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Competition and Consumer Amendment (Competition Policy Review) Bill 2017

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2016-2017

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

competition and consumer amendment (competition policy review) bill 2017

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by authority of the

Treasurer, the Hon Scott Morrison MP)



Table of contents

Glossary.............................................................................................................. 1

General outline and financial impact............................................................ 3

Chapter 1               Definition of competition................................................... 13

Chapter 2               Cartels.................................................................................. 17

Chapter 3               Price signalling and concerted practices....................... 25

Chapter 4               Exclusionary provisions.................................................... 37

Chapter 5               Covenants affecting competition..................................... 41

Chapter 6               Secondary boycotts............................................................ 43

Chapter 7               Third line forcing................................................................ 45

Chapter 8               Resale price maintenance................................................ 49

Chapter 9               Authorisations, notifications and class exemptions..... 55

Chapter 10            Admissions of fact.............................................................. 81

Chapter 11            Power to obtain information, documents and evidence 85

Chapter 12            Access to services.............................................................. 93

Chapter 13            Application and transitional provisions........................ 113

Chapter 14            Other amendments.......................................................... 119

Chapter 15            Regulation impact statement......................................... 129

Chapter 16            Statement of Compatibility with Human Rights.......... 145

Index............................................................................................................... 167

 

 



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

Abbreviation

Definition

Act

Competition and Consumer Act 2010

ACL

The Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 )

Commission

Australian Competition and Consumer Commission

Council

National Competition Council

Final Report

Final Report of the Competition Policy Review (March 2015)

Harper Review

Competition Policy Review

ICCPR

International Covenant on Civil and Political Rights

ICESCR

International Covenant on Economic, Social and Cultural Rights

PC

Productivity Commission

Price signalling

Anti-competitive disclosure of pricing and other information

Regime

National Access Regime

Review Panel

The Competition Policy Review Panel chaired by Professor Ian Harper

RIS

Regulation Impact Statement

RPM

Resale Price Maintenance

Tribunal

Australian Competition Tribunal

TPA

Trade Practices Act 1974

 



Overview

The Competition Policy Review

In 2014, the Government commissioned a ‘root and branch’ review of Australia’s competition laws and policy to ensure Australia continues to experience long-term productivity growth.

The Competition Policy Review (Harper Review) was led by a Review Panel chaired by Professor Ian Harper and supported by a secretariat. The terms of reference, issued on 27 March 2014, set out that the Review Panel was to ensure thorough engagement with all interested stakeholders. The terms of reference further set out that the key areas of focus would be to identify impediments across the economy that restrict competition and reduce productivity, which are not in the broader public interest.

The Review Panel released an Issues Paper on 14 April 2014 and a Draft Report on 22 September 2014. The Review Panel received almost 350 submissions in response to the Issues Paper and around 600 submissions to the Draft Report.

The Review’s Final Report, released on 31 March 2015, contained 56 recommendations on competition policy, law and institutions. The Harper Review concluded that while the concepts, prohibitions and structure of the Competition and Consumer Act 2010 (the Act) are sound, some provisions are unnecessarily complex, imposing costs on the economy and burdens on business, as well as inhibiting the adaptability of the laws to changing circumstances.

The Government received 140 submissions in response to the Final Report.

The Government released its response to the Harper Review on 24 November 2015, and supports 40 of the recommendations in full or in principle and a further 5 recommendations in part. The Government also noted or remained open to the remaining 11 recommendations, subject to further review and consultation.

Exposure Draft

An Exposure Draft of this Bill was released for public consultation from 5 September 2016 to 28 October 2016. A total of 61 written submissions were received, of which 5 were confidential. [1]

Definition of competition

Schedule 1 to this Bill amends the definition of ‘competition’ in section 4 of the Act, to clarify that competition includes competition from goods and services that are capable of importation, in addition to those actually imported.

Date of effect :  Schedule 1 does not commence at all unless the Competition and Consumer Amendment (Misuse of Market Power) Act 2017 receives Royal Assent. If that Act receives Royal Assent, Schedule 1 commences from a day to be fixed by Proclamation. If no earlier day is fixed by Proclamation, Schedule 1 commences the day after 6 months from the day this Act or the Competition and Consumer Amendment (Misuse of Market Power) Act 2017 receives Royal Assent (whichever is later).

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact : Nil compliance cost impact.  

Cartels

Schedule 2 to this Bill makes a number of amendments to the Act to simplify the provisions on cartel conduct and better target anti-competitive conduct, including:

•        confining the application of the provisions to cartel conduct affecting competition in Australian markets; and

•        changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures.

Date of effect :  Part 1 of Schedule 2, containing the substantive amendments to the provisions, commences at the same time as Schedule 1. Part 2 of Schedule 2, which renumbers the cartel provisions, commences immediately after the commencement of Part 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16, paragraphs.

Compliance cost impact Nil compliance cost impact.

Price signalling and concerted practices

Schedule 3 to this Bill repeals Division 1A of Part IV of the Act, the price signalling provisions.

Schedule 3 also extends section 45 to prohibit a corporation from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition, and inserts an exception for where the only parties to a concerted practice are the Crown and one or more government authorities. 

Schedule 3 also repeals the separate prohibition on exclusionary provisions from the Act.

Date of effect :  Schedule 3 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact An increase of $0.64 million per year.

Exclusionary provisions

Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by Schedule 3.

As detailed in Chapter 2, a related amendment is made by Schedule 2 to the provisions on cartel conduct, to ensure there is no gap following the repeal of the prohibition on exclusionary provisions.

Date of effect :  Schedule 4 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact Nil compliance cost impact.

Covenants affecting competition

Schedule 5 to this Bill simplifies the provisions of the Act by defining ‘contract’ and ‘party’ to include covenants, and repealing redundant provisions which separately deal with covenants.

Date of effect :  Schedule 5 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact Nil compliance cost impact.

Secondary boycotts

Schedule 6 amends the Act to increase the maximum penalty applying to breaches of the secondary boycott provisions. This aligns the penalty with penalties for other breaches of the competition law.

Date of effect :  Schedule 6 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact Nil compliance cost impact.

Third line forcing

Schedule 7 to this Bill amends the Act to prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition.

Date of effect :  Schedule 7 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact :  A decrease of $3.6 million per year .

Resale price maintenance

Schedule 8 to this Bill amends the resale price maintenance (RPM) and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct.

Schedule 8 also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

Date of effect :  Schedule 8 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact An increase of $0.16 million per year.

Authorisations, notifications and class exemptions

Schedule 9 to this Bill amends Part VII and Part IX of the Act to:

•        consolidate the various authorisation provisions, including those relating to mergers, into a single authorisation process;

•        grant the Commission a ‘class exemption’ power;

•        allow the Commission to impose conditions on notifications for resale price maintenance and collective bargaining that involves collective boycott conduct;

•        grant the Commission a power to issue a ‘stop notice’ requiring notified collective boycott conduct that is the subject of a notification to cease; and

•        provide for Tribunal review of Commission merger authorisation determinations.

Date of effect :  Items 1 to 103 of Schedule 9 commence at the same time as Schedule 1.  Item 104 commences immediately after items 1 to 103. Items 105 to 132 commence at the same time as Schedule 1. Item 133 commences immediately after Schedule 1. Items 134 to 167 commence at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact :  A decrease of $0.44 million per year.

Admissions of fact

Schedule 10 to this Bill extends section 83 of the Act so that a party bringing certain proceedings may rely on both admissions of fact and findings of fact made in certain other proceedings.

Date of effect :  Schedule 10 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact Nil compliance cost impact.

Power to obtain information, documents and evidence

Schedule 11 to this Bill extends the Commission’s power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

Schedule 11 also introduces a ‘reasonable search’ defence to the offence of refusing or failing to comply with section 155, and increases the fine for non-compliance with section 155.

Date of effect :  Schedule 11 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact A decrease of $1.3 million per year.

Access to services

Schedule 12 amends Part IIIA of the Act, which contains the National Access Regime (Regime), to ensure that it better addresses the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

Date of effect :  Schedule 12 commences at the same time as Schedule 1.

Proposal announced The proposal was announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact Nil compliance cost impact.

Application and transitional provisions

Schedule 13 to this Bill inserts a new Division 3 into Part XIII of the Act, which deals with the transitional application of amendments made by a number of other Schedules to this Bill.

Date of effect Schedule 13 commences at the same time as Schedule 1.

Proposal announced This proposal relates to those announced in the Australian Government Response to the Competition Policy Review on 24 November 2015.

Financial impact Nil.

Human rights implications :  This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact Nil compliance cost impact.

Other amendments

Schedule 14 to this Bill makes various amendments to streamline the administration of the Act, to reduce compliance burdens for business, individuals and within Government, while preserving the protections available under the Act.

Date of effect Schedule 14 commences on the day after Royal Assent.  

Proposal announced The measures in Schedule 14 were announced on 13 June 2014 in a communique by the Legislative and Governance Forum on Consumer Affairs.   

Financial impact Nil.

Human rights implications :  This Schedule is compatible with human rights. See Statement of Compatibility with Human Rights — Chapter 16.

Compliance cost impact A small but unquantifiable decrease in compliance costs.

 

Summary of regulation impact statement

Regulation impact on business

Impact :  The measures included in this Bill have an overall reduction in annual compliance costs.  

Main points :

•        The Government has been informed of the regulatory impacts of various reform options by the findings of Harper Review, previous independent reviews and inquiries, and through public and targeted consultations at multiple stages.

•        The Harper Review made a number of recommendations which are deregulatory in nature and result in a compliance cost saving for those subject to the law, specifically those related to: the definition of competition; third line forcing; class exemptions; and the power to obtain information, documents and evidence.

•        A number of the recommendations made by the Harper Review involve substantive changes to improve the competition law, specifically those related to: price signalling and concerted practices; resale price maintenance; and collective bargaining. These measures will result in an increase in compliance costs, particularly during the initial transitional period as businesses seek legal advice to ensure their practices continue to be compliant with the Act. The increase in compliance costs also incorporates the costs of seeking exemption for conduct via authorisation or notification. While the increased availability of exemptions is beneficial in terms of certainty, only the financial cost is quantified.

•        The remainder of the measures contained in this Bill are expected to have nil compliance cost impact.



Chapter 1          

Definition of competition

Outline of chapter

1.1                   Schedule 1 to this Bill amends the definition of ‘competition’ in section 4 of the Act, to clarify that competition includes competition from goods and services that are capable of importation, in addition to those actually imported.

Context of amendments

1.2                   The provisions of the Act are focused on conduct that damages competition in markets in Australia. When applying the provisions of the Act, it is therefore necessary to analyse the relevant market and the forms of competition which may affect that market.

1.3                   ‘Market’ and ‘competition’ are both defined terms within the Act, and the Harper Review considered the appropriateness of the respective definitions.

1.4                   Competition is defined in section 4 to include competition from imported goods or from services rendered by persons not resident or not carrying on business in Australia.

1.5                   Market is defined in section 4E to mean a market in Australia for goods and services that are substitutable for, or otherwise competitive with, each other. It includes the area of close competition between firms for goods and services.

1.6                   The Harper Review found that although the current definition of market appropriately focuses on Australian markets, the definition of competition should be amended so there is no doubt it includes competition from potential imports of goods and services, not just actual imports.

Summary of new law

1.7                   Schedule 1 amends the definition of ‘competition’ to clarify that it includes potential imports of goods and services and is not limited to actual imports of goods and services.

Comparison of key features of new law and current law

New law

Current law

Competition expressly includes goods and services that are capable of being imported, in addition to goods and services that are imported.

Competition includes goods and services that are imported.

Detailed explanation of new law

1.8                   The definition of competition is amended so that the term specifically includes:

•        Competition from goods that are imported, or are capable of being imported, into Australia; and

•        Competition from services that are rendered, or are capable of being rendered, by persons not resident or not carrying on business in Australia. [Schedule 1, item 1, subsection 4(1)]

1.9                   The express inclusion of goods and services that are ‘capable’ of being imported does not require consideration of every product and service that could conceivably be imported into Australia. Rather, this change clarifies that a credible threat of import competition is a relevant component of competition analysis.

1.10               Where there is only a remote possibility of importation, for example because importation would not be commercially viable, this possibility would not constitute a credible threat of import competition and should not form part of a competition analysis as the goods or services are not ‘capable’ of being imported.

Commencement, application and transitional provisions

1.11               Schedule 1 does not commence at all unless the Competition and Consumer Amendment (Misuse of Market Power) Act 2017 receives Royal Assent. If that Act receives Royal Assent, Schedule 1 commences from a day to be fixed by Proclamation. If no earlier day is fixed by Proclamation, Schedule 1 commences the day after 6 months from the day this Act or the Competition and Consumer Amendment (Misuse of Market Power) Act 2017 receives Royal Assent (whichever is later).



Chapter 2          

Cartels

Outline of chapter

2.1                   Schedule 2 to this Bill makes a number of amendments to the Act to simplify the provisions on cartel conduct and better target anti-competitive conduct, including:

•        confining the application of the provisions to cartel conduct affecting competition in Australian markets; and

•        changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures.

Context of amendments

2.2                   Division 1 of Part IV of the Act prohibits certain types of provisions within contracts, arrangements or understandings between competitors that amount to cartel conduct.

2.3                   A provision of a contract, arrangement or understanding between competitors is a ‘cartel provision’ if it has: the purpose of output restriction, market sharing or division, or bid-rigging; or the purpose, effect or likely effect of price-fixing. Cartel conduct is anti-competitive in most circumstances, as it usually increases prices or reduces consumer choice, and is prohibited on a per se basis.

2.4                   The Act contains both criminal and civil sanctions for contravention of the prohibition on cartel provisions, at Subdivisions B and C of Division 1 of Part IV of the Act. Subdivision D contains a number of exceptions to the general prohibition, some of which are available for both the criminal and civil sanctions, and some of which are available for only one type of sanction.

2.5                   A number of specific changes were recommended by the Harper Review, which were intended to simplify the cartel conduct provisions and better target them at anti-competitive conduct. These included broadening the exceptions for joint ventures, which the Harper Review considered were too narrow and potentially captured pro-competitive conduct.

Summary of new law

2.6                   Schedule 2 to this Bill makes a number of amendments to Division 1 of Part IV, to simplify the cartel conduct provisions and better target anti-competitive conduct.

2.7                   The defined term ‘trade or commerce’ is incorporated into various provisions within Division 1 of Part IV, to expressly confine the application of the provisions to cartel conduct affecting competition in Australia or between Australia and other places.

2.8                   The joint venture exceptions are broadened to apply to:

•        arrangements or understandings (in addition to contracts); and

•        joint ventures for the acquisition of goods and services (in addition to the production or supply of goods and services).

2.9                   The joint venture exceptions are also amended so that they only apply to:

•        cartel provisions that are for the purposes of, and reasonably necessary for, undertaking the joint venture; and

•        joint ventures that are not carried on for the purpose of substantially lessening competition.

2.10               The burdens of proof for the joint venture exceptions are also amended to require the defendant to prove the elements of the relevant exception on the balance of probabilities.

2.11               The ‘output restriction’ purpose condition in paragraph 44ZZRD(3)(a) is broadened to include restrictions on acquisitions of goods or services, to address any gap resulting from the repeal of the separate prohibition on exclusionary provisions.

Comparison of key features of new law and current law

New law

Current law

The cartel conduct provisions apply to conduct ‘in trade or commerce’, i.e. conduct occurring within Australia, or between Australia and places outside Australia.

The cartel conduct provisions are not expressly confined to conduct ‘in trade or commerce’.

The joint venture exceptions apply to contracts, arrangements or understandings.

The joint venture exceptions apply only to contracts or intended contracts.

The joint venture exceptions apply to joint ventures for the acquisition of goods, in addition to joint ventures for the production and/or supply of goods or services.

The joint venture exceptions apply to joint ventures for the production and/or supply of goods or services.

The joint venture exceptions apply to cartel provisions that are for the purposes of a joint venture and reasonably necessary for undertaking a joint venture.

The joint venture exceptions apply to cartel provisions that are for the purposes of a joint venture.

The joint venture exceptions do not apply to joint ventures that are carried on for the purpose of substantially lessening competition.

The joint venture exceptions are available to any joint venture within the definition of section 4J of the Act.

The defendant bears a legal burden of proof, in establishing the joint venture exceptions.

The defendant bears an evidential burden of proof, in establishing the joint venture exceptions.

The ‘output restriction’ purpose condition refers to production, capacity, supply and acquisition.

The ‘output restriction’ purpose condition refers to production, capacity and supply.

Detailed explanation of new law

Cartel conduct affecting ‘trade or commerce’

2.12               The Harper Review was of the view that, for cartel conduct to be an offence within Australia, it should have an effect on trade or commerce within, to or from Australia, consistent with the treatment of cartel conduct in comparable overseas jurisdictions.

2.13               Schedule 2 amends a number of provisions in Division 1 of Part IV to include a specific requirement that cartel conduct must be ‘in trade or commerce’. Trade or commerce is defined in section 4 to mean trade or commerce within Australia, or between Australia and places outside Australia. [Schedule 2, items 3 to 8, subsection 44ZZRD (note), paragraphs 44ZZRD(4)(c) to (e), 44ZZRD(4)(f), 44ZZRD(4)(g), 44ZZRD(4)(h), 44ZZRD(4)(ha), 44ZZRD(4)(i) and 44ZZRD(4)(j)]

2.14               The intention of this amendment is to expressly confine the application of the provisions to cartel conduct that affects businesses or consumers in Australia.

2.15               This amendment aligns the cartel conduct provisions with the Act’s objective of enhancing the welfare of Australians.

Exceptions for joint ventures

2.16               The Harper Review’s view was that the narrow framing of the joint venture exceptions to the cartel provisions may have the effect of limiting legitimate commercial transactions and increasing business compliance costs.

2.17               The Harper Review also noted that broadening the joint venture exception for cartel conduct will not put joint ventures beyond the reach of the competition law, as section 45 prohibits joint venture arrangements that have the purpose, effect or likely effect of substantially lessening competition.

2.18               Schedule 2 makes a number of amendments to broaden the joint venture exceptions to both the criminal cartel provisions and the civil cartel provisions (in sections 44ZZRO and 44ZZRP respectively).

2.19               Firstly, the amended joint venture exceptions apply to arrangements and understandings containing cartel provisions, in addition to contracts containing such provisions. This recognises that not all features of a joint venture will be contained in a formal written contract. [Schedule 2, items 11, 12 and 17, subsections 44ZZRO(1) and 44ZZRP(1)]

2.20               Secondly, the amended joint venture exceptions are extended to apply to joint ventures for the acquisition of goods or services. The amended exceptions apply to one or more of the production, supply or acquisition of goods or services. [Schedule 2, items 13 and 18, paragraphs 44ZZRO(1)(b) and 44ZZRP(1)(b)]

2.21               Joint ventures for the acquisition of goods or services are common, and may encourage pro-competitive economic activity, for example by allowing smaller businesses to increase their bargaining power, decrease their cost base and become more price-competitive.

2.22               Thirdly, the amended joint venture exceptions only apply to cartel provisions that are both for the purposes of the joint venture and reasonably necessary for undertaking the joint venture (where the reference to ‘purpose’ should be read in the context of section 4F of the Act). [Schedule 2, items 13 and 18, paragraphs 44ZZRO(1)(a) and 44ZZRP(1)(a)]

2.23               The addition of the ‘reasonably necessary’ element tightens the exceptions to ensure that they exclude cartel provisions that are not reasonably necessary for the joint venture.

2.24               For example, a provision that specified the price at which outputs of a mining joint venture should be sold may be reasonably necessary for undertaking a mining joint venture. However a provision that similarly specified that output from mines not part of the joint venture must be sold at the same price may be for the purposes of, but is unlikely to be reasonably necessary for, the joint venture.

2.25               Fourthly, the amended joint venture exceptions only apply to joint ventures that are not carried on for the purpose of substantially lessening competition. This amendment confines the exceptions to joint ventures established for genuine commercial purposes. [Schedule 2, items 13 and 18, paragraphs 44ZZRO(1)(ba) and 44ZZRP(1)(ba)]

2.26               The defence in section 76C to proceedings relating to an exclusionary provision illustrates a precedent for this approach. That defence (which is repealed by Schedule 4 to this Bill) is similarly limited to exclusionary provisions that are for the purposes of a joint venture and which do not have the purpose, effect or likely effect of substantially lessening competition.

2.27               The reference to ‘purpose’ should also be read in the context of section 4F of the Act, such that a defendant will be unable to rely on the joint venture exceptions if the purpose of substantially lessening competition is a substantial purpose, even if it is not the only purpose or the primary purpose.

2.28               Finally, the joint venture exceptions are amended to increase the standard of proof that a defendant must discharge in raising the relevant exception. To raise the joint venture exception in a civil action (section 44ZZRP), the defendant must prove the relevant matters on the ‘balance of probabilities’. To raise the joint venture exception in a criminal action (section 44ZZRO), the defendant is under a ‘legal burden’ and this must also be discharged on the balance of probabilities. [Schedule 2, items 12, 15, 17 and 20, subsections 44ZZRO(1), 44ZZRO(1)(note), 44ZZRP(1) and 44ZZRP(2)]

2.29               In either case, the defendant must meet the standard of a ‘balance of probabilities’ to raise the relevant joint venture exception, as opposed to the standard of proof for the current evidential burden (‘a reasonable possibility’). Given this practical similarity, the two exceptions are discussed together below. 

2.30               The increase in the burden of proof on the defendant is appropriate and justifiable in light of the extension of the exceptions to arrangements or understandings containing a cartel provision.

2.31               Currently, for either of the exceptions to apply, the relevant cartel provision must be contained in a contract and the defendant must satisfy an evidential burden - that is, the defendant must produce evidence suggesting a reasonable possibility that the matters in section 44ZZRO or 44ZZRP exist. It is likely that the production of the contract, which should be readily available to the defendant if it exists, would satisfy this evidential burden. It would then fall to the prosecution to prove on the balance of probabilities (in a civil action) or beyond reasonable doubt (in a criminal action), that the evidence produced does not establish the relevant exception - for example, by proving that the cartel provision is not for the purposes of the joint venture. Under the current exceptions, an evidential burden on the defendant is reasonable as the primary evidence as to the nature of the claimed joint venture would be before the court.

2.32               In contrast, under the amended joint venture exceptions which extend to arrangements or understandings, the relevant element of the joint venture may be contained across several documents of greater or lesser formality, and may not be contained in any form of written documentation (for example, it may have been established through a series of conversations or agreed in a meeting). In this circumstance, it is likely to be relatively easy and inexpensive for a defendant to produce evidence suggesting a reasonable possibility that their joint venture falls within the relevant exception, even if this were not the case.

2.33               However, it would be extremely difficult and expensive for the prosecution to obtain sufficient evidence to prove in the first instance, to the applicable standard, that the relevant exception did not apply, as the evidence needed to do this may be known only to, and be held by, the defendant. This practical difficulty may create scope for abuse of the joint venture exceptions by parties who are not genuinely engaged in a joint venture to which the exceptions apply.

2.34               Increasing the standard of proof which the defendant must meet improves this situation as, in practice, the defendant is required to provide stronger evidence to the court in order to prove on the balance of probabilities that the relevant exception applies. The defendant will be in a unique position to easily and cheaply produce such evidence, having ready access to the full range of formal and informal correspondence between the parties.

2.35               With the additional information before the court, the prosecution would then have sufficient information to determine whether to make a case in reply and thereby seek to prove to the requisite standard that the exception does not apply (for example, to argue based on that evidence that the joint venture was, in fact, carried on for the purpose of substantially lessening competition). 

2.36               Widening the application of the exceptions will decrease the ongoing business compliance costs for genuine commercial joint venture undertakings, by increasing certainty that genuine joint venture activities will not contravene the cartel conduct prohibition. However, without the higher burden of proof on the defendant, it is likely that the practical difficulties for the prosecutor would be such that anti-competitive, collusive conduct would be able to avoid the cartel conduct prohibitions. The higher burden is therefore necessary in order to broaden exceptions in the manner described above.

Exclusionary provisions

2.37               The ‘output restriction’ purpose condition is amended to prohibit cartel provisions with the purpose of directly or indirectly preventing, restricting or limiting production, capacity, supply or acquisition. The inclusion of acquisition is achieved by adding a fourth subparagraph to paragraph 44ZZRD(3)(a). [Schedule 2, item 2, subparagraph 44ZZRD(3)(a)(iv)]

2.38               This change is made as a result of the repeal of the separate prohibition on exclusionary provisions, as detailed in Chapters 3 and 4, and addresses a possible gap in the law following that repeal.

Renumbering

2.39               Part 2 of Schedule 2 renumbers Division 1 of Part IV to the Act, in order to make the cartel conduct provisions easier to navigate. [Schedule 2, item 38, Division 1 of Part IV]

2.40               Amendments are also made to Schedule 1 to the Act, to mirror the renumbering of the Act itself. [Schedule 2, item 39, Division 1 of Part 1 of Schedule 1 to the Act]

2.41               Schedule 2 also provides for references in other Acts, instruments or documents to be construed as a reference to the renumbered provision where appropriate. [Schedule 2, item 40]

Consequential amendments

2.42               Following the amendments to the joint venture exceptions, consequential amendments are made to sections 44ZZRO and 44ZZRP so that they also apply to arrangements and understandings. [Schedule 2, items 14 and 19, paragraphs 44ZZRO(1)(c), 44ZZRO(1)(d), 44ZZRP(1)(c) and 44ZZRP(1)(d)]

2.43               Following the addition of subparagraph 44ZZRD(3)(a)(iv), amendments are made to various provisions of the Act to add a reference to the new subparagraph 44ZZRD(3)(a)(iv) alongside existing references to subparagraph 44ZZRD(3)(a)(iii). [Schedule 2, items 1, 9 and 10, subsection 44ZZRD(5) and paragraphs 6(2C)(h) and 44ZZRD(7)(a)]  

2.44               Following the amendment to apply the joint venture exceptions to arrangements and understandings, complex additional subsections relating to arrangements and understandings have been removed from section 44ZZRO. [Schedule 2, item 16, subsections 44ZZRO(1A) and 44ZZRO(1B)] .

2.45               As a defendant is now under a legal burden to raise the joint venture exceptions, subsection 44ZZRO is amended to remove a requirement for the defendant to give the prosecutor a written notice setting out the facts and witnesses on whom the defendant wishes to rely. [Schedule 2, item 16, subsections 44ZZRO(2) to 44ZZRO(4)]

2.46               Schedule 2 also makes amendments to Schedule 1 to the Act, to correspond to the amendments made by Schedule 2 to the Act itself and apply those amendments to persons. [Schedule 2, items 21 to 37, subsections 44ZZRD(4)(note), 44ZZRD(5), 44ZZRO(1), 44ZZRO(1A) to 44ZZRO(5), 44ZZRP(1), 44ZZRP(1A) and 44ZZRP(2), paragraphs 44ZZRD(4)(c) to 44ZZRD(4)(e), 44ZZRD(4)(f), 44ZZRD(4)(g), 44ZZRD(4)(h), 44ZZRD(4)(ha), 44ZZRD(4)(i), 44ZZRD(j), 44ZZRD(7)(a), 44ZZRO(1)(a), 44ZZRO(1)(b), 44ZZRO(1(c), 44ZZRO(1)(d), 44ZZRP(1)(a), 44ZZRP(1)(b), 44ZZRP(1)(c) and 44ZZRP(1)(d) and subparagraph 44ZZRD)(3)(a)(iv) of Schedule 1 to the Act]

Commencement, application and transitional provisions

Part 1 of Schedule 2 commences at the same time as Schedule 1. Part 2 of Schedule 2 commences immediately after the commencement of Part 1.

 



Chapter 3          

Price signalling and concerted practices

Outline of chapter

3.1                   Schedule 3 to this Bill repeals Division 1A of Part IV of the Act, the price signalling provisions.

3.2                   Schedule 3 also extends section 45 to prohibit a corporation from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition, and inserts an exception for where the only parties to a concerted practice are the Crown and one or more government authorities.  

3.3                   Schedule 3 also repeals the separate prohibition on exclusionary provisions from the Act.

Context of amendments

Price signalling

3.4                   Division 1A of Part IV of the Act was added in 2012 and prohibits the anti-competitive disclosure of pricing and other information (price signalling). The provisions apply only to a single industry (banking) and no cases have ever been brought for contravention of the prohibitions.

3.5                   The Harper Review noted that Division 1A is complex, particularly as defining the circumstances under which price disclosure is pro-competitive or benign is difficult. The public disclosure of pricing information can help consumers to make informed choices and is unlikely to be harmful to competition. Where such disclosures occur in private, this may facilitate anti-competitive collusion between competitors, such as the coordination of pricing decisions resulting in higher price outcomes. However, the private disclosure of pricing information may in some circumstances be pro-competitive or a necessary part of business, for example in the case of a joint venture or similar type of collaborative business activity.

3.6                   The Review further considered that other provisions of the Act could deal with anti-competitive price signalling, particularly section 45. It also considered that there was no policy rationale for price signalling laws that applied only to the banking sector.

3.7                   The Harper Review concluded that the price signalling provisions are not fit for purpose and recommended repealing them.

3.8                   It further recommended that concerns about the ability of section 45 to address price signalling be addressed by expanding the section to include a prohibition on concerted practices (in addition to contracts, arrangements or understandings) with the purpose, effect or likely effect of substantially lessening competition.

Exclusionary provisions

3.9                   See Chapter 4 for detail on the context of the repeal of the separate prohibition on exclusionary provisions.

Summary of new law

3.10               Division 1A of Part IV of the Act is repealed, and section 45 of the Act is expanded to include the concept of a ‘concerted practice’.

3.11               An exemption is inserted at subsection 45(8AA), where the only persons engaging in a concerted practice are the Crown (in right of the Commonwealth, a State or Territory) and one or more government authorities.

3.12               Subparagraphs 45(2)(a)(i) and 45(2)(b)(i) are repealed, to remove the separate prohibition on exclusionary provisions from the Act.

Comparison of key features of new law and current law

New law

Current law

The anti-competitive disclosure of pricing and other information is dealt with under the more general prohibitions in the competition law.

The anti-competitive disclosure of pricing and other information is separately and specifically prohibited.

A corporation is prohibited from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition.

No equivalent.

An exemption from the prohibition on concerted practices is added where the only parties are a government and one or more authorities of that government.

No equivalent.

There is no separate prohibition on contracts, arrangements or understandings containing exclusionary provisions.

There is a separate prohibition on contracts, arrangements or understandings containing exclusionary provisions.

Section 51 provides a range of additional exceptions related to specific contracts, arrangements, understandings and concerted practices.

Section 51 provides a range of additional exceptions related to specific contracts, arrangements and understandings. 

Detailed explanation of new law

3.13               Schedule 3 repeals Division 1A of Part IV of the Act, relating to the anti-competitive disclosure of pricing and other information.

[Schedule 3, item 1, Division 1A of Part IV]

3.14               Schedule 3 also broadens section 45 to apply to ‘concerted practices’. This is intended to capture conduct previously falling within the separate prohibitions within Division 1A. At the same time, subsections of section 45 are amended for simplification. [Schedule 3, items 2, 4 and 5, subsections 45(1) to 45(3),45(6) 45(7) and 45(8)]

3.15               Schedule 3 also inserts an exception into section 45 where the only parties to a concerted practice are the Crown and one or more government authorities. [Schedule 2, item 5, subsection 45(8AA)]   

Concerted practices

3.16               Schedule 3 amends section 45 to prohibit corporations from engaging in a ‘concerted practice’ that has the purpose, effect or likely effect of substantially lessening competition. Schedule 3 also rewrites subsections 45(1), 45(2) and 45(3) to incorporate concerted practices and simplify the provision. Section 45 will continue to also prohibit making, arriving at or giving effect to a contract, arrangement or understanding with the purpose, effect or likely effect of substantially lessening competition. [Schedule 3, item 1, subsections 45(1), 45(2) and 45(3)]

3.17               Schedule 3 does not insert a definition of ‘concerted practice’ into the Act. The Harper Review considered it unnecessary to introduce a legislative definition of ‘concerted practice’, as the word ‘concerted’ has a clear and practical meaning.

3.18               The concept of a ‘concerted practice’ under section 45 is to be distinguished from the concept of ‘acting in concert’ as it appears in section 45D. The concept of a ‘concerted practice’ is to be read and applied in the context of section 45 and with reference to the explanatory material that follows, and not in the context of section 45D or any case authority or explanatory material on section 45D. The following is intended to guide the interpretation of the term while retaining a flexible and principled application of the concept.

Characteristics of a concerted practice

3.19               A concerted practice is any form of cooperation between two or more firms (or people) or conduct that would be likely to establish such cooperation, where this conduct substitutes, or would be likely to substitute, cooperation in place of the uncertainty of competition.

3.20               It is not necessary that any (or all) of the parties to a concerted practice should act:

•        in the same manner;

•        in the same market; or

•        at the same time.

3.21               It is intended that the concept of a ‘concerted practice’ should capture conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45.

3.22               A concerted practice does not require, but may involve:

•        the formality or legally enforceable obligations characteristic of a contract;

•        the express communication characteristic of an arrangement. A concerted practice may be established in the absence of any direct contact between the firms, for example where firms communicate indirectly through an intermediary such as a peak industry body; or

•        the commitment characteristic of an understanding. A concerted practice may exist even if none of the parties is obliged, either legally or morally, to act in any particular way.

Example 3.1 - Concerted practice

In a small country town, there are three petrol stations: X, Y and Z. Immediately before adjusting its prices, X sends an email to Y and Z with a price. After several emails, it becomes clear to Y and Z that immediately after sending the email with the price, X changes its price to match the email. Y and Z join in, and each emails their own proposed price adjustments to the other two. A practice develops so that, with a few exceptions, where one petrol station emails their prices, the three stations all change their prices to match the price in the email.

At no point do any of them expressly or implicitly agree to reciprocate the communication or to change their prices accordingly. On some occasions after one of the stations announces a price rise, one of the other stations chooses not to match the price, and thereby gains extra customers on that occasion by increasing their price by less than the other two stations and having the lowest price. There are no consequences of this occasional divergence from the usual practice.

X, Y and Z are each likely to have contravened section 45 by engaging in a concerted practice with the purpose, effect or likely effect of substantially lessening competition. Even though none of the parties committed to communicate or change their prices, and even though there were some occasions where a petrol station did not change its prices in accordance with the email, the effect of the overall practice was that the petrol stations could increase their prices safe in the knowledge that this would be unlikely to result in a loss of customers as the others would most likely reciprocate. This practice has substantially reduced price competition for petrol in the town.

3.23               A concerted practice may exist in addition to, or ancillary to, a contract, arrangement or understanding.

3.24               It is not necessary that a concerted practice have an anti-competitive ‘provision’, as it is the practice itself which has the anti-competitive purpose, effect or likely effect.

3.25               The concept of a concerted practice is not intended to capture mere innocent parallel conduct, for example where two firms who are determining their prices independently happen to charge similar prices for the same product (see Example 3.4).

3.26               Similarly, it is not intended to capture conduct such as the public disclosure of pricing information which facilitates price comparison by consumers, as this conduct will increase rather than substantially lessen competition.

3.27               The following examples illustrate that a concerted practice:

•        does not necessarily involve regular or repeated conduct - a single instance of conduct may constitute a concerted practice (Example 3.2);

•        will typically, but not necessarily, involve the communication of commercial information either by one party to another, or between the parties, generally to reduce or eliminate uncertainty as to the future conduct of the firm making the communication; and

•        does not require that any (or all) of the parties to the practice reciprocate the actions of the first party or in any way change their conduct as a result of the first party’s actions - the actions of the first party will be sufficient to establish the concerted practice, and the culpability of each other party to the concerted practice will depend on the nature of their involvement and their subsequent action.

3.28               Once conduct has been found to be a concerted practice, the central issue, and the determinant of whether the relevant conduct is prohibited under section 45, is whether the concerted practice has the purpose, effect or likely effect of substantially lessening competition.

Example 3.2 - Concerted practice as a single instance of conduct

Salmon fishers in a small geographic region form an industry association that meets regularly, usually to discuss general industry issues. At one meeting, one fisher (X) states that they will restrict their output to a certain quantity for the next three months, in order to increase the price of salmon in the region. X shares this information in the hope that the other fishers will similarly restrict their output, so that X can adopt the strategy without fearing it will lose customers to the other fishers. 

X has shared commercially sensitive information which reduces uncertainty as to X’s likely output over the next three months. X is likely to have contravened section 45, by engaging in a concerted practice with the purpose or likely effect of substantially lessening competition, even if X was unable to convince all of the other salmon fishers to adopt a similar strategy and even some or all of the others did not adopt such a strategy (that is, even if the ultimate effect was not a substantial lessening of competition).

Example 3.3 - Concerted practice as communication of commercial information, reciprocity not required

Bank X and Bank Y are two competing banks. A week before banks are expected to announce their respective interest rates for the next quarter, X sends Y a document setting out the interest rate it will announce the following week. Y did not ask for this information, and does not act on this information by either reciprocating with information about its own intended interest rate or changing its strategy to match X’s interest rate.

The different actions of X and Y will have different implications under section 45.

X is likely to have contravened section 45, by engaging in a concerted practice with the purpose or likely effect of substantially lessening competition, even if this was not the actual effect because Y did not act on the information.

X’s communication to Y has made Y a party to a concerted practice. However, Y is not likely to have contravened section 45, as Y did not use the information to inform a decision or change strategy, and this conduct did not have the purpose, effect or likely effect of substantially lessening competition. Y could further ensure it did not breach section 45 by expressly rejecting X’s approaches and requesting that X not communicate any further information of this nature.

Example 3.4 - Mere parallel conduct 

Company X manufactures and distributes the most popular budget television, which is stocked by all major television retailers and two smaller retailers. X supplies the televisions to large retailers for $300 each, and charges the smaller retailers $320 each due to the lower quantity ordered.

The major retailers are able to sell the televisions for $320 and make a commercial profit. However, the two smaller retailers independently determine that they cannot sell the televisions for any less than $340 and still make a commercial profit.

The conduct of the two smaller retailers is unlikely to constitute a concerted practice. The two smaller retailers have a similar cost base, and have taken this cost base into account in independently determining the prices they will charge for the television. This is merely innocent parallel conduct, which the concerted practices prohibition in section 45 is not intended to capture.

Crown exemption

3.29               An exemption is inserted at subsection 45(8AA), so that section 45 does not apply to a concerted practice where the only persons engaging in it are, or would be:

•        the Crown in right of the Commonwealth, and one or more authorities of the Commonwealth; or

•        the Crown in right of a State or Territory, and one or more authorities of that State or Territory. [Schedule 3, item 5, subsection 45(8AA)]

3.30               This exemption is similar to the exemption for related bodies corporate in subsection 45(8), and recognises that although the Crown can engage in market activities through government authorities, the Crown and its authorities cannot benefit from the exemption for related bodies corporate.

3.31               This exemption ensures that the prohibition against concerted practices does not unnecessarily hinder the social policy objectives that the Commonwealth, a State or a Territory may pursue through market activities. In particular, the exemption exists to ensure that cooperation by authorities to fulfil community service obligations is not hindered.

Example 3.5 - Exemption for related bodies corporate

A State government is responsible for the governance of two State-owned electricity corporations. Each year, the State government asks the providers to coordinate which geographical areas each corporation will agree to service over the next year. This information allows the State government to ensure that community service obligations are met and there is no area left without an electricity provider if no private provider is available.

While this conduct may constitute a concerted practice, this would not contravene section 45 due to the exemption in subsection 45(8AA). Although the two electricity corporations have shared what would ordinarily be commercially sensitive information, the only parties to this concerted practice are a State government and two authorities of that State government.

Operation of section 45

3.32               The following is intended to clarify the operation of section 45 as amended. Where provisions are amended for simplification, their operation is not intended to change except as described in this Chapter.

3.33               Paragraphs 45(1)(a) and 45(1)(b) set out that a corporation must not enter into or give effect to a contract, arrangement or understanding, if the contract, arrangement or understanding (or a provision thereof) has the purpose, or would have or be likely to have the effect, of substantially lessening competition. [Schedule 3, item 1, paragraphs 45(1)(a) and 45(1)(b)]

3.34               Paragraph 45(1)(c) sets out that a corporation must not engage with one or more persons in a concerted practice that has the purpose, or has or is likely to have the effect, of substantially lessening competition. [Schedule 3, item 1, paragraph 45(1)(c)]

3.35               Subsection 45(2) makes it clear that a corporation must not give effect to a prohibited provision of a contract, arrangement or understanding that was made or arrived at before the commencement of section 45 as amended. [Schedule 3, item 1, paragraph 45(2)]

3.36               Subsection 45(3) contains a specific definition of ‘competition’ for the purposes of section 45, which focuses on the relevant markets in which competition is to be considered. When considering whether conduct substantially lessens competition for the purposes of section 45, the appropriate markets in which competition is to be assessed include any market in which a corporation (or related body corporate) that is party to the contract, arrangement or understanding containing the prohibited provision supplies or acquires goods or services (or would supply or acquire goods or services, but for the anti-competitive provision).

3.37               With the introduction of the concept of a concerted practice, the definition of competition is further extended, for the purposes of section 45, in relation to a concerted practice. This ensures that there is a consistent approach to determining the markets for analysis of any potential anti-competitive effects. [Schedule 3, item 1, paragraph 45(3)(b)]

3.38               Subsection 45(5A) is inserted to prevent the application of section 45 to conduct which would also contravene section 47, or would do so aside from subsection 47(10), an authorisation under section 88 or a notification under section 93. This applies only to contracts, arrangements and understandings, and not to concerted practices. This provision replaces the former subsection 45(6) insofar as it referred to conduct under section 47. [Schedule 3, item 9, subsection 45(5A)]

3.39               In addition to the new exception in subsection 45(8AA), section 45 contains a number of existing exceptions, which are amended to incorporate concerted practices:

•         an anti-overlap provision which prevents section 45 capturing conduct which would contravene more specific prohibitions (subsection 45(6));

•         an exception for the acquisition of shares in the capital of a body corporate or any assets of a person (subsection 45(7)); and

•         an exception where the only parties to the contract, arrangement, understanding or concerted practice are related bodies corporate (subsection 45(8)). [Schedule 3, item 5, subsections 45(6) to 45(8)]

3.40               Similarly, the exception in subsection 51(2) is amended to extend the exception to concerted practices. This means that in determining whether a contravention of Part IV (other than sections 45D, 45DA, 45DB, 45E, 45EA or 48) has been committed, regard shall not be had to concerted practices which meet the applicable requirements of subsection 51(2) as amended . [Schedule 3, items  16, 18, 19 and 20, subsection 51(2AA), paragraphs 51(2)(a), 51(2)(aa), 51(2)(c), 51(2)(d) and 51(2)(g)]

Exclusionary provisions

3.41               Schedule 3 to this Bill also repeals subparagraphs 45(2)(a)(i) and 45(2)(b)(i) to remove the separate prohibition on exclusionary provisions from the Act. This is achieved by repealing subsections 45(1) to 45(3) and rewriting the provisions without the separate prohibition on exclusionary provisions. [Schedule 3, item 2, subsections 45(1) to 45(3)]

3.42               As detailed in Chapter 4, section 4D, which contains the definition of exclusionary provision , is repealed as the repeal of the separate prohibition on exclusionary provisions makes the definition redundant. [Schedule 4, item 1, section 4D]

3.43               As detailed in Chapter 2, a consequential amendment is made to the cartel conduct provisions to address any gap in the law as a result of the repeal of the separate prohibition on exclusionary provisions. [Schedule 2, item 2, subparagraph 44ZZRD(3)(a)(iv)]

Consequential amendments

3.44               Minor consequential amendments are made to various provisions of the Act to reflect the addition of the concept of concerted practices and other amendments as detailed in this Chapter. [Schedule 3, items 3, 11 to 15, 17 and 21 to 29, subsections 45(5A), 45(8A), 45(9), 51(4),93AC(2), 166(1) and 166(3), paragraphs 4(2)(a), 4(2)(b), 6(2)(d), 51(2)(b), 84(1)(b), 84(3)(b), 93AB(1)(a) and 93AB(1)(b) and subparagraph 6(2)(b)(i)]

3.45               Schedule 3 also makes amendments to Schedule 1 to the Act, to correspond to the amendments made by Schedule 3 to the Act itself and apply those amendments to persons. [Schedule 3, items 6 to 10 and 30 to 37, Division 1A of Part 1 of Schedule 1, subsections 45(1) to 45(3), 45(5A), 45(6), 45(7) to 45(9), 51(2AA) and 51(4), and paragraphs 51(2)(a), 51(2)(aa), 51(2)(b), 51(2)(c), 51(2)(d) and 51(2)(g) of Schedule 1 to the Act]

Commencement, application and transitional provisions

3.46                Schedule 3commences at the same time as Schedule 1.

 



Chapter 4          

Exclusionary provisions

Outline of chapter

4.1                   Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by Schedule 3.

4.2                   As detailed in Chapter 2, a related amendment is made by Schedule 2 to the provisions on cartel conduct, to ensure there is no gap following the repeal of the prohibition on exclusionary provisions.

Context of amendments

4.3                   Sub-paragraphs 45(2)(a)(i) and 45(2)(b)(i) of the Act respectively, prohibit making a contract or arrangement, arriving at an understanding, or giving effect to a contract, arrangement or understanding, containing an exclusionary provision.

4.4                   Exclusionary provision is defined in section 4D, and broadly means a provision of an actual or proposed contract, arrangement or understanding between competitors, where the provision has the purpose of preventing, restricting or limiting supplies of goods and services to, or acquisitions from, particular persons or classes of persons.

4.5                   Section 76C contains a defence to proceedings relating to an exclusionary provision where the provision is for the purposes of a joint venture and does not have the purpose, effect or likely effect of substantially lessening competition.

4.6                   The prohibition on exclusionary provisions substantially overlaps with the prohibition on cartel provisions, particularly where a provision in a contract, arrangement or understanding between competitors has the purpose of:

•        restricting the actual or likely production of goods, supply of goods or services, or the capacity to supply services (i.e. output restriction) (paragraph 44ZZRD(3)(a)); or

•        allocating customers or geographical areas of supply or acquisition between the parties (i.e. market sharing or division) (paragraph 44ZZRD(3)(b).

4.7                   Where a provision has the purpose of output restriction or market sharing or division, that provision is likely to constitute both a cartel provision and an exclusionary provision.

4.8                   Section 45 contains a number of anti-overlap provisions which prevent the application of section 45 to conduct which contravenes one of several other provisions. However, there is no anti-overlap provision preventing the application of section 45 to conduct which contravenes the prohibition on cartel provisions.

4.9                   The Harper Review considered that this overlap is unnecessary and increases the complexity of the law, and recommended that the separate prohibition on exclusionary provisions be repealed, with an amendment to the provisions on cartel conduct to address any resulting gap in the law.

Summary of new law

4.10               Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ in section 4D and makes consequential amendments to remove references to section 4D throughout the Act.

4.11               The defence to the exclusionary provision prohibition is also repealed as it is no longer needed.

Comparison of key features of new law and current law

New law

Current law

‘Exclusionary provision’ is not defined in the Act.

‘Exclusionary provision’ is defined in the Act.

There is no defence as there is no longer a separate prohibition on exclusionary provisions.

There is a defence to the prohibition against exclusionary provisions.

Detailed explanation of new law

4.12               Schedule 4 repeals the definition of ‘exclusionary provision’, in section 4D. [Schedule 4, item 1, section 4D]

4.13               The definition of ‘exclusionary provision’ is redundant following the repeal of the separate prohibition on exclusionary provisions (as detailed in Chapter 3).

4.14               Schedule 4 to this Bill also repeals section 76C, the defence to the prohibition on exclusionary provisions, as it is made redundant by the repeal of the separate prohibition. [Schedule 4, item 2, section 76C]

Consequential amendments

4.15               Consequential amendments are made to provisions of the Act which reference section 4D or exclusionary provisions, to remove such references. [Schedule 4, items 3-5, subsections 93AC(1) and 10.08(1)]

Commencement, application and transitional provisions

4.16                Schedule 4commences at the same time as Schedule 1.

 



Chapter 5          

Covenants affecting competition

Outline of chapter

5.1                   Schedule 5 to this Bill simplifies the provisions of the Act by defining ‘contract’ and ‘party’ to include covenants, and repealing redundant provisions which separately deal with covenants.

Context of amendments

5.2                   Section 45 concerns contracts, arrangements or understandings that restrict dealings or affect competition. The operation of section 45 is detailed in Chapter 3.

5.3                   Sections 45B and 45C relate to covenants and largely duplicate the concepts of section 45. Covenants are a form of agreement in which one or more parties promise to do, or refrain from doing, some action. The distinction between contracts and covenants appears throughout the Act, for example in section 87 which details the orders the Court may make and contains separate references to contracts and covenants.

5.4                   In a legal sense, there are technical differences between contracts and covenants. However, the Harper Review found that these technical differences have little to no impact on the agreement’s effect on competition.

5.5                   The Harper Review recommended that provisions which are redundant or unnecessarily duplicate other provisions could be removed, and identified the provisions relating to covenants as one example of unnecessary duplication.

Summary of new law

5.6                   Schedule 5 to this Bill simplifies the provisions of the Act by inserting definitions of ‘contract’ and ‘party’ and defining those terms to include covenants.

5.7                   Provisions which deal separately with covenants, which are now redundant, are repealed.

Comparison of key features of new law and current law

New law

Current law

Contract is defined, to include a covenant.

Contract is not defined.

Party to a contract that is a covenant, is defined to include a person bound by or entitled to the benefit of a covenant.

Party is not defined.

Covenants are dealt with under the provisions of the Act referring to contracts.

Throughout the Act, contracts and covenants are dealt with under separate provisions.

Detailed explanation of new law

5.8                   Schedule 5 to this Bill inserts a definition of ‘contract’ into the Act, and deems ‘contract’ to include a covenant. The definition does not define contract more generally, as the definition is well established in the common law. [Schedule 5, item 1, subsection 4(1)]

5.9                   Schedule 5 also inserts a definition of ‘ party’ to clarify that a party to a contract that is a covenant, includes a person who is bound by, or entitled to the benefit of, the covenant. [Schedule 5, item 1, subsection 4(1)]

Consequential amendments

5.10               The new definitions of ‘contract’ and ‘party’ render the separate provisions concerning covenants redundant. As a result, those provisions are repealed and other provisions are amended as required to remove any remaining references to covenants. [Schedule 5, items 2-17, sections 45B, 45C, and 44ZZRQ, subsections 4(3), 45(5), 46A(6), 87(3) and 87(5), paragraphs 4F(1)(a), 6(2)(e), 87(3)(a), 87(3)(c) and 87(3)(d), and subparagraphs 4F(1)(a)(i) and 6(2)(b)(i)]

5.11               Schedule 5 also makes amendments to Schedule 1 to the Act, to correspond to the amendments made by Schedule 2 to the Act itself and apply those amendments to persons. [Schedule 5, items 18-20, section44ZZRQ, subsection 45(5), section 45B and 45C of Schedule 1]

Commencement, application and transitional provisions

5.12               Schedule 5 commences at the same time as Schedule 1.



Chapter 6          

Secondary boycotts

Outline of chapter

6.1                   Schedule 6 to this Bill amends the Act to increase the maximum penalty applying to breaches of the secondary boycott provisions. This aligns the penalty with penalties for other breaches of the competition law.

Context of amendments

6.2                   Broadly, a secondary boycott involves one person, in concert with another person, engaging in conduct that hinders or prevents a third person supplying goods or services to, or acquiring goods or services from, a fourth person.

6.3                   Sections 45D and 45DB prohibit secondary boycotts, where the purpose and actual or likely effect of the conduct is respectively: to cause substantial loss or damage to the fourth person’s business; or to prevent or substantially hinder the third person from engaging in trade or commerce involving the movement of goods between Australia and overseas.

6.4                   Section 76 details the maximum pecuniary (monetary) penalties for breaches of the Act. Under paragraph 76(1A)(a), a corporation that breaches the secondary boycott provisions (section 45D or 45DB) is liable to a civil penalty not exceeding $750,000. By comparison, other breaches of the Act attract maximum penalties of $10 million or higher depending on the benefit obtained and the body corporate’s annual turnover.

6.5                   Secondary boycotts are harmful to trading freedom and therefore harmful to competition. The Harper Review saw no reason for the significant variation in maximum penalties, and recommended aligning the maximum penalty for breaches of secondary boycott provisions with the maximum penalty for other breaches of the competition law.

Summary of new law

6.6                   Schedule 6 to this Bill increases the maximum pecuniary penalty that applies for secondary boycotts, in line with the maximum penalty for other breaches of the competition law.

Comparison of key features of new law and current law

New law

Current law

The maximum penalty for a breach of the secondary boycott provisions is the greatest of:

•        $10,000,000;

•        three times the total value of the benefits obtained from the secondary boycott; or

•        if the court cannot determine the total value of these benefits, 10% of the annual turnover of the corporation for the twelve months leading up to when the secondary boycott occurred.

The maximum penalty for a breach of the secondary boycott provisions is $750,000.

 

Detailed explanation of new law

6.7                   Paragraph 76(1A)(a) provides for a separate maximum pecuniary penalty of $750,000 for a breach of certain listed provisions. Schedule 6 removes sections 45D and 45DB from the provisions listed in paragraph 76(1A)(a). [Schedule 6, item 1, subsection 76(1A)(a)]

6.8                   The effect of this amendment is that the maximum pecuniary penalty for a breach of the secondary boycott provisions is instead determined by paragraph 76(1A)(b), and is therefore the greatest of:

-                $10,000,000;

-                three times the total value of the benefits obtained from the secondary boycott; or

-                if the court cannot determine the total value of these benefits, 10% of the annual turnover of the corporation for the twelve months leading up to when the secondary boycott occurred.

6.9                   These amounts are a maximum penalty, and the court has discretion to set a penalty lower than the maximum.

Commencement, application and transitional provisions

6.10               Schedule 6 commences at the same time as Schedule 1.



Chapter 7          

Third line forcing

Outline of chapter

7.1                   Schedule 7 to this Bill amends the Act to prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition.

Context of amendments

7.2                   Third line forcing is a form of exclusive dealing (also known as a vertical trading restriction) and involves the supply of goods or services, or the giving of a particular price or discount, on the condition that the purchaser also acquire goods or services from another unrelated person, or a refusal to supply because the purchaser will not agree to such a condition.

7.3                   Third line forcing is prohibited under subsections 47(6) and 47(7) and paragraphs 47(8)(c) and 47(9)(d) of the Act. It is prohibited on a per se basis, that is, it is prohibited irrespective of its purpose, effect or likely effect.

7.4                   Third line forcing may be exempted from the prohibition, and protected from legal action under the Act, for example, by filing a notification with the Commission under section 93 of the Act. The Commission may revoke the notification if it considers that the likely public detriment from the conduct outweighs the likely any public benefit from the conduct.

7.5                   Australia is the only comparable jurisdiction that prohibits third line forcing on a per se basis. Other jurisdictions, including the United States, Canada, the European Union and New Zealand, assess similar conduct under a test that looks at the effect of the conduct on competition.

7.6                   The Harper Review noted that third line forcing is similar to second line forcing, in which a corporation supplies a product on the condition that the purchaser acquires another product from the same corporation (or a related corporation). Second line forcing is also known as ‘bundling’ or ‘tying’, and is not prohibited on a per se basis. Rather, it is prohibited where the conduct has the purpose, effect or likely effect of substantially lessening competition.

7.7                   The Harper Review found there was no need for third line forcing to be prohibited on a per se basis and singled out from other forms of vertical trading restriction which are subject to a competition test. The Harper Review acknowledged the availability of an exemption through the notification process, but found that the regulatory cost of lodging a notification is unnecessary, because in most cases the notification will be allowed.

7.8                   The Harper Review recommended that third line forcing be prohibited only where the conduct has the purpose, effect or likely effect of substantially lessening competition.

Summary of new law

7.9                   Schedule 7 to this Bill amends section 47 of the Act so that third line forcing is only prohibited where it has the purpose, effect or likely effect of substantially lessening competition.

Comparison of key features of new law and current law

New law

Current law

Third line forcing is prohibited only where it has the purpose, effect or likely effect of substantially lessening competition.

Third line forcing is prohibited on a per se basis.

Detailed explanation of new law

7.10               Subsection 47(1) of the Act prohibits a corporation engaging in exclusive dealing in trade or commerce. Subsections 47(2) to 47(9) set out various forms of conduct which constitute exclusive dealing, including third line forcing in subsections 47(6) and 47(7) and paragraphs 47(8)(c) and 47(9)(d).

7.11               Subsection 47(10) provides that the forms of exclusive dealing listed in that subsection are only prohibited where they have the purpose, effect or likely effect of substantially lessening competition. Forms of exclusive dealing not listed in subsection 47(10) are prohibited on a per se basis. 

7.12               Schedule 7 amends subsection 47(10) so that all forms of exclusive dealing are prohibited where the conduct has the purpose, effect or likely effect of substantially lessening competition. The references to the specific types of exclusive dealing conduct to which the test currently applies are removed. [Schedule 7, item 1, subsection 47(10)]

7.13               As all third line forcing conduct is now subject to a substantial lessening of competition test, Schedule 9 makes consequential amendments to the notification provisions. These amendments are detailed in Chapter 9, and ensure the grounds on which the Commission is able to consider a notification are consistent for all forms of exclusive dealing that may be notified. 

7.14               Following the amendment to the provisions for notification of exclusive dealing, subsection 47(10A), which specifically deals with notifications for third line forcing, is repealed. [Schedule 7, item 4, subsection 47(10A)]

Consequential amendments

7.15               Schedule 7 makes a minor amendment to the wording in paragraphs 47(10)(a) and 47(10(b). References to ‘that conduct’ have been changed to ‘the conduct that constitutes the practices of exclusive dealing’, to make clear that the ‘practice’ referred to in subsection 47(1) is also ‘conduct’. [Schedule 7, items 2 and 3, paragraphs 47(10(a) and 47(10)(b)]

7.16               Schedule 7 also makes amendments to Schedule 1 to the Act, to correspond to the amendments made by Schedule 7 to the Act itself and apply those amendments to persons. [Schedule 7, items 5-8, subsections 47(10) and 47(10A) and paragraph s47(10(a) and 47(10)(b) of Schedule 1 to the Act]

Commencement, application and transitional provisions

7.17               Schedule 7 commences at the same time as Schedule 1.

Do not remove section break.



Chapter 8          

Resale price maintenance

Outline of chapter

8.1                   Schedule 8 to this Bill amends the resale price maintenance (RPM) and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct. 

8.2                   Schedule 8 also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

Context of amendments

8.3                   Broadly, RPM involves the supply of goods on the condition that the goods not be sold below a price specified by the supplier. RPM is a form of vertical restraint concerning resale prices, and is prohibited under section 48 on a per se basis. Section 96 specifies conduct that constitutes RPM.

8.4                   The Harper Review noted that RPM may have varied impacts on competition. In some circumstances, RPM may facilitate anti-competitive collusion. However, RPM will not have a substantial effect on competition in a market if the good or service is subject to strong competition. RPM may be pro-competitive and beneficial for consumers where, for example, it creates an incentive for retailers to invest in training their staff on the use of a complex product.

8.5                   The Harper Review also noted that RPM is becoming more commonplace in online markets, which are an increasingly significant part of the economy. A number of online business models now use distribution arrangements which may constitute RPM, but provide benefits such as expanding the range of product sold in Australia.

8.6                   The Commission may grant authorisation for RPM conduct where it would result in a net public benefit. Authorisation for RPM has been available since 1995, but is seldom used relative to authorisations for other prohibited conduct. The Harper Review noted a concern that the cost and delay of the authorisation process is a deterrent to businesses seeking exemption for a retailing or distribution strategy involving RPM, particularly where this would delay the launch of a new product.

8.7                   Notification is available for other forms of vertical restriction, including third line forcing, but is not available for RPM. Notification is generally a quicker and less expensive means of obtaining an exemption.

8.8                   The Harper Review considered it prudent to retain a per se prohibition on RPM, but recommended that notification be made available for RPM. The Panel noted that the Commission could withdraw the exemption if it considered that the anti-competitive harm of the conduct outweighed any public benefit.

8.9                   The Harper Review also recommended that the prohibition on RPM should not apply to related bodies corporate.

Summary of new law

8.10               Schedule 8 amends the resale price maintenance and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct.

8.11               Schedule 8also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

Comparison of key features of new law and current law

New law

Current law

A corporation or other person may notify the Commission of RPM conduct.

Notification is not available for RPM conduct.

Actions between related bodies corporate do not constitute engaging in RPM conduct.

Acts between related bodies corporate may constitute engaging in RPM conduct.

Detailed explanation of new law

Notification

8.12               Schedule 8 amends section 48 to provide that the prohibition against RPM does not apply to a corporation or other person engaging in conduct that constitutes RPM if the corporation or other person has given the Commission a notice under section 93(1), and that notice is in force. [Schedule 8, items 1 and 2, subsections 48(1) and 48(2)]

8.13               Section 93 is renamed to indicate that notification is now available under that section for RPM conduct. Subsection 93(1) sets out the types of conduct or proposed conduct for which a corporation or other person may give a notice to the Commission. Schedule 8 amends subsection 93(1) to include conduct of the kind referred to in section 48 (that is, RPM). The subsection is also split into two paragraphs for simplification. [Schedule 8, items 3 to 5, Subdivision A of Division 2 of Part VII, subsection 93(1)]

8.14               Subsection 93(3A), which allows the Commission to give a written notice to revoke a notification if it is satisfied that the public benefits of the notified conduct will not outweigh the detriments, is also amended to incorporate conduct of the kind referred to in section 48. [Schedule 8, item 9, paragraph 93(3A)(a)]

8.15               Subsection 93(7A) is amended so that subsection 93(1) notices for conduct referred to in section 48 come into force:

-                at the end of the period of 60 days, or such other period as is prescribed by the regulations, starting on the day when the corporation or other person gave the Commission notice; or

-                if the Commission gives notice to the corporation or other person under subsection 93A(2) during that period - when the Commission decides not to give the corporation or other person a notice under subsection 93(3A). [Schedule 8, item 13, subsection 93(7A)]

8.16               The latter timing applies where, within the initial 60 day or otherwise prescribed period, the Commission issues a draft notice proposing to revoke a notification under subsection 93(3A) and invites the corporation and other interested persons to request a conference with the Commission (under subsection 93A(2)) but then decides not to give a notice under subsection 93(3A).

8.17               Subsections 93(7B) and 93(7C), respectively outline when certain types of notifications do not come into force or cease to be in force. Each of these subsections is amended to apply to conduct under section 48 (that is, RPM). [Schedule 8, items 14 and 16, subsections 93(7B) and 93(7C)]

8.18               Section 48 applies to a ‘corporation or other person’, and so provisions of section 93 relating to section 48 are amended to refer to a ‘corporation or other person’. Provisions within section 93 relating to other sections of the Act remain applicable to corporations only. The application of these other sections to persons occurs through the operation of Schedule 1 to the Act. [Schedule 8, items 6, 7, 8, 10, 11, 15, 17, 18, 19 and 20, subsections 93(2), 93(3A), 93(5), 93(6), 93(10) and 93A(2), paragraphs 93(2)(a), 93(3A)(a), 93(7C)(b), 93(8)(a) and 93(8)(b) and subparagraphs 93(7B)(b)(i) and 93(7B)(b)(ii)]

8.19               Section 93 is further amended by Schedule 9 to allow the Commission to impose conditions on a notification for RPM conduct. If the Commission reasonably believes that it would have grounds to give the corporation or person a notice under subsection 93(3A) (that the conduct is not approved), but that those grounds would not exist if particular conditions relating to the proposed conduct were complied with, then the Commission may impose those conditions. [Schedule 9, item 7, section 93AAA]

8.20               If the Commission is satisfied that the corporation or other person has failed to comply with those conditions, the Commission may at any time revoke the RPM notification by issuing a written notice that sets out the reasons the Commission is so satisfied.  [Schedule 9, item 6, subsection 93(3B)]

8.21               The decision of the Commission to impose conditions on a notification given under section 93 is subject to Tribunal review. If the person satisfies the Tribunal either that the Commission would not have had grounds to object to the notice under subsection 93(3A), or that the conditions imposed would not have addressed those grounds, the Tribunal must set aside the notice. If the Tribunal is not so satisfied, it must affirm the notice. [Schedule 9, item 25, subsection 105(5AAB)]

8.22               The decision of the Commission to revoke a notification, on the basis that a person has not complied with conditions, is also subject to Tribunal review. If a person satisfies the Tribunal that they have in fact complied with the conditions, the Tribunal must set aside the notice revoking the notification. If the Tribunal is not so satisfied, it must affirm the notice. [Schedule 9, item 25, subsection 105(5AAA)]

8.23               Further amendments to the notification provisions are made by Schedule 9 and detailed below in Chapter 9. 

Related bodies corporate

8.24               A new subsection is added to section 96, so that the actions listed in subsection 96(3) do not constitute engaging in RPM if the supplier and second person are related bodies corporate. [Schedule 8, item 21, subsection 96(8)]

8.25               This change reflects the general tenet of competition law that companies within a corporate group are treated as a single economic entity and are not considered to be competitors. This also brings section 48 in line with the prohibitions in sections 45 and 47, which do not apply to trading arrangements entered into between related companies.

Consequential amendments

8.26               Schedule 8 makes a number of consequential amendments as a result of providing for notification in respect of RPM, including to provide that certain elements of section 93 should only apply to notification for exclusive dealing, and not to RPM. [Schedule 8, items 2 and 12, subsections 48(2) and 93(7)]

8.27               As a result of the repeal of the price-signalling provisions detailed in Chapter 3, notification is no longer required for price-signalling and section 93 is amended to remove any reference to those provisions. [Schedule 8, items 5, 9, 13, 14 and 16, subsections 93(1), 93(7A), 93(7B), and 93(7C) and paragraph 93(3A)(a)]

8.28               As a result of the removal of the per se prohibition on third line forcing, and the change to a competition-based test as detailed in Chapter 7, third line forcing is removed from the subsections of section 93 which detail additional or different requirements for conduct notified under specified sections only. [Schedule 8, items 9, 13, 14 and 16, subsections 93(7A), 93(7B), 93(7C) and paragraph 93(3A)(a)]

8.29               Schedule 8 also makes amendments to Schedule 1 to the Act corresponding with amendments made to the Act itself by Schedule 8. These amendments to Schedule 1 of the Act apply the Schedule 8 changes to persons. [Schedule 8, items 22 and 23, section 48 of Schedule 1 to the Act]

Commencement, application and transitional provisions

8.30               Schedule 8 commences at the same time as Schedule 1.

 



Outline of chapter

9.1                   Schedule 9 to this Bill amends Part VII and Part IX of the Act to:

•        consolidate the various authorisation provisions, including those relating to mergers, into a single authorisation process;

•        grant the Commission a ‘class exemption’ power;

•        allow the Commission to impose conditions on notifications for resale price maintenance and collective bargaining that involves collective boycott conduct;

•        grant the Commission a power to issue a ‘stop notice’ requiring collective boycott conduct that is the subject of a notification to cease; and

•        provide for Tribunal review of Commission merger authorisation determinations.

Context of amendments

9.2                   Part VII of the Act covers authorisations (Division 1), notifications (Division 2) and merger clearances and authorisations (Division 3). While these processes have different features, each provides an exemption from the application of Part IV of the Act.

Simplification

9.3                   The Harper Review considered that the authorisations and notifications provisions were unnecessarily complex, generating excessive regulatory and administrative costs and creating a focus on technicalities over issues of substance.

9.4                   The Harper Review recommended two principal changes to simplify the authorisations and notifications provisions:

•        ensuring that only a single authorisation application is required for a single business arrangement or transaction; and

•        empowering the Commission to grant authorisation on the basis that the conduct would not be likely to substantially lessen competition.  

Mergers

9.5                   Submissions to the Harper Review raised concerns about the Commission’s formal merger clearance process and the merger authorisation processes undertaken by the Tribunal. A merger clearance can only be granted if the Commission is satisfied that the merger will not substantially lessen competition. A merger authorisation can only be granted if the Tribunal is satisfied that there will be net public benefits from the merger.

9.6                   The Harper Review noted that the formal clearance process has not been used since it was introduced in 2007, and that the merger authorisation process has been used only a few times since it was reformed in 2007.

9.7                   Unlike authorisations for other conduct prohibited under Part IV, the Commission is not currently the decision-maker at first instance for merger authorisations. Instead, the Tribunal makes the decision at first instance and there is no avenue for review of these decisions other than seeking judicial review by the Federal Court.

9.8                   The Harper Review recommended combining the formal clearance process with the merger authorisation process to create a single,  streamlined authorisation process with the following features:

•        the Commission should be the decision-maker at first instance (as it is better suited to undertaking investigations);

•        the Commission should be empowered to authorise a merger if satisfied the merger would not substantially lessen competition or would result, or be likely to result, in a net public benefit;

•        the formal process should not be subject to prescriptive information requirements, but the Commission should be empowered to require the production of business and market information;

•        the formal process should be subject to strict timelines that cannot be extended except with the consent of the merger parties;

•        decisions of the Commission should be subject to review by the Tribunal under a process that is also governed by strict timelines; and

•        the review by the Tribunal should be based upon the material that was before the Commission, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied there is sufficient reason.  

Class exemptions

9.9                   The Harper Review recommended granting the Commission the power to issue a ‘class exemption’ for business practices (types or kinds of conduct) that are unlikely to generate competition concerns, or are likely to generate a net public benefit. Such exemptions would remove the need to make individual applications by creating ‘safe harbours’ for business and thereby reduce compliance and administration costs and increase certainty.

Collective Bargaining

9.10               Collective bargaining by businesses may be detrimental to competition and consumer welfare. Such behaviour may allow firms to exploit consumers, force out competition, and reduce general economic welfare. The same is true of collective boycotts, where a bargaining group refuses to deal with suppliers or customers. However, in certain circumstances collective bargaining conduct can be beneficial for competition. Similarly, in some circumstances a collective boycott can be an appropriate and useful tool to support collective bargaining.

9.11               For example, small businesses will typically have less bargaining power than one large supplier, putting them at a disadvantage in individual negotiations. By negotiating as a collective, small business may be able to negotiate with bargaining power equal to a larger firm, and achieve a more efficient and pro-competitive outcome.

9.12               The Harper Review considered that the collective bargaining notification process is potentially of significant benefit to small business and could be more widely used. It recommended reforms to introduce greater flexibility into the collective bargaining notification process, including:

•        enabling notifications to cover future members of the bargaining group and multiple counterparties;

•        enabling the Commission to impose conditions on notifications involving collective boycotts;

•        extending the time allowed for the Commission to consider notifications involving collective boycotts before they come into force; and

•        giving the Commission a ‘stop power’ to require collective boycotts to cease in exceptional circumstances.

Summary of new law

9.13               Schedule 9 simplifies the various authorisation provisions into a single authorisation provision that allows the Commission to authorise conduct that would otherwise be prohibited under Part IV.

9.14               Schedule 9also repeals the formal merger clearance and authorisation processes contained in Division 3 of Part VII. Mergers will now be subject to the general authorisation process in section 88. Among other things, this means the decision-maker at first instance for merger authorisations will change from the Tribunal to the Commission.

9.15               Schedule 9 introduces a ‘class exemption’ power, allowing the Commission to exempt conduct or categories of conduct if it is unlikely to raise competition concerns or is likely to generate net public benefits.

9.16               Schedule 9 also amends the notification process for collective bargaining, including by allowing the Commission to impose conditions on notifications which include collective boycott activity, and granting the Commission the power to issue a ‘stop notice’ requiring collective boycott conduct to cease.

Comparison of key features of new law and current law

New law

Current law

The Commission can grant an authorisation if it is satisfied that conduct:

- will not (or is not likely to) substantially lessen competition or

- is likely to result in a net public benefit.

The Commission can grant an authorisation only if it is satisfied the conduct is likely to result in a net public benefit.

There is a single authorisation provision for all types of authorisations, with some procedural differences between merger and non-merger authorisations.

There are separate authorisation provisions applying to mergers and other types of authorisations.

The decision-maker at first instance for merger authorisations is the Commission.

The decision-maker at first instance for merger authorisations is the Tribunal.

No separate merger clearance provision.

The Commission can grant a merger clearance if it is satisfied the merger will not (or is not likely to) substantially lessen competition.

The Commission’s determination on a merger authorisation is subject to merits review by the Tribunal.

The Tribunal’s determination on a merger authorisation is not subject to merits review.

The Commission may impose conditions on collective boycott and RPM notifications.

The Commission can only approve or reject collective boycott notifications. Notification is not available for RPM conduct.

A collective boycott must cease when the Commission gives a ‘stop notice’.

There is no provision for a ‘stop notice’.

Detailed explanation of new law

Repeal of the formal merger clearance and authorisation processes

9.17               Schedule 9 broadly adopts the recommendations of the Harper Review in relation to merger authorisations, with some slight differences in detail as discussed below.

9.18               Schedule 9 repeals the existing Division 3 of Part VII. This includes the formal merger clearance process, and the separate merger authorisation process. [Schedule 9, item 22, Division 3 of Part VII]

9.19               The general authorisation provisions are amended to incorporate merger authorisations and also to simplify the provisions.

9.20               The following paragraphs outline the authorisation process as applicable to all authorisations, followed by detail of several provisions which are specific to merger authorisations. 

Simplification of the general authorisation process

9.21               Schedule 9 significantly simplifies the authorisation provisions by removing separate provisions applicable to specific types of authorisations, and instead including a single provision under which conduct may be authorised (section 88) and a single test for authorisation (section 90).

9.22               The following paragraphs explain the operation of the amended provisions, which apply to all types of authorisations (both merger and non-merger). Except as described below, these amendments are not intended to change the authorisation process itself. Rather, they are intended to reduce the complexity of the provisions of the Act that set out the authorisation process.

Power to grant authorisation

9.23               Section 88 no longer contains several provisions allowing authorisation to be granted for different types of conduct prohibited by Part IV. Instead, subsection 88(1) allows the Commission to grant an authorisation to a person to engage in conduct to which one or more provisions of Part IV would or might apply. This power is discretionary and is exercisable on application by a person. [Schedule 9, item 1, subsection 88(1)]

9.24               The power to grant authorisation under section 88(1) now extends to conduct under section 46 (misuse of market power) and section 50 (mergers).

9.25               The Commission may grant a single authorisation for several types of conduct, or separate authorisations for any of the conduct to which the application relates. [Schedule 9, item 1, subsection 88(5)]

9.26               ‘Engage in conduct’ is defined in subsection 4(2) of the Act as ‘doing or refusing to do any act’. Although subsection 4(2) of the Act does not expressly include the acquisition of shares or assets, these are ‘acts’ and mergers may now be authorised under section 88 on the basis that sections 50 or 50A, which are contained in Part IV, would or might apply to such acquisitions.

9.27               The Commission may still only prospectively authorise conduct. The Commission does not have the power to grant authorisation for past conduct, that is, conduct (including mergers) engaged in before the Commission determined the application for authorisation. This replaces the former subsections 88(6B), (8D) and (12) with a general rule for all types of authorisation. [Schedule 9, item 1, subsection 88(6)]

Authorisation subject to conditions

9.28               The Commission may continue to grant an authorisation subject to conditions specified in the authorisation, and the protection of an authorisation does not apply if any of the conditions are not complied with. [Schedule 9, item 1, subsection 88(3)]

9.29               For example, where a merger authorisation is granted on the basis of a condition that is to be complied with before the merger takes place, and the merger is completed without the condition having been complied with, the merger will not be in accordance with the authorisation. This means the merger will not benefit from the protection afforded by the authorisation and the merger may contravene section 50.

9.30               The ability to grant an authorisation subject to conditions allows the Commission to address elements of the conduct which are a cause for concern, rather than denying the application outright on the basis of those concerns.

Effect of an authorisation

9.31               While an authorisation is in force, the provisions of Part IV specified in the authorisation do not apply to the conduct specified in the authorisation, to the extent it is engaged in by:

•        the applicant;

•        any other person named or referred to in the application as a person who is engaged in, or proposed to be engaged in, the conduct; and

•        any particular person or class of persons, as specified in the authorisation, who become engaged in the conduct. [Schedule 9, item 1, subsection 88(2)]

9.32               An authorisation provides protection only for the conduct and provisions specified in that authorisation. This protection does not extend to conduct not specified in the authorisation or to provisions of Part IV that may also apply to the conduct but which have not been specified in the authorisation.  

Applications for authorisation

9.33               An application for authorisation must specify both the relevant conduct that is to be engaged in, and the provisions of Part IV that would or might apply to the specified conduct. [Schedule 9, item 1, subsection 88(1)]

9.34               Where a single application for authorisation deals with a merger and other conduct under Part IV, the application is only considered to be a ‘merger authorisation’ insofar as it relates to the merger. Where the procedure for merger authorisations differs from the procedure for non-merger authorisations, the procedure applicable to each type of authorisation applies to the corresponding component of the authorisation.

9.35               The requirements for an application for authorisation (including a minor variation, revocation or revocation and substitution) are set out in subsection 89(1). Schedule 9 to the Bill removes the requirement that the application must be in the form prescribed by the regulations, and instead requires that the application be in the form approved by the Commission in writing. An application must be accompanied by any other information or documents required by the form. [Schedule 9, item 77, paragraph 89(1)(a)]

9.36               This change introduces greater flexibility into the authorisation process by allowing the Commission to determine which information is likely to be required to assess proposed conduct.

9.37               The application fee will continue to be prescribed by the regulations.

9.38               The applicant may withdraw their application for authorisation at any time, by writing to the Commission. [Schedule 9, item 1, subsection 88(7)]

Test for authorisation

9.39               Section 90 is amended to incorporate merger authorisations and simplify the provision. It no longer contains separate tests for granting authorisation for different types of conduct prohibited by Part IV.

9.40               Subsection 90(7) now contains a single ‘authorisation test’ which applies to all types of authorisations. The new test provides that the Commission must not grant an authorisation unless it is satisfied in all the circumstances either:

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

•        that the conduct would result, or be likely to result, in a benefit to the public which would outweigh the detriment to the public that would result, or be likely to result, from the conduct. [Schedule 9, item 3, subsection 90(7)]

9.41               The first limb of the test is a new basis for granting authorisation. The second limb is consistent with the tests previously contained in section 90.

9.42               Section 90(8) specifies that the first limb is not applicable to the extent that the conduct specified in an application for authorisation is prohibited on a per se basis. [Schedule 9, item 3, subsection 90(8)]  

9.43               This means that authorisations for cartel conduct (Division 1 of Part IV), secondary boycotts (sections 45D or 45DB) or resale price maintenance (section 48) may only be granted if the Commission is satisfied of the second limb of the test.

9.44               This avoids a mismatch between the basis on which the conduct is prohibited, which does not look to whether the purpose, effect or likely effect of the conduct is a substantial lessening of competition, and the basis on which authorisation for that conduct may be granted.

9.45               Subsections 90(8A), (8B) and (9), which contain specific tests for authorisation of dual-listed company arrangements and overseas mergers, are repealed. [Schedule 9, item 3, subsections 90(8A) to 90(9)]

Power to seek additional information

9.46               Currently, the Commission may consult with interested parties before making an authorisation determination. Under section 90(2), it is required to take all submissions received from the applicant, the Commonwealth, a State or any other person into account.

9.47               The new subsection 90(6) replaces 90(2) and explicitly provides that the Commission may invite written submissions from interested persons within a specified period, and give the applicant or another person written notice to provide further or particular information, or consult with persons as reasonable and appropriate. The Commission may consult with persons as it considers reasonable and appropriate [Schedule 9, item 3, subsection 90(6)]

9.48               The new subsection 90(6A) provides that before making its determination, the Commission must take into account submissions and information received under subsection 90(6) within the period specified in the written notice (if any), but is not required to take into account submissions and information received after the specified period. This does not prevent the Commission taking such information into consideration if it wishes to do so. [Schedule 9, item 3, subsection 90(6A)]

Period for consideration and default determination

9.49               Schedule 9 does not change the period for consideration, or default determination, of a non-merger application. Under subsection 90(10), if the Commission does not determine an application for a non-merger application within the ‘relevant period’ (as set out in subsection 90(10A)), it is taken to have granted the authorisation.

Tribunal review of general authorisations

9.50               Currently, a person dissatisfied with a Commission authorisation determination may apply to the Tribunal for a review under section 101 of the Act. Schedule 9 continues the position that the Tribunal conducts a rehearing of non-merger authorisations. [Schedule 9, item 118, subsection 101(2)]

Minor variation, revocation, and revocation and substitution

9.51               Sections 91A, 91B and 91C, respectively, deal with minor variations, revocation, and revocation and substitution of an authorisation. Schedule 9 sets out powers of the Commission and the requirements related to these processes. The powers and requirements are broadly consistent with those that apply for the original application for authorisation.

9.52               Subsection 91A(4) is amended so that the test for granting a minor variation of an authorisation corresponds to the new test applying to the original grant of authorisation.

9.53               If the Commission granted the authorisation on the grounds (in paragraph 90(7)(a)) that the conduct would not, or would not be likely to substantially lessen competition, then it must not grant the minor variation unless it is satisfied in all the circumstances that the variation would not, or would not be likely to increase the extent to which the conduct lessens competition. [Schedule 9, item 92, paragraph 91A(4)(a)]

9.54               If the Commission granted the authorisation on the grounds (in paragraph 90(7)(b)) that the conduct would, or would be likely to generate a net public benefit, then it must not grant the minor variation unless it is satisfied in all the circumstances that the variation would not, or would not be likely to, reduce the net public benefit of the conduct. [Schedule 9, item 92, paragraph 91A(4)(b)]

9.55               Subsection 91A(4A) makes clear that this test does not require the Commission to complete a fresh assessment of the conduct in its entirety. The Commission need not have regard to conduct that is unaffected by the variation. This is intended to ensure the focus is on the effect of the minor variation, and to ensure applications for minor variations can be efficiently determined by the Commission. [Schedule 9, item 92, subsection 91A(4A)]

9.56               Prior to making its determination in relation to a minor variation, revocation or revocation and substitution of an authorisation the Commission may seek additional information from, or consult with, persons in accordance with subsection 90(6). The requirements for the Commission to consult in relation to a minor variation, revocation or revocation and substitution of an authorisation are included elsewhere in sections 91A, 91B and 91B. [Schedule 9, items 92 to 94, subsections 91A(2A), 91B(3A), 91B(3B), 91C(3A) and 91C(3B)]

9.57               Subsections 91A(3), 91B(4) and 91C(4) respectively set out the information the Commission must consider before it may make a determination granting or refusing a minor variation, revocation or revocation and substitution. Where the Commission seeks certain information within a specified period, because of the application of subsection 90(6) to section 91A, 91B or 91C, the Commission is only required to consider information received within that period. The Commission may consider late information if it wishes to do so. [Schedule 9, items 92 to 94, subsections 91A(3), 91B(4) and 91C(4)]

9.58               The tests for revocation and revocation and substitution of an authorisation remain the same, although minor amendments are made within sections 91B and 91C to reflect the other amendments made by Schedule 9 (such as the move to a single test for authorisation under subsection 90(7)). [Schedule 9, items 93 and 98, subsections 91B(5) and 91C( 7)]  

Merger authorisations

9.59               The paragraphs below refer to merger authorisations generally, except where they distinguish between domestic and overseas merger authorisation.

New defined terms

9.60               The definition of ‘clearance’ is repealed, as merger clearances no longer exist under the Act. [Schedule 9, item 28, subsection 4(1)]

9.61               Similarly, the definition of ‘authorisation’ is amended to reflect the repeal of Division 3 of Part VII. [Schedule 9, item 27, subsection 4(1)]

9.62               Definitions are inserted into subsection 4(1), to distinguish between a ‘merger authorisation’ and an ‘overseas merger authorisation’. [Schedule 9, item 29, subsection 4(1)]

9.63               A merger authorisation is defined as:

•        an authorisation for a person to engage in conduct to which section 50 or 50A would or might apply; but

•        not authorisation for a person to engage in conduct to which any provision of Part IV, other than section 50 or section 50A, would or might apply. [Schedule 9, item 29, subsection 4(1)]

9.64               An overseas merger authorisation is defined to mean a merger authorisation that is not an authorisation for conduct to which section 50 would or might apply. By implication, a merger authorisation that is not an overseas merger authorisation is a ‘domestic merger authorisation’.  [Schedule 9, item 29, subsection 4(1)]

9.65               A domestic merger authorisation is an authorisation that is not an overseas merger authorisation. [Schedule 9, item 122, paragraph 102(1AA)(1)(a)]

Authorisation subject to conditions

9.66               The Commission may make it a condition of granting a merger authorisation that a person must give, and comply with, an undertaking under section 87B. If the person does not comply with this condition, the protection of the merger authorisation will not apply. Subsection 87B(4) sets out additional consequences for failure to comply with a section 87B undertaking. [Schedule 9, item 1, subsection 88(4)]  

9.67               The application form for a merger application, as approved by the Commission, may contain a section 87B undertaking not to make the acquisition while the Commission is considering the application. [Schedule 9, item 78, subsection 89(1AA)]

Period for consideration and default determinations

9.68               Given their commercial sensitivity, the Act sets shorter timeframes for considering merger authorisations than for non-merger authorisations. Schedule 9 preserves the existing period for consideration of a domestic merger authorisation, as well as the default position in the event the Commission has not made a determination by the end of that period.

9.69               Under subsection 90(10B), the Commission has 90 days to determine a domestic merger authorisation, beginning on the day the Commission receives the application. [Schedule 9, item 82, subsection 90(10B)]

9.70               The 90 day period may be extended under subsection 90(12) if the applicant informs the Commission in writing, before the end of the initial 90 day period (or other base period as applicable), that they agree to the Commission taking a specified longer period. [Schedule 9, item 84, subsection 90(12)]

9.71               If the Commission has not determined an application for a domestic merger authorisation by the end of the 90 day period (or the longer period, if extended under subsection 90(12)), the Commission is taken to have refused the application. [Schedule 9, item 82, subsection 90(10B)]

9.72               Similarly, no changes are made to the timing for, or default decision on, overseas merger authorisations under subsection 90(11). The Commission continues to have 30 days, from the day on which the application is received, to determine the application. If the Commission has not determined an application for an overseas merger authorisation by the end of the 30 day period, the Commission is taken to have granted the application.

Period for determining minor variations, revocations or revocation and substitutions of domestic merger authorisations

9.73               Subsections 90(10B), 90(12) and 90(13) carry over the timing for determining an original application for a domestic merger authorisation to an application for a minor variation, revocation or revocation and substitution of that domestic merger authorisation. [Schedule 9, items 82, 92, 93 and 99, subsections 91A(5), 91B(5) and 91C(7A)]

9.74               This means that the Commission will be deemed to have refused to grant the minor variation, revocation or revocation and substitution if it has not determined the application within 90 days (or longer period if extended in accordance with those subsections).

9.75               This does not apply in relation to overseas merger authorisations.

Tribunal review of merger authorisations

9.76               The Tribunal may review a determination of the Commission in relation to:

•        an application for a merger authorisation;

•        an application for a minor variation of a merger authorisation;

•        an application for, or the Commission’s proposal for, the revocation of a merger authorisation; and

•        an application for, or the Commission’s proposal for, the revocation of a merger authorisation and the substitution of another merger authorisation. [Schedule 9, items 118 and 128, subsections 101(2) and 102(8)]

9.77               Under subsection 101(2), the Tribunal’s review is not a rehearing of the matter where it relates to a determination of any of these applications. [Schedule 9, item 118, subsection 101(2)]

9.78               Subsection 102(10) provides that when conducting a review in relation to a domestic merger authorisation, the Tribunal must not have regard to any information, documents or evidence other than:

•        information referred to in the Commission’s reasons for its determination;

•        any information or report given to the Tribunal under subsection 102(6);

•        the information, documents or evidence referred to in subsection 102(7);

•        information given to the Tribunal as a result of the Tribunal seeking such information, and consulting with such persons, as it considers reasonable and appropriate for the sole purpose of clarifying the information, documents or evidence referred to in subsection 102(7); and

•        any information, documents or evidence referred to in subsection 102(9). [Schedule 9, item 128, subsection 102(10)]

9.79               Subsection 102(9) grants the Tribunal a power to allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time of the Commission’s determination. This allows the Tribunal to take account of a change in circumstances that has occurred since the Commission’s determination. For example, if there is a new entry to the relevant market after the Commission’s determination is made, the Tribunal may allow a person to provide new information about the entrant so this change in circumstances can be taken into account in the Tribunal’s review. [Schedule 9, item 128, subsection 102(9)]

9.80               The limitations on the information that may be considered by the Tribunal appropriately balance the interests of all parties to a review of a merger authorisation matter. In particular, they are intended to ensure that applicants for merger authorisation provide the Commission with all relevant material at the time of the application, and do not delay production of that material until later in the process or until Tribunal review. The limitations also facilitate the Tribunal conducting its review expeditiously, given the time sensitive nature of merger transactions.

9.81               Subsection 102(9) ensures that the parties to an application for review are not unfairly prejudiced by the limitations of the Tribunal review where there is genuinely new relevant information, documents or evidence that was not in existence at the time of the Commission’s determination.

9.82               Subsection 102(1AA) provides that the Tribunal must determine an application for review of a domestic merger authorisation within the relevant period . This ‘relevant period’ is 90 days, beginning on the day the Tribunal receives the application, unless:

•        the Tribunal allows new information, documents or evidence under subsection 102(9), in which case the period is extended to 120 days. This extension allows the Tribunal sufficient time to consider the new material.; or

•        the Tribunal determines in writing before the end of the initial 90 or 120 day period (as applicable) that the matter cannot be dealt with properly within that initial period, either due to its complexity or other special circumstances, and that an extended period of up to a further 90 days in addition to the initial period applies. [Schedule 9, item 122, subsections 102(1AA), 102(1AC) and 102(1AD)]

9.83               If the Tribunal determines to extend its period of consideration under subsection 102(1AD), it must notify the applicant and the Commission of the determination before the end of the initial 90 or 120 day period (as applicable). [Schedule 9, item 122, paragraph 102(1AD)]

9.84               If the Tribunal does not make a determination on a domestic merger authorisation matter within the applicable period, it is taken to have affirmed the Commission’s determination. [Schedule 9, item 122, subsection 102(1AB)]

9.85               Schedule 9 continues the requirement that the Tribunal must make a determination on the review of overseas merger authorisations within 60 days unless it considers that the matter cannot be dealt with properly within that period (in accordance with subsection 102(1AA)).

Providing false or misleading information

9.86               A new section 92 replaces former section 95AZN. Section 92 prohibits a person giving false or misleading information to the Commission or Tribunal under Division 1 of Part VII or Part XIB, in connection with:

•        an application for merger authorisation;

•        an application for a minor variation of a merger authorisation;

•        an application for, or the Commission’s proposal for, the revocation or revocation and substitution of a merger authorisation; or

•        the Tribunal’s review in relation to any of the above applications or proposals. [Schedule 9, item 100, subsection 92(1)]

9.87               Section 92 will be contravened where a person is negligent as to whether the information is false or misleading in a material particular. The requirement of negligence will also be satisfied by proof that the person knew, or was reckless as to whether, the information was false or misleading in a material particular.  [Schedule 9, item 100, subsection 92(2)]

9.88               Consequential amendments are made throughout the Act to replace references to section 95AZN with references to section 92. [Schedule 9, items 54-62, 69 and 72, sections 76A and 76B, subsections 75B(1), 76A(2), 76B(2) to 76B(4), paragraphs 76(1A)(c), 76(1B)(a),76B(5)(a), 81A(1)(d) and 89(1)(a), and subparagraph 76(1)(a)(iii)]

Class exemption power

9.89               Schedule 9 inserts a new Division 3 of Part VII that allows the Commission to create class exemptions for particular kinds of conduct, so as to create ‘safe harbours’ for business and thereby reduce compliance and administration costs associated with individual authorisations. [Schedule 9, item 22, Division 3 of Part VII]

9.90               The new subsection 95AA grants the Commission a power to determine that one or more specified provisions of Part IV do not apply to conduct of a kind specified in the determination. [ Schedule 9, item 22, section 95AA]

9.91               Parties will need to self-assess whether their conduct falls within a class exemption.

Test for determination of a class exemption

9.92               The Commission may only determine a class exemption if it is satisfied in all the circumstances that conduct of that type satisfies one limb of the two-limb test in subsection 95AA(1). That is, that the conduct of that kind would:

•        not have the effect or would not be likely to have the effect, of substantially lessening competition; or

•        result, or be likely to result, in a benefit to the public which would outweigh the detriment that would result, or be likely to result, from the conduct. [Schedule 9, item 22, subsection 95AA(1)]  

9.93               This test for the Commission to determine a class exemption is therefore the same as the test that the Commission would apply when authorising a particular instance of conduct. Parties will need to self-assess whether their conduct falls within a particular class exemption.

Form of a class exemption

9.94               A class exemption is a legislative instrument within the meaning of section 8 of the Legislation Act 2003 , and must be registered on the Federal Register of Legislation. [ Schedule 9, item 22, subsection 95AA(1)]

9.95               Under subsection 33(3) of the Acts Interpretation Act 1901 , the Commission’s power to make a class exemption includes a power to revoke or vary a class exemption. The power to revoke or vary a class exemption is subject to the same conditions as the power to make the initial class exemption, including that the Commission must be satisfied with respect to the matters listed in subsection 95AA(1). [ Schedule 9, item 22, note at subsection 95AA(1)]

9.96               It is expected that the Commission will conduct appropriate consultation prior to any decision to vary or revoke a class exemption.

When a class exemption commences and ceases to be in force

9.97               A class exemption enters into force on the day it is made or a later date as specified in the determination. A class exemption remains in force until the end of the period specified in the determination, or until the Commission revokes the determination (whichever is earliest). [Schedule 9, item 22, subsection 95AA(4)]

9.98               To ensure that class exemptions remain relevant and appropriate, the Commission’s determination must specify a period for which the class exemption is to be in force. This period cannot be more than 10 years, which is consistent with the general rule in the Legislation Act 2003 that legislative instruments automatically ‘sunset’ after they have been in force for 10 years. [Schedule 9, item 22, subsection 95AA(3)]

Limitation and withdrawal of the benefit of a class exemption

9.99               A class exemption exempts ‘conduct of a kind’ rather than a particular instance of that conduct. As a result, the Commission may not be made aware of, be able to anticipate, every circumstance of future conduct to which the exemption may apply before it determines a class exemption. As a result, there may be some circumstances in which it would not be appropriate for particular conduct to be exempted, despite falling within the class exemption.

9.100           Where the Commission does identify particular circumstances in which a class exemption should not apply, it may specify a number of limitations. These limitations allow the Commission to restrict the application of the class exemption to:

•        persons of a specified kind;

•        circumstances of a specified kind;

•        conduct that complies with specified conditions.

[Schedule 9, item 22, subsection 95AA(2)]

9.101           Where the Commission later forms the view, based on the facts and circumstances of a particular case, that the class exemption should not apply in that particular case, section 95AB allows the Commission to withdraw the benefit of a class exemption in that if it is satisfied that the particular conduct would not meet either of the two limbs of the test in subsection 95AA(1). [Schedule 9, item 22, subsection 95AB(1)]

9.102           To withdraw the benefit of the class exemption in a particular case, the Commission must give a person written notice and must, in or with the notice, give a written statement of its reasons for withdrawing the benefit of the class exemption.  [Schedule 9, item 22, subsections 95AB(1) and 95AB(2)]

9.103           A notice of withdrawal comes into force when the Commission gives it to the person, and therefore the benefit of a class exemption can only be withdrawn on a prospective basis. The Commission cannot retrospectively withdraw the benefit of a class exemption. [Schedule 9, item 22, paragraph 95AB(4)(a)]

9.104           While a notice of withdrawal is in force, the class exemption does not apply to the specified conduct engaged in by the recipient of the notice. [Schedule 9, item 22, subsection 95AC(3)]

9.105           A notice of withdrawal ceases to be in force (and the benefit of the class exemption is reinstated) at the earliest of the following times:

•        if the Tribunal sets aside the notice under subsection 102(5G), at the end of the day the Tribunal sets it aside;

•        when the Commission revokes the notice; or

•        the time the specified under subsection 95AA(3).

[Schedule 9, item 22, paragraph 95AB(4)(b)]

Tribunal review in relation to a class exemption

9.106           As a class exemption is a legislative instrument, it is subject to disallowance by Parliament. The Commission’s decision to determine the class exemption is not subject to merits review by the Tribunal.

9.107           However, the Commission’s decision to withdraw the benefit of a class exemption in a particular case is reviewable by the Tribunal. A person dissatisfied with the giving of a notice under section 95AB may apply to the Tribunal for a review. An application for review must be made within the time prescribed under the regulations. The Tribunal must review the giving of the notice if the applicant for review is the recipient of the notice or the Tribunal is satisfied the person has a sufficient interest. [Schedule 9, item 23, subsection 101B]

9.108           The Tribunal must make a determination setting aside the notice of withdrawal if the applicant for review satisfies the Tribunal that the conduct specified in the notice of withdrawal would satisfy one of the limbs of the test in subsection 95AA(1). [Schedule 9, item 26, paragraph 102(5G)(a)]

9.109           If the Tribunal is not so satisfied, then it must make a determination affirming the Commission’s notice of withdrawal. [Schedule 9, item 26, paragraph 102(5G)(b)]

Collective bargaining notifications and collective boycott conduct

9.110           Schedule 9 makes a number of changes to the provisions related to the notification of collective bargaining and collective boycotts, in order to make the notification process easier and allow greater flexibility in the bargaining process, particularly for small businesses.

New defined term

9.111           A definition of collective boycott conduct is inserted into subsection 4(1), to mean conduct that has a purpose referred to in subsection 44ZZRD(3) in relation to a contract, arrangement or understanding. This definition applies across the Act, wherever there is a reference to ‘collective boycott conduct’.  [Schedule 9, item 29, subsection 4(1)]

Scope of a collective bargaining notification

9.112           A corporation may give a notification of collective bargaining conduct, if the requirements of section 93AB are satisfied. A notice of collective bargaining may include collective boycott conduct. [Schedule 9, item 17, paragraph 93AD(1)(a)]

9.113           A new subsection 93AB(7A) is inserted, to allow the protection of a collective bargaining notice to extend to include people who join the bargaining group after the notice is given to the Commission. However, future members are only covered if the notice is expressed in such a way as to allow future members, and if those future members could have given the notice on their own behalf at the time they became members of the collective bargaining group. [Schedule 9, items 14 and 17 to 19, subsections 93AD(3)(note) and 93AB(7A), and paragraphs 93AD(1)(a) and 93AD(3)(c)]

9.114           This means that, at the time of joining the bargaining group, the relevant future member(s) must meet the requirements set out in section 93AB.

9.115           These amendments ensure that the protection afforded by a collective bargaining notification can be appropriately extended if the membership of the bargaining group changes.

9.116           Amendments are also made throughout section 93AB to allow one notice by the bargaining group to deal with multiple counterparties. This removes the need for the group to give the Commission separate notices for each counterparty it intends to deal with. [ Schedule 9, items 8 to 13, subsections 93AB(2) to 93AB(4) and paragraphs 93AB(4)(a) and 93AB(4)(b)]

Commission may impose conditions on a collective bargaining notification

9.117           Schedule 9 also adds a new section 93ACA, to allow the Commission to impose conditions on collective bargaining notifications which wholly or partially relate to collective boycott conduct. [Schedule 9, item 16, subsection 93ACA(1)]

9.118           The Commission may only impose conditions where it reasonably believes that it would have grounds to issue an objection notice relating to the collective bargaining notification, but that those grounds would not exist if particular conditions relating to the proposed conduct were complied with. The Commission may only impose conditions that would remove the grounds for issuing an objection notice. [Schedule 9, item 16, subsection 93ACA(1)]

9.119           The Commission must impose the conditions by written notice, and must give the corporation a written statement of its reasons for imposing the conditions. [Schedule 9, item 16, subsection 93ACA(2)]

9.120           The Commission’s decision to impose conditions on a collective bargaining notice (which includes collective boycott conduct) is reviewable by the Tribunal. If the person satisfies the Tribunal either that the Commission would not have had grounds to object to the notice, or that the conditions imposed would not have addressed those grounds, the Tribunal must set aside the notice. If the Tribunal is not so satisfied, it must affirm the notice. [Schedule 9, item 26, subsection 102(5D)]

9.121           If the Commission imposes conditions on a collective bargaining notice which includes collective boycott conduct, and the Commission is satisfied the corporation has failed to comply with those conditions, the Commission may give the corporation an objection notice. [Schedule 9, item 15, subsection 93AC(2A)]

9.122           If the Commission gives an objection notice under subsection 93AC(2A), this is reviewable by the Tribunal. If the Tribunal is satisfied that the person did not fail to comply with the conditions, it must set aside the objection notice and the notification remains effective. If the Tribunal is not so satisfied, it must affirm the objection notice. [Schedule 9, item 25, subsection 102(5AB)]  

When a collective bargaining notice commences and ceases to be in force

9.123           A collective bargaining notice, which does not relate to collective boycott conduct, comes into force 14 days after the corporation gives the Commission the notice. The regulations may prescribe a longer or shorter period than this. [Schedule 9, item 17, paragraph 93AD(1)(a)]

9.124           Where a collective bargaining notice incorporates collective boycott conduct, it will come into force 60 days after the corporation gave the Commission the notice. The regulations may prescribe a longer or shorter period. This longer period recognises the greater level of harm that may be caused by collective boycott activity and the need to allow the Commission a longer period to consult with relevant parties and to consider the proposed conduct and whether to object to the notice. [Schedule 9, item 17, paragraph 93AD(1)(a)]

9.125           A collective bargaining notice ceases to be in force at the earliest of the following times:

•        When it is withdrawn or taken to be withdrawn; or

•        If the Commission gives the Corporation an objection notice, 31 days after the ‘relevant day’ (as set out in subsection 93AD(4)) or a later day specified in writing by the Commission; or

•        At the end of:

-       The period of three years, beginning on the day the corporation gave the collective bargaining notice; or

-       An alternative period determined by the Commission under subsection 93AD(5). [Schedule 9, item 18, paragraph 93AD(3)(c)] 

9.126           New subsection 93AD(5) allows the Commission to determine an alternative period for a collective bargaining notice to expire, if it determines that the 3 year period is not appropriate in all the circumstances. The alternative period set by the Commission may be any period up to 10 years, beginning on the day the corporation gives the Commission the collective bargaining notice. The Commission must give the corporation a written notice determining the alternative period and stating its reasons. [Schedule 9, item 20, subsections 93AD(5) and 93AD(6)]

9.127           The Commission’s decision to set an alternate period under subsection 93AD(5) is reviewable by the Tribunal. If the Tribunal is satisfied that the default period of 3 years is appropriate in all the circumstances, or the alternate period set by the Commission is not appropriate in all the circumstances, it must set aside the notice under subsection 93AD(5). If it is not so satisfied, it must affirm the notice. [Schedule 9, item 26, subsection 102(5E)]

Stop notices for collective boycott activity

9.128           Where a corporation has given the Commission a notice of collective bargaining that relates to collective boycott conduct, and that notice remains in force, Schedule 9 grants the Commission a power to issue a ‘stop notice’ requiring the collective boycott conduct to cease. [Schedule 9, item 21, section 93AG]

9.129           A stop notice may only be given by the Commission where the following conditions are met:

•        there has been a material change of circumstances since the Commission previously gave a stop notice (if applicable) or since the collective bargaining notice came into force; and

•        the Commission reasonably believes that:

-       the collective boycott conduct has resulted in serious detriment to the public; or

-       serious detriment to the public is imminent as a result of the collective boycott conduct. [Schedule 9, item 21, subsection 93AG(1)]

9.130           This ensures that once a notification is in force, the Commission has the flexibility to respond to changing circumstances where the conduct poses harm which is different to, or greater than, the actual or likely harm that was apparent at the time of the notification. This allows the Commission to intervene and stop serious, harmful conduct while it prepares a final objection or conditions notice.

9.131           The Commission must, at the time it gives the corporation the stop notice, give the corporation a written statement of its reasons for giving the stop notice. [Schedule 9, item 21,subsection 93AG(2)]

9.132           The effect of a stop notice is that the collective bargaining notification is taken not to be in force under section 93AD and that the legal protection available for a collective boycott is temporarily suspended, to the extent the notification relates to collective boycott conduct. [Schedule 9, item 21, subsection 93AG(3)]

9.133           Despite a stop notice, collective bargaining may continue whilst the collective bargaining notification remains in force, provided it does not involve collective boycott conduct.

9.134           The stop notice comes into force at the time the Commission gives the corporation the stop notice. [Schedule 9, item 21, subsection 93AG(4)]

9.135           The Commission may extend a stop notice by up to 90 days, if it is satisfied that in all the circumstances it is reasonable to do so. If the Commission extends the stop notice, it must do so by giving the corporation a written notice which must include, or be accompanied by, a written statement of the Commission’s reasons for the extension. [Schedule 9, item 21, subsections 93AG(7) and 93AG(8)]

9.136           The stop notice ceases to be in force at the earliest of the following times:

-       the end of 90 days (or the end of up to 180 days, if the Commission extends the stop notice); or

-       when the Commission issues a final objection notice under subsections 93AC(1) or 93AC(2); or

-       when the Commission issues notice under subsection 93ACA(1) imposing conditions; or

-       when the Commission withdraws the stop notice (if it is withdrawn). [Schedule 9, item 21, subsection 93AG(5)]

9.137           The Commission’s decision to issue a stop notice is not reviewable by the Tribunal. This is because a stop notice can only be issued in order to prevent actual or imminent serious detriment to the public. The prevention of such detriment would be undermined by a merits review process, which would divert the Commission’s resources away from assessing the conduct itself and onto the review. The lack of merits review is appropriate as a stop notice can only be in place for a maximum of 90 days before the Commission must either: extend the notice, issue a final objection notice or final conditions notice, or withdraw the stop notice. A final objection notice or final conditions notice is reviewable by the Tribunal.

9.138           The Commission’s decision to extend the stop notice is reviewable by the Tribunal under subsection 102(5F). If the applicant for review satisfies the Tribunal that in all the circumstances it was not reasonable to extend the stop notice, the Tribunal must make a determination setting aside the notice of extension. If the Tribunal is not so satisfied, it must make a determination affirming the notice of extension. [Schedule 9, item 26, subsection 102(5F)]

Consequential amendments

Notification amendments

9.139           As detailed in Chapter 8, Schedule 9 makes consequential amendments to the notification provisions of Part VII to reflect related amendments detailed in this Chapter, Chapter 7 and Chapter 8 (allowing notification for RPM, allowing for conditions to be imposed on RPM notifications, and simplifying the assessment of all forms of exclusive dealing under a single test).  

Radiocommunications Act 1992

9.140           Schedule 9 also makes consequential amendments to provisions within Part 3.2 (Spectrum Licences) and Part 3.3 (Apparatus Licences) of the Radiocommunications Act 1992, to update references to provisions in the Competition and Consumer Act 2010 (the Act) which are amended by Schedule 9. [Schedule 9, items 164-167, sections 68A, 71A, 106A and 114A of the Radiocommunications Act 1992].

9.141           Sections 68A, 71A, 106A and 114A of the Radiocommunications Act 1992 currently refer to section 50 and subsections 81(1) and (1A) of the Act. However, since 2006 those provisions of the Radiocommunications Act 1992 have incorrectly referred to authorisation provisions related to section 50A (overseas acquisitions) following amendments made by the Trade Practices Legislation Amendment Act (No. 1) 2006.  Consequential amendments to the Radiocommunications Act 1992 were overlooked at that time.

9.142           Those sections are repealed and re-written with reference to Parts VII and IX of the Act. Firstly, certain actions (the issue of, and authorisations under, a spectrum licence or apparatus licence) are deemed to be an ‘acquisition’ and ‘conduct’ for the purposes of certain provisions of the Act. Secondly, those provisions of the Act are specified as section 50, subsections 81(1) and (1A), and Parts VII and IX to the extent that the provisions of those Parts relate to section 50.

9.143           This ensures that where certain actions under the Radiocommunications Act 1992 are brought within the scope of the prohibition in section 50 of the Act, an authorisation may be sought in relation to those actions.   

Other consequential amendments

9.144           Schedule 9 makes a number of consequential amendments throughout the Act to update references in the Act to new, amended or repealed provisions of Part VII. [Schedule 9, items 5, 30-53, 63-68, 70, 71, 73-76, 80, 81, 83, 85-91, 95-97, 101-105, 107-117, 119-121, 123-127, 129-145, Part VII (heading), Division 1 of Part VII (heading), Division 1 of Part IX (heading) and Division 3 of Part IX, sections 29P, 45EA, 81A, 93AA, 101A, 102A, 150J, 157AA and 174, subsections 8A(6), 90(9A), 25(1), 44ZZRS(1), 45(6A), 45(9), 45D(1), 45DA(1), 45DB(1), 45E(8), 46A(6), 49(1), 50(1), 50(2), 50(5), 80AC(1), 80AC(2), 81A(3), 81A(6), 87B(1A), 87ZP(1), 90(5), 90(10), 90(11), 90(12), 90(13), 90(15), 90A(1), 91(2A), 91C(5), 93(3A), 93(4), 93(5), 93(6), 93(7C), 93(9), 93AB(1), 93A(1), 93A(3), 93A(4), 93A(10A), 101(1A), 101(1C), 102(1), 102(5AC), 109(1A), 163(5), 165(3A), 172(2B), 172(3) and 174(2), paragraphs 44ZZR(1)(b), 44ZZRS(2)(a), 44ZZRT(1)(b), 44ZZRT(2)(b), 45(6)(a), 50(4)(b), 50(4)(c), 50(4)(d), 80AC(1)(b), 80AC(1)(d), 80AC(1)(e), 81A(1)(b), 81A(1)(e), 81A(1)(f), 90B(2)(c), 91C(6)(a), 93(1A)(a), 93(7A)(b), 93(10)(a), 93AB(6)(a), 95(1)(ga), 101(1B)(a), 102(1A)(a), 102(1A)(b), 102(1A)(c), 157(1)(a), 157(1)(ba), 165(1)(a) and 170(3)(a), subparagraphs 44ZZRS(2)(b)(i), 45(6)(b)(i), 93(7B)(b)(ii), 155(2)(b)(iv) and 170(3(b)(ii) and sub-subparagraph 102(4)(a)(ii)(B)]

9.145           Schedule 9 also makes consequential amendments to Schedule 1 to the Act corresponding with amendments made to the Act itself by Schedule 9 (where applicable). [Schedule 9, items 146-163, section 45EA, subsections 44ZZRS(1), 45(6A), 45(9), 45D(1), 45DA(1), 45E(8), 50(1) and 50(5), paragraphs 44ZZRR(1)(b), 44ZZRS(2)(a), 44ZZRT(1)(b), 44ZZRT(2)(b), 45(6)(a), 50(4)(b), 50(4)(c) and 50(4)(d) and subparagraphs 44ZZRS(2)(b)(i) and 45(6)(b)(i) of Schedule 1 to the Act]

Commencement, application and transitional provisions

9.146           Items 1 to 103 of Schedule 9 commence at the same time as Schedule 1.  Item 104 commences immediately after items 1 to 103. Items 105 to 132 commence at the same time as Schedule 1. Item 133 commences immediately after Schedule 1. Items 134 to 163 commence at the same time as Schedule 1.

 



Chapter 10      

Admissions of fact

Outline of chapter

10.1               Schedule 10 to this Bill extends section 83 of the Act so that a party bringing certain proceedings may rely on both admissions of fact and findings of fact made in certain other proceedings.

Context of amendments

10.2               Consumers or businesses harmed by a contravention of the competition law can seek relief by commencing a private action before the Federal Court (for example, a person may commence an action for damages under section 82).

10.3               Section 83 of the Act is intended to facilitate private actions by enabling findings of fact made in certain proceedings against a corporation to be used as prima facie evidence against that corporation in certain other proceedings. For example, if the Commission brings an action against a corporation seeking pecuniary penalties under section 77 or an injunction under section 80 for a contravention of the Act, and during that proceeding the court makes a finding of fact, that finding may be relied upon by a person later bringing a private action.

10.4               This mechanism helps to reduce the cost of private actions, as a person relying on a previous finding of fact as prima facie evidence does not need to establish that fact.

10.5               Many proceedings brought by the Commission are resolved by a corporation making admissions of fact that establish the contravention. However, it is uncertain whether section 83 also applies to admissions of fact, and the extent to which litigants in subsequent proceedings may rely on these admissions.

10.6               The Harper Review noted this lack of clarity was an impediment to the right to private enforcement of the competition law, and recommended amending section 83 to clarify that it applies to admissions of fact as well as findings of fact. This would enhance the effectiveness of section 83 as a means of reducing the cost of private actions, and thereby facilitating access to justice. 

Summary of new law

10.7               Schedule 10 amends section 83 so that a party bringing certain proceedings (such as an action for damages under section 82) may rely on both admissions of fact and findings of fact made in certain other proceedings (such as an action by the Commission seeking pecuniary penalties under section 77 or an injunction under section 80).

Comparison of key features of new law and current law

New law

Current law

Admissions of fact made by a person, and findings of fact made by a court, in certain proceedings against a person may be used in certain other proceedings against that person under the Act.

Findings of fact made by a court in certain proceedings against a person may be used in certain other proceedings against that person under the Act.

Detailed explanation of new law

10.8               The scope of section 83 is broadened so that where a person has made an admission of fact in certain proceedings against that person, and that person was found in those proceedings to have contravened or been involved in a contravention of certain provisions of the Act, that admission can be used as prima facie evidence of that fact in certain other proceedings against that person. [Schedule 10, item 1, subsection 83(1)]

10.9               An admission of fact can only be used against the person who made the admission. [Schedule 10, item 1, subsection 83(1)]  

10.10           Both admissions of fact and findings of fact may be proved by a document under the seal of the court from which the finding or admission appears. Admissions of fact may also be proved by a document from which the admission appears that is filed in the court. [Schedule 10, item 1, subsection 83(2)]

10.11           Subsections 83(1) and (2) together ensure that admissions cannot be relied upon as prima facie evidence in subsequent proceedings unless they have first been tested by a court and have therefore been taken into consideration in that court finding that the person contravened or was involved in a contravention of the Act. 

10.12           As with findings of fact, an admission of fact proved in accordance with subsection 83(2) is only prima facie evidence of that fact, meaning that the defendant is not precluded from producing contrary evidence to disprove that fact.

10.13           Section 83 is also rewritten for simplification. The operation of section 83 is not intended to change except as detailed in this Chapter. [Schedule 10, item 1, section 83]

Commencement, application and transitional provisions

10.14           Schedule 10 commences at the same time as Schedule 1.

10.15           The amendments made by Schedule 10 only apply to admissions of fact made on or after the commencement of the application provision in Schedule 10. Admissions of fact made prior to the commencement of this provision may not be relied on in subsequent proceedings, irrespective of whether the proceedings commenced before or after the commencement of Schedule 10 .This preserves the context in which those admissions of fact were made and ensures that admissions are made with knowledge of how those admissions may be relied upon. [Schedule 10, item 2, application provision]

 



Outline of chapter

11.1               Schedule 11 to this Bill extends the Commission’s power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

11.2               Schedule 11 also introduces a ‘reasonable search’ defence to the offence of refusing or failing to comply with section 155, and increases the fine for non-compliance with section 155.

Context of amendments

Operation of section 155

11.3               The Commission’s primary investigative power is contained in section 155. Given that the competition law is concerned with regulating conduct which often occurs secretively, such as cartel conduct, the Commission requires strong coercive powers to investigate and uncover such contraventions.

11.4               A section 155 notice may be issued by the Commission in relation to the matters specified in subsection 155(1), and may require a person to furnish information to the Commission, to produce documents to the Commission, or to appear before the Commission to give evidence and produce documents.

11.5               Under subsection 155(5), a person shall not refuse or fail to comply with a notice, or knowingly provide false or misleading evidence or information. Subsection 155(6A) makes it an offence to contravene subsection 155(5), and sets out the applicable maximum fine or term of imprisonment upon conviction.

Scope of section 155

11.6               The Commission may accept a court-enforceable undertaking under section 87B of the Act, or section 218 of the Australian Consumer Law (Schedule 2 to the Act).

11.7               A section 155 notice may be issued by the Commission in relation to a range of matters that are specified in subsection 155(1). The investigation of an alleged contravention of a court-enforceable undertaking is not currently a matter in relation to which a section 155 notice may be issued.

11.8               The Harper Review recommended extending section 155 to cover the investigation of alleged contraventions of court-enforceable undertakings (that is, a breach of one or more terms of such an undertaking).

11.9               The Harper Review considered that the ability to gather information about a possible contravention of an undertaking accepted by the Commission would assist in protecting the integrity of undertakings as part of the broader compliance and enforcement framework.

Search for documents

11.10           As noted by the Harper Review, section 155 notices have been a longstanding element of Australia’s competition law. The power to compel the production of evidence, information and documents is crucial to the Commission’s administration and enforcement of the Act.

11.11           However, in the digital age, businesses retain many more documents, such as emails, than in the past. Strict compliance with a section 155 notice may require an electronic search of tens of thousands of documents, which can constitute a significant compliance cost.

11.12           In recognition of the increasing cost of documentary searches, courts have modified the rights of discovery in recent years. For example, the Federal Court Rules 2011 require a party to undertake a ‘reasonable search’ for documents. Under the Rules , in making a reasonable search, consideration may be given to factors such as the number of documents to be searched and the ease and cost of retrieving a document.

11.13           In light of these developments, the Harper Review recommended introducing a ‘reasonable search’ defence to the offence of a ‘refusal or failure to comply’ with a section 155 notice.

Penalty for non-compliance with section 155

11.14           Subsection 155(6A) currently sets out that the maximum fine upon conviction for an offence under section 155 is 20 penalty units for an individual.

11.15           Under subsection 4B(3) of the Crimes Act 1914 , unless the contrary intention appears and if the court thinks fit, the penalties for corporations are five times that of individuals. Consequently, the maximum pecuniary penalty under section 155 is 100 penalty units. When applied to a corporation, this equates to a maximum fine of $18,000 (at current penalty rates).

11.16           By comparison, the maximum pecuniary penalties for a corporation failing or refusing to comply with similar notice-based investigative powers are significantly higher. For example, section 63 of the Australian Securities and Investments Commission Act 2001 applies a maximum pecuniary penalty of 100 penalty units for individuals (which equates to $90,000 for corporations, at current penalty rates).

11.17           The Harper Review noted that compliance with compulsory investigative powers facilitates the Commission’s ability to investigate competition concerns, and considered that the current maximum penalty is inadequate. It recommended that the maximum penalty for an offence under section 155 be increased, in line with similar notice-based evidence-gathering powers of other regulators.

Summary of new law

11.18           Section 155 is broadened, so that a notice may be issued in relation to an alleged contravention of a court-enforceable undertaking made to the Commission under section 87B or section 218 of the Australian Consumer Law or in relation to an application for merger authorisation.

11.19           A defence is introduced to section 155, so that a person who is not aware of the requested documents after undertaking a reasonable search is taken not to have contravened subsection 155(5).

11.20           The maximum penalty for non-compliance with a section 155 notice is increased.

Comparison of key features of new law and current law

New law

Current law

If a person has refused or failed to comply with a notice to produce documents it is a defence if, after a reasonable search, the person is not aware of the documents.

No equivalent.

A section 155 notice may be issued in relation to alleged contraventions of court-enforceable undertakings given under section 87B of the Act or section 218 of the Australian Consumer Law, and in relation to a merger authorisation decision.

A section 155 notice may not be issued in relation to alleged contraventions of court-enforceable undertakings.

The maximum penalty for non-compliance with a section 155 notice is 100 penalty units or 2 years imprisonment (for an individual).

The maximum penalty for non-compliance with a section 155 notice is 20 penalty units or 12 months imprisonment (for an individual).

Detailed explanation of new law

Scope of section 155

11.21           Schedule 11 simplifies subsection 155(1) by moving provisions relating to the scope of section 155 to a new subsection 155(2). Schedule 11 also expands the scope of section 155 to allow the Commission to give a notice in relation to:

•        matters that constitute, or may constitute, a contravention of the terms of an undertaking accepted under section 87B of the Act or section 218 of the Australian Consumer Law; or

•        a matter that is relevant to the Commission’s decision under subsection 90(1) in relation to a merger authorisation. [Schedule 11, item 2, subsection 155(2)]

11.22           The inclusion of merger authorisations follows the amendments to the merger authorisation process, as detailed in Chapter 9. 

11.23           These amendments assist in protecting the integrity of undertakings as part of the broader compliance and enforcement framework of the Act.

‘Reasonable search’ defence

11.24           Schedule 11 inserts a ‘reasonable search’ defence into section 155 in relation to the failure or refusal to comply with a notice requiring the production of documents.

11.25           A person will not have contravened paragraph 155(5)(a), and will not be guilty of an offence under subsection 155(6A), to the extent that:

•        the section 155 notice relates to producing documents;

•        after a reasonable search, the person is not aware of the documents; and

•        the person provides a written response to the notice, including a description of the scope and limitations of the search. [Schedule 11, item 3, subsection 155(5B)]

Determining what constitutes a ‘reasonable search’

11.26           In determining whether a search is reasonable, the following factors may be taken into account:

-       the nature and complexity of the matter to which the notice relates;

-       the number of documents involved;

-       the ease and cost of retrieving a document, relative to the resources of the person who was given the notice; and

-       any other relevant matter. [Schedule 11, item 3, subsection 155(6)]

11.27           This list is not exhaustive and does not limit the matters that may be taken into account in determining whether a search is reasonable. It may be appropriate for other factors to be considered under paragraph s155(6)(d), ‘any other relevant matter’. Such a relevant matter may be, for example, the costs of document review relative to the resources of the person who was given the notice, or whether the Commission and the person agreed to the scope of the search.

11.28           Whether a person has made a reasonable search is an objective test. The defence will not be established where the recipient of a section 155 notice subjectively decides that it is not reasonable to conduct a search at all, or has conducted only a limited search, if this falls short of what would objectively be considered reasonable.

Awareness of documents

11.29           The recipient of a section 155 notice may only rely on the reasonable search defence to the extent that, after a reasonable search, the person is not ‘aware’ of the documents.

11.30           The defence will not be established where the recipient of a section 155 notice chooses not to search for a document the person is aware exists, or chooses not to produce a document that the person is aware exists.

Written response to the Commission

11.31           Under paragraph 155(5B)(c), a person may only rely on the reasonable search defence if they have provided the Commission with a written response to the section 155 notice. This written response must include a description of the scope of the search which the person undertook, and a description of the limitations of the search. That is, the response must outline those factors which the person considers made it unreasonable to search any further than they searched or made it reasonable to limit the search in the way they did. [Schedule 11, item 3, paragraph 155(5B)(c)]

11.32           The purpose of this requirement is to ensure the Commission has sufficient information to make an assessment of whether it also considers the person has conducted a reasonable search. Without this requirement, the Commission’s first opportunity to test the reasonableness of a person’s search would be in proceedings against that person relating to an offence under subsection 155(5)(a).

Burden of proof

11.33           The defendant bears a legal burden of establishing that they have undertaken a reasonable search, which must be discharged on the ‘balance of probabilities’ (that is, the defendant must establish, on the balance of probabilities, that they undertook a reasonable search and after that reasonable search they were not aware of the requested documents). [Schedule 11, item 3, note at subsection 155(5B)]

11.34           It is appropriate to cast the matter as a defence rather than as an element of the offence, and to place a legal burden on the defendant, because the facts amounting to a reasonable search will be peculiarly within the knowledge of the defendant. For example, it is likely that only a defendant will possess information such as how many documents could possibly have been searched to find the documents the notice requested, and how many documents were actually searched.

11.35           With this knowledge, the defendant could readily and cheaply provide evidence to establish, on the balance of probabilities, that they conducted a reasonable search.

11.36           By contrast, it would be extremely difficult and costly for the prosecution to gather the same evidence through its own investigations. This would constitute a significant hurdle for the prosecution and allow the new defence to undermine the integrity of section 155, particularly given the breadth of matters which may be relevant to determining whether the search conducted by the defendant constitutes a ‘reasonable search’.

11.37           Moreover, once the defendant meets their legal burden, the prosecution must still disprove the defence beyond a reasonable doubt in order to establish a contravention of paragraph 155(5)(a). This is a significantly higher standard to meet than a balance of probabilities.

11.38           The introduction of this defence, which has not previously been available to defendants facing prosecution under section 155, is only made possible and viable by placing the legal burden on the defendant.

Penalty for non-compliance with section 155

11.39           The maximum penalty for a contravention of section 155(5) is increased to 100 penalty units (500 penalty units for corporations) or imprisonment for two years. [Schedule 11, item 4, subsection 155(6A)]

11.40           This aligns the penalty under section 155 with the penalty for non-compliance with similar notice-based evidence-gathering powers of other regulators.

Commencement, application and transitional provisions

11.41           Schedule 11 commences at the same time as Schedule 1.

11.42           Following the commencement of Schedule 11, section 155 notices that were in force immediately before commencement continue in force, and, with the exception of the increased penalty, the amended section 155 applies in relation those notices as if they had been issued under section 155 as amended. [Schedule 11, item 5, application provision]

11.43           The effect of this is to allow the ‘reasonable search’ defence to be used for section 155 notices that were in force immediately before the commencement of Schedule 11. However, the increased penalty under subsection 155(6A) does not apply to notices that were served prior to the commencement of Schedule 11. [Schedule 11, item 5, application provision]

 



Chapter 12      

Access to services

Outline of chapter

12.1               Schedule 12 to this Bill amends Part IIIA of the Act, which contains the National Access Regime (Regime), to ensure it better promotes effective competition in dependent markets. It does this by addressing the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

Context of amendments

The economic problem addressed by the Regime

12.2               The Regime provides a regulatory framework for third parties to seek access to nationally significant infrastructure services that are owned and operated by others.

12.3               The Regime promotes effective competition in dependent markets. It achieves this by addressing the economic problem of natural monopoly in markets for infrastructure services that face an enduring lack of effective competition. Large, usually sunk, fixed costs and economies of scale, which are typical characteristics of natural monopoly, can serve as impediments to prospective competitors entering the markets.

12.4               A provider may have the ability and incentive to deny access to a service, or restrict output and charge monopoly prices, where there is a lack of effective competition in markets for that service. This can reduce economic efficiency where access to the service is required for third parties to compete effectively in dependent (upstream or downstream) markets. As a consequence, transactions that would enhance community wellbeing may not proceed.

12.5               The Regime provides a means of promoting competition in dependent markets, which rely on a service provided by nationally significant infrastructure to compete effectively. As part of this, the Regime considers if a facility owner is earning a commercial investment return so as not to impair investment incentives.

The operation of the access Regime

12.6               The Regime enables third parties to seek access to nationally significant infrastructure services. It includes Part IIIA of the Act, and clause 6 of the Competition Principles Agreement, that sets out general principles to assess the effectiveness of State and Territory access regimes.

12.7               A declaration under the Regime gives an access seeker the right to negotiate access to a service provided by means of a facility. Declarations are therefore limited to matters that are defined as a service under s 44B. This includes the use of an infrastructure facility, handling or transporting goods, or a communications service.

12.8               The designated Minister is only able to make a declaration once they have received a recommendation from the National Competition Council (Council). The Council must be satisfied that the four declaration criteria are met when making a recommendation to declare a service. When considering the Council’s recommendation, the Minister must be satisfied those same four criteria are met, before deciding to declare a service. The criteria determine when access regulation will and will not apply, as they constrain the considerations of the Council and Minister.

Developments in the past few years

12.9               The declaration criteria have been examined in a number of cases heard by both the Federal and High Courts. The declaration criteria have been subject to several different interpretations in these cases, with particular implications for how competition in dependent markets should be assessed. For investment to continue to be made in nationally significant infrastructure, it is important that the Regime is easily understood, creates outcomes that are predictable and addresses the economic problem of natural monopoly in markets for infrastructure services.

12.10           The Regime has been reviewed three times, by the Productivity Commission in 2001 and 2013, and then by the Harper Review in 2015. Both the 2013 and 2015 reviews examined the application of the declaration criteria and whether they were achieving the objectives of the Regime. These two reviews involved extensive consultation with the public and the States and Territories.

12.11           The Government decided in 2014 that it would respond to both reviews following the conclusion of the Harper Review.

12.12           The Government decided to implement all of the recommendations of the Productivity Commission as part of its response to the Harper Review. These amendments seek to refocus and clarify the intent of the Regime. In particular, they seek to clarify the declaration criteria that the Council and Minister must be satisfied of in order to recommend that a service be declared, or declare the service, respectively. This then determines when arbitration by the Commission will be available to access seekers or access providers.

Summary of new law

12.13           Schedule 12 amends the Regime to ensure that it remains an accessible and effective regulatory option, which can boost competition in the economy and create predictable outcomes. The primary changes included in this Schedule are:

-       amend and clarify the declaration criteria that must be used by the Council and designated Minister;

-       amend the default position, whereby the Minister is now deemed to have made a decision in accordance with the declaration recommendation of the Council if the Minister has not responded within 60 days; and

-       amend and clarify the scope of a determination made by the Commission to ‘extend’ a facility in an access dispute.

-       provide the Minister with power to revoke certification on recommendation by the Council, if the regime ceases to be effective.

Comparison of key features of new law and current law

New law

Current law

Declaration criteria

The declaration criteria that must be considered by the Council and Minister are contained in a single section.

The declaration criteria that must be considered by the Council and Minister are replicated across multiple sections.

T he decision maker must consider whether access (or increased access) on reasonable terms and conditions as a result of declaration would promote a material increase in competition.

Declaration criterion (a) requires the decision maker to consider whether access (or increased access) would promote a material increase in competition.

The decision maker must consider whether total foreseeable market demand could be met by the facility over the declaration period at least cost when compared to two or more facilities.

The decision maker must consider whether it is uneconomical for anyone to develop another facility to provide the service.

No change.

The decision maker must consider whether the facility is of national significance, having regard to its size, importance to constitutional trade or commerce and to the national economy.

The decision maker must consider whether access (or increased access) would promote the public interest.

The decision maker must consider whether access (or increased access) would not be contrary to the public interest.

The decision maker cannot declare a service if it is subject to an effective access regime. (No longer a criterion - now a threshold question).

The decision maker must consider whether the service is subject to an effective access regime as part of the declaration criteria.

Power of the Minister and the Commission

The Minister may revoke the certification on recommendation by the Council, if the regime ceases to be effective. The Council may make a recommendation on its own initiative or on application.

No equivalent.

The Commission’s power to make a determination requiring a facility operator to extend or expand the facility, and the safeguards on that power, are clarified to include capacity and geographical expansions.

The Commission’s power to make a determination requiring a facility operator to extend the facility, and the safeguards on that power, has been interpreted to include the power to order ‘expansions’.

Default declaration decision

The Minister is taken to have accepted the Council’s recommendation if he or she does not publish a decision on a declaration within the 60 day time limit

The Minister is taken to have not made a declaration if they have not published a decision within the 60 day time limit.

Detailed explanation of new law

12.14           The declaration criteria are matters about which the Council and Minister must be satisfied prior to recommending a declaration be made, or making a declaration, respectively. Additional considerations of a commercial, economic or other character may be relevant in determining whether criterion (d) is met.

Simplification of declaration criteria

12.15           Schedule 12 simplifies the law by specifying in a separate section the four declaration criteria that must be considered by both the Council and the Minister. This makes it clearer that the Minister and the Council must consider the same matters, and avoids duplication within the legislation. [Schedule 12, items 1 to 2, sections 44B and 44CA]

12.16           To reflect the movement of the declaration criteria into a separate section, sections 44G and 44H(4) provide, respectively, that the Council cannot recommend that a service be declared unless it is satisfied of all the declaration criteria for the service, and the designated Minister cannot declare a service unless he or she is satisfied of all the declaration criteria for the service. [Schedule 12, items 10and 11, sections 44G and 44H(4)]

12.17           Certain other elements of the Act are amended to reflect that the declaration criteria the Minister and Council must consider are now in a single provision. Councillors are now required to include in the Annual Report prepared under section 29O details of any judicial interpretation of the declaration criteria. [Schedule 12, items 43 and 45, subparagraphs 29O(b)(ii) and 29O(2)(b)(ii)]

(1) The competition test (criterion (a))

12.18           Paragraph 44CA(1)(a) requires an assessment of the effect of access (or increased access) on competition in at least one market, other than the market for the service, as a result of a declaration. [Schedule 12, item 2, paragraph 44CA(1)(a)]

12.19           The amendments require the Council and the Minister to consider whether access (or increased access) on reasonable terms and conditions as a result of declaration would promote a material increase in competition in a market other than the market for the service. That is, the amendments focus the test on the effect of declaration, rather than merely assessing whether access (or increased access) would promote competition.

12.20           This requires a comparison of two future scenarios: one in which the service is declared and more access is available on reasonable terms and conditions, and one in which no additional access is granted. That is a comparison of either: no access without declaration compared with some access as a result of declaration; or some access without declaration to additional access as a result of declaration. In comparing these two scenarios, it must be the case that it is the declaration resulting in access (or increased access) on reasonable terms and conditions that promotes the material increase in competition.

12.21           What are reasonable terms and conditions is not defined in the legislation. This is an objective test that may involve consideration of market conditions. It does not require that the Council or Minister come to a view on the outcomes of a Part IIIA negotiation or arbitration. The requirement that access is on reasonable terms and conditions is intended to minimise the detriment to competition in dependent markets that may otherwise be caused by the exploitation of monopoly power. Reasonable terms and conditions include those necessary to protect the legitimate interests of the owner of the facility.

(2) Total foreseeable market demand test (criterion (b))

12.22           Paragraph 44CA(1)(b) asks whether the facility that provides (or will provide) the service could meet the total foreseeable market demand at least cost over the declaration period. This is in comparison to a scenario where there are two or more facilities. The amendment to this paragraph is intended to refocus the test to a ‘natural monopoly’ test instead of a ‘private profitability’ test. [Schedule 12, item 2, paragraph 44CA(1)(b)]

12.23           The approach under the new paragraph is market-based, requiring the market in which the infrastructure service under application is supplied to be defined. This includes any substitute services that serve or will serve the market.

12.24           Total foreseeable market demand is considered over the declaration period the decision-maker is considering for declaration of the service. In assessing whether a facility could meet total foreseeable market demand at least cost, this calls for a consideration of whether what could be expected to be maximum demand could be supported by the facility.

12.25           The requirement to assess whether a facility could meet total foreseeable market demand ‘over the period for which the service would be declared’ does not limit the Council and the Minister to consideration of any period claimed in the application for declaration. The Council and the Minister are to recommend and decide, respectively, what is the appropriate period for declaration of the service. 

12.26           Because the test uses the concept of foreseeability, it is not limited to looking at maximum demand based on current uses of the service. Other future uses may be relevant to the consideration, if they are foreseeable.

12.27           The time period for declaration will be relevant to considerations of foreseeability. If the declaration period being contemplated is only 10 years, it is not necessary to consider demand for the service far beyond that period. While it may be possible to foresee increased demand for the service in 30 years as a result of a long-term development, it is unlikely this demand would affect the natural monopoly status of the service within the declaration period. The Council and the Minister may need to consider multiple potential declaration periods in determining whether there is an appropriate declaration period over which criterion (b) would be met.

12.28           Whether total foreseeable market demand can be met at least cost over the declaration period is a question of judgement informed by facts. Consideration would be given to a comparison of the costs from the facility in question meeting total foreseeable market demand with the costs that would be incurred in the least costly alternative scenario.

12.29           Broadly, the alternative scenarios to be considered will depend on whether there is a substitute service provided by another facility. Different alternative scenarios could be considered based on whether there are existing substitutable services or not, for example:

-       if there is a substitute service provided by another facility there are, broadly, two potential alternative scenarios: the two substitute facilities share total foreseeable market demand; or a third facility is built to provide part of total foreseeable market demand; or

-       if there is not a substitute service provided by another facility there may only be one potential alternative scenario, that is the duplication (or partial duplication) of the facility.

12.30           Paragraph 44CA(2)(a) contemplates that a facility, which is at capacity, can be declared if it is reasonably possible for it to be extended or expanded. However, it is not necessary for the Council and the Minister to have regard to a facility at capacity as if it had expanded capacity, if it is not reasonably possible for that facility to be expanded or extended. [Schedule 12, item 2, paragraph 44CA(2)(a)]

Determining costs of meeting total foreseeable market demand

12.31           The costs relevant to determining whether a facility can meet total foreseeable market demand at least cost are not defined, but specifically include the cost to the provider of the service of co-ordinating multiple users of the facility. These co-ordination costs could include the costs of lost production or of being allocated less of the service’s capacity as a result of the facility becoming a multi-user facility. [Schedule 12, item 2, paragraph 44CA(2)(b)]

12.32           The costs of application for declaration should not be considered, because those are irrelevant to whether the facility is operating as a natural monopoly. [Schedule 12, item 2, subsection 44CA(2)]

12.33           The administrative and compliance costs that may be incurred by the service provider as a result of the declaration would be considered in criterion (d), as they would not be incurred if access was provided without the declaration. Further guidance on the allocation of costs and benefits between criterion (b) and criterion (d) is below. [Schedule 12, item 2, subsection 44CA(3)]

12.34           To reflect the changes that have been made to criterion (b), subsections 44F(4) and 44H(2) have been repealed. This also makes it clear that this test will be considered once, as part of the declaration criteria. [Schedule 12, items 7 and 11, subsections 44F(4) and 44H(2)]

(3) The national significance test (criterion (c))

12.35           Paragraph 44CA(1)(c) requires the decision maker to be satisfied that the facility is of national significance, having regard to:

-       the size of the facility;

-       the importance of the facility to constitutional trade or commerce; or

-       the importance of the facility to the national economy. [Schedule 12, item 2, paragraph 44CA(1)(c)]

12.36           This test replicates, in the new subsection 44CA(1), the existing national significance test.

(4) The public interest test (criterion (d))

12.37           Subsection 44CA(1)(d) asks if access or increased access to the service as a result of declaration of the service, on reasonable terms and conditions, would promote the public interest. This means that a decision maker must be satisfied that declaration is likely to generate overall gains to the community. [Schedule 12, item 2, paragraph 44CA(1)(d)]

12.38           Subsections 44CA(3)(a) and (3)(b) set out non-exhaustive factors that decision makers are required to consider to determine the effect of the declaration on the public interest. These include the effect of declaration on investment in infrastructure services and dependent markets, as well as the administrative and compliance costs incurred once a service is declared. [Schedule 12, item 2, paragraph 44CA(3)]

12.39           Subsection 44CA(1)(d) now constitutes an additional positive requirement which must be met before a service can be declared. However, it is only to be considered when subsections (a), (b) and (c) have been met, and it does not necessarily follow from this result that (d) will also be satisfied.  [Schedule 12, item 2, paragraph 44CA(1)(d)]

12.40           Criterion (d) does not call into question the results of subsections 44CA(1)(a), (b) and (c). It accepts the results derived from the application of those subsections, but it enquires whether, on balance, declaration of the service would promote the public interest. It provides for the Minister to consider any other matters that are relevant to the public interest. [Schedule 12, item 2, paragraph 44CA(1)(d)]

Considering costs and benefits under criterion (b) and criterion (d)

12.41           The examples below provide an illustration of the allocation of costs and benefits between criterion (b) and criterion (d), noting that the circumstances of each case will vary and that it will not always be appropriate or necessary to consider any or all of the costs and benefits outlined.

Example 12.1  

A mining company has built a track of rail from its mine through to the local port. The mining company is the only user of the rail track and does not intend for other entities to use it. A new miner now wants to access the railway line but has been unable to enter a reasonable commercial agreement with the line’s owner.

The new miner decides to make an application for declaration of the rail line. The line is not subject to an existing declaration or an access undertaking and is not covered by a certified effective access regime.

In relation to criterion (b), consideration would be given to the appropriate time period for declaration, what the demand from the new mine will be for the service and whether other new mines or other entities might also add to this demand. In this example, a 10 year declaration period is considered appropriate and, because of high commodity prices, it is likely another two or three mines may be built in the area which would also need access to rail transport services. 

Once this has been established, consideration can be given to the costs of meeting the demand using the existing rail line (including costs of extending the line to the new mine or mines), compared with the costs of this demand being met by  two or more lines (the existing line without expansion or extension and a new line).

If the demand were met by the existing line, the costs that may be considered for the assessment of criterion (b) could include:

•        the costs of changes and extensions to the facility to allow third party access, such as physical modifications to the railway line to increase its capacity to deal with higher demand and associated increased maintenance costs;

•        coordination costs associated with having multiple users of the same rail line, such as the costs of putting new systems or technologies in place to administer all freight trains; and

•        opportunity costs associated with having multiple users of the facility (and that would be incurred even if multiple users were granted access through a commercial agreement rather than as a result of declaration) such as:

-       costs to the mining company associated with a reduction in the total capacity of the rail line due to it becoming a multi-user facility,

-       costs arising from delays to undertaking expansions of capacity because of the need to consult other users; and

-       costs arising from delays to implementing technological improvements because of the need for other users to also adapt their operations.

If the demand were met by the existing line and a new line, then the costs that may be considered for the assessment of criterion (b) could include:

•        the costs of land acquisitions,

•        construction and maintenance costs for the new line;

•        the costs of supporting infrastructure for the new line.

When considering whether declaration would promote the public interest, the Council and the Minister may have regard to a very wide range of matters. Examples of the costs and benefits that may be relevant to the assessment of criterion (d) may include:

•        the administration and compliance costs that are associated with complying with a declaration, such as the costs of arbitration by the ACCC;

•        environmental and social costs and benefits, such as the costs to the local community of disruption or displacement associated with land acquisitions, or increased employment in the region as a result of investment in the new mine or a new rail line;

•        the potential for incentives to undertake investment in other significant infrastructure to decline because of a (real or perceived) risk that such infrastructure will be declared; and

•        the loss of investment, or reduced incentive to invest, in markets that are dependent on access to the rail line, such as other mines, as a result of declaration.

The above is neither a determinative nor an exhaustive list of what may be included under the two criteria. Other costs may also be relevant, however if they are considered under (b), then (d) should accept the results derived from the application of that subsection, and should not consider them again. This is also the case for any corresponding benefits that are considered as part of the tests.

If all of the criteria in sections 44CA(1)(a) - (d) are met, it is appropriate that the service be declared.

Example 12.2  

An airport has a number of existing carriers that access its services. A new carrier now also wants to access the airport, but has been unable to reach a reasonable commercial agreement with the owner.

The new carrier decides to make an application for declaration of the airport. The airport is not currently subject to declaration or an access undertaking, and is not covered by a certified effective access regime.

In relation to criterion (b), it would be relevant to consider the appropriate time period for declaration, and expected passenger traffic over the period. In this example, a 10 year declaration period is considered appropriate and, because of an increase in tourist traffic in the area, demand for airport’s services is expected to increase.

Once this has been established, consideration can be given to the costs of meeting the demand using the existing airport (including costs of expanding the capacity of the airport), compared with the costs of this demand being met by two or more airports (the existing airport without expansion or extension and a new airport).

If the demand were met by the existing airport, the costs that may be considered for the assessment of criterion (b) could include:

•        the costs of expanding the airport to increase its capacity to deal with higher demand, including increased maintenance costs and transitional declines in capacity during construction;

•        increased coordination costs to the airport associated with supporting additional carriers;

•        increased production costs, such as wages, of meeting total demand for the airport’s services;

•        opportunity costs associated with having more users of the facility. Some opportunity costs will have already been incurred given the facility already has multiple users per the existing commercial agreement. These include:

-       costs arising from delays to undertaking expansions of capacity because of the need to consult the additional users; and

-       costs arising from delays to implementing technological improvements because of the need for the new users to also adapt their operations.

If the demand were met by the existing airport and a new airport, then the costs that may be considered for the assessment of criterion (b) could include:

•        the costs of land acquisitions;

•        construction and maintenance costs for the new airport;

•        the costs of supporting infrastructure for the new airport, such as metro lines, roads and highways.

When considering whether declaration would promote the public interest, examples of the costs and benefits that may be relevant to the assessment of criterion (d) may include:

•        the administration and compliance costs that are associated with complying with a declaration such as the costs of arbitration by the ACCC;

•        environmental and social costs and benefits such as the costs to the local community of disruption or displacement associated with land acquisitions, increased employment in the region as a result of investment in a new airport, costs to the local community of increased access by carriers such as increased pollution and noise levels;

•        the potential for incentives to undertake investment in other significant infrastructure to decline because of a (real or perceived) risk that such infrastructure will be declared; and

•        the loss of investment, or reduced incentive to invest, in markets that are dependent on the declaration occurring, such as the commercial facilities of the airport or hotels and resorts dependent on increased tourism traffic from new carriers.

The above is neither a determinative nor an exhaustive list of what may be included under the two criteria. Other costs may also be relevant, however if they are considered under (b), then (d) should accept the results derived from the application of that subsection, and should not consider them again. This is also the case for any corresponding benefits that are considered as part of the tests.

If all of the criteria in sections 44CA(1)(a) - (d) are met, it is appropriate that the service be declared.

Dealing with submissions on an application for declaration

12.42           Subsection 44FA(4) allows the Council to make information it receives in response to a notice issued under section 44FA publicly available, subject to any confidentiality concerns. [Schedule 12, item 9, subsection 44FA(4)]

Minister is taken to have made a decision in accordance with the recommendation after 60 days

12.43           The Minister will be taken to have made a decision that is in accordance with the declaration recommendation if they have not published under section 44HA their decision within 60 days after receiving a recommendation.

12.44           This means that if a decision on the declaration recommendation has not been published within 60 days, then it will be made by default after the period. The default decision will also be taken to be published in accordance with section 44HA. [Schedule 12, item 12, subsection 44H(9)]

Applications may not be made for declaration of a service where it is subject to certain decisions

12.45           An application for declaration will now only be considered valid if the service to be declared is not the subject of: a decision under section 44N that the regime to which the service is subject is an effective access regime; an access undertaking in operation under Division 6; a decision by the Council under section 44PA(3); a 15-year no-coverage determination or a price regulation exemption in force under the National Gas Law (where the service is provided by means of a pipeline); or a decision of the designated Minister in force under section 44LG. [Schedule 12, items 5 and 6, subsections 44F(1) and 44F(2)]

12.46           If the Council decides that any of these situations (set out in section 44F(1)(a) - (e)) apply to a service in relation to which a person has made an application for declaration, the Council must provide written notice explaining why the situation applies and that an application cannot therefore be made for declaration of the service. [Schedule 12, item 5, subsection 44F(1A)]

12.47           These changes make the aforementioned situations threshold criteria. This means that the Council is able to save on the administrative costs of considering the application and expedite the decision making process.

Designated Minister

12.48           Amendments have been made to section 44D to remove ambiguity regarding who the designated Minister is where the provider is a state or territory body. This will provide certainty in relation to decisions to declare a service and as to whether a service is ineligible to be declared. For example, there is currently ambiguity where the service is owned by a state or territory body, but operated by another non-state or territory body. The amendments mean that the designated Minister will be the responsible state or territory Minister where the provider is a state or territory body that has some control over the conditions for accessing the relevant facility. [Schedule 12, items 3 and 4, paragraphs 44D(2)(a) and 44D(4)(a)]

Recommending to revoke a declaration - considering if a service is subject to an effective access regime

12.49           Subsection 44J(2) sets out that the Council cannot recommend revocation of a declaration unless it is satisfied that: subsection 44F(1) would prevent the making of an application for recommendation of declaration; or subsection 44H(4) would prevent the service concerned from being declared. This change to subsection 44J(2) means that the Council is able to consider if the service in question is the subject of a certified access regime when recommending the revocation of a declaration. [Schedule 12, Item 13, subsection 44J(2)]

Revoking the certification that an access regime is ‘effective’

12.50           Part IIIA provides that a service cannot be declared by the designated Minister if the service is already subject to a regime that has been certified as an effective access regime. The amendments insert new subdivision CA to Division 2A of Part IIIA that deals with the revocation of access regimes that have previously been certified as effective by the Commonwealth Minister. [Schedule 12, item 20, Subdivision CA]

12.51           Subsections 44NBA(1), (5) and (6) set out that if a ministerial decision on whether an access regime is effective under section 44N is in effect, then the Council may on its own initiative, or on application, assess whether to recommend that the Commonwealth Minister revoke or not revoke their decision. [Schedule 12, item 20, subsections 44NBA(1), 44NBA(5), 44NBA(6)]

12.52           Before considering on its own initiative whether to recommend that the Commonwealth Minister should revoke the decision, the Council must publish, by electronic or other means, a notice to that effect, and give a copy of the notice to the responsible Minister for the State or Territory and to the provider of the service. It signals to the facility operator and to the responsible Minister for the State or Territory that the Council is considering revocation of the access regime. [Schedule 12, item 20, subsections 44NBA(2) and 44NBA(3)]

12.53           Subsection 44NBA(3) sets out that an application may be made by a person seeking access to the service, the responsible Minister for the State or Territory, or the provider of the service. It also sets out that the Council must give a copy of the application to the responsible Minister for the State or Territory and the provider of the service, unless they are the applicant. [Schedule 12, item 20, subsection 44NBA(3)]

12.54           The purpose for reconsideration is whether the access regime continues to be an effective access regime. Accordingly, subsection 44NBA(5) sets out that the Council must consider whether the access regime continues to meet the principles of what is an effective access regime. An access regime may cease to meet the definition because there has either been a substantial change to the regime, or substantial changes to the principles on what constitutes an effective regime. [Schedule 12, item 20, subsection 44NBA(5)]

12.55           Subsection 44NBA(4) sets out that, subject to subsection 44NBA(5), the Council’s consideration of whether to make the recommendation must be in accordance with section 44M(4). This is to ensure the Council’s consideration of whether to make a recommendation for revocation of certification is done in accordance with the factors that would be relevant when it is recommending that the Minister decide that an access regime is effective. [Schedule 12, item 20, subsections 44NBA(4) and 44NBA(5)]

12.56           The recommendations made by the Council to the Commonwealth Minister under subsections 44NBA(6) and (7) must be in writing. [Schedule 12, item 20, subsections 44NBA(6) and 44NBA(7)]

12.57           On receiving a recommendation, the Commonwealth Minister must assess whether he or she should revoke the decision. The Commonwealth Minister must make their decision in accordance with the factors that would be relevant to whether they should make a decision that an access regime is effective, as set out in section 44N(2). [Schedule 12, item 20, subsection 44NBC(1)]

12.58           The Commonwealth Minister must be satisfied with the Council’s assessment of whether the access regime is effective. This requires them to consider the same factors and matters as the Council, rather than assess the process that led the Council to the decision. [Schedule 12, item 20, subsection 44NBC(2)]

12.59           Once the Commonwealth Minister has decided if they are satisfied or not so satisfied, then they must issue a notice in writing, either revoking or not revoking the decision. A notice that sets out that the Commonwealth Minister is so satisfied must specify the day on which the decision is to cease to be in force. [Schedule 12, item 20, subsections 44NBC(3) and 44NBC(4)]

12.60           If the Commonwealth Minister does not publish their decision in accordance with section 44NG, within 60 days of receiving the recommendation of the Council, they are taken to have made the decision in accordance with the recommendation, and to have published that decision under 44NG. [Schedule 12, item 20, subsection 44NBC(5)]

12.61           If the Commonwealth Minister has made a decision under section 44NBC, the person who applied to the Council for the Commonwealth Minister to make that decision, or anyone else who would have had standing to request that the Council recommend to the Commonwealth Minister that the decision be revoked, may apply to the Tribunal for review of the Commonwealth Minister’s decision. [Schedule 12, item 35, subsection 44O(1A)]

12.62           For the purposes of the Council’s assessment of what recommendation to make, the Council may give a person a written notice requesting information that they consider to be relevant. The information requested must be specified in the notice. The notice may specify kinds of information that may be requested, and not just specific, precise or itemised bits of information, provided that the Council considers it may be relevant to deciding what recommendation to make. The notice must also request the information be provided within a specified period. [Schedule 12, item 20, subsections 44NBB(1)]

12.63           If the Council has given a notice to a person, they must give a copy of this notice to the applicant, the provider of the service, and the responsible Minister for the State or Territory. If the applicant or the service provider is issued a notice, then the Council does not have to also send them a copy in addition to the notice. The Council must also cause a notice to be published by electronic or other means. [Schedule 12, item 20, subsection 44NBB(2)]

12.64           In deciding what recommendation to make on the application, the Council must have regard to any information that was given within the specified time period, but at their discretion may disregard information given after the expiration of that period. [Schedule 12, item 20, subsection 44NBB(3)]

Extensions of facilities

12.65           The Commission can make a determination in an access dispute that requires an infrastructure service provider to extend the facility or permit interconnection to the facility by a third party. This is separate to the declaration process, as the Commission may only arbitrate an access dispute after a service has been declared. There are also a number of safeguards that restrict how the Commission may use these powers.

12.66           Various references in sections 44V, 44W and 44X are amended. The intent of these amendments is to clarify that the Commission can require a service provider to expand the capacity of its facility (as well as being able to require a geographical extension) when making an access determination. The amendments also clarify that the safeguards in sections 44W and 44X apply to directed capacity expansions.  It is intended that the Commission could require a provider to expand a facility’s capacity, whether or not it requires the provider to extend the facility’s geographical reach. [Schedule 12, items 38 to 41, subsection 44V(2), paragraphs 44W(1)(d), 44W(1)(e) and 44X(1)(e)]

Classification of decisions as legislative instruments

12.67           Subsections 44F(8), 44LG(7) and 44LI(10) have been repealed. The effect of this is to make instruments under subsections 44F(7), 44LG(1) and 44LI(3) subject to item 19 of the table in section 6(1) of the Legislation (Exemptions and Other Matters) Regulation 2015 , consistent with other decisions by the Minister and the NCC under Part IIIA. [Schedule 12, items 8, 16 and 18, subsections 44F(8), 44LG(7) and 44LI(10)]

Consequential amendments

12.68           Schedule 12 makes a number of consequential amendments to provisions of the Act as a result of moving the ‘declaration criteria’ to section 44CA. [Schedule 12, items  14, 15 and 17,  paragraphs 44LB(3)(b), 44LG(5)(b), 44LI(2)(a)]

12.69           Schedule 12 also makes a number of consequential amendments to provisions of the Act as a result of the replacement of section 44F(1). [Schedule 12, items 6, 10 and 11, subsections 44F(2), 44G(1)-(1A), (6)-(7), 44H(3)-(3A), (6B)-(6C)]

12.70           Schedule 12 also makes a number of consequential amendments to the provisions of the Act as a result of the insertion of the new Subdivision CA of Division 2A of Part IIIA. [Schedule 12, items 21 to 36, 42 and 44, subsections, 44NC(1), 44NC(2), 44NC(3), 44NC(5), 44NE(1), 44NE(3), 44NF(1), 44NG(1), 44O(1), paragraphs 29O(a) and 29O(2)(a), 44NC(8)(a), 44NC(9)(a), 44NF(2)(a), 44NF(4)(a), 44NG (2)(a), 44NG(3)(a), 44ZZOAAA(3)(a), subparagraph, 44NE(6)(c)(iii)]

Commencement provisions

12.71           Schedule 12 commences on a day or days to be fixed by Proclamation. If any of the provisions do not commence within 6 months from the date of Royal Assent, they commence on the day after that 6 month period.

Commencement, application and transitional provisions

12.72             Schedule 12 commences at the same time as Schedule 1.

Declared services (Part 1 of Schedule 12)

12.73           The amendments of sections 44F to 44H made by Part 1 of Schedule 12 apply in relation to applications made under subsection 44F(1) (as amended by Part 1 of Schedule 12) on or after the commencement of Schedule 12. [Schedule 12, item 19, sub item 19(1)]

12.74           If, on or after the commencement of Schedule 12, a Court or Tribunal makes a decision interpreting any of the matters mentioned in subsection 44H(4) (as in force before that commencement), details of that decision must be included in the annual report required to be produced by the Councillors under section 29O. [Schedule 12, item 19, sub item 19(2)]

12.75           The amendment of section 44J made by Part 1 of Schedule 12 applies in relation to declarations made before, on or after the commencement of this item. [Schedule 12, item 19, sub item 19(3)]

Effective access regimes (Part 2 of Schedule 12)

12.76           The amendments to effective access regimes in Part 2 of Schedule 12 apply to all decisions under section 44N made on or after 1 January 2017. [Schedule 12, item 37]

Contingent numbering

12.77           Part 4 of Schedule 12 contains alternate numbering amendments where commencement is contingent on whether Schedule 2 to the Public Governance and Resources Legislation Amendment Act (No. 1) 2017 commences before this Bill. If Schedule 2 to the Public Governance and Resources Legislation Amendment Act (No. 1) 2017 commences before this Bill, items 42 and 43 apply. If that Schedule does not commence before this Bill, items 44 and 45 apply. [Schedule 12, items 42-45, paragraphs 29O(a) and 29O(2)(a), subparagraphs 29O(b)(ii) and 29O(2)(b)(ii)]

 

 



Outline of chapter

13.1               Schedule 13 to this Bill inserts a new Division 3 into Part XIII of the Act, which deals with the transitional application of amendments made by a number of other Schedules to this Bill.

Context of amendments

13.2               Schedules 1 (definition of competition), 5 (covenants affecting competition), 8 (resale price maintenance) and 9 (authorisations, notifications and class exemptions) make amendments to the Act which require transitional provisions to clarify how the amended provisions apply to certain matters.

Summary of new law

13.3               Schedule 13 inserts transitional provisions dealing with:

•        The application of the amended definition of ‘competition’;

•        Existing orders under section 87 relating to contravention of section 45B;

•        Authorisations granted and in force under section 88 before commencement;

•        Applications for authorisation under section 88 made, but not yet determined, before commencement;

•        Notifications made under section 93 before commencement;

•        Applications for merger clearances made, and not determined, before commencement; and

•        Applications for merger clearances granted, but not yet in force, before commencement. 

Comparison of key features of new law and current law

New law

Current law

A new Division 3 is inserted into Part XIII of the Act, containing transitional provisions related to amendments made by other Schedules to this Bill. 

Transitional provisions are not required.

Detailed explanation of new law

13.4               Schedule 13 inserts a new Division 3 into Part XIII of the Act, which deals with the transitional application of amendments made by a number of other Schedules to this Bill. [Schedule 13, item 1, Division 3 of Part XIII]

New defined terms

13.5               Schedule 13 inserts definitions of ‘amended Act’, ‘amending Act’ and ‘commencement time’ into the new Division 3 of part XIII. [Schedule 13, item 1, section 180]

13.6               Amended Act is defined to mean the Act, as amended by the amending Act.

13.7               Amending Act is defined to mean the Competition and Consumer (Competition Policy Review) Act 2017 . References to Schedules to the amending Act are also references to the corresponding Schedule to this Bill.

13.8               Commencement time is defined to mean the commencement of Schedule 1 to the amending Act.

Amended definition of ‘competition’

13.9               The new section 181 provides that the definition of competition, as amended by Schedule 1 to this Bill, applies in relation to conduct engaged in at or after the commencement time.

Orders under section 87

13.10           A new section 182 provides that the amendments to section 87 made by Schedule 5 of the amending Act do not apply in relation to, or affect the validity of, certain orders under section 87 relating to a contravention of section 45B. The specific orders in question are those made before the commencement time and in force immediately before the commencement time. [Schedule 13, item 1, section 182]

Authorisations under section 88

13.11           A new section 183 is inserted, which addresses authorisations under section 88.

13.12           Authorisations granted under section 88 (other than subsections 88(5) or (6A)) before the commencement time, and in force immediately before the commencement time, continue in force (and may be dealt with) as if they had specified the relevant section of the Act as amended by this Bill (as set out in the relevant subparagraph of paragraph 183(1)(b)). [Schedule 13, item 1, subsection 183(1)]

13.13           Providing that such authorisations ‘may be dealt with’ as if they had been granted under the amended Act allows the provisions of the new law to apply to procedures which may change, or otherwise relate to, the authorisation (for example, an application for minor variation, revocation or revocation and substitution, or a Tribunal review). 

13.14           If a valid application for authorisation is made under section 88 (other than the former subsections 88(5) or 88(6A), or for a merger authorisation or merger clearance) before the commencement time, and the Commission has not determined the application before commencement time, then the application is taken to be an application made under section 88 of the amended Act. Such applications may be dealt with as if they had been made under section 88 of the amended Act. [Schedule 13, item 1, subsection 183(2)]

13.15           This ensures that applications for authorisation which are pending at the commencement time may be continued under the new law, without the need for a fresh application.

13.16           If an authorisation is granted under section 88 (other than subsections 88(5) or 88(6A)) before the commencement time, but has not come into force by the commencement time, then the authorisation is taken to be granted under section 88 of the amended Act from the time it commences. Such applications may be dealt with as if they had been made under section 88 of the amended Act. [Schedule 13, item 1, subsection 183(3)]

Notices under section 93

13.17           A new section 184 is inserted to deal with notices under a provision of section 93 that were in force immediately before the commencement time. Such notices are to continue in force, and may be dealt with, as if they had been given under section 93 as amended by Schedule 8 to the amending Act. [Schedule 13, item 1, section 184]

Merger clearances and authorisations

13.18           A new section 185 is inserted to deal with merger clearances and authorisations, applied for, or granted under, Division 3 of Part VII before the commencement time.

13.19           As detailed below, the new section 185 provides a number of general transitional rules for merger clearances and authorisations:

•        existing old law merger clearances and authorisations (that is, merger clearances and authorisations that are in force immediately before the commencement time) are to be treated as new law merger authorisations;

•        the old law continues to apply to applications for merger clearances and authorisations pending at commencement (that is, applications that have not yet been determined, or have been granted but not yet enter into force);

•        the new law generally applies for review of merger clearance determinations (unless the Tribunal has not yet made its decision at the commencement time); and

•        old law merger clearances and authorisations granted or coming into force after commencement are to be treated as new law merger authorisations.

13.20           Where a merger clearance or authorisation was granted before the commencement time and in force immediately before the commencement time, it continues in force, and may be dealt with, as if it was granted under section 88 as amended by Schedule 9 of the amending Act, and as if it specified section 50. [Schedule 13, item 1, subsection 185(1)]

13.21           Where a merger clearance was applied for, but not determined before the commencement time, Subdivisions A and B of Division 3 of Part VII (except sections 95AH, 95AL, 95AR and 95AS) continue to apply as if they had not been repealed by the amending Act. This does not apply where:

•        a determination was made under section 95AM, refusing to grant the clearance, before the commencement time; or

•        the clearance came into force before the commencement time. [Schedule 13, item 1, subsection 185(2)]

13.22           If a merger clearance is granted in relation to an application falling under subsection 185(2), it is taken to be an authorisation under section 88 that specifies section 50. [Schedule 13, item 1, note at subsection 185(2)]

13.23           Where a merger authorisation was applied for under section 95AU, but not determined before the commencement time, Subdivisions A and C of Division 3 of Part VII (except sections 95AZ, 95AZA, 95AZL and 95AZM) continue to apply as if they had not been repealed by the amending Act. [Schedule 13, item 1, subsection 185(3)]

13.24           If a merger authorisation is granted in relation to an application falling under subsection 185(3), it is taken to be an authorisation under section 88 that specifies section 50. [Schedule 13, item 1, note at subsection 185(3)]

13.25           New subsection 185(4) deals with clearance determinations , which are defined in the subsection to mean a determination made by the Commission before, at or after the commencement time under former section 95AM. [Schedule 13, item 1, subsection 185(4)]

13.26           After the commencement time, Part IX as amended by Schedule 9 to the amending Act applies in relation to a clearance determination as if the clearance determination related to a domestic merger authorisation rather than a clearance. The effect of this provision is that the new law for Tribunal review of merger authorisations also applies for Tribunal review of merger clearances. [Schedule 13, item 1, subsection 185(4)]

13.27            However, where an application for a review of a clearance determination is made before the commencement time, but the Tribunal has not made its decision before the commencement time, then subsection 185(4) does not apply. For those applications, Division 3 of part IX continues to apply as if it had not been repealed by Schedule 9 to the amending Act . This ensures such reviews can proceed to determination by the Tribunal without the need for a fresh application for review. [Schedule 13, item 1, subsection 185(5)]  

13.28           Where a merger clearance or authorisation was applied for before the commencement time, and granted at or after the commencement time, it is to be treated as a merger authorisation granted under the new law. That is, it is taken to be an authorisation granted under section 88 of the amended Act that specifies section 50. [Schedule 13, item 1, subsection 185(6)]  

13.29           Where a merger clearance was granted under former section 95AD before the commencement time, but not yet in force, before the commencement time, it is taken to be, and may be dealt with, as an authorisation granted under section 88 of the amended Act that specifies section 50. [Schedule 13, item 1, subsection 185(7)]

13.30           New subsection 185(8) provides that the new section 92 applies to information given to the Tribunal or Commission under Division 3 of Part VII or Division 3 of Part IX (the old Divisions for merger clearances, merger authorisations and Tribunal review of Commission merger clearance decisions), as those Divisions continue to apply under subsections 185(2), 185(3) or 185(5), as if that information had been given under the new authorisation provisions in connection with a merger authorisation. [Schedule 13, item 1, subsection 185(8)]

13.31           The effect of this provision is to ensure that the prohibition against providing false or misleading information applies to information provided under the old law for merger clearances and authorisations (and Tribunal review of merger clearances), despite the repeal of the relevant old provisions. 

13.32           Finally, subsection 185(9) clarifies that nothing in section 185 limits the application of Part IX or section 92. [Schedule 13, item 1, subsection 185(9)]

Commencement, application and transitional provisions

13.33            Schedule 13 commences at the same time as Schedule 1.

 



Chapter 14      

Other amendments

Outline of chapter

14.1               Schedule 14 to this Bill makes various amendments to streamline the administration of the Act, to reduce compliance burdens for business, individuals and within Government, while preserving the protections available under the Act.

Context of amendments

14.2               Following its meeting on 13 June 2014, the Legislative and Governance Forum on Consumer Affairs issued a joint communique announcing its intention to pursue measures to reduce compliance burdens on business and consumers in the consumer law, whilst preserving important protections under the Act.

14.3               The measures in this Schedule give effect to this decision, with a focus on the requirements of the Australian Consumer Law (ACL), which is set out in Schedule 2 to the Act.

Summary of new law

14.4               Schedule 14 to this Bill amends the Act and the ACL to:

•        remove the requirement for private litigants to seek Ministerial consent to bring an action for a breach of the Act that takes place overseas (Part 1);

•        extend the jurisdiction of State and Territory courts to hear actions under the Act for pyramid selling and unsafe goods liability (Part 2);

•        remove the redundant requirement for the ACCC to keep a register of certain records when they hold conferences for product safety bans (Part 3);

•        permit the disclosure of certain information by the ACCC to specific agencies where it is reasonably necessary to protect public safety (Part 4);

•        rectify a drafting error so that the offence of conspiracy is removed from the Act, ensuring there is no overlap with the Criminal Code Act 1995 (Part 5) ;

•        make clear the requirements in the ACL regarding the cooling off period for unsolicited consumer agreements (Part 6);

•        rectify a drafting error which previously did not extend to any person, as a law of the Commonwealth, the application of the ACL regarding certain types of misleading conduct (Part 7); and

•        permit the ACCC to seek a court order directing a person to comply with a notice given under section 155 of the Act to furnish information, produce documents or give evidence (Part 8).

Comparison of key features of new law and current law

New law

Current law

Removes the requirement for private litigants to seek Ministerial consent to bring action for a breach of the Act that takes place overseas.

The Act requires Ministerial consent to bring action for a breach of the Act that takes place overseas.

Extends the jurisdiction of State and Territory courts to hear actions under the Act for pyramid selling and unsafe goods liability.

State and Territory courts cannot hear actions for pyramid selling and unsafe goods liability.

Removes the requirement for the ACCC to keep a register of records of proceedings at certain conferences or recommendations under the product safety requirements.

Paragraphs 95(1)(h) and (j) require the ACCC to maintain certain records, that  relate to sections of the Act that have been repealed and superseded by Div 3 of Part XI of the Act.

Permits the disclosure of certain confidential information by the ACCC to specific agencies where it is reasonably necessary to protect public safety.

Section 132A of the ACL permits the ACCC to provide certain confidential information to any other person only in limited circumstances.

Rectifies a drafting error so that the offence of conspiracy is carved out of the Act, ensuring there is no overlap with the Criminal Code Act 1995 .

Both the Act and subsection 11.5 of the Criminal Code Act 1995 apply to a relevant offence against the cartel offence provisions in the Act.

Clarifies that the cooling-off period for unsolicited consumer agreements begin on the day the agreement is entered into.

The current drafting of subsection 86(1) of the ACL may inadvertently raise confusion about whether traders can supply unsolicited goods or services and accept or require payment after an unsolicited consumer agreement is entered into but before the ten business days commence for the cooling-off period.

Rectifies a drafting error by extending to any person the application of the ACL, as a law of the Commonwealth, regarding conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods.

Section 131 of the Act provides that section 33 of the ACL applies only to the conduct of corporations in trade or commerce, as a law of the Commonwealth, regarding conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods.

Permit the ACCC to seek a court order directing a person to comply with a notice given under section 155 of the Act to furnish information, produce documents or give evidence.

Section 155 of the Act does not permit the ACCC to seek a court order to compel a person to comply with a notice given under that section to furnish information, produce documents or give evidence .

Detailed explanation of new law

Part 1 — Removal of requirements for Ministerial consents

14.5               Section 5 allows for the extraterritorial application of certain provisions of the Act. Under section 5, Parts IV and XI, the Australian Consumer Law (other than Part 5-3) and related provisions of the Act extend to conduct engaged in outside of Australia by certain entities (corporations incorporated in Australia or carrying on business within Australia, Australian citizens and persons ordinarily resident in Australia).

14.6               Currently, section 5 prevents private litigants from relying on the extraterritorial application of the Act without the consent of the responsible Minister.

14.7               This Part repeals subsections 5(3) and 5(4), and thereby removes the requirement for private parties to seek Ministerial consent before commencing an action for, or relying on, the extraterritorial application of the Act under section 5 in certain competition or consumer law actions relating to conduct occurring overseas. [Schedule 14, item 1, subsections 5(3) and (4)]

14.8               Subsection 5(5), which details when the responsible Minister is required to give consent, is also repealed as it is made redundant by the repeal of subsections 5(3) and 5(4). [Schedule 14, item 1, subsection 5(5)]

14.9               These amendments were recommended by the Harper Review, and remove an unnecessary roadblock to possible redress for harm suffered as a result of a contravention of the competition or consumer provisions of the Act.  

14.10           Section 5 continues to require that the contravening firm has a connection with Australia in the nature of residence, incorporation or business presence.   

Application provisions

14.11           The repeal of subsection 5(3) of the Act will apply to hearings commencing on or after the day Schedule 14 commences. This means that Ministerial consent will not be required for such hearings but will still be required for hearings that have already commenced. [Schedule 14, item 2]

14.12            The repeal of subsection 5(4) of the Act will apply to applications made on or after the day Schedule 14 commences. This means that Ministerial consent will not be required for such applications.  [Schedule 14, item 2]

Part 2 — Jurisdiction of State and Territory courts

14.13           This Part amends Division 8 of Part XI of the Act to correct a drafting error regarding the jurisdiction of state and territory courts.

14.14           Specifically, it extends jurisdiction to State and Territory courts to hear cases relating to pyramid selling (Division 3 of Part 3-1 of the ACL) and manufacturer’s liability for goods with safety defects (Part 3-5 of the ACL).

14.15           States and Territories were consulted regarding this amendment.

14.16           Although this amendment extends jurisdiction, the current subsection 138B(3) of the Act will still provide that the States and Territories can, where they prefer to do so, limit their courts’ jurisdiction to hear cases relating to pyramid selling and manufacturer’s liability for goods with safety defects.

14.17           This Part secures greater access to justice for consumers by allowing them to seek redress in State and Territory courts and tribunals for any breach of the ACL, rather than needing to seek recourse in Federal courts. [Schedule 14, items 3 to 7, subsections 138B(2), 138C(1), 138C(3) and paragraphs 138D(1)(b) and 138E(1)(b)]

Application provision

14.18           The amendments made by this Part apply to matters arising on or after the day Schedule 14 commences. [Schedule 14, item 8]

Part 3 — Register of notifications

14.19           This Part amends subsection 95(1) of the Act to remove the requirement for the ACCC to keep a register containing records of proceedings at conferences held under section 65J or 65M of the former Trade Practices Act 1974 (TP Act), and recommendations made to the Minister responsible for the TP Act by the ACCC under sections 65K or 65N of the former TP Act.

14.20           The requirements of sections 65J, 65K, 65M and 65N were superseded by Division 3 of Part XI of the Act. Sections 132D and 132G of the Act now achieve the objective of subsections 95(1)(h) and (j) in ensuring transparency and accountability for product safety decisions.

14.21           This amendment will not result in the removal of any information on the Register of Notifications previously required to be kept by the ACCC under subsection 95(1) of the Act. Such information will continue to be kept consistent with the requirements of the Archives Act 1983 . Sections 132D and 132G of the Act also operate in a similar manner to ensure that such information is published.

14.22           The information previously required to be held in accordance with subsections 95(1)(h) and (j) will be kept consistent with the requirements of Division 3 of Part XI of the Act in future. [Schedule 14, items 9 to 10, paragraphs 95(1)(gb), 95(1)(h) and (j)]

Part 4 — Confidentiality of notices

14.23           Under section 131 of the ACL, suppliers of consumer goods of a particular kind have an obligation to report to the Commonwealth Minister by written notice, within two working days of becoming aware, that the goods have been associated with the death, serious injury or illness of any person.

14.24           Section 132A of the ACL provides for the confidentiality of these notices, unless the person who gave the notice has consented to the ACCC sharing the information, or in other specific circumstances, such as disclosure:

•        by the Commonwealth Minister to another Consumer Affairs Minister, the regulator or an associate regulator (for example, the agency that has responsibility for administering the ACL as a law of the State or Territory);

•        by the Commonwealth Minister where they consider it is in the public interest;

•        among the ACCC and associate regulators;

•        required or authorised by or under law; or

•        reasonably necessary for the enforcement of the criminal law or a law imposing a pecuniary penalty.

14.25           This Part improves the ACCC’s ability to share notices it receives under section 132A of the ACL with specified agencies where it is reasonably necessary to protect public safety. To the extent that a particular notice contains personal or confidential information, the disclosure of such notices to other agencies or bodies will still be required to comply with the law, including the Privacy Act 1988 .

14.26           Agencies specified in this Part and the reasons for their inclusion are set out below:

Agency

Reason for their inclusion

Any agency within the meaning of the Freedom of Information Act 1982

The ACCC works closely with a range of Commonwealth agencies to ensure the safety of products in Australia, for example, the Australian Customs and Border Protection Service, Food Standards Australia New Zealand, the Department of Infrastructure and Regional Development and the Therapeutic Goods Administration. It is essential that the ACCC can provide copies of notices it receives to relevant Commonwealth agencies where it is reasonably necessary to protect public safety.

Commonwealth Director of Public Prosecutions

The Director of Public Prosecutions is responsible for prosecuting breaches of the criminal offences contained in the ACL, including the product safety requirements of the ACL.

A State/Territory government body (within the meaning of section 155AAA of the Act)

The ACCC works closely with a range of State and Territory bodies to ensure the safety of products in Australia, for example, State and Territory consumer agencies, food regulators and electricity regulators. It is essential that the ACCC can provide copies of notices it receives to relevant State and Territory bodies where it is reasonably necessary to protect public safety.

A foreign government body (within the meaning of section 155AAA of the Act)

The ACCC works closely with its counterpart regulators in other jurisdictions to ensure the safety of products in Australia, given the global nature of product markets. It is essential that the ACCC can provide copies of notices it receives to its counterparts overseas where it is reasonably necessary to protect public safety. As these notices relate to product safety and are provided by industry, disclosure to a foreign government agency is not expected to raise national security concerns.

14.27           Before disclosing this information, the ACCC must be satisfied that the disclosure is reasonably necessary to protect public safety. [Schedule 14, item 11, section 132A of Schedule 2]

Application provisions

14.28           The amendments made by this Part in relation to section 132A only apply to disclosures relating to notices made on or after the day Schedule 14 commences. [Schedule 14, item 27, section 291 of Schedule 2]

Part 5 — Cartel offences

14.29           Section 79 of the Act provides for ancillary offences in relation to criminal cartels and seeks to remove the duplicative application of the equivalent requirements of the Criminal Code, which is set out in a Schedule to the Criminal Code Act 1995 , where the Act applies.

14.30           Due to a drafting error, section 79 does not remove the parallel application of the offence of conspiracy found in subsection 11.5 of the Criminal Code. This Part corrects this error and removes this overlap between the Act and the Criminal Code. [Schedule 14, item 12, subsection 79(5)]

Application provision

14.31           The amendments made by this Part apply in relation to contraventions arising on or after the day Schedule 14 commences. [Schedule 14, item 13]

Part 6 — Unsolicited consumer agreements

14.32           This Part amends subsection 86(1), paragraphs 82(3)(a)-(d), 85(3)(a) and 85(6)(a), 86(1)(d)-(e) and section 179 of the ACL to clarify the operation of the cooling-off period for unsolicited consumer agreements.

14.33           Subsection 86(1) currently provides that a supplier under an unsolicited consumer agreement must not supply unsolicited goods or services, or accept or require payment under an unsolicited consumer agreement, for ten business days commencing on the first business day after such an agreement was made in person, or if it was made by telephone, commencing at the start of the business day after the consumer is given a copy of the agreement.

14.34           The current drafting of this provision may inadvertently permit traders to supply unsolicited goods or services and accept or require payment after an unsolicited consumer agreement has been entered into, but before the ten business days commence (that is, on the day the contract is agreed).

14.35           This amendment clarifies the responsibilities for traders and the rights of consumers regarding the supply and acceptance of payment for unsolicited goods or services and the commencement of the cooling-off period. In particular, it now makes it clear that the cooling-off period commences when the agreement is entered into and that during this period traders are not permitted to supply unsolicited goods or services and accept or require payment under an unsolicited consumer. [Schedule 14, items 18 and 19, subsection 86(1) of Schedule 2]

14.36           Consequential amendments are being made to paragraphs 82(3)(a)-(d), 85(3)(a) and 85(6)(a), and section 179 of the ACL to ensure consistency with section 86 in the expression of, and basis for, calculating the cooling-off period in those requirements. [Schedule 14, items 14 to 17 and 20 to 22, subsections 82(3)(a) to (d), 85(3)(a) and 85(6)(a) and section   179 of Schedule 2]

Application provision

14.37           The amendments made by this Part apply in relation to unsolicited consumer agreements made on or after the day Schedule 14 commences. [Schedule 14, item 27, section 292 of Schedule 2]

Part 7 — Misleading conduct as to the nature etc. of goods

14.38           This Part corrects a drafting error by amending subsection 131(2) of the Act to extend the application of section 33 of the ACL, as a law of the Commonwealth, to the conduct of any person.

14.39           The equivalent section under the former TP Act (section 55) had applied to the conduct of any person and section 33 of the Act, as a law of a state or territory, currently applies to the conduct of any person.

14.40           Section 33 of the ACL implements Australia’s obligations under the Paris Convention for the Protection of Industrial Property . [Schedule 14, item 23, subsection 131(2)]

Application provision

14.41           The amendment made by this Part applies to conduct occurring on or after the day Schedule 14 commences. [Schedule 14, item 24]

Part 8 — Power to obtain information, documents and evidence

14.42           Section 155 of the Act sets out the ACCC’s powers to obtain information, documents and evidence. Currently, failure to comply with a notice to furnish information, produce documents or give evidence may result in a fine or a term of imprisonment. The operation of section 155 is further detailed at Chapter 11.

14.43           This Part improves the efficacy of section 155 by permitting the ACCC to seek a court order directing a person to comply with a notice given under section 155. [Schedule 14, item 25, subsection 155(8)]

Application provision

14.44           The amendment made by this Part to section 155 applies in relation to a refusal or failure to comply with a notice given on or after the day Schedule 14 commences. [Schedule 14, item 26]

Application and transitional provisions

14.45           The application of the amendments made by Schedule 14 is detailed above in relation to each Part.



Chapter 15      

Regulation impact statement

Policy objective

15.1               Prior to the 2013 Federal Election, the Government committed to a ‘root and branch’ review of competition laws and policy. The review would examine the broader competition framework to identify opportunities to increase productivity and efficiency in markets, drive benefits to ease cost of living pressures and raise living standards for all Australians.

15.2               The then Prime Minister and the then Minister for Small Business announced a review of competition policy on 4 December 2013. On 27 March 2014, the then Minister for Small Business released the final Terms of Reference following consultation with the States and Territories, and announced the independent Review Panel, chaired by Professor Ian Harper.

15.3               The Review was conducted over the course of 12 months, and concluded with the release of the Final Report on 31 March 2015. The Harper Review made 56 recommendations related to competition laws, competition policies and competition institutions.

15.4               The Government released its response on 24 November 2015.

15.5               The package of amendments contained in this Bill implement a significant number of the reforms to competition laws which the Government supported in its response to the Harper Review. A number of the other recommendations have already been addressed through Government decisions, or are directed at State and Territory governments.

15.6               In relation to the National Access Regime, the Government announced its support for the recommendations made by the Productivity Commission (PC) in its 2013 Inquiry Report into the National Access Regime.

15.7               As detailed in earlier chapters, the recommendations which are either partially or wholly contained in this Bill are:

•        The definition of ‘competition’ should be amended to ensure it includes competition from potential imports (recommendation 25);

•        The cartel conduct provisions should apply to conduct taking place within Australia or across Australian borders, and the joint venture exceptions should be broadened (recommendation 27);

•        The separate prohibition on exclusionary provisions should be repealed (recommendation 28);

•        The price signalling provisions should be repealed and replaced by a more general prohibition on concerted practices with the purpose, effect or likely effect of substantially lessening competition (recommendation 29);

•        Third-line forcing should be prohibited only if it has the purpose, effect or likely effect of substantially lessening competition (recommendation 32);

•        Notification and a ‘related bodies corporate’ defence should be available for resale price maintenance (recommendation 34);

•        The formal merger exemption processes should be significantly reformed (recommendation 35);

•        The maximum fines for secondary boycotts should be increased in line with fines for other breaches of the Act (recommendation 36);

•        The authorisation and notification provisions should be simplified to allow a single application for each transaction or arrangement, and authorisation should be available for conduct which does not substantially lessen competition, in addition to conduct that has a net public benefit (recommendation 38);

•        The Commission should have a class exemption power to exempt kinds of conduct that are not of competition concern (recommendation 39);

•        Section 155 should be amended to: cover alleged contravention of court-enforceable undertakings; introduce a reasonable search defence; and increase the penalty for non-compliance (recommendation 40);

•        Section 83 should be extended to allow reliance on admissions of fact (recommendation 41);

•        The National Access Regime declaration criteria should be revised (recommendation 42) (note that the declaration criteria are being revised in accordance with the recommendations made by the PC in its Inquiry Report); and

•        The Act should be reformed to introduce greater flexibility for collective bargaining by small business (recommendation 54).

15.8               On 21 July 2015, Treasury certified that the Productivity Commission Inquiry Report on the National Access Regime constituted a process and analysis equivalent to a RIS. On 15 November 2015, Treasury certified that the independent Harper Review constituted a process and analysis equivalent to a Regulation Impact Statement (RIS).

15.9               The Australian Government Guide to Regulation identifies seven questions that a RIS should address. Following is a summary of the analysis of those questions that occurred as part of the independent reviews and stakeholder consultation process in relation to the recommendations implemented in this Bill. 

Problem

15.10           The Harper Review Draft Report and Final Report and the PC Inquiry Report into the National Access Regime discuss, in detail, the problems with each of the provisions that this Bill substantially amends, as well as with the Competition and Consumer Act 2010 (the Act) more generally. 

15.11           The Harper Review was the first comprehensive review of Australia’s competition framework in more than 20 years. The Review Panel examined whether Australia’s existing competition settings were fit for purpose, especially in light of the persistent forces for change that will shape the Australian economy now and into the future. The Harper Review identified several such forces for change.

15.12           Firstly, the rise of Asia and other emerging economies provides significant opportunities for Australia but also poses some challenges. A heightened capacity for agility and innovation will be needed to match changing tastes and preferences in emerging economies.

15.13           Secondly, Australia’s ageing population will give rise to a wider array of needs and preferences among older Australians and their families. The right policy settings will help people to meet their individual health and aged care needs.

15.14           Thirdly, new technologies are ‘digitally disrupting’ the way many markets operate, the way business is done and the way consumers engage with markets. The challenge for governments is to capture the benefits of digital disruption by ensuring that Australia’s competition settings encourage innovation, but still preserve expected safeguards for consumers.

15.15           Competition laws which are ‘fit for purpose’ will be well suited to support Australia’s economy throughout these changes. The Harper Review found, while the concepts, prohibitions and structures of Australia’s competition were sound, implementing a range of specific reforms would address problem areas and enhance the effectiveness of the competition law.

15.16           In its Inquiry Report into the National Access Regime, the PC similarly recommended reforms to the Regime to enhance its effectiveness. The PC found that the scope of the Regime should be confined to ensure its use is limited to the exceptional cases where the benefits arising from increased competition in dependent markets are likely to outweigh the costs of regulated third party access to infrastructure services. The PC recommended amendments to clarify the declaration criteria to achieve this outcome

Need for government action

15.17           The Harper Review Draft Report and Final Report and the PC Inquiry Report into the National Access Regime explain why government action is needed to progress and implement those recommendations which are contained in this Bill.

15.18           As discussed above, Australia’s competition framework needs to be suited to a number of challenges facing Australia’s economy.

15.19           The consultation and research undertaken by the Panel and by the PC provide clear evidence that reform to Australia’s competition laws is overdue and critical to improving Australia’s productivity performance and sustaining standards of living over the long term.

15.20           The Harper Review found that overall the central concepts, prohibitions and structure of the current competition law should be retained, as they are appropriate to serve the current and future needs of the Australian economy.

15.21           However, the Harper Review also found that Australia’s competition laws could be reformed to enhance their effectiveness and ensure they continue to be fit for purpose. Many of the competition law recommendations of the Harper Review are intended to address the following types of problems:

•        some provisions of the Act are unnecessarily complex, leading to regulatory uncertainty, unnecessary compliance burdens on business and undue costs on the economy;

•        some provisions of the Act are overly prescriptive, or are duplicative and redundant, and could be greatly simplified;

•        some provisions of the Act are unfit for purpose, and either unnecessarily inhibit pro-competitive conduct or fail to adequately prohibit anti-competitive conduct.

Policy options

15.22           The Harper Review Final Report considers and discusses a range of policy options to enhance competition policy settings in Australia. The benefits of reform are considered, with a preference for reforms that enhance the long-term interests of Australians.

15.23           The Issues Paper, published early in the Review process, provided an initial forum for stakeholders to raise policy options. The Draft Report weighed stakeholder views, considered the benefits of potential reforms, made a range of draft recommendations and invited further submissions in response to those recommendations. The Final Report again weighed stakeholder views, considered the benefits of potential reforms and made final recommendations which were considered to be the best options for reform.

15.24           The Harper Review examined the Act to assess whether Australia’s competition laws remained fit for purpose having regard to consumer and business experience with the laws, changes that have occurred in the Australian economy and that are anticipated, and relevant international developments.

15.25           The policy options considered by the Review Panel, before arriving at each of the final recommendations, are extensively detailed in the Harper Review Final Report. 

15.26           The following paragraphs detail the options that were considered in determining how best to implement the policy intent in relation to three key areas of reform:

•        joint venture exceptions for cartel conduct;

•        concerted practices; and

•        Tribunal review in relation to merger authorisations.

15.27           In relation to the National Access Regime, the PC considered options including:

•        retaining the status quo - keeping the Regime in its present form;

•        reforming the Regime - keeping the Regime, but making changes to the framework in order to lower the costs of the Regime, and/or increase the benefits; and

•        removing the Regime and relying on alternatives such as general competition law, new regulatory structures, price surveillance or monitoring, or ad hoc measures.

Analysis of costs/benefits

15.28           In considering whether Australia’s competition laws are fit for purpose, the Review Panel asked four questions:

•        Does the law focus on enhancing consumer wellbeing over the long term?

•        Does the law protect competition rather than individual competitors?

•        Does the law strike the right balance between prohibiting anti-competitive conduct and not interfering with efficiency, innovation and entrepreneurship?

•        Is the law as clear, simple and predictable as it can be?

15.29           The Review Panel found that some areas of Australia’s competition law do not appropriately address each of these considerations.

15.30           Before proceeding to make specific recommendations for reform, the Review Panel and the PC analysed the costs and benefits of the relevant policy options by benchmarking the status quo against each proposal for reform.

15.31           Where the Panel considered that the competition laws have served Australia well, the Final Report recommended specific reforms to enhance their effectiveness. The Panel and the PC recommended a number of changes to simplify and clarify the operation of the law, to bring to the forefront the competition policy objectives of the law, and to reduce business compliance costs.

15.32           Importantly, the Review Panel recognised that all changes to the law will involve some transitional costs as firms become familiar with the new provisions and as courts develop jurisprudence on their application.

15.33           Many of the recommendations were specifically designed to help businesses manage transitional costs, including:

•        legislative guidance to help guide the courts with respect to the intended operation of provisions;

•        broadening the Commission’s powers to authorise conduct where there is a net public benefit or where there are unlikely to be competition concerns; and

•        encouraging the Commission to publish guidance material which sets out its enforcement approach.

15.34           The Government further evaluated each of the chosen policy options in light of stakeholder feedback received during exposure draft consultation.

15.35           As detailed under ‘consultation’ below, the Government has refined the draft law and explanatory material to further reduce uncertainty and minimise the cost to business while retaining the benefits of reform.

Joint venture exceptions for cartel conduct

15.36           The Harper Review recommended that a broad exemption should be included for joint ventures, whether for the production, supply, acquisition or marketing of goods or services.

15.37           The Harper Review made this recommendation on the basis that the current exceptions are too narrowly framed. Among other limitations, the exceptions only apply where the relevant cartel provision is contained in a contract and where the joint venture is for the production and/or supply of goods or services. Submissions to the Harper Review raised concerns that the narrow application of the current exceptions was limiting legitimate commercial transactions.

15.38           At the exposure draft stage, amendments were drafted to broaden the joint venture exceptions so they do not limit legitimate commercial transactions. In particular, the draft amendments extended the joint venture exceptions to arrangements and understandings containing cartel provisions, and to joint ventures for the acquisition of goods or services. A decision was made not to extend the exceptions to joint ventures for the marketing of goods or services, as a joint venture established only for marketing would effectively constitute a price-fixing cartel, and this would weaken the prohibition on price-fixing cartels.

15.39           While the exposure draft amendments significantly broadened the joint venture exceptions for the benefit of legitimate joint ventures, concerns were raised that this may come at the cost of significantly undermining the integrity of the cartel conduct prohibitions; specifically, that the broadened exceptions would be open to abuse by parties engaged in anti-competitive cartel conduct and not genuinely in a joint venture.

15.40           Due to these concerns, a decision was made to proceed with broadening the exceptions, but to also make appropriate amendments to strengthen the exceptions to guard against abuse of the exceptions. Specifically, the exceptions were limited to joint ventures that are not for the purpose of substantially lessening competition, and the burden of proof on a defendant to raise the exceptions was raised to a legal burden. These amendments will ensure the joint venture exceptions can only be raised by parties who are engaged in a genuine joint venture.    

Concerted practices

15.41           The Harper Review recommended that section 45 should be extended to prohibit a person engaging in a concerted practice with one or more other persons that has the purpose, effect or likely effect of substantially lessening competition.

15.42           The Review Panel considered that no legislative definition of a ‘concerted practice’ was required, as “the word ‘concerted’ has a clear and practical meaning”, and the exposure draft legislation was drafted on this basis. At that stage, the explanatory material on concerted practices was not extensive and referred to European law.

15.43           However, submissions to the exposure draft called for more guidance as to what constitutes a concerted practice, as the concept is new to Australian law. Several options to address this concern were considered.

15.44           A legislative definition was considered, but ultimately not adopted. Although a legislative definition would possibly increase ‘certainty’ as to what does and does not constitute a concerted practice, this would require a focus on determining whether conduct fits within detailed technical provisions, rather than making a principled assessment of the conduct in its entirety. It was considered that this approach would carry the risk of inadvertently excluding conduct which should constitute a ‘concerted practice’ under section 45. Further, while consultation generally showed a consensus as to the features of a concerted practice, reducing these features to a legislative definition proved problematic.

15.45           Ultimately, a decision was made to expand the explanatory material in Chapter 3, to provide additional guidance as to the typical features of a concerted practice while also leaving scope within the Act to apply the concept to new forms of anti-competitive conduct as they arise. This option was judged to most increase certainty while also avoiding inappropriately limiting the scope of the new concept.

Tribunal review in relation to merger authorisations

15.46           The Harper Review recommended that the review by the Tribunal should be based upon the material that was before the Commission, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied that there is sufficient reason.

15.47           The exposure draft legislation provided for the Tribunal’s review in relation to a merger authorisation to be a limited merits review, that is, reviews would be based only on the material before the Commission at the time of the Commission’s determination.  This approach was adopted as it would ensure that parties had the incentive to place all relevant evidence and information before the Commission at first instance, and that Tribunal reviews in relation to merger authorisations could be concluded expeditiously so as not to unduly prejudice merger transactions.

15.48           However, concerns were raised that a limited merits review is inappropriate, particularly as this would mean the Tribunal is unable to take account of a change in circumstances following the Commission’s decision, and parties would be unable to produce evidence or information that they were not able to produce at the time of the Commission’s decision. Several options to address this concern were considered.

15.49           A full merits review (that is, a rehearing) by the Tribunal was considered to be inappropriate in relation to merger authorisations, given the time and commercial sensitivities of such transactions. The prospect of a lengthy merits review could be open to abuse by parties seeking to endanger the success of a merger transaction.

15.50           Ultimately, a ‘hybrid’ merits review, similar to that proposed by the Harper Review, was adopted. The Tribunal’s review in relation to a merger authorisation will be based on the material before the Commission, but the Tribunal may seek clarifying information, and the Tribunal may allow the parties to present new information or evidence which was not in existence at the time of the Commission’s decision. This would appropriately balance procedural fairness by allowing for a change of circumstances to be taken into account, but would prevent parties abusing the authorisation process by choosing to withhold information from the Commission at first instance.

Consultation

15.51           The amendments contained in this Bill have been the subject of extensive consultation. The 12-month review process provided all interested stakeholders with opportunities to comment on proposed changes to competition policies, laws and institutions. The Harper Review process commenced with the release of an Issues Paper on 14 April 2014, followed by an eight week consultation period. During this consultation period, the Review Panel received written submissions and held meetings with local businesses in a number of locations as arranged through representative business groups.

15.52           A Draft Report was released on 22 September 2014, followed by a further eight week consultation period during which the Review Panel received written submissions and held public forums in Perth, Adelaide, Sydney, Brisbane, Canberra, Darwin and Hobart. On 23-24 October 2014, the Review Panel hosted an International Conference, to draw on international and domestic expertise to consider the review and recommendations in the Draft Report.

15.53           Over the course of the Harper Review, the Panel hosted more than 150 meetings with stakeholders and received almost 1,000 written submissions (almost 350 in response to the Issues Paper and around 600 in response to the Draft Report).

15.54           In relation to the National Access Regime, the PC released an issues paper in November 2012 for public comment. The PC held roundtables concerning the issues paper in Melbourne and Sydney. The PC released a draft report for public comment on 28 May 2013, and held public hearings in Perth, Sydney and Melbourne. The PC received 76 submissions through the consultation process.

15.55           The amendments contained in this Bill were released for exposure draft consultation as the Competition and Consumer Amendment (Competition Policy Review) Bill 2016. Submissions were accepted over an eight week period from 5 September 2016 to 28 October 2016. During this public consultation period, 61 submissions were received, of which 5 were confidential. A number of stakeholder meetings were also held during this period.

15.56           Stakeholders raised a number of concerns with the proposed amendments, as contained in the exposure draft legislation. The main points of concern were:

•        that the meaning of ‘likely’, in the absence of the definition in section 44ZZRB, was uncertain;

•        that the joint venture and vertical trading restriction exceptions to the cartel prohibitions had become too broad, and would be open to abuse by firms not genuinely in a joint venture or a vertical relationship;

•        that the meaning of ‘concerted practices’ was not sufficiently clear;

•        that the Tribunal review of the Commission’s decision in relation to a merger authorisation was a limited merits review; 

•        the transitional treatment of certain merger authorisations and clearances, following the amendments in Schedule 9, was not sufficiently clear; and

•        that to allow an admission of fact to be proven by any document would allow for documents not previously tested before a court to be relied on as prima facie evidence.

•        that the updated declaration criteria in section 44CA(1), and the costs to be taken into account under the different criteria, were not sufficiently clear.

15.57           In response to these concerns, the Government made a number of substantive amendments to the draft Bill and the Explanatory Memorandum:

•        the amendment repealing section 44ZZRB was removed, to be given further consideration;

•        the joint venture cartel exceptions were expressly limited to joint ventures that are not for the purpose of substantially lessening competition, and the burden of proof on the defendant was increased;

•        the vertical trading restriction cartel exception was removed from this Bill, to be given further consideration and progressed in a future legislative package together with amendments to section 47;

•        additional guidance as to what may constitute a ‘concerted practice’ has been inserted into Chapter 3 of this Explanatory Memorandum;

•        the Tribunal was given a discretion to allow parties to a review of the Commission’s decision in relation to a merger authorisation to admit new evidence if that evidence was not in existence at the time of the Commission’s decision;

•        a new Schedule 13 was added to the Bill, containing additional, detailed transitional provisions for the treatment of merger authorisations and clearances which were applied for, or granted, under the old law; and

•        proof of an admission of fact was limited to either a document under the seal of the court from which the admission of fact appears, or a document filed with the court.

•        the declaration criteria were amended to provide greater clarity and additional guidance as to the costs to be considered under different criteria has been inserted in Chapter 12 of this Explanatory Memorandum.

Agreed option

15.58           On 24 November 2015, in its response to the Harper Review, the Government announced that it supported and would adopt each of the recommendations being progressed through this Bill. This included the recommendations of the PC Inquiry Report into the National Access Regime, which the Government adopted in preference to the Harper recommendations where they differed.

15.59           A regulatory costing for each of these amendments has been prepared, consistent with the Government’s Regulatory Burden Measurement Framework.

15.60           The amendments relating to price signalling and concerted practices, resale price maintenance, and collective bargaining and collective boycotts have each been estimated to result in a slight increase in compliance costs.

15.61           In relation to price signalling and concerted practices, the increased compliance costs are expected to be borne only initially, and primarily by large businesses operating in concentrated markets (i.e. those firms whose conduct is likely to have a substantial impact on competition). At least some of those businesses are likely to seek legal advice to ensure that their practices continue to be compliant with section 45 as amended. After this initial expenditure, any ongoing additional compliance costs will be minimal. 

15.62           In relation to resale price maintenance, compliance costs will be reduced by the availability of notification, which is a quicker and less costly exemption process than seeking an authorisation. However, as noted in Chapter 8, the delay and expense of seeking authorisation for resale price maintenance means that the authorisation process is currently not utilised by businesses. To the extent that some businesses will make use of the newly available notification procedure for resale price maintenance, when they would not have sought an exemption for the same conduct through authorisation, those businesses will incur additional compliance costs.   

15.63           In relation to collective bargaining and collective boycotts, the notification process is made more flexible and accessible by the amendments, and this carries substantial benefits for small businesses. To the extent that this greater flexibility and accessibility encourages notifications from small businesses, who previously would not have sought any form of exemption, additional compliance costs will be incurred by those small businesses. However, those compliance costs will be minimal and the benefits of a more efficient exemption process will ultimately prove to be of significant value to small businesses wishing to collectively bargain.

15.64           The regulatory costs of each recommendation implemented in this Bill are summarised in Table 15.1.



 

Table 15.1 : Regulatory burden estimate (RBE) table

Average annual regulatory costs (from business as usual)

Harper rec.

Amendment

Schedules

Business

Community organisations

Individuals

Total change in costs

25

Definition of competition

1

-

-

-

-

27

Cartel conduct prohibition

2

-

-

-

-

28

Exclusionary provisions

4, also 2 and 3

-

-

-

-

29

Price signalling and concerted practices

3

0.64

-

-

0.64

32

Third-line forcing test

7

-3.6

-

-

-3.6

34

Resale price maintenance

8, also 9

0.16

-

-

0.16

35

Mergers

9

-

-

-

-

36

Secondary boycotts

6

-

-

-

-

38

Authorisation and notification

9

-

-

-

-

39

Class exemption power

9

-0.45

-

-

-0.45

40

Power to obtain information, documents and evidence

 11

-1.3

-

-

-1.3

41

Admissions of fact

10

-

-

-

-

42

Access to services

12

-

-

-

-

54

Collective bargaining and collective boycotts

9

0.01

-

-

0.01

Total :   $-4.54m per year  

Implementation and evaluation

15.65           Implementation of the amendments contained in this Bill will be undertaken jointly by the Government and the Commission.

15.66           Concurrently with the release of the exposure draft legislation, the Commission consulted on a draft Framework for concerted practices guidelines . The feedback from this consultation will inform the development of the Commission’s final guidelines, which will detail its approach to the interpretation and enforcement of section 45 as amended.

15.67           The Commission will be responsible for approving forms for use in applications for authorisations, notification of exclusive dealing or resale price  maintenance and notification of collective bargaining (under sections 89, 93 and 93AB respectively).

15.68           Prior to exercising its new power to make, vary or revoke a class exemption, it is expected that the Commission will undertake consultation with the affected industry and other relevant parties to determine the most appropriate scope of the class exemption.

15.69           Implementing the measures in this Bill is expected to:

•        reduce overall compliance costs for those subject to the law;

•        increase competition in affected markets;

•        strengthen competition laws and better facilitate long-term productivity growth.

 



Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Competition and Consumer Amendment (Competition Policy Review) Bill 2017

16.1               This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Schedule 1 - Definition of competition

Overview

16.2               Schedule 1 to this Bill amends the definition of ‘competition’ in section 4 of the Act, to clarify that competition includes competition from goods and services that are capable of importation and not just goods and services actually imported.

16.3               This reflects the fact that even if goods and services are not ultimately imported, the credible threat of importation can exert competitive pressure on, and affect competition in, Australian markets.

Human rights implications

16.4               This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

16.5               This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 2 - Cartels

Overview

16.6               Schedule 2 to this Bill makes a number of amendments to simplify the provisions on cartel conduct and better target anti-competitive conduct.

16.7               The application of the provisions is confined to cartel conduct affecting competition in Australian markets, to align with the Act’s objective of enhancing the welfare of Australians. This is achieved by adding the words ‘in trade or commerce’ to various provisions. Trade or commerce is defined in section 4 to mean trade or commerce within Australia or between Australia and places outside Australia. 

16.8               The scope of the joint venture exceptions in sections 44ZZRO and 44ZZRP is modified to more appropriately exempt legitimate joint ventures.

16.9               The amended exceptions are:

•        broadened to apply to arrangements or understandings (in addition to contracts);

•        broadened to apply to joint ventures for the acquisition of goods or services (in addition to the production or supply of goods or services); and

•        limited to cartel provisions that are for the purposes of, and reasonably necessary for undertaking, the joint venture.

16.10           The joint venture exceptions are also tightened so they do not apply to joint ventures that are carried on for the purpose of substantially lessening competition. This ensures that the exceptions are confined to joint ventures established for genuine commercial purposes.

16.11           The joint venture exceptions are also amended to increase the standard of proof that a defendant must discharge in raising the relevant exception (from an evidential burden to a ‘balance of probabilities’ in a civil action, and a ‘legal burden’ in a criminal action).

16.12           Finally, the ‘output restriction’ purpose condition in paragraph 44ZZRD(3)(a) is broadened to address any gap resulting from the repeal of the separate prohibition on exclusionary provisions by Schedule 3 to this Bill.

Human rights implications

16.13           The amendments to confine the cartel provisions to conduct affecting competition in Australian markets, and the broadening of the ‘output restriction’ purpose condition, do not raise any human rights issues. 

16.14           This Schedule engages the right to the presumption of innocence, as contained in Article 14(2) of the International Covenant on Civil and Political Rights (ICCPR), insofar as it:

•        introduces new matters that the defendant must establish to raise the relevant joint venture exception (that the joint venture is not carried on for the purpose of substantially lessening competition, and that the relevant provision is reasonably necessary for undertaking the joint venture); and

•        increases the burden on the defendant to a legal burden rather than an evidential burden.

16.15           A ‘reverse onus provision’ may be considered a limitation on the right to the presumption of innocence when charged with a criminal offence. This is not an absolute right. Schedule 2 does not create new reverse onus provisions, as the joint venture exceptions already place an evidential burden on the defendant. Rather, Schedule 2 amends existing reverse onus provisions.

16.16           The addition of new matters that the defendant must establish, in order to raise the relevant joint venture exception, is appropriate in light of the exceptions being broadened to be available in a greater range of circumstances. The new matters to be established also reflect the extremely broad definition of ‘joint venture’ in section 4J. That definition does not, itself, contain any express limitations on the purposes for which a joint venture may be carried on. It is therefore necessary to include in the exceptions a limitation that the joint venture must not be carried on for the purpose of substantially lessening competition. This limitation ensures that the exceptions may be made more widely available, without undermining the integrity of the cartel conduct prohibitions. 

16.17           Similarly, the increase in the burden of proof on the defendant is appropriate and justifiable in light of the extension of the exceptions to arrangements or understandings containing a cartel provision. Currently, the exceptions only apply to cartel provisions contained in a contract, and in those circumstances it is appropriate for the defendant to be under a lower, evidential burden because the primary evidence as to the nature of the claimed joint venture would be before the court (in the contract). Once the relevant exception is raised by the defendant, the prosecution would then have to discharge its burden to the applicable standard (balance of probabilities in a civil action, and beyond reasonable doubt in a criminal action) and thereby disprove the exception. 

16.18           In contrast, the amended exceptions are extended to arrangements and understandings, in which case the joint venture provision may be contained in informal documents, contained across several documents, or not be contained in any form of written documentation (for example, the provision may have been verbally discussed in one or more conversations). In such cases, it is likely to be relatively easy and inexpensive for a defendant to produce evidence suggesting a reasonable possibility that their joint venture falls within the relevant exception (that is, to meet an evidential burden) even if the joint venture in fact does not satisfy the elements of the relevant exception. 

16.19           However, it would be extremely difficult and expensive for the prosecution to obtain sufficient evidence to prove in the first instance, to the applicable standard, that the relevant exception did not apply. The prosecution would effectively be required to prove a negative, and the evidence needed to do this may be known only to, and held by, the defendant. This practical difficulty may create scope for abuse of the joint venture exceptions by parties who are not genuinely engaged in a joint venture to which the exceptions apply.

16.20           In these circumstances, it is reasonable and appropriate to require the defendant to produce stronger evidence as to the nature of the claimed joint venture. The defendant will be in a unique position to easily and cheaply produce such evidence, as they will have ready access to the full range of formal and informal correspondence between the parties.

16.21           It is important to note that the increase in the legal burden on the defendant does not establish a presumption that, unless the defendant discharges that burden, the defendant is guilty of contravening the cartel conduct provisions. The prosecution must still prove the contravention to the requisite standard.

Conclusion

16.22           This Schedule is compatible with human rights as it raises, but does not unnecessarily, unreasonably or disproportionately limit, the right to the presumption of innocence.

Schedule 3 - Price signalling and concerted practices

Overview

16.23           Schedule 3 to this Bill repeals Division 1A of Part IV of the Act, which relates to the anti-competitive disclosure of pricing and other information (known as ‘price signalling’).

16.24           The price signalling provisions are confined to the banking industry and no cases have been brought for contravention of the provisions since their introduction in 2012. Further, the Harper Review found that the price signalling provisions have the potential to overreach and capture pro-competitive disclosures.

16.25           As recommended by the Harper Review, Schedule 3 repeals Division 1A of Part IV of the Act, and expands section 45 to prohibit a corporation from engaging with one or more other persons in a concerted practice with the purpose, effect or likely effect of substantially lessening competition.

16.26           The defences and exceptions applicable to section 45 are also extended to cover concerted practices. Further, an exemption is introduced for circumstances where the only parties to a concerted practice are the Crown (in right of the Commonwealth, a State or a Territory) and one or more authorities of that Crown, to reflect the fact that although such entities may engage in trade or commerce, they cannot benefit from the exception for related bodies corporate.

16.27           As detailed in this Chapter under ‘ Schedule 4 - Exclusionary provisions ’, Schedule 3 to this Bill also repeals subparagraphs 45(2)(a)(i) and 45(2)(b)(i) to remove the separate prohibition on exclusionary provisions from the Act.

Human rights implications

16.28           Insofar as the existing defences and exceptions in section 45 are extended to cover concerted practices, and a new exemption is created for related bodies politic, this Schedule may appear to engage the right to the presumption of innocence as contained in Article 14(2) of the ICCPR.

16.29           However, that right only applies to criminal offences and therefore is not applicable to section 45 and its exceptions. Further, these amendments are in the interests of entities subject to section 45, as they ensure there are appropriate exceptions available to the new prohibition on concerted practices.

Conclusion

16.30           This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 4 - Exclusionary provisions

Overview

16.31           Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’, as the repeal of the separate prohibition on exclusionary provisions by Schedule 3 makes the definition redundant.

16.32           The Harper Review found there is significant overlap between what constitutes an exclusionary provision and what constitutes an ‘output restriction’ or a ‘market sharing or division’ cartel provision. Given the lack of an anti-overlap provision to prevent both prohibitions applying to the same conduct, this creates uncertainty and complexity in the law.

16.33           Consequential to the repeal on the separate prohibition on exclusionary provisions, a defence specific to that prohibition (section 76C) is also repealed as it is now redundant.  

Human rights implications

16.34           This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

16.35           This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 5 - Covenants affecting competition

Overview

16.36           Schedule 5 to this Bill inserts definitions of ‘contract’ and ‘party’ into the Act and defines those terms to include covenants.

16.37           A number of provisions of the Act which refer to contracts, arrangements or understandings are largely duplicated with reference to covenants. While there is a technical, legal difference between a contract and a covenant, the Harper Review found that this distinction made little to no impact on the agreement’s effect on competition, and was therefore unnecessary for the purposes of the Act.     

16.38           By including covenants within the definitions of ‘contract’ and ‘party’, the separate provisions on covenants are made redundant and are therefore repealed by Schedule 5.

Human rights implications

16.39           This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

16.40           This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 6 - Secondary boycotts

Overview

16.41           Schedule 6 to this Bill increases the maximum penalty applying to breaches of the secondary boycott provisions (sections 45D and 45DB).

16.42           Under section 76, a corporation found to be in breach of the secondary boycott provisions is liable to a maximum civil pecuniary penalty of $750,000. This is disproportionately low when compared to the maximum penalty under section 76 for various other breaches of the Act, which may be $10 million or higher.

16.43           The Harper Review saw no reason why the penalty for breaches of the secondary boycott provisions should be significantly lower than the penalty for other breaches, particularly given the harm to trading freedom, and therefore to competition, which secondary boycotts cause.  

16.44           The amendment made by Schedule 6 aligns the penalty for breaches of the secondary boycott provisions with the penalties for other breaches of the competition law.

Human rights implications

16.45           As far as it relates to engaging in boycott activity, Schedule 6 may engage work-related rights as contained in the International Covenant on Economic, Social and Cultural Rights (ICESCR), in particular Article 8 which relates to the activities of trade unions. 

16.46           However, section 45DD makes it clear that boycotts are permitted under the competition law if the dominant purpose of the conduct relates substantially to employment matters, i.e. remuneration, conditions of employment, hours of work or working conditions. Consequently, the increased penalty in section 76 is only applicable to secondary boycotts with a dominant purpose that does not relate to employment matters.

16.47           Where a secondary boycott has a dominant purpose not related to employment matters, but a non-dominant purpose that does relate to employment matters, the boycott may be prohibited under section 45D or 45DB. To this extent, sections 45D and 45DB may engage the rights described in Article 8 of the ICESCR. 

16.48           However, Schedule 6 does not create a new regulation on the activities of trade unions, nor does it alter the scope of the existing prohibitions. Rather, Schedule 6 increases the penalty for the existing prohibitions in sections 45D and 45DB, to align with the maximum penalties applicable to other breaches of the competition law.

16.49           The existing limitation is necessary to protect the broader economic welfare of Australians by preventing secondary boycotts which are harmful to competition and are not justified by a dominant purpose which is substantially related to employment matters. The increase is reasonable, as it brings the maximum penalty for a breach of the secondary boycott provisions in line with, and does not exceed, the maximum penalties for other breaches of the competition law. Further, the increased penalty is proportionate relative to the other penalties in the Act and relative to the level of harm that can be caused by the conduct which the penalty seeks to deter.

Conclusion

16.50           This Schedule is compatible with human rights as it engages, but does not further limit, work-related rights in the ICESCR. 

Schedule 7 - Third line forcing

Overview

16.51           Schedule 7 to this Bill amends the Act to only prohibit third line forcing where it has the purpose, effect or likely effect of substantially lessening competition.

16.52           Third line forcing is prohibited in section 47 along with various other forms of exclusive dealing. However, it is the only form of exclusive dealing which is prohibited on a per se basis; the other forms, including second line forcing (or ‘bundling’) are prohibited only if they have the purpose, effect or likely effect of substantially lessening competition.

16.53           The Harper Review found there was no need for third line forcing to be prohibited on a per se basis while similar forms of exclusive dealing are prohibited where they have the purpose, effect or likely effect of substantially lessening competition.

16.54           This amendment ensures that all forms of exclusive dealing are assessed under the same test.

Human rights implications

16.55           This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

16.56           This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 8 - Resale price maintenance

Overview

16.57           Schedule 8 to this Bill amends the resale price maintenance (RPM) and notification provisions, to allow a corporation or person to notify the Commission of RPM conduct as an alternative to seeking authorisation.

16.58           RPM is prohibited under section 48 on a per se basis, and authorisation is available for RPM. However, applications for authorisation for RPM are rare, and the Harper Review considered that the cost and delay involved with seeking authorisation may be a real deterrent to businesses seeking authorisation for RPM.

16.59            As recommended by the Harper Review, the amendments by Schedule 8 (and also Schedule 9) make notification available as an alternative means of seeking exemption from the RPM prohibition in section 48.  Notification is generally a quicker and less expensive process than authorisation.

16.60           Schedule 8 also introduces an exception for RPM conduct between related bodies corporate, reflecting the general tenet of competition law that the companies within a corporate group are treated as a single economic entity and are not considered to be competitors.

Human rights implications

16.61           This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

16.62           This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 9 - Authorisations, notifications and class exemptions 

Overview

16.63           Schedule 9 to this Bill amends the notification and authorisation provisions in Part VII to simplify the provisions and processes, and grants the Commission new ‘stop notice’ and ‘class exemption’ powers. Schedule 9 also amends Part IX, which relates to Australian Competition Tribunal (Tribunal) review of determinations of the Commission.

Authorisation process and Tribunal review

16.64           Currently, the process for merger authorisations is separate to the general authorisation process, and the Tribunal is the first instance decision-maker for merger authorisations, rather than the Commission. Further, the Act currently provides for formal merger ‘clearance’ in addition to authorisation.

16.65           Schedule 9 consolidates the various authorisation provisions into a single authorisation process, by repealing Division 3 of Part VII which contains the merger authorisation and clearance provisions, and amending Division 1 of Part VII to incorporate merger authorisations within the general authorisations provisions. The provisions on formal merger clearances are not incorporated into Division 1, as the provisions are unduly complex and had never been used. 

16.66           Given the commercial and time sensitivity of merger transactions, merger authorisations are subject to a number of procedures that are different to other types of authorisations. The main distinction is that domestic merger authorisations must be determined by the Commission in 90 days, rather than 6 months. Some of the procedures applicable to non-merger authorisations (e.g. draft determination and opportunity for a conference under section 90A) are not feasible within this shorter timeframe, and are therefore not applicable to merger authorisations.

Class exemptions

16.67           Under the current Part IV, common business practices may be captured by one or more prohibitions despite there being no competition or public interest concerns. To seek exemption, businesses must individually make a notification or apply for authorisation (as applicable), and the Commission must individually assess each notification and application for authorisation.   

16.68           Schedule 9 grants the Commission a power to make a ‘class exemption’ for business practices (‘conduct of a kind’) that do not generate competition concerns or are likely to generate a net public benefit. This reduces compliance and administration costs, increases certainty and creates safe harbours for businesses.

16.69           A class exemption will take the form of a legislative instrument, and consistently with subsection 33(3) of the Acts Interpretation Act 1901 , the Commission’s power to make the class exemption includes a power to vary or revoke that class exemption.

16.70           The Commission also has a power under section 95AB to withdraw the benefit of a class exemption in a particular case, where the conduct has the actual or likely effect of substantially lessening competition and this detriment would not be outweighed by an actual or likely benefit to the public.

Collective bargaining notifications and stop notices

16.71           Currently, collective bargaining may be prohibited under the cartel provisions in Division 1 of Part IV of the Act, or under section 45 which deals with contracts, arrangements or understandings that restrict dealings or affect competition. However, collective bargaining is not always detrimental to competition and consumer welfare. For example, if smaller businesses are, together, able to negotiate with bargaining power equal to one large firm, this may achieve a more efficient and pro-competitive outcome. Similarly, in some circumstances, collective boycotts can be an appropriate tool to support collective bargaining.

16.72           While it is possible to include collective boycott conduct in a notification for collective bargaining, such notifications are relatively rare, and this may be due to a belief that a notification including collective boycott conduct will not be approved by the Commission.

16.73           The Harper Review recommended reforming the notification provisions to introduce greater flexibility into the notification process for collective bargaining, and thereby encourage greater use of the process by small businesses.

16.74           This includes a power for the Commission to impose conditions on notifications involving collective boycott activity, and a ‘stop notice’ power allowing the Commission to require collective boycott conduct to cease where it causes imminent, serious public detriment. 

Human rights implications

Authorisation process and Tribunal review

16.75           Insofar as the jurisdiction of the Tribunal is altered, so that it is no longer the first instance decision-maker for merger authorisations, this engages fair trial and fair hearing rights.

16.76           However, by making the Commission the first instance decision-maker for merger authorisations, this allows the Tribunal to undertake merits review of the decision. Currently, the only means of appealing the Tribunal’s decision on a merger authorisation is to take the matter to the Federal Court. This amendment provides an additional avenue of review which was not previously available, which promotes fair trial and fair hearing rights.

16.77           While the Tribunal’s review of general authorisation determinations is a full re-hearing of the matter, in the case of mergers the review is to be based on the material before the Commission. This aspect of Schedule 9 also engages fair trial and fair hearing rights as the rules of evidence are regulated in reviews before the Tribunal. However, this limitation is reasonable and necessary to ensure that parties present all relevant evidence to the Commission in an application for merger authorisation. This limitation also ensures that the Tribunal review process cannot be used vexatiously to damage a merger transaction, by effectively turning the review into a full rehearing.

16.78           Further, this limitation is not absolute and a mechanism is in place to ensure applicants for review are not unreasonably or unnecessarily disadvantaged. Where evidence was not in existence at the time of the initial application, the Tribunal may allow that new evidence to be produced. This appropriately balances the interests of all parties to a Tribunal review in relation to a merger authorisation.

Class exemptions

16.79           Insofar as the determination of a class exemption is not subject to merits review by the Tribunal, this may appear to engage fair trial and fair hearing rights as contained in Article 14 of the ICCPR. However, as class exemptions are legislative instruments, it is not appropriate that the determination of a class exemption should be reviewable by a Tribunal conducting merits review. Rather, class exemptions will be disallowable by the Parliament. Insofar as the Commission has the power to withdraw the benefit of a class exemption in particular cases, fair trial and fair hearing rights are engaged. However, such rights are promoted by Schedule 9 because the Commission’s decision to withdraw the benefit of a class exemption in an individual case is reviewable by the Tribunal.

Collective bargaining notifications and stop notices

16.80           Insofar as it deals with collective bargaining and collective boycotts, Schedule 9 may appear to engage work-related rights as contained in the ICESCR, in particular Article 8 which relates to the activities of trade unions. However, such rights are not engaged, for a number of reasons.

16.81           Firstly, unlike secondary boycotts, collective bargaining and collective boycotts are engaged in by two or more corporations , rather than two or more persons or a trade union comprised of persons.

16.82           Secondly, collective bargaining and collective boycotts are not engaged in for reasons relating to employment matters. Rather, they are typically engaged in because there is an inequality of bargaining power between corporations who are trading with each other.

16.83           Thirdly, while the Commission has the power to issue a stop notice requiring collective boycott activity to cease, this is justified because the power is only exercisable to prevent imminent serious public detriment. Further, the Commission may currently achieve the same objective of preventing public detriment by not allowing a notification to stand in the first place.

16.84           For these reasons, work-related rights are not engaged by aspects of Schedule 9 relating to collective bargaining or collective boycotts, including stop notices.

Conclusion

16.85           This Schedule is compatible with human rights as it engages, but does not unreasonably or unnecessarily limit fair trial and fair hearing rights as contained in Article 14 of the ICCPR.

Schedule 10 - Admissions of fact

Overview

16.86           Schedule 10 to this Bill extends section 83 of the Act so that a party bringing certain proceedings may rely on both admissions of fact and findings of fact made in certain other proceedings.

16.87           Currently, section 83 allows for findings of fact made by a court, in certain proceedings against a corporation, to be used as prima facie evidence against the corporation in certain other proceedings. This section helps to reduce the costs for private litigants, who may rely on findings of fact without the cost and delay associated with establishing the same fact again.

16.88           This amendment is intended to further facilitate access to justice by reducing the cost for private litigants to pursue actions against corporations for breaches of the competition law.

16.89           An admission of fact made in certain proceedings will only be prima facie evidence of that fact in certain other proceedings, if that admission is proven by either:

•        a document under the seal of the court from which the admission appears; or

•        a document from which the admission appears that is filed with the court.

Human rights implications

16.90           This Schedule engages fair trial and fair hearing rights as contained in Article 14 of the ICCPR, as it regulates the rules of evidence before the Court by placing limitations as to how admissions of fact made in earlier proceedings may be used as prima facie evidence of that fact in later proceedings.

16.91           However, this limitation is necessary to ensure that an admission of fact may only be relied upon as prima facie evidence in later proceedings where it has been put before the court in the initial proceedings, and thereby tested by that court.   

16.92           Insofar as this Schedule allows for an admission by a person to be used against that person in subsequent proceedings, this Schedule appears to engage the right against self-incrimination as also contained in Article 14(3)(g) of the ICCPR. However, that right generally protects a person from being compelled to testify against themselves or to confess guilt.

16.93           An admission of fact can only be proven by a document which was filed with the court in the first proceedings by the person making the admission. The person making the admission will be the person against whom the subsequent proceedings are brought, and who was found in the first proceedings to have contravened, or to have been involved in a contravention of, certain provisions of the Act. The person will have voluntarily made the admission, and nothing in section 83 provides for a person to be compelled to make such an admission.  

16.94           Further, the application provision of Schedule 10 ensures that admissions of fact can only be relied upon if they are made on or after the commencement of Schedule 10. This ensures that past admissions cannot be relied upon for a purpose which the person making the admission was unaware of at the time of the admission, and future admissions will be made with the knowledge as to how they may be used in subsequent proceedings.  

Conclusion

16.95           This Schedule is compatible with human rights as it engages, but does not unreasonably or unnecessarily limit, fair trial and fair hearing rights, including the right against self-incrimination, as contained in Article 14 of the ICCPR.

Schedule 11 - Power to obtain information, documents and evidence

Overview

16.96           Schedule 11 to this Bill extends the Commission’s power to obtain information, documents and evidence in section 155, to allow section 155 notices to be issued in relation to additional matters. 

16.97           The Commission may now issue a section 155 notice to investigate alleged contraventions of court enforceable undertakings given under section 87B of the Act or section 218 of the Australian Consumer Law. This extension was recommended by the Harper Review, and protects the integrity of such undertakings.

16.98           The Commission may now also issue a section 155 notice to investigate matters relevant to the Commission’s determination in relation to an application for merger authorisation under subsection 90(1). This reflects the fact that the Commission is now the first-instance decision-maker for merger authorisation applications.

16.99           Schedule 11 also introduces a new ‘reasonable search’ defence to the offence of refusing or failing to comply with section 155, as recommended by the Harper Review.  This defence recognises that strict compliance with a section 155 notice may be very costly depending on the circumstances. However, a person wishing to rely on the reasonable search defence is under a legal burden. 

16.100       Finally, Schedule 11 also increases the fine for non-compliance with section 155, as recommended by the Harper Review, in line with similar notice-based evidence gathering powers of other regulators.  

Human rights implications

16.101       Schedule 11 may engage a number of the applicable rights or freedoms.

16.102       Firstly, insofar as Schedule 11 requires the production of information, documents or evidence, and depending on the nature of the material requested, this may appear to engage both legal professional privilege or the right against self-incrimination.

16.103       In relation to the right against self-incrimination, as contained in Article 14(3)(g) of the ICCPR, the existing subsection 155(7) already engages and places a limitation on that right. That subsection provides that a person is not excused from producing information, documents or evidence on the basis that such material would tend to incriminate that person or expose that person to a penalty. The amendments to Schedule 11 do not further limit the right against self-incrimination, except to the extent that section 155 notices may now be issued in relation to additional matters. However, subsection 155(7) ensures that self-incriminating material cannot be used against that person in any criminal proceedings other than proceedings for an offence against section 155. Therefore, to the extent that section 155 engages the right against self-incrimination, the right is not unreasonably or disproportionately limited because the use of any self-incriminating material produced in response to a section 155 notice is extremely restricted.   

16.104       In relation to legal professional privilege, subsection 155(7B) makes clear that a person is not required to produce a document that would disclose information that is the subject of legal professional privilege. The amended section 155 will still be subject to subsection 155(7B), which prevents any abrogation of legal professional privilege.

16.105       Secondly, any amendment to an information-gathering power such as section 155 may appear to engage the right to privacy as contained in Article 17 of the ICCPR. However section 155 contains limitations on when a section 155 notice can be issued; the Commission must have reason to believe the material requested relates to a possible contravention of the Act, or is relevant to specific decisions the Commission is required to make under the Act (such as determining a merger authorisation). This limitation means that a section 155 notice will request information, documents and evidence related to conduct, not personal information. Further, the use of this power is subject to additional restrictions. To the extent that the material requested in a section 155 notice may also contain personal information, the Commission must comply with the requirements of the Privacy Act 1988 , which provides for the protection of personal information and among other matters sets standards for the collection and use of personal information.

16.106       Thirdly, to the extent that the amendments to section 155 are applied retrospectively, this may appear to engage the prohibition on retrospective criminal laws as contained in Article 15 of the ICCPR. However, the retrospective application provision only makes the reasonable search defence available for notices given before the commencement of Schedule 11. The increased penalty for non-compliance with a section 155 notice does not apply retrospectively.  

16.107       Finally, the fact that a defendant is under a legal burden to establish the ‘reasonable search’ defence engages the right to the presumption of innocence as contained in Article 14(2) of the ICCPR. This is not an increase in an existing burden, but rather the burden deemed reasonable, necessary and appropriate in order to create a new defence that was not previously available.

16.108       The reasonable search defence means that a person will not be guilty of an offence under subsection 155(6A) to the extent the section 155 notice relates to producing documents, and after a reasonable search the person is not aware of the documents, and that person has provided the Commission with a written response to the notice which includes a description of the scope and limitations of the search.

16.109       The facts amounting to whether a reasonable search has been conducted will be uniquely within the knowledge of the defendant. For example, only a defendant will know how many documents it could possibly have searched, and how many documents were actually searched. With this knowledge, the defendant could easily and cheaply produce evidence to establish, on the balance of probabilities, the elements of the defence. By contrast, it would be extremely costly and difficult for the prosecution to discover, through its own investigations, evidence sufficient to prove a negative: that the defendant did not conduct a reasonable search.

16.110       In these circumstances, it would not be appropriate to introduce the concept of a ‘reasonable search’ as either an element of the offence, or a defence with an evidential burden, without significantly undermining the Commission’s primary power for conducting investigations and enforcing the Act.

Conclusion

16.111       This Schedule is compatible with human rights as it engages, but does not unreasonably, unnecessarily or disproportionately limit:

•        the right against self-incrimination;

•        legal professional privilege;

•        the prohibition on retrospective criminal laws; and

•        the right to the presumption of innocence.

Schedule 12 - Access to services

Overview

16.112       Schedule 12 to this Bill amends Part IIIA of the Act, which contains the National Access Regime (Regime), to ensure that it better addresses the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

16.113       The primary changes included in this Schedule are to:

-       amend and clarify the declaration criteria that must be used by the Council and designated Minister;

-       amend the default position, whereby the Minister is now deemed to have made a decision in accordance with the declaration recommendation of the Council if they have not responded within 60 days; and

-       amend and clarify the scope of a determination made by the Commission to ‘extend’ a facility in an access dispute.

-       provide the Minister with power to revoke certification on recommendation by the Council, if the regime ceases to be effective.

Human rights implications

16.114       This Schedule creates a new power for the Commonwealth Minister to decide to revoke a decision made under section 44N to certify that a regime established by a State or Territory for access to a service is an effective access regime. Item 37, new subsection 44O(1A) establishes that this decision is reviewable by the Tribunal.

16.115       This engages fair trial and fair hearing rights as contained in Article 14 of the ICCPR, as it alters the jurisdiction of the Tribunal. However, the change promotes these rights, as it adds to the rights of review already available under the Act.

16.116       This Schedule inserts a new section 44FA(4) to establish a process for the Council to make information it receives in response to a notice under section 44FA(1) publicly available, subject to any confidentiality concerns.

16.117       This engages the right to privacy under Article 17 of the ICCPR, but given the nature of the information that is likely to be received pursuant to a section 44FA(1) notice, it does not infringe upon this right. Moreover, the changes in section 44FA(4) protect this right by establishing that a person who provided information in response to a section 44FA(1) notice can require that it be returned to them.

Conclusion

16.118       This Schedule is compatible with human rights as it engages but does not unreasonably, unnecessarily or disproportionately limit fair trial and fair hearing rights and the right to privacy.

Schedule 13 - Transitional provisions

Overview

16.119       Schedule 13 to this Bill inserts a new Division 3 into Part XIII of the Act, which details the transitional application of amendments made by a number of other Schedules to this Bill.

16.120       The new transitional provisions deal with:

•        The application of the amended definition of ‘competition’;

•        Existing orders under section 87 relating to contravention of section 45B;

•        Authorisations granted under section 88 before commencement;

•        Notifications made under section 93 before commencement; and

•        Applications for merger clearances and authorisations made, and not determined, before commencement.

Human rights implications

16.121       This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

16.122       This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 14 - Other amendments

Overview

16.123       Schedule 14 to this Bill implements measures to streamline the administration of the Competition and Consumer Act 2010 (the Act) to reduce compliance burdens for business, individuals and within Government, while preserving the protections available under the Act. The Bill has a particular focus on the requirements of the ACL, which is set out in Schedule 2 of the Act.

16.124       Specifically, Schedule 14:

•        removes the requirement for private litigants to seek Ministerial consent to bring an action for a breach of the Act that takes place overseas (Part 1);

•        extends the jurisdiction of State and Territory courts to hear actions under the Act for pyramid selling and unsafe goods liability (Part 2);

•        removes a redundant requirement for the ACCC to keep certain records (Part 3) and rectifies drafting errors relating to overlap with the Criminal Code Act 1995   (Part 5) and the application of a misleading conduct provision in the ACL (Part 7);

•        permits the disclosure of certain information by the ACCC to specific agencies where it is reasonably necessary to protect public safety (Part 4);

•        clarifies the requirements in the ACL regarding the cooling off period for unsolicited consumer agreements (Part 6); and

•        permits the ACCC to seek a court order directing a person to comply with a notice to furnish information, produce documents or give evidence (Part 8).

Human rights implications

16.125       Aside from Part 4, Schedule 14 does not engage any of the applicable rights or freedoms.

16.126       Part 4 of Schedule 14 improves the ACCC’s ability to share notices it receives under section 132A of the ACL with specified agencies where it is reasonably necessary to protect public safety. To the extent that a particular notice contains personal information, its disclosure may engage the right to privacy under Article 17 of the ICCPR. However, to the extent that a particular notice contains personal or confidential information, the disclosure of such notices to other agencies or bodies following the implementation of Part 4 of Schedule 14 will still be required to comply with the law, including the Privacy Act 1988 . Specifically, the Privacy Act 1988 provides for the protection of personal information in the Commonwealth public sector and private sector and sets the standard for the collection, storage, security, use, disclosure and quality of personal information.

16.127       The Privacy Act 1988 also creates obligations on agencies and organisations regarding access to, and correction of, an individual’s own personal information. Further, the disclosure of information permitted by Part 4 is restricted by the requirement that the regulator be satisfied that the disclosure is reasonably necessary to protect public safety.

Conclusion

16.128       This Schedule is compatible with human rights as it does not raise any human rights issues (aside from Part 4) The amendment in Part 4 of Schedule 14 is consistent with Article 17 of the ICCPR because, to the extent the amendment authorises the disclosure of confidential information, this is necessary to achieve a legitimate public purpose and any disclosure is subject to the protections of the Privacy Act 1988 .

 



 

Schedule 1:  Definition of competition

Bill reference

Paragraph number

Item 1, subsection 4(1)

1.8

Schedule 2:  Cartels

Bill reference

Paragraph number

Items 1, 9 and 10, subsection 44ZZRD(5) and paragraphs 6(2C)(h) and 44ZZRD(7)(a)

2.43

Item 2, subparagraph 44ZZRD(3)(a)(iv)

2.37, 3.43

Items 3 to 8, subsection 44ZZRD (note), paragraphs 44ZZRD(4)(c) to (e), 44ZZRD(4)(f), 44ZZRD(4)(g), 44ZZRD(4)(h), 44ZZRD(4)(ha), 44ZZRD(4)(i) and 44ZZRD(4)(j)

2.13

Item 5, subsection 45(8AA)

3.15

Items 11, 12 and 17, subsections 44ZZRO(1) and 44ZZRP(1)

2.19

Items 12, 15, 17 and 20, subsections 44ZZRO(1), 44ZZRO(1)(note), 44ZZRP(1) and 44ZZRP(2)

2.28

Items 13 and 18, paragraphs 44ZZRO(1)(a) and 44ZZRP(1)(a)

2.22

Items 13 and 18, paragraphs 44ZZRO(1)(ba) and 44ZZRP(1)(ba)

2.25

Items 13 and 18, paragraphs 44ZZRO(1)(b) and 44ZZRP(1)(b)

2.20

Items 14 and 19, paragraphs 44ZZRO(1)(c), 44ZZRO(1)(d), 44ZZRP(1)(c) and 44ZZRP(1)(d)

2.42

Item 16, subsections 44ZZRO(2) to 44ZZRO(4)

2.45

Item 16, subsections 44ZZRO(1A) and 44ZZRO(1B)

2.44

Items 21 to 37, subsections 44ZZRD(4)(note), 44ZZRD(5), 44ZZRO(1), 44ZZRO(1A) to 44ZZRO(5), 44ZZRP(1), 44ZZRP(1A) and 44ZZRP(2), paragraphs 44ZZRD(4)(c) to 44ZZRD(4)(e), 44ZZRD(4)(f), 44ZZRD(4)(g), 44ZZRD(4)(h), 44ZZRD(4)(ha), 44ZZRD(4)(i), 44ZZRD(j), 44ZZRD(7)(a), 44ZZRO(1)(a), 44ZZRO(1)(b), 44ZZRO(1(c), 44ZZRO(1)(d), 44ZZRP(1)(a), 44ZZRP(1)(b), 44ZZRP(1)(c) and 44ZZRP(1)(d) and subparagraph 44ZZRD)(3)(a)(iv) of Schedule 1 to the Act

2.46

Item 38, Division 1 of Part IV

2.39

Item 39, Division 1 of Part 1 of Schedule 1 to the Act

2.40

Item 40

2.41

Schedule 3:  Price signalling and concerted practices

Bill reference

Paragraph number

Item 1, Division 1A of Part IV

3.13

Item 1, subsections 45(1), 45(2) and 45(3)

3.16

Item 1, paragraphs 45(1)(a) and 45(1)(b)

3.33

Item 1, paragraph 45(1)(c)

3.34

Item 1, paragraph 45(2)

3.35

Item 1, paragraph 45(3)(b)

3.37

Items 2, 4 and 5, subsections 45(1) to 45(3),45(6) 45(7) and 45(8)

3.14

Item 2, subsections 45(1) to 45(3)

3.41

Items 3, 11 to 15, 17 and 21 to 29, subsections 45(5A), 45(8A), 45(9), 51(4),93AC(2), 166(1) and 166(3), paragraphs 4(2)(a), 4(2)(b), 6(2)(d), 51(2)(b), 84(1)(b), 84(3)(b), 93AB(1)(a) and 93AB(1)(b) and subparagraph 6(2)(b)(i)

3.44

Item 5, subsection 45(8AA)

3.29

Item 5, subsections 45(6) to 45(8)

3.39

Items 6 to 10 and 30 to 37, Division 1A of Part 1 of Schedule 1, subsections 45(1) to 45(3), 45(5A), 45(6), 45(7) to 45(9), 51(2AA) and 51(4), and paragraphs 51(2)(a), 51(2)(aa), 51(2)(b), 51(2)(c), 51(2)(d) and 51(2)(g) of Schedule 1 to the Act

3.45

Item 9, subsection 45(5A)

3.38

Items  16, 18, 19 and 20, subsection 51(2AA), paragraphs 51(2)(a), 51(2)(aa), 51(2)(c), 51(2)(d) and 51(2)(g)

3.40

Schedule 4:  Exclusionary provisions

Bill reference

Paragraph number

Item 1, section 4D

3.42, 4.12

Item 2, section 76C

4.14

Items 3-5, subsections 93AC(1) and 10.08(1)

4.15

Schedule 5:  Covenants affecting competition

Bill reference

Paragraph number

Item 1, subsection 4(1)

5.8, 5.9

Items 2-17, sections 45B, 45C, and 44ZZRQ, subsections 4(3), 45(5), 46A(6), 87(3) and 87(5), paragraphs 4F(1)(a), 6(2)(e), 87(3)(a), 87(3)(c) and 87(3)(d), and subparagraphs 4F(1)(a)(i) and 6(2)(b)(i)

5.10

Items 18-20, section44ZZRQ, subsection 45(5), section 45B and 45C of Schedule 1

5.11

Schedule 6:  Secondary boycotts

Bill reference

Paragraph number

Item 1, subsection 76(1A)(a)

6.7

Schedule 7:  Third line forcing

Bill reference

Paragraph number

Item 1, subsection 47(10)

7.12

Items 2 and 3, paragraphs 47(10(a) and 47(10)(b)

7.15

Item 4, subsection 47(10A)

7.14

Items 5-8, subsections 47(10) and 47(10A) and paragraph s47(10(a) and 47(10)(b) of Schedule 1 to the Act

7.16

Schedule 8:  Resale price maintenance

Bill reference

Paragraph number

Items 1 and 2, subsections 48(1) and 48(2)

8.12

Items 2 and 12, subsections 48(2) and 93(7)

8.26

Items 3 to 5, Subdivision A of Division 2 of Part VII, subsection 93(1)

8.13

Items 5, 9, 13, 14 and 16, subsections 93(1), 93(7A), 93(7B), and 93(7C) and paragraph 93(3A)(a)

8.27

Items 6, 7, 8, 10, 11, 15, 17, 18, 19 and 20, subsections 93(2), 93(3A), 93(5), 93(6), 93(10) and 93A(2), paragraphs 93(2)(a), 93(3A)(a), 93(7C)(b), 93(8)(a) and 93(8)(b) and subparagraphs 93(7B)(b)(i) and 93(7B)(b)(ii)

8.18

Item 9, paragraph 93(3A)(a)

8.14

Items 9, 13, 14 and 16, subsections 93(7A), 93(7B), 93(7C) and paragraph 93(3A)(a)

8.28

Item 13, subsection 93(7A)

8.15

Items 14 and 16, subsections 93(7B) and 93(7C)

8.17

Item 21, subsection 96(8)

8.24

Items 22 and 23, section 48 of Schedule 1 to the Act

8.29

Schedule 9:  Authorisations, notifications and class exemptions

Bill reference

Paragraph number

Item 1, subsection 88(1)

9.23, 9.33

Item 1, subsection 88(5)

9.25

Item 1, subsection 88(6)

9.27

Item 1, subsection 88(3)

9.28

Item 1, subsection 88(2)

9.31

Item 1, subsection 88(7)

9.38

Item 1, subsection 88(4)

9.66

Item 3, subsection 90(8)

9.42

Item 3, subsections 90(8A) to 90(9)

9.45

Item 3, subsection 90(6)

9.47

Item 3, subsection 90(6A)

9.48

Item 3, subsection 90(7)

9.40

Items 5, 30-53, 63-68, 70, 71, 73-76, 80, 81, 83, 85-91, 95-97, 101-105, 107-117, 119-121, 123-127, 129-145, Part VII (heading), Division 1 of Part VII (heading), Division 1 of Part IX (heading) and Division 3 of Part IX, sections 29P, 45EA, 81A, 93AA, 101A, 102A, 150J, 157AA and 174, subsections 8A(6), 90(9A), 25(1), 44ZZRS(1), 45(6A), 45(9), 45D(1), 45DA(1), 45DB(1), 45E(8), 46A(6), 49(1), 50(1), 50(2), 50(5), 80AC(1), 80AC(2), 81A(3), 81A(6), 87B(1A), 87ZP(1), 90(5), 90(10), 90(11), 90(12), 90(13), 90(15), 90A(1), 91(2A), 91C(5), 93(3A), 93(4), 93(5), 93(6), 93(7C), 93(9), 93AB(1), 93A(1), 93A(3), 93A(4), 93A(10A), 101(1A), 101(1C), 102(1), 102(5AC), 109(1A), 163(5), 165(3A), 172(2B), 172(3) and 174(2), paragraphs 44ZZR(1)(b), 44ZZRS(2)(a), 44ZZRT(1)(b), 44ZZRT(2)(b), 45(6)(a), 50(4)(b), 50(4)(c), 50(4)(d), 80AC(1)(b), 80AC(1)(d), 80AC(1)(e), 81A(1)(b), 81A(1)(e), 81A(1)(f), 90B(2)(c), 91C(6)(a), 93(1A)(a), 93(7A)(b), 93(10)(a), 93AB(6)(a), 95(1)(ga), 101(1B)(a), 102(1A)(a), 102(1A)(b), 102(1A)(c), 157(1)(a), 157(1)(ba), 165(1)(a) and 170(3)(a), subparagraphs 44ZZRS(2)(b)(i), 45(6)(b)(i), 93(7B)(b)(ii), 155(2)(b)(iv) and 170(3(b)(ii) and sub-subparagraph 102(4)(a)(ii)(B)

9.144

Item 6, subsection 93(3B)

8.20

Item 7, section 93AAA

8.19

Items 8 to 13, subsections 93AB(2) to 93AB(4) and paragraphs 93AB(4)(a) and 93AB(4)(b)

9.116

Items 14 and 17 to 19, subsections 93AD(3)(note) and 93AB(7A), and paragraphs 93AD(1)(a) and 93AD(3)(c)

9.113

Item 15, subsection 93AC(2A)

9.121

Item 16, subsection 93ACA(1)

9.117, 9.118

Item 16, subsection 93ACA(2)

9.119

Item 17, paragraph 93AD(1)(a)

9.112, 9.123, 9.124

Item 18, paragraph 93AD(3)(c)

9.125

Item 20, subsections 93AD(5) and 93AD(6)

9.126

Item 21, subsection 93AG(1)

9.129

Item 21,subsection 93AG(2)

9.131

Item 21, subsection 93AG(3)

9.132

Item 21, subsection 93AG(4)

9.134

Item 21, subsections 93AG(7) and 93AG(8)

9.135

Item 21, subsection 93AG(5)

9.136

Item 21, section 93AG

9.128

Item 22, subsection 95AA(1)

9.92, 9.94

Item 22, note at subsection 95AA(1)

9.95

Item 22, subsection 95AA(4)

9.97

Item 22, subsection 95AA(3)

9.98

Item 22, subsection 95AA(2)

9.100

Item 22, subsection 95AB(1)

9.101

Item 22, subsections 95AB(1) and 95AB(2)

9.102

Item 22, paragraph 95AB(4)(a)

9.103

Item 22, subsection 95AC(3)

9.104

Item 22, paragraph 95AB(4)(b)

9.105

Item 22, Division 3 of Part VII

9.18

Item 22, Division 3 of Part VII

9.89

Item 22, section 95AA

9.90

Item 23, subsection 101B

9.107

Item 25, subsection 105(5AAB)

8.21

Item 25, subsection 102(5AB)

9.122

Item 25, subsection 105(5AAA)

8.22

Item 26, paragraph 102(5G)(a)

9.108

Item 26, subsection 102(5D)

9.120

Item 26, paragraph 102(5G)(b)

9.109

Item 26, subsection 102(5F)

9.138

Item 26, subsection 102(5E)

9.127

Item 27, subsection 4(1)

9.61

Item 28, subsection 4(1)

9.60

Item 29, subsection 4(1)

9.62, 9.63, 9.64, 9.111

Items 54-62, 69 and 72, sections 76A and 76B, subsections 75B(1), 76A(2), 76B(2) to 76B(4), paragraphs 76(1A)(c), 76(1B)(a),76B(5)(a), 81A(1)(d) and 89(1)(a), and subparagraph 76(1)(a)(iii)

9.88

Item 77, paragraph 89(1)(a)

9.35

Item 78, subsection 89(1AA)

9.67

Item 82, subsection 90(10B)

9.69, 9.71

Items 82, 92, 93 and 99, subsections 91A(5), 91B(5) and 91C(7A)

9.73

Item 84, subsection 90(12)

9.70

Items 92 to 94, subsections 91A(3), 91B(4) and 91C(4)

9.57

Item 92, paragraph 91A(4)(a)

9.53

Item 92, paragraph 91A(4)(b)

9.54

Item 92, subsection 91A(4A)

9.55

Items 92 to 94, subsections 91A(2A), 91B(3A), 91B(3B), 91C(3A) and 91C(3B)

9.56

Items 93 and 98, subsections 91B(5) and 91C( 7)

9.58

Item 100, subsection 92(1)

9.86

Item 100, subsection 92(2)

9.87

Item 118, subsection 101(2)

9.77

Item 118, subsection 101(2)

9.50

Items 118 and 128, subsections 101(2) and 102(8)

9.76

Item 122, paragraph 102(1AD)

9.83

Item 122, subsection 102(1AB)

9.84

Item 122, paragraph 102(1AA)(1)(a)

9.65

Item 122, subsections 102(1AA), 102(1AC) and 102(1AD)

9.82

Item 128, subsection 102(9)

9.79

Item 128, subsection 102(10)

9.78

Items 146-163, section 45EA, subsections 44ZZRS(1), 45(6A), 45(9), 45D(1), 45DA(1), 45E(8), 50(1) and 50(5), paragraphs 44ZZRR(1)(b), 44ZZRS(2)(a), 44ZZRT(1)(b), 44ZZRT(2)(b), 45(6)(a), 50(4)(b), 50(4)(c) and 50(4)(d) and subparagraphs 44ZZRS(2)(b)(i) and 45(6)(b)(i) of Schedule 1 to the Act

9.145

Items 164-167, sections 68A, 71A, 106A and 114A of the Radiocommunications Act 1992

9.140

Schedule 10:  Admissions of fact

Bill reference

Paragraph number

Item 1, subsection 83(1)

10.8, 10.9

Item 1, subsection 83(2)

10.10

Item 1, section 83

10.13

Item 2, application provision

10.15

Schedule 11:  Power to obtain information, documents and evidence

Bill reference

Paragraph number

Item 2, subsection 155(2)

11.21

Item 3, subsection 155(5B)

11.25

Item 3, subsection 155(6)

11.26

Item 3, paragraph 155(5B)(c)

11.31

Item 3, note at subsection 155(5B)

11.33

Item 4, subsection 155(6A)

11.39

Item 5, application provision

11.42, 11.43

Schedule 12:  Access to services

Bill reference

Paragraph number

Items 1 to 2, sections 44B and 44CA

12.15

Item 2, paragraph 44CA(1)(a)

12.18

Item 2, paragraph 44CA(1)(b)

12.22

Item 2, paragraph 44CA(2)(a)

12.30

Item 2, paragraph 44CA(2)(b)

12.31

Item 2, subsection 44CA(2)

12.32

Item 2, subsection 44CA(3)

12.33

Item 2, paragraph 44CA(1)(c)

12.35

Item 2, paragraph 44CA(1)(d)

12.37, 12.39, 12.40

Item 2, paragraph 44CA(3)

12.38

Items 3 and 4, paragraphs 44D(2)(a) and 44D(4)(a)

12.48

Item 5, subsection 44F(1A)

12.46

Items 5 and 6, subsections 44F(1) and 44F(2)

12.45

Items 6, 10 and 11, subsections 44F(2), 44G(1)-(1A), (6)-(7), 44H(3)-(3A), (6B)-(6C)

12.69

Items 7  and 11, subsections 44F(4) and  44H(2)

12.34

Items 8, 16 and 18, subsections 44F(8), 44LG(7) and 44LI(10)

12.67

Item 9, subsection 44FA(4)

12.42

Items 10and 11, sections 44G and 44H(4)

12.16

Item 12, subsection 44H(9)

12.44

Item 13, subsection 44J(2)

12.49

Items  14, 15 and 17,  paragraphs 44LB(3)(b), 44LG(5)(b), 44LI(2)(a)

12.68

Item 19, sub item 19(1)

12.73

Item 19, sub item 19(2)

12.74

Item 19, sub item 19(3)

12.75

Item 20, subsections 44NBA(6) and 44NBA(7)

12.56

Item 20, subsection 44NBC(1)

12.57

Item 20, subsection 44NBC(2)

12.58

Item 20, subsections 44NBC(3) and 44NBC(4)

12.59

Item 20, subsection 44NBC(5)

12.60

Item 20, subsections 44NBB(1)

12.62

Item 20, subsection 44NBB(2)

12.63

Item 20, subsection 44NBB(3)

12.64

Item 20, Subdivision CA

12.50

Item 20, subsections 44NBA(1), 44NBA(5), 44NBA(6)

12.51

Item 20, subsections 44NBA(2) and 44NBA(3)

12.52

Item 20, subsection 44NBA(3)

12.53

Item 20, subsection 44NBA(5)

12.54

Item 20, subsections 44NBA(4) and 44NBA(5)

12.55

Items 21 to 36, 42 and 44, subsections, 44NC(1), 44NC(2), 44NC(3), 44NC(5), 44NE(1), 44NE(3), 44NF(1), 44NG(1), 44O(1), paragraphs 29O(a) and 29O(2)(a), 44NC(8)(a), 44NC(9)(a), 44NF(2)(a), 44NF(4)(a), 44NG (2)(a), 44NG(3)(a), 44ZZOAAA(3)(a), subparagraph, 44NE(6)(c)(iii)

12.70

Item 35, subsection 44O(1A)

12.61

Item 37

12.76

Items 38 to 41, subsection 44V(2), paragraphs 44W(1)(d), 44W(1)(e) and 44X(1)(e)

12.66

Items 42-45, paragraphs 29O(a) and 29O(2)(a), subparagraphs 29O(b)(ii) and 29O(2)(b)(ii)

12.77

Items 43 and 45, subparagraphs 29O(b)(ii) and 29O(2)(b)(ii)

12.17

Schedule 13:  Application and transitional provisions

Bill reference

Paragraph number

Item 1, Division 3 of Part XIII

13.4

Item 1, section 180

13.5

Item 1, section 182

13.10

Item 1, subsection 183(1)

13.12

Item 1, subsection 183(2)

13.14

Item 1, subsection 183(3)

13.16

Item 1, section 184

13.17

Item 1, subsection 185(1)

13.20

Item 1, subsection 185(2)

13.21

Item 1, note at subsection 185(2)

13.22

Item 1, subsection 185(3)

13.23

Item 1, note at subsection 185(3)

13.24

Item 1, subsection 185(4)

13.25, 13.26

Item 1, subsection 185(5)

13.27

Item 1, subsection 185(6)

13.28

Item 1, subsection 185(7)

13.29

Item 1, subsection 185(8)

13.30

Item 1, subsection 185(9)

13.32

Schedule 14:  Other amendments

Bill reference

Paragraph number

Item 1, subsections 5(3) and (4)

14.7

Item 1, subsection 5(5)

14.8

Item 2

14.11, 14.12

Items 3 to 7, subsections 138B(2), 138C(1), 138C(3) and paragraphs 138D(1)(b) and 138E(1)(b)

14.17

Item 8

14.18

Items 9 to 10, paragraphs 95(1)(gb), 95(1)(h) and (j)

14.22

Item 11, section 132A of Schedule 2

14.27

Item 12, subsection 79(5)

14.30

Item 13

14.31

Items 14 to 17 and 20 to 22, subsections 82(3)(a) to (d), 85(3)(a) and 85(6)(a) and section 179 of Schedule 2

14.36

Items 18 and 19, subsection 86(1) of Schedule 2

14.35

Item 23, subsection 131(2)

14.40

Item 24

14.41

Item 25, subsection 155(8)

14.43

Item 26

14.44

Item 27, section 291 of Schedule 2

14.28

Item 27, section 292 of Schedule 2

14.37

 




[1] Non-confidential submissions are available at: https://consult.treasury.gov.au/