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Government consultation on the meaning of 'understanding' under the Trade Practices Act 1974



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GOVERNMENT CONSULTATION ON THE MEANING OF 'UNDERSTANDING'

UNDER THE TRADE PRACTICES ACT 1974

Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen MP, today released a discussion paper calling for submissions on the meaning and proof of the term 'understanding' in the Trade Practices Act 1974 (TPA).

One of the issues considered in the 2007 Report of the ACCC inquiry into the price of unleaded petrol was the role of the TPA in addressing impediments to competition, in particular anticompetitive agreements under section 45.

The ACCC expressed concerns that court decisions have, over time, narrowed the kind of conduct that is caught by the term 'understanding' in the TPA. The ACCC also raised concerns about the Court's readiness to draw inferences from evidence in determining whether parties have reached an understanding.

In the ACCC's analysis, the 2007 Geelong petrol case in particular set a high evidentiary bar for proving the existence of an understanding for the purposes of the price-fixing provisions of the TPA.

"I have previously announced that the Government would consult on the most appropriate way to implement the ACCC's recommendation in its Petrol Prices Report on the use and interpretation of the term 'understanding' in relation to alleged cartels", said Mr Bowen.

"Now that the Government has introduced legislation to criminalise serious cartel conduct, it is an appropriate time to further consider the approach to the meaning of understandings in the Act.

"This discussion paper seeks views on whether the current interpretation of 'understanding' limits the ability of the TPA to properly address anticompetitive conduct, as well as what inferences a court may draw from the evidence before it when considering the existence of

an understanding."

Copies of the discussion paper can be obtained from the Treasury website.

The closing date for submissions is 31 March 2009. They may be lodged by email, post or facsimile.

Media Release of 08/01/2009