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Thursday, 25 October 1973
Page: 2733

Mr ENDERBY (Australian Capital Territory) (Minister for Secondary Industry and Minister for Supply) - I move:

That the Bill be now read a second time.

The purpose of this Bill is to control restrictive trade practices and monopolisation and to proprotect consumers from unfair commercial practices. The Bill will replace the existing Restrictive Trade Practices Act, which has proved to be one of the most ineffectual pieces of legislation ever passed by this Parliament. The Bill will also provide on a national basis long overdue protection for consumers against a wide range of unfair practices.

The Bill is similar to another Bill that the Government introduced into the on 27 September. Debate on that Bill has been deferred by the Senate until next year. The Government has made it clear that such a delay in the passage of legislation of this importance is quite unacceptable. The Bill deals with matters of pressing importance and has particular relevance to the problem of inflation. The present Bill is introduced into this House so as to afford it an opportunity to consider and express its views on the important provisions of the Bill.

Restrictive trade practices have long been rife in Australia. Most of them are undesirable and have served the interests of the parties engaged in them, irrespective of whether those interests coincide with the interests of Australians generally. These practices cause prices to be maintained at artificially high levels. They enable particular enterprises or groups of enterprises to attain positions of economic dominance which are then susceptible to abuse; they interfere with the interplay of competitive forces which are the foundation of any market economy; they allow discriminatory action against small businesses, exploitation of consumers and feather bedding of industries. In consumer transactions unfair practices are widespread. The existing law is still largely founded on the principle known as caveat emptor - meaning let the buyer beware. Thatprinciple was far more appropriate for transactions conducted in village markets than for modern consumer-oriented transactions of today. It has ceased to be appropriate as a general rule. Now the marketing of goods and services is conducted on an organised basis and by trained business executives. The untrained consumer is often no match for the businessman who attempts to persuade the consumer to buy goods or services on terms and conditions suitable only to the vendor. The consumer needs protection by the law and this Bill will provide such protection.

The Bill is especially important because of its relevance to inflation. The purpose of many restrictive practices is to maintain prices at levels higher than would otherwise prevail. This contributes to the inflationary trend. It also reduces the likelihood that the benefits of the Government's recent tariff cut will be passed on to the public. Increased competition from imports will be of little benefit if not accompanied by increased domestic competition. Consumer protection also assists in the fight against inflation. It is the consumer who has to bear the burden of higher prices and of unfair methods of dealing.

The Bill gives effect to a recommendation by the Council of the Organisation for Economic Co-operation and Development in December 1971 concerning action against inflation in the field of competition policy. The recommendation urged member governments of OECD, as part of the action to be taken by them against inflation, to adopt stronger measures to control restrictive trade practices and to protect consumers. The Government has a firm electoral commitment to introduce effective legislation in the areas of restrictive trade practices and consumer protection. This implements the promises made by the Government at the last general election. The Government believes that the Bill introduced into this Parliament should, as far as possible, indicate what forms of conduct are to be prohibited. We believe that the existing restrictive trade practices legislation is unsatisfactory in this regard.

Under that legislation prohibition of a practice or agreement comes not from the law itself but from a restraining order made by the Trade Practices Tribunal. These proceedings can be instituted only by the Commissioner of Trade Practices where, in his opinion, the institution of such proceedings is desirable. To this there is a real exception in the case of resale price maintenance and apparent exceptions in the cases of collusive tendering and collusive bidding.

In our view, except for resale price maintenance, the existing Restrictive Trade Practices Act unfairly places the burden on persons whose responsibility it is to administer the law, not to make it. I do not overlook the need for some flexibility in legislation of this kind. Some agreements and practices are not objectionable. The law should provide for such agreements or practices to be treated after appropriate consideration by the administering authorities as exceptions to the general rule. This is the approach taken in the Bill. A related consideration is that a law is bound to be ineffective if it commits to the administering authorities more work than they could hope to perform. The unsatisfactory operation of the existing Act is made clear in the recently tabled sixth annual report of the Commissioner of Trade Practices. This report states that on 30 June this year there were no fewer than 12,360 operative agreements entered in the register maintained by the Commissioner. This was only 193 fewer agreements than the corresponding number on 30 June last year. The Commissioner and his staff have done their best to deal with a vast number of agreements and practices in accordance with the procedure laid down by the Act. But it is clear from the report that the rate of progress they have 'been able to achieve is extremely inadequate if effective control of restrictive agreements and practices is to be attained within a reasonable period.

The progress being made under the existing Act is such that it would be many years before the legislation had any significant impact on the economy. This would be unsatisfactory if inflation was not a pressing problem. Such a slow rate of progress is plainly intolerable. Another important principle is that a breach of such legislation should give those who are affected by the breach the right to bring private enforcement proceedings. Under the existing Act one who is adversely affected by a practice or agreement has no right to take the first necessary step of instituting proceedings in the Trade Practices Tribunal. Under that Act the institution of such proceedings is the exclusive prerogative of the Commissioner of Trade Practices. If the Commissioner takes no action the person adversely affected by the practice or agreement has no alternative course of action. It is clear that the effectiveness of legislation with respect to trade practices will depend upon the existence of a strong administrative agency. This Bill recognises the need for such an agency. The agency will be called the Trade Practices Commission and will consist of a Chairman, a Deputy Chairman and such other members as are appointed by the Governor-General.

The Trade Practices Commission will replace the Commissioner of Trade Practices. It will have a wide range of responsibilities covering not only enforcement, but the granting of authorisations for conduct otherwise prohibited, the granting of clearances where there is uncertainty as to the application of particular provisions and inquiring, at the instance of the Attorney-General, into the need for further legislation with respect to practices that appear to be operating unfairly against the interests of consumers. The Commission's functions with respect to consumer protection will complement those of the Consumer Standards Commission which the Minister for Science (Mr Morrison) is establishing. The Bill provides for mandatory consumer standards where desirable. The method will be to prescribe the standard by regulation. Any such regulation will be made under the legislation now proposed although decisions to prescribe standards will be taken in close consultation with the Minister for Science. Some of the functions of the Trade Practices Commission will involve the making of administrative determinations of a quasijudicial character similar in a number of respects to the determinations at present made by the Trade Practices Tribunal. The Bill provides for the Tribunal to be retained as a body of review. It will have power to review determinations of the Commission upon the application of an interested party.

I refer now to some features of the drafting of the Bill. Legislation of this kind is concerned with economic considerations. There is a limit to the extent to which such considerations can be treated in legislation as legal concepts capable of being expressed with absolute precision. Such an approach leads to provisions which are complex in the extreme and give rise to more problems than they remove. The present Bill recognises the futility of such drafting. Many matters have, of course, had to be stated in detail. But other provisions, particularly those describing the prohibited restrictive trade practices, have been drafted along general lines using, wherever possible, well understood expressions. I am confident that this will be more satisfactory. The courts will be afforded an opportunity to apply the law in a realistic manner in the exercises of their traditional judicial role.

The constitutional power of the Australian Parliament to enact legislation such as that contained in the Bill was clarified by the very important decision of the High Court in what is known as the concrete pipes case. For present purposes that case established that restrictive trade practices and monopolisation legislation contained in the Australian Industries Preservation Act could validly derive support from the corporations power in the Constitution. It also established that legal problems can arise when provisions that depend on that power are drafted so as to be inextricably mixed in their operation with provisions that depend on other powers. The Bill takes acount of these considerations. Most of the provisions are drafted so as to apply only when a corporation is involved. But these provisions are given by clause 5 a separate operation in reliance upon other powers. In the result, provisions which appear to be restricted to situations involving a corporation, will have an extended operation involving interstate trade or commerce, the Australian Capital Territory, the Northern Territory or dealings with the Australian Government, any of its authorities or instrumentalities, or the use of postal, telegraphic or telephone services or a radio or television broadcast.

The present Act places much emphasis on secrecy. Everything on the register of trade agreements is subject to secrecy requirements, as are the functions of the Commissioner and his staff until, in relation to a particular agreement or practice, he institutes proceedings in the Tribunal. Such secrecy is undesirable and goes beyond what is reasonably necessary for the protection of confidential information and can be against the public interest. The Bill confines secrecy to confidential information. However, the secrecy which has applied to the register is not to be removed. I should add that under the Bill the existing registration requirements are not to be continued. The importance of the register will become progressively less and less. The existing overseas cargo shipping provisions have been included in the Bill in their present form. This should not be taken as an indication that the Government is satisfied with the provisions. They will be the subject of a later review which will take into account, amongst other things, international negotiations. This will be done by the Minister for Transport (Mr Charles Jones), who has the ministerial responsibility in this area.

My last preliminary comment is that the Government has received some suggestions that the Bill should contain a provision to ensure that, in appropriate cases, legal aid be available to persons involved in proceedings under the legislation, whether in a court, the Trade Practices Tribunal or the Trade Practices Commission. Such a provision would plainly have much to commend it. The matter is under consideration and we expect to introduce an appropriate provision by way of amendment when the Bill is being considered in Committee.


In brief, the Bill prohibits the following practices:

Contracts, combinations and conspiracies in restraint of trade; monopolisation; exclusive dealing; resale price maintenance; price discrimination; anti-competitive mergers; The provisions with respect to contracts, combinations and conspiracies in restraint of trade are to be found in clause 45. No exhaustive definition of these terms is provided, but sub-clause (3) makes it clear that certain specified forms of conduct are included. This clause will cover collusive tendering and collusive bidding, which are not the subject of any specific provision. Contracts covered by this clause are rendered unenforceable and this applies whether they were made before or after the commencement of the provision. Monopolisation is defined in clause 46 so as to cover various forms of conduct by a monpolist against his competitors or wouldbe competitors. A monopolist for this purpose is a person who substantially controls a market. The application of this provision will be a matter for the court. An arithmetical test such as one-third of the market - as in the existing legislation - is unsatisfactory. The certainty which it appears to give is illusory.

Sub-clause (1) of clause 46 applies where the conduct takes place in the market controlled by the monopolist. In such a case, the sub-clause applies so long as the conduct is directed to eliminating or substantially damaging a competitor; prevent the entry of a person into the market; or deterring or preventing a person from engaging in competitive conduct. Sub-clause (2) applies where the conduct is in another market. In such a case it is necessary that the anti-competitive conduct of the monopolist involves taking advantage of his monopoly position. Exclusive dealing is defined in clause 47. It covers arrangements in accordance with which either the supplier or the acquirer of goods or services has limited his freedom to deal as regards persons or places. Exclusive dealing is prohibited in 2 sets of circumstances. The first is in the course of carrying on a business in reliance on a licence, permit, authority or registration under a law of Australia or of a Territory. The second is where the effect of the practice may substantially lessen competition or tend to result in a person being in a position to control a market.

Resale price maintenance is denned in Part VIII in substantially the same terms as defined in the existing Act. One of the changes made to this definition ensures that the definition covers action by a manufacturer to induce a retailer, who has obtained the manufacturer's goods through a wholesaler, to maintain retail prices, specified by the manufacturer. Another change ensures that the definition covers the practice by which a supplier stipulates minimum prices at which a distributor may advertise, as distinct from sell. Permissible methods of recommending resale prices have been clarified, as also have the evidentiary provisions in clause 99. The practice of price discrimination is defined in clause 49. There is no need, as under the existing legilation, for a threat or promise, and the prohibition extends to the granting, as well as the obtaining, of discriminatory prices. The .practice is prohibited where it will substantially lessen competition or tend to result in a person controlling a market.

Mergers are prohibited by clause 50 where an effect would be to lessen competition or to tend to result in the corporation being in a position substantially to control a market. The prohibition does not apply to the acquisition of shares in the capital, or assets, of a body corporate in pursuance of an offer made before tomorrow. The Bill does not conflict in any way with the operation of the Companies (Foreign Take-overs) Act. Provisions to avoid such conflict are to be found in clause 90. Subclause 9 of clause 90 enables the Government to ensure that a merger is permissible if, in the Government's view, there are special considerations which conform to the interests of national economic policy.


Authorisations may be granted by the Commission in respect of some practices. The effect of an authorisation is to remove the prohibition that would otherwise apply by virtue of this legislation. Authorisations may be granted in respect of contracts or combinations in restraint of trade - other than those having the purpose or effect of fixing, controlling or maintaining prices; exclusive dealing; and mergers.

The Government has concluded that the impact of the legislation would be greatly lessened if provision was made for authorisations to be granted in respect of pricefixing agreements. These agreements are now generally recognised in many countries as being undesirable, particulary in times of inflation as we are now experiencing. It is essential that the Commission should be able to deal expeditiously with applications for authorisations. The Bill has been framed with this in mind. The Commission will not be required to hold a public hearing in respect of every application for an authorisation. It will be able to hold such a hearing where it considers it appropriate.

If the Commission deals with an authorisation application without a public hearing, the relevant documents will be available for public inspection, subject to special provisions for the protection of confidential information. In all cases the Commission is to be required to take any submissions into account. The approach to be taken by the Commission in considering whether to grant an authorisation is indicated in sub-clause (5) of clause 90. The Commission is directed by that provision not to grant an authorisation unless it is satisfied that a specific and substantial benefit to the public is likely to result or that the effect on competition is so slight that it can be disregarded.

The Commission is required also to be satisfied that, in all the circumstances, the benefit to the public or the slight effect on competition justifies the granting of an authorisation. The position, therefore, is that the onus will be firmly on the applicant to satisfy the Commission that the granting of an authorisation is justified. I might say, on that particular aspect, that it reflects the centuries-old attitude of the common law. Unless and until an authorisation is obtained in respect of a practice falling into one of the prohibited classes I have mentioned, such practice will be unlawful.

The Bill recognises, however, that there is a need for special transitional provisions for a period immediately following the commencement of the legislation. The prohibitions of contracts in restraint of trade and exclusive dealing will not become effective until 4 months after the commencement date. During that period it will be possible for persons to apply to the Commission for authorisations in respect of those practices. As the Commission may find itself unable to give full consideration to the applications it receives in this period, provision is included to enable the grant of interim authorisations. An interim authorisation, if granted, will have the effect of permitting the practice to continue until the Commission, after full consideration, makes a final determination.

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

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

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

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

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

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


The consumer protection provisions are to be found, for the most part, in Part V. Some of these provisions are expressly limited to transactions involving consumers. The meaning of a consumer is dealt with by sub-clause (4) of clause 4. Unless a contrary intention appears, that provision excludes a person who uses the goods or services in question for the purpose of, or in the course of, trade or business or for a public purpose; or a person who acquires goods for the purpose of resale. The consumer protection provisions do not necessarily displace State legislation in the same field. Clause 74 expressly states that Part V is not intended to exclude or limit the concurrent operation of any law of a State or Territory. The Bill recognises that in many consumer protection matters there is a need for a national approach, and that the effectiveness of State laws is necessarily limited. Division 1 of Part V prohibits a number of unfair practices. Clause 52 prohibits misleading or deceptive conduct - and does so in general terms. It is important that there should be such a provision if the law is not to be continually one step behind persons who resort to smart practices. Clause 52 overlaps the operation of some of the other more specific provisions. I point out in this connection that a breach of a specific provision exposes the person concerned to a penalty, whereas a breach of the more general provisions in clause 52 gives rise to a right to an injunction only. Clause 53 prohibits a number of specific forms of false representations with respect to goods and services. Clause 54 prohibits the offering of prizes in connection with the promotion of goods and services when there is no intention of actually providing the prizes.

Clause 55 prohibits misleading conduct covered by the Paris Convention for the Protection of Industrial Property as revised at Stockholm on 14 July 1967. This Convention covers conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of goods. Clause 55 does not come into operation until the Convention enters into force for Australia. This will be soon. Clause 56 prohibits the practice known at bait advertising. This is the practice in accordance with which a bargain is advertised and in point of fact the bargain either does not exist or is available only for a very short time. The purpose of such advertising is mainly to attract a customer into a store.

The practice of referral selling is prohibited by clause 57. This is the practice by which a supplier induces a customer to acquire goods or services by indicating that the consumer, after paying for the goods or services - I stress that it is after such payment - will get rebates or commissions on subsequent sales by the supplier to other persons whose names are provided by the consumer or who view the work done for the consumer by the supplier. Clause 58 prohibits the acceptance of payment without intention to supply as ordered. Clause 59 prohibits the making of misleading statements about home operated businesses.

Clause 60 prohibits coercive conduct by salesmen or debt collectors at a person's place of residence. Pyramid selling is a practice that has been a cause of much concern in recent years. This practice is prohibited by clause 61. I have already mentioned that the Bill will enable consumer standards to be prescribed and made mandatory. Provision is made in this connection for product safety standards and product information standards. A prescribed product safety standard will require compliance with safety requirements. A prescribed product information standard will require the disclosure of information relating to matters such as the performance, composition, contents, design, construction, finish or packaging of goods. The provisions relating to both kinds of standards are to be found in clauses 62 and 63.

Clause 64 deals with the practice of unsolicited goods and unsolicited directory entries. The clause prohibits the assertion of a right to payment for such goods or directory entries. This provision does not apply if the person against whom a right to payment for goods is asserted, ordinarily uses like goods in the course of his profession, business, trade or occupation. Under clause 65, a person who has received unsolicited goods is to be relieved of liability for loss or damage to the goods, other than loss or damage resulting from the doing by him of a wilful and unlawful act.

Division 2 of Part V provides for a number of conditions and warranties designed to protect the consumer to apply and to be incapable of being excluded. These provisions are limited to consumer transactions. I have already referred to the limited meaning of 'consumer under sub-clause (4) of clause 4.

Clause 67 (1) prevents the inclusion in consumer contracts of provisions rendering Australian law inapplicable to contracts, the proper law of which is otherwise Australian. Subclause (2) of this clause prevents the substitution of provisions in the law of another country for provisions in Division 2. Clause 68 renders void a term of a consumer contract that purports to exclude, restrict or modify the application of Division 2. Clause 69 provides for certain conditions as to title encumbrances and quiet possession to be implied in every consumer contract. Clause 70 implies certain conditions in consumer contracts for the supply of goods by description. Clause 71 implies certain undertakings in consumer contracts as to quality or fitness. Clause 72 implies certain conditions in consumer contracts for the supply of goods by reference to sample. Clause 73 implies certain conditions in consumer contracts for the supply of services.


A contravention of a provision of Part V - other than the general provision in clause 52 - is to be an offence. The maximum penalty for such an offence is to be, in the case of a corporation, a fine not exceeding $50,000, and in the case of an individual, a fine not exceeding $10,000 or imprisonment for not more than 6 months (clause 79). Contraventions that can be regarded as excusable are the subject of a special defence provided in clause 85. Provision for injunctions is included in clause 80. A right to recover damages is conferred by clause 82. Apart from that right, clause 87 (2) empowers the Court, upon finding that there has been a contravention, to direct a refund of money or a payment to a person who has suffered loss or damage.

The jurisdiction to deal with consumer protection proceedings under the Bill is to be confined initially to the Commonwealth Industrial Court. This, will assist the early development of a cohesive body of case law which might not be possible, if, in the early stages of the operation of the legislation, courts of lower status - presided over by magistrates, for example - were to have jurisdiction. In due course it will be desirable to confer jurisdiction on such lower courts to deal with consumer protection matters. It will be desirable that the ready enforcement of rights under the legislation is facilitated in this way. A suitable opportunity to confer jurisdiction on courts of lower status will arise when the proposed Australian Superior Court is established. I envisage that an amendment for the purpose will be effected at that time.

Mr Speaker,it will be apparent to honourable members that the Bill is of great importance. It represents a great advance in the areas of restrictive trade practices and consumer protection and attends to a wide variety of problems. Australia has been for too long without this sort of legislation.

This is intended to promote efficiency and competition in business, to reduce prices and to protect all Australians against unfair practices. I commend the Bill to the House.

Debate (on motion by Mr King) adjourned.

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