol retailers as it is proposed that the ACCC will absorb costs associated with conducting these compliance and enforcement activities.

Conclusion

The Government considered different options canvassed by the ACCC report including the maintenance of existing arrangements, reducing opportunities available to petrol retailers to share fuel price information and increasing fuel price transparency through the expansion of available fuel price information to consumers.

Other options only partially address the Government’s objectives through the introduction of improved fuel price transparency.  The absence of price commitment rules means that scope for price coordination between petrol retailers would continue and that consumer anxiety relating to petrol price volatility would remain unabated as consumers would receive no further information regarding future fuel price levels or changes.  Importantly, consumers would continue to have no greater certainty or increased confidence that they have purchased fuel at the lowest possible price available in their local area.

The National Fuelwatch scheme proposed by the Bill is most suited to meeting the Government’s objectives.  The 24-hour price commitment rules set out in the Bill is an advantageous feature that directly targets consumer anxieties relating to price volatility and, in particular, the high level of consumer concern that exists in relation to future changes in fuel prices.

National Fuelwatch effectively provides for the creation of a new public good, in the form of fuel price information freely available to all members of the community.  Increased information, especially in relation to the commencement of new price cycles, will mean that consumers are empowered to take advantage of the lowest prices available to them from the most convenient location.

Greater transparency and increased predictability, through the dissemination of fuel price information and the operation of the price commitment rule are significant, highly valued consumer benefits that will help to allay consumer concerns regarding fuel prices.

 

 



C hapter 1

Elements of the National Fuelwatch Scheme

Outline of chapter

1.1                    The Bill establishes a National Fuelwatch Scheme (National Fuelwatch) to commence operation on the day after it receives Royal Assent.

1.2                    Parts 1 and 2 of the Bill prescribe that under National Fuelwatch:

•        petrol retailers in a declared locality prescribed by the regulations must provide their details to the Australian Competition and Consumer Commission (ACCC);

•        petrol retailers must notify the ACCC of their next day’s standard price for each kind of motor fuel sold at their service station by 2.00 pm each day;

•        the ACCC must publish notified retail prices for each kind of motor fuel offered for sale by petrol retailers;

•        if a petrol retailer does not offer motor fuel for sale at the notified price, a civil penalty may be imposed; and

•        the ACCC must maintain a register that contains details and copies of notices provided by petrol retailers.

Context of amendments

1.3                    On 15 April 2008, the Government announced the introduction of National Fuelwatch in a joint press conference, and subsequent media release, by the Prime Minister and the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs.

1.4                    The Government announced that the purpose of National Fuelwatch is to promote competition and transparency in the fuel market and that the establishment of the scheme will assist consumers to decide when to buy the cheapest petrol in their area.

1.5                    The Government outlined that the key elements of National Fuelwatch will include the following requirements for petrol retailers to:

•        notify the ACCC of their next day’s prices by 2.00 pm the day before; and

•        maintain this advised price for a 24-hour period; and

•        apply the scheme to unleaded petrol (ULP), premium unleaded petrol (PULP), liquefied petroleum gas (LPG), diesel, 98 research octane number (98 RON) and biodiesel blends.

1.6                    The Government announced that National Fuelwatch will cost $20.9 million over four years and commence operation on 15 December 2008.  The Government will review the effectiveness of the scheme 12 months after its commencement.

Summary of new law

1.7                    The Bill provides that petrol retailers in a declared locality must provide details to the ACCC .  A failure to provide details to the ACCC is a civil penalty provision under this Bill.

1.8                    Petrol retailers in a declared locality must notify the ACCC of their next day’s standard price during the fixed price period for each kind of motor fuel sold at their service station by 2.00 pm each day.  A fixed price period is defined as a period beginning at 6.00 am on a particular day and ending 24 hours late r.

1.9                    Failure to notify the ACCC of the next day’s standard price and/or maintain this price for the fixed price period will result in a civil penalty.

1.10                The ACCC must publish the notified standard price for each kind of motor fuel offered for sale by petrol retailers on a website to be maintained by the ACCC, or through other mechanisms approved by the ACCC in writing, by 4.00 pm each day.

1.11                The ACCC must maintain a register that contains details, and copies of notices, which petrol retailers are required to provide under the Bill.

Detailed explanation of new law

Obligation of petrol retailers to give details to the ACCC

1.12                A petrol retailer must not offer motor fuel for retail sale at a service station in a declared locality unless the petrol retailer, or an agent of the petrol retailer, provides certain details to the ACCC.  [Part 2, section 7]

1.13                The Bill provides that a petrol retailer, or an agent of a petrol retailer, must give ACCC notice of the following details:

•        the name and the Australian Business Number (ABN) of the petrol retailer;

•        the location of the service station;

•        the kinds of motor fuel to be offered for retail sale at that service station; and

•        any other prescribed details.

[Part 2, section 7]

1.14                Petrol retailers are required to give notice to the ACCC in the form, and using the method, approved in writing by the ACCC.  [Part 2, subsection 7(3)]

1.15                The Bill provides that petrol retailers who fail to notify the ACCC under subsection 8(1) of the Bill will breach the bill and may be subject to a penalty. [Part 2, subsection 7(2)]

1.16                A petrol retailer is defined as:

•        constitutional corporation that offers motor fuel for retail sale;

•        an person who offers motor fuel for retail sale as the agent or franchisee of a constitutional corporation;

•        a person who offers motor fuel for sale that has been purchased from a constitutional corporation for retail sale; or

•        a person who offers motor fuel for retail sale in a Territory.

[Part 1, subsection 5(1)]

1.17                A constitutional corporation is a corporation to which section 51(xx) of the Constitution (the corporations power) applies.  The corporations power provides that the Parliament has the power to make laws for the peace, order and good government of the Commonwealth with respect to foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.  [Part 1, subsection 5(1)]

1.18                A petrol retailer who is not a corporation and who offers motor fuel for sale that has been purchased from a constitutional corporation, is only required to give their details to the ACCC for the purpose of this Bill where the offer of motor fuel for sale, or the sale of motor fuel, affects or is capable of affecting the activities, functions, relationships or business of a constitutional corporation.  [Part 1, subsection 5(2)]

1.19                The regulations may prescribe localities that are to be declared localities for the purposes of this Bill on and from 30 November 2008.  [Part 1, subsection 6(1)]

1.20                The Minister has discretion to declare any other locality to be a declared locality for the purposes of this Bill after its date of commencement.  Similarly, the Minister may also declare that a locality prescribed in the regulations is no longer to be a declared locality for the purposes of the Bill.  [Part 1, subsection 6(2)]

1.21                The Minister may make a declaration under subsection 6(2) of the Bill by legislative instrument.  In making a declaration, the Minister must give consideration to the likely benefit to consumers and competition in the particular locality.  As a result, the Minister must have regard to each of the following factors:

•        the size of the locality;

•        the population of the locality;

•        the number of vehicles registered under the law of the State or Territory in which the locality is situated, in relation to which an address in the locality is specified in the registration;

•        the number of service stations in the locality;

•        the ownership and operating arrangements for service stations in the locality; and

•        any submissions made by a local government body for an area wholly or partly within the locality.

[Part 1, subsection 6(3)]

1.22                For the purposes of paragraph 6(3)(f), a local government body is a body established for the purposes of local government by or under a law applying in a State or Territory.  [Part 1, subsection 5(1)]

Notification of next day’s retail price

1.23                The effect of National Fuelwatch is to encourage petrol retailers to nominate their best, most competitive price in advance.

1.24                Under Fuelwatch, petrol retailers in a ‘declared locality’ are required to notify the ACCC of the standard price during a fixed price period.  Petrol retailers are required to notify the standard price for each kind of motor fuel they offer for sale at their service station by 2.00 pm on the immediately preceding day.  An agent of the petrol retailer may also notify the ACCC on the retailer’s behalf.  [Part 2, subsection 8(1)]

1.25                Petrol retailers must notify the ACCC in the approved form.  Failure to notify the ACCC by petrol retailers of their standard fuel prices during a fixed price period is a breach of the bill to which a civil penalty attaches [Part 2, subsections 8(3), (4) and (5)]

1.26                However, petrol retailers are not required to notify the ACCC of the standard price at which motor fuel of a particular kind is to be offered for sale at their station during the fixed price period if the standard price has not changed from the standard price from the previous day.  [Part 2, subsection 8(6)]

1.27                A fixed price period is a period beginning at 6.00 am (by legal time in a declared locality) on a particular day and retailers are required to maintain the standard price for a 24-hour period.  [Part 2, subsection 8(2)]

1.28                 In relation to the retail sale by a petrol retailer of a kind of motor fuel, the standard price is the price at which the petrol retailer offers the kind of motor fuel for retail sale.  The standard price does not include any shopper docket arrangements retailers have in place, or any other discounts offered by retailers.  [Part 1, subsection 5(1)]

1.29                A service station is a place at which motor fuel is offered for retail sale and retail sale refers to the sale by petrol retailers to another person for that person’s use.  [Part 1, subsection 5(1)]

1.30                Motor fuel is defined as fuel that is suitable for use in an internal combustion engine (excluding aviation gas).  Motor fuel may include ULP, PULP, LPG, diesel, 98 RON, and biodiesel blends.  [Part 1, subsection 5(1)]

Publication of retail fuel prices and register of fuel price notifications

1.31                The ACCC is responsible for establishing and administering National Fuelwatch.  As the administrator of the scheme, the ACCC must:

•        publish daily fuel price information once it has been received from petrol retailers; and

•        maintain a register containing details of petrol retailers under subsection 7(1) and copies of petrol prices notified by petrol retailers.

Publication of next day’s retail price

1.32                Where petrol retailers have notified the ACCC of their standard fuel prices, the ACCC must publish the standard price for each kind of motor fuel that is to be offered for sale at those service stations during the fixed period beginning on that day.  The ACCC must publish the information by 4.00 pm (by legal time in the declared locality) on the day on which the ACCC receives notice from fuel retailers.  [Part 2, subsections 9(1) and (3)]

1.33                The ACCC must publish this fuel price information on a dedicated National Fuelwatch website that is to be maintained by the ACCC.  The ACCC also has discretion to approve, in writing, other methods which can be used to communicate fuel price information to consumers.  Other mechanisms may include, for example, sending an email or SMS text message to consumers who wish to subscribe to those services.  [Part 2, subsection 9(2)]

1.34                Timely collection, publication and dissemination of price information across participating retail sites by the ACCC serves to increase price transparency for retail consumers, and allays previous consumer concerns regarding petrol price volatility.

1.35                The Bill allows consumers to make an informed decision about where to buy the cheapest petrol in their area, and as a result, consumers are able to plan their fuel purchases in advance.  Consumers may bring forward their purchase if they are aware that the next day’s fuel price is more expensive, and delay their purchase if the next day’s petrol price is cheaper.

1.36                Media sources (particularly radio and television) may also play a role in the provision of information to consumers and complement pricing information available via the internet and email notifications.

Register of fuel price notifications

1.37                The ACCC must maintain a register that contains details provided by petrol retailers, or their agent, of the name and ABN of the retailer, the location of the service station, and the kinds of motor fuel offered by retailers for the purposes of this Bill.  [Part 2, paragraph 11(a)]

1.38                The ACCC is also required to keep copies of all the notices given to it by retailers of their next day’s standard prices, and any other details as prescribed, on the same register.  [Part 2, paragraph 11(b) and (c)]

Regulations

1.39                The Bill enables the Governor-General to prescribe regulations, not inconsistent with the Bill, all matters required or permitted by the Bill to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Bill.  [Part 5, section 28]

 

 



C hapter 2     

Civil penalty regime under the National Fuelwatch Scheme

Outline of chapter

2.1                  Part 2 of the Bill introduces civil penalties relating to a breach of the obligation on petrol retailers to give details to the ACCC, the obligation on petrol retailers to notify the ACCC of their retail price for the next day, and the selling of motor fuel at other than the notified retail price.

2.2                    Part 3 of the Bill provides the ACCC with the ability to give a person an infringement notice.

Summary of new civil penalty regime

2.3                  The Fuelwatch scheme provides for civil penalties relating to: the obligation on petrol retailers to give details to the ACCC, the obligation on petrol retailers to notify the ACCC of their retail price for the next day, and the selling of motor fuel at other than the notified retail price.  [Part 2]

2.4                  The structure of the penalty regime is designed to allow a variety of enforcement responses, ranging from responses to minor breaches through to serious flagrant contraventions of the Fuelwatch scheme by larger petrol retailers.

2.5                  For example, in the case of a breach of subsection 8(1), the maximum civil penalty payable by a body corporate is five times the penalty provided for under the subsection 8(4) (200 penalty units or $22,000), specifically 1,000 penalty units ($110,000), for bodies corporate.

2.6                  The ACCC is also able to serve infringement notices on retailers in relation to non compliance with aspects of the scheme, enhancing the effectiveness of the enforcement regime.  However, infringement notices attract a lesser penalty than those available under the civil penalty regime.  [Part 3]

2.7                  Civil penalties don’t require proof of a fault element.   The imposition of civil penalties without the need for a proof of fault element is justifiable in circumstances where the majority of offenders will be corporations.  Further, it is reasonable to expect petrol retailers to take steps to guard against any inadvertent contraventions.

2.8                  The Bill provides a specific defence in relation to breaching of the obligation to notify the ACCC of the next day’s retail price for fuel offered.  [Part 2, subsection 8(5)]

Detailed explanation of new civil penalty regime

Obligation on petrol retailers to give details

2.9                  The Bill provides that petrol retailers must provide the ACCC with a notice specifying: their name and ABN; the location of the service station; the kinds of motor fuel to be offered for retail sale at that service station; and any other details as prescribed by the regulations, in the form and using the method approval by the ACCC.  [Part 2, subsection 7(1)]

2.10              A petrol retailer who fails to comply with this obligation breaches the bill and is subject to a penalty of up to 200 penalty units (or 1,000 penalty units for a body corporate).  [Part 2, subsection 7(2)]

2.11              A breach of the obligation can be the subject of an infringement notice issued by the ACCC.  [Part 3, subsection 12(1)]

2.12                The penalty that may be imposed by the ACCC under an infringement notice for a breach of section 7 is one fifth of the maximum penalty for the offence:

•        5 penalty units ($550) for individuals, and

•        25 penalty units ($2,750) for a body corporate.

[Part 3, sections 12 and 14]

Obligation to notify of next day’s retail price

2.13              The Bill provides that petrol retailers must give the ACCC notice of the standard price at which the motor fuel will be offered, by 2.00 pm on the preceding day.  [Part 2, subsection 8(1)]

2.14              The notification of the next day’s standard price applies to retail sales offered during the period beginning at 6.00 am on a particular day and ending 24 hours later, and must be given in the form and using the method approved in writing by the ACCC.  [Part 2, subsections 8(2) and 8(4)]

2.15              A petrol retailer who fails to comply with the requirement under subsection 8(1) breaches the bill and is subject to a maximum penalty of 200 penalty units or $22,000 (1,000 penalty units or $110,000 for a body corporate).  [Part 2, subsection 8(3)]

2.16                The penalty that may be imposed by the ACCC under an infringement notice for a breach of section 8:

•        5 penalty units ($550) for individuals, and

•        25 penalty units ($2,750) for a body corporate.

[Part 3, sections 12 and 14]

2.17              A petrol retailer will not be subject to the civil penalty provisions if it is not possible for the petrol retailer to comply with the requirement to notify the ACCC of the standard price at which the motor fuel will be offered, by reason of a failure in computing or telecommunications systems used by the ACCC or by the petrol retailer (in circumstances where the failure is beyond the control of the petrol retailer).  [Part 2, subsection 8(5)]

2.18                The Bill also provides that, if the standard price at which motor fuel is offered by a petrol retailer does not differ from the standard price on the immediately preceding day, the retailer is taken to have given notice under subsection 8(1).  As a result, where a retailer maintains the same price for their fuel, there is no obligation to notify the ACCC.  It follows that, should the retailer charge a different price to this, they are in breach of section 10 of the Bill.  [Part 2, subsection 8(6)]

Obligation to selling motor fuel at the notified retail price

2.19                Section 10 requires petrol retailers to sell the motor fuel they offer for sale at the price they have notified to the ACCC.  Failure to do so constitutes a breach of the provisions of section 10.

2.20                A petrol retailer who breaches subsection 10(1) will be subject to a maximum penalty of 200 penalty units or $22,000 (1,000 penalty units or $110,000 for a body corporate).  [Part 2, subsection 10(1)]

2.21                A breach of section 10 can also be the subject of an infringement notice issued by the ACCC.  The penalty that may be imposed by the ACCC under an infringement notice is:

•        5 penalty units ($550) for individuals, and

•        25 penalty units ($2,750) for a body corporate.

Infringement notice regime

2.22              The Bill provides the ACCC with the ability to give a person an infringement notice, if it has reasonable grounds to believe the person has contravened subsection 7(3), 8(5) or 10(2).  The infringement notice must be given within 12 months of the alleged contravention.  [Part 3, subsections 12(1) and 12(2)]

2.23              The inclusion of the infringement notice regime provides the ACCC with sufficient flexibility to make a proportionate response in relation to breaches of the Bill, in relation to the range of petrol retailers to which the Bill applies.

2.24              Section 13 specifies the information that must be included in the infringement notice.  Because of the possibility that infringement notices could be issued in relation to a continuing breach, the notice must include the date of the alleged contravention.  [Part 3, section 13]

2.25              The penalty applicable for a breach of subsections 7(3), 8(5) or 10(2) is a pecuniary penalty of 5 penalty units or $550 (25 penalty units or $2,750 for a body corporate).  The level of the infringement penalty balances the need for it to be an adequate deterrent and not simply a cost of doing business, with the competing consideration that an infringement penalty set too high would provide no incentive to a guilty defendant not to take the matter to court.  [Part 3, section 14]

2.26              An infringement notice can be withdrawn by the ACCC within 28 days of being issued.  Where the penalty specified in the notice has already been paid, the ACCC is liable to refund that penalty in relation to a withdrawn infringement notice.  [Part 3, section 15]

2.27              Once paid, any liability of the person for the alleged contravention for which the infringement notice was issued is discharged, and further civil penalty proceedings may not be brought against the person in respect of the alleged contravention.  [Part 3, section 16]

2.28              Nothing in Part 3 of the Bill requires an infringement notice to be issued by the ACCC in relation to an alleged contravention, nor does it affect the liability of a person to have civil penalty proceedings brought against them for an alleged contravention.  The court’s discretion to determine the amount of the penalty imposed for a breach of the civil penalty provisions under the Bill is similarly not affected.  [Part 3, section 17]

Civil penalty regime

2.29              Civil penalties may be enforced under Part 4 of the Bill. The maximum penalty that can be imposed is 1,000 penalty units for a corporation and 200 penalty units for persons other than a body corporate.  The burden of proof in proceedings for a civil penalty is on the balance of probabilities and there is no requirement to prove any fault elements in relation to the offending conduct.

2.30                A person must not:

(a) attempt to contravene a civil penalty clause;

(b) aid, abet, counsel or procure a contravention of a civil penalty clause;

(c) induce, whether by threats or promises or otherwise, a contravention of a civil penalty clause;

(d) is in any way, directly or indirectly knowingly concerned in or party to, a contravention of a civil penalty clause; or

(e) conspire with others to effect a contravention of a civil penalty clause.

[Part 4, section 18]

2.31                The Federal Court may order a person to pay a pecuniary penalty to the Commonwealth where it is satisfied that a person has contravened civil penalty provision.  Federal Court must take into account the matters set out in paragraphs 19(3)(a) to (g) in determining the amount of the pecuniary penalty.

[Part 4, section 19]

2.32                The maximum penalty for a body corporate is 1,000 penalty units, and the maximum penalty for any other person is 200 penalty units.   [Part 4, subsections 19(4) and 19(5)]   The value for a penalty unit is prescribed by section 4AA of the Crimes Act 1914 .  One penalty unit currently equals $110.  [Part 1, section 5]

2.33                If a person’s conduct contravenes more than one civil penalty clause and proceedings are instituted in relation to contravention of more than one clause, then the person cannot be subject to more than one pecuniary penalty in relation to the same conduct.  [Part 4, subsection 19(6)]

2.34                Pecuniary penalties are civil debts owing to the Commonwealth and may be enforced as if they were a judgment debt.  [Part 4, subsection 19(7)]

2.35                Only the ACCC may apply for a civil penalty order.  [Part 4, section 20]

2.36                The Federal Court can direct that two or more proceedings for a civil penalty order may be heard together.  [Part 4, section 21]

2.37                Proceedings for a civil penalty order may not be commenced more than 6 years after the alleged contravention.  [Part 4, section 22]

2.38                The Federal Court is required to apply the rules of evidence and procedure for civil matters in proceedings for a civil penalty order.  This means that the civil standard of proof, namely the balance of probabilities, will apply.  [Part 4, section 23]

2.39                The Federal Court must not make a civil penalty order against a person where the person has been convicted of a criminal offence for substantially the same conduct.  [Part 4, section 24]

2.40                Where proceedings for a civil penalty order and criminal proceedings are started against a person for substantially the same conduct the civil proceedings will be stayed.  The civil proceedings will be dismissed if the person is convicted of the offence but may be resumed if the person is not convicted of the offence.  [Part 4, section 25]

2.41                The fact that a civil penalty order has been made against a person does not prevent criminal proceedings being started against the person for substantially the same conduct.  [Part 4, section 26]

2.42                Where criminal proceedings are commenced against a person who has already given evidence or produced documents in civil penalty proceedings arising from substantially the same conduct, that evidence inadmissible in the criminal proceedings.  This does not apply to criminal proceedings relating to the falsity of the evidence in the civil proceedings.  [Part 4, section 27]

 



C hapter 3     

Consequential amendments to the Trade Practices Act 1974

Outline of chapter

3.1                    The National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008 (the Consequential Amendments Bill) amends Part XID and sections 155 and 155A of the Trade Practices Act 1974 (the TPA) to refer specifically to the Bill. 

Detailed explanation of new law

3.2                  The Consequential Amendments Bill makes amendments to the TPA that assist in the efficient and effective operation and enforcement of the National Fuelwatch regime, provided for under the National Fuelwatch (Empowering Consumers) Bill 2008.

3.3                  The amendments provide for: an ability for the ACCC to delegate any of its powers under the Bill; the ability of the Minister to direct the ACCC in relation to its functions or powers under the Bill; the application of the ACCC’s search and seizure powers to its enforcement of the Bill; the application of the ACCC’s powers to obtain information, documents and evidence to suspected contraventions of the Bill; and applying the protections provided for information obtained by the ACCC through its search and seizure or information gathering powers to the Bill.

Ability for the ACCC to delegate

3.4                  Section 25 of the TPA provides that the ACCC may resolve to delegate to a member of the ACCC any of its powers under a range of legislation.  The delegation is revokable at will and does not prevent the exercise of a power by the ACCC.

3.5                  The Consequential Amendments Bill amends subsection 25(1) of the TPA to include reference to the Bill.  [Schedule 1, item 1]

Ability of the Minister to direct the ACCC

3.6                  Section 29 of the TPA enables the Minister to give a direction to the ACCC connected with the performance of its functions or the exercise of its powers.

3.7                  The Consequential Amendments Bill amends subsection 29(1) of the TPA to include reference to the Bill.  [Schedule 1, item 2]

Application of the ACCC’s search and seizure powers

3.8                  Part XID of the TPA provides for an enforcement regime that enables the ACCC to exercise search and seizure powers in relation to contraventions of the TPA and related legislation.  Under the Consequential Amendments Bill, the ACCC’s powers and duties under Part XID of the TPA are amended to enable the ACCC to seek and execute a search warrant in relation to suspected contraventions of the Bill.  [Schedule 1, item 3]

3.9                  The regime is applied to the National Fuelwatch scheme by amending the definition of evidentiary material in section 154A of the TPA to include reference to the Bill.  [Schedule 1, item 4]

3.10              The Consequential Amendments Bill also amends the TPA to make reference to the Bill in relation to the ability of a magistrate to order that an inspector may retain something for the purposes of an investigation into an alleged contravention of the Bill.  [Schedule 1, item 5]

Application of the ACCC’s powers to gather information

3.11              Section 155 of the TPA enables the ACCC to require a person to provide information, produce documents, or appear before the ACCC in relation to a suspected contravention of the TPA.

3.12              The Consequential Amendments Bill provides that section 155 of the TPA applies specifically to the National Fuelwatch scheme, by including a specific reference to the Bill in subsection 155(1).  [Schedule 1, item 6]

3.13              This would enable the ACCC to require a person to provide information or documents, or answer any question put to the person; it has reason to believe they are capable of providing in relation to a contravention of the Bill.

Protections provided for information obtained by the ACCC

3.14              Section 155AAA of the TPA provides for the protection of information obtained by the ACCC.  An ACCC official must not disclose any protected information to any person outside the performance of their duties and functions, unless they are required or permitted to do so by a law of the Commonwealth, State or Territory.

3.15              The Consequential Amendments Bill amends section 155AAA of the TPA to specifically refer to the Bill, thereby protecting information gathered by the ACCC in the course of administering and enforcing the Bill against unauthorised disclosure.  [Schedule 1, item 7]