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Fair Prices and Better Access for All (Petroleum) Bill 1999

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1999

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

FAIR PRICES AND BETTER ACCESS FOR ALL (PETROLEUM)

BILL 1999

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

(Circulated by authority of the Shadow Minister for Small Business, Mr Joel Fitzgibbon MP)

 

 



 

 

 

 

FAIR PRICES AND BETTER ACCESS FOR ALL (PETROLEUM) BILL 1999

 

 

 

OUTLINE

 

The Fair Prices and Better Access for All (Petroleum) Bill 1999 will secure improved competition in the wholesale sector of the petroleum market and help create an environment of fairer pricing and better access in the supply of petroleum products by ensuring that franchisees in the petroleum sector are able to purchase fuels for re-sale from a variety of sources.

 

The Bill amends section 47 of the Trade Practices Act by the insertion of sub-section 47(14) which provides that all fuel supply agreements entered into on or after the commencement of the OilCode, as a code mandated under the Trade Practices Act, are deemed to substantially lessen competition or to have the effect of substantially lessening competition unless those agreements provide that a franchisee can purchase up to 50 per cent of each kind or grade of fuel from suppliers other than the primary supplier.

 

The Bill also provides for a regulation making power for matters required to be regulated under the Act (namely the display of notices) and any other matters as necessary to give effect to the Act.

 

The Bill also provides for a penalty regime for breaches of the Act.

 

 

FINANCIAL IMPACT STATEMENT

 

Some small additional cost may be incurred by the Commonwealth Government through the designation of officers of the Australian Competition and Consumer Commission as authorised officers under the Act.  Authorised officers are permitted by the Bill to inspect and take extracts from franchisee records of fuel purchases.  The Bill will require franchisees to keep such records.

 

 



 

 

 

NOTES ON CLAUSES

 

 

 

Clause 1 - Short Title

 

This clause provides that the Act may be cited as the Fair Prices and Better Access for All (Petroleum) Act 1999 .

 

 

Clause 2 - Commencement

 

This clause provides that the Act will commence on the commencement of the Trade Practices (Industry Codes - OilCode) Regulations.

 

 

Clause 3 - Object of the Act

 

This clause states that the object of the Act is to secure improved competition in the wholesale sector of the petroleum market and to help create an environment of fairer pricing and better access in the supply of petroleum products by ensuring that franchisees in the petroleum sector are able to purchase fuels for re-sale from a variety of sources.

 

 

Clause 4 - Definitions

 

This clause sets out definitions of various terms used in the Act.

 

 

Clause 5 - Franchisee’s rights

 

Clause 5(1) provides that subject to this Act and the Trade Practices Act 1974 a franchisee may use any dispensing equipment or underground storage equipment on its site for the dispensing and storage of fuel which the franchisee is lawfully able to purchase from suppliers other than the primary supplier.

 

Clause 5(2) provides that a franchisee must give seven days notice tohis or her primary supplier of the intention to store or dispense fuel provided by suppliers other than the primary supplier.

 

Clause 5(3) provides that where a franchisee intends to exercise the right conferred by 5(1) the franchisee must ensure that:

(a)                                         The franchisee has fuel of each kind or grade that he or she is obligated to purchase from the primary supplier available for sale at the service station;

(b)                                        in any six month period the franchisee must purchase at least as much motor fuel of each kind or grade from the primary supplier as it purchases from all other suppliers.  This in effect gives the franchisee the right to purchase up to 50 per cent of supplies of each kind or grade of fuel from alternative suppliers;

(c)                                         if a franchisee uses dispensing equipment (petrol pumps) to dispense fuel supplied by other than the primary supplier, he or she must be disclosed that the fuel may be supplied by an alternative supplier;

(d)                                        a permanent register of all fuel purchases is to be kept;

(e)                                         once fuel is received it must be entered on the register referred to in (d);

(f)                                         an authorised officer (of the Australian Competition and Consumer Commission) is permitted to inspect and take extracts from the register;

(g)                                        petrol and diesel should not be mixed in an underground storage tank;

(h)                                        all dispensing equipment (petrol pumps) should have sealed volume totalisers which record the total amount of fuel dispensed by the pump;

 

Clause 5(4) provides that if in any six month period the primary supplier has not been able to supply the reasonable fuel requirements of the franchisee, clause 5(3)(b) does not apply.

 

Clause 5(5) makes null and void any term of a franchise agreement which

(a)                                         requires a franchisee to display either the name or business name of the primary supplier or any logo or colour associated with the primary supplier on dispensing equipment;

(b)                                        restricts the rights conferred on the franchisee by this Act to use, maintain or paint fuel dispensing equipment;

(c)                                         permits the primary supplier to paint or affix signs on any dispensing equipment used by the franchisee in accordance with the Act.

 

Clause 5(6) provides that where a franchisee exercises the right under clause 5(1) - that is to use dispensing equipment and underground storage facilities for the dispensing and storage of fuel supplied by suppliers other than the primary supplier - the franchisee shall display a notice in accordance with what is set out in the regulations.

 

Clause 5(7) provides a penalty of 10 penalty units for making a false entry in, or in some other manner falsifying, a register required to be kept by this Act.

 

 

 



Clause 6 - Franchisee’s liability

 

Clause 6(1) provides that where a franchisee uses dispensing equipment that has been installed or maintained by the franchisee’s primary supplier to dispense fuel supplied by other suppliers then the franchisee is liable to pay to the primary supplier 50 per cent of the cost incurred by the primary supplier in maintaining the equipment.

 

Clause 6(2) provides that the dispensing equipment is deemed to have been used for dispensing motor fuel sourced from other than the primary supplier from the date of effect of the notice in writing provided by the franchisee (under clause 5(2)) until such time as the franchisee has advised the primary supplier in writing that the franchisee has ceased to use the equipment for that purpose.

 

 

Clause 7 - Franchisor not to impose charges or limitations

 

Clause 7(1) provides that the primary supplier cannot impose a charge or limitation on a franchisee or remove or threaten to remove any benefit provided to the franchisee because the franchisee has exercised its rights under this Act.

 

Clause 7(2) recognises that certain actions taken by franchisors in the ordinary course of business (eg in the promotion of products) are not to be regarded as breaching subsection (1)

 

Clause 7(3) provides that in determining whether a breach of clause 8(1) has occurred matters that are specifically authorised or permitted by regulations to this Act shall not be considered.

 

 

Clause 8 - Compensation

 

Clause 8(1) provides that where a person suffers a loss or damage because another party has contravened or failed to comply with this Act, the ‘damaged’ person can seek compensation from the second person in a Court of competent jurisdiction.

 

Clause 8(2) provides that an action under clause 981) may be commenced at any time within three years from the date on which the cause of action occurred.

 

Clause 8(3) states that a certified copy of a court order convicting a person of contravening or failing to comply with this Act will be evidence of the contravention or failure to comply for the purposes of seeking compensation under this Act.

 

Clause 8(4) states that in any proceedings for compensation brought under this Act the standard of proof will be the same as that for civil proceedings generally.

 

 

Clause 9 - Injunctions

 

Clause 9(1) provides that any person may apply to the courts and the Court may make one or more of the following orders:

(a)                                         an order restraining a person from contravening or engaging in conduct that would contravene this Act or its regulations;

(b)                                        an order directing a person to comply with the Act or the regulations;

(c)                                         any other orders as the Court thinks fit.

 

Clause 9(2) provides that the Court may grant interim injunctions pending a determination of an issue under 10(1).

 

Clause 9(3) provides that the Court may vary or rescind an order granted under 10(1) or (2).

 

Clause 9(4) allows the Court to grant an order under 10(1) or (2) restraining a person from engaging in certain conduct whether or not it appears to the Court that the person intends to engage in that conduct again or to continue to engage in that conduct or whether there is an imminent danger of substantial damage to a person.

 

 

Clause 10 - Offences

 

Clause 10 provides that any person who fails to comply with the Act or regulations is liable for a penalty of ?? penalty units.

 

 

Clause 11 - Minister may designate authorised officer

 

Clause 11 provides that the authorised officer appointed by the Minister will be an officer of the Australian Competition and Consumer Commission.

 

 

Clause 12 - Regulations

 

Clause 12 provides that the Governor-General may make regulations under the Act as required or permitted by the Act and other regulations necessary or convenient to be prescribed for the carrying out or giving effect to the Act.

 

 

Clause 13 - Trade Practices Act

 

This provides that the Trade Practices Act is amended as set out in Schedule 1.

 

 

Schedule 1 - Amendment to the Trade Practices Act 1974

 

This schedule provides for amendment of the Trade Practices Act 1974 by the insertion of new subsection 47(14).  Section 47 of the Trade Practices Act prohibits exclusive dealing in circumstances where that dealing has or is likely to have the effect of substantially lessening competition.

 

The amendment provides that section 47 of the Trade Practices Act be amended by including a new sub-section (14) which deems, per se , all contracts for the supply of motor fuel entered into on or after the commencement of the Trade Practices (Industry Codes - OilCode) Regulations as having or likely to have the effect or purpose of substantially lessening competition and thus be subject to the penalties under the Trade Practices Act 1974 , unless those contracts provide that the franchisee can purchase up to 50 per cent of its fuel supplies from a supplier other than the primary supplier.