Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Competition and Consumer Amendment (Continuing ACCC Monitoring of Domestic Airline Competition) Bill 2023

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

 

 

 

 

2022-2023

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

SENATE

 

 

 

 

 

Competition and Consumer Amendment

(Continuing ACCC Monitoring of Domestic Airline Competition)

Bill 2023

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

(Circulated by authority of Senators Dean Smith and McKenzie)



COMPETITION AND CONSUMER AMENDMENT (CONTINUING ACCC MONITORING OF DOMESTIC AIRLINE COMPETITION) BILL 2023

 

OUTLINE

 

This Bill amends the Competition and Consumer Act 2010 to direct the Australian Competition and Consumer Commission (ACCC) to continue its monitoring program of prices, costs and profits relating to the supply of domestic air passenger transport services.

 

Domestic Airlines Competition Background



The final ACCC Airline Competition in Australia Report from June 2023 identified ongoing issues connected to insufficient competition within Australia’s domestic airline industry, a problem that has persisted for many years. The lack of competition has led to higher airfares and a decline in service quality.

 

According to the report, while the emergence of smaller carriers has opened possibilities for increased competition in the domestic airline sector, these airlines would need significant growth to genuinely challenge the dominance of Australia’s largest two carriers.



Over the past twenty years, 90% or more of domestic passengers have opted to fly with Australia’s two largest carriers. As of April 2023, these two airline conglomerates accounted for 94% of all domestic passengers.

 

Australian Competition and Consumer Commission (ACCC) Monitoring

 

On 19 June 2020, the Commonwealth Government directed the ACCC under subsections 95ZE(1) and 95ZH(1) of the Competition and Consumer Act 2010 to monitor prices, costs and profits relating to the supply of domestic air passenger transport services for 3 years.

 

The monitoring produced 12 reports and the program expired at the end of June 2023.

 

The ACCC’s previous monitoring assisted in providing important information relating to airline competition. This monitoring offered a level of oversight previously absent in the sector for the benefit of all Australian airline travelers. The reporting role and focus by the ACCC also allowed consumers to raise concerns about anti-competitive conduct in the sector.

 

This bill largely replicates the previous direction and also requires the ACCC to report on its monitoring at least once every quarter. The monitoring will take into consideration the need for commercial confidentiality. The ACCC must publish each report on their website and the Minister must cause the report to be tabled in Parliament.

 

 

 

 

 

 

 

 

NOTES ON CLAUSES

Clause 1: Short Title

1.           Clause 1 is a formal provision specifying the short title of the Bill, as enacted, is to be cited as the Competition and Consumer Amendment (Continuing ACCC Monitoring of Domestic Airline Competition) Act 2023 .

Clause 2: Commencement

2.           This clause provides the whole of the Bill, as enacted, commences on the day after this Act receives the Royal Assent.

Clause 3 - Schedules

3.                 Legislation specified in a Schedule to the Act is amended or repealed as is set out in the applicable items in the Schedule.  Any other item in a Schedule to the Act has effect according to its terms.

Schedule 1—Price Monitoring

Part 1 Amendments

Competition and Consumer Act 2010

Item 1: Proposed section 95ZGA   

4.                    This item inserts proposed section 95ZGA within Part VII A. This provision pertains to the monitoring of prices for domestic air passenger transport services and the associated goods and services.

5.                   Subsection (1) explains that the objective of this provision is to conduct a monitoring process for a duration of three years. This process involves the assessment of prices, costs, and profits associated with the provision of domestic air passenger transport services, as well as the related goods and services.

6.                   Subsection (2) requires the Commission to monitor prices , costs, and profits associated with the provision of domestic air passenger transport services, as well as the related goods and services.

7.                   Paragraph (2)(a) requires the Commission to monitor prices, costs, and profits associated with the supply of goods and services by individuals or entities operating within the air passenger transport service industry.

8.                   Paragraph (2)(b) requires the Commission to submit periodic reports to the Minister. These reports must be provided at least once every quarter throughout a three-year period starting from the commencement of this section. These reports will detail the findings and observations resulting from the ongoing monitoring efforts conducted by the Commission .

9.                    Subsection (3) provides exemptions where subsection (2) does not apply in the following circumstances:

·            Paragraph (3)(a): This exception refers to situations where a supply of goods or services is considered exempt under the legislation. A supply of goods and services is exempt when a declaration under section 95B is in force in relation to those goods and services. In such cases, the monitoring obligations described in subsection (2) do not apply.

·            Paragraph (3)(b): This exception covers scenarios where a good or service is provided by an authority of a State or Territory. In such cases, the monitoring obligations described in subsection (2) do not apply.

10.               Subsection (4) stipulates that when the Commission is in the process of preparing a report in accordance with paragraph (2)(b), it is required to consider the necessity of maintaining commercial confidentiality. This provision emphasizes the Commission’s responsibility to balance its duty to monitor and report on industry matters with the need to protect sensitive commercial information that could be of a confidential nature. It ensures that the Commission respects and upholds the confidentiality interests of businesses and other commercial entities involved in the air passenger transport service industry when preparing its reports.

11.               Subsection (5) establishes that the Commission is obligated to publish a report given to the Minister under paragraph (2)(b) on its website. This action must be taken as soon as practicable after the Commission has submitted the report to the Minister.

12.               Subsection (6) requires the Minister to table the report in each House of the Parliament. These provisions underscore the commitment to transparency and accountability in the regulatory process. They ensure that the information and findings contained within the reports are made accessible to the public, allowing for greater transparency and scrutiny of the Commission’s activities in monitoring and reporting on the air passenger transport service industry.

13.               Subsection (7) requires the Commission to accord special consideration to factors outlined in paragraphs (7)(a) and (b):

·          Paragraph (7)(a): The overarching objective defined in subsection (1), which sets the overall purpose and goals of the section.

·          Paragraph (7)(b) : A dual focus on monitoring the prices, costs and profits relating to the supply of:

o    domestic air passenger transport services; and

o    goods and services that are related to the provision of domestic air passenger transport services .

14.               Subsection (8) provides a set of definitions. These definitions clarify and explain the specific meanings of certain terms and phrases used within the section.

·          air passenger transport service industry means the industry comprised of those parts of the air and space transport class 4900 that relate to the supply of air passenger transport services, as classified in ANZSIC.

·          ANZSIC means the Australian and New Zealand Standard Industrial Classification 2006 (1292.0) published by the Australian Statistician, as revised and in force on the day this section commences. The text of the Classification is available through the Australian Bureau of Statistics website.

·          domestic air passenger transport service means an air passenger transport service to the extent that it is provided for the purposes of air passenger transport between places within Australia.

·          quarter means a period of 3 months ending on 31 March, 30 June, 30 September, or 31 December.

Part 2 Repeals

Competition and Consumer (Price Monitoring—Domestic Air Passenger Transport) Direction   2020

Item 2: The whole of the instrument 

15.             This item takes into consideration that Part 1 of Schedule 1 to this Bill largely inserts the provisions of the Competition and Consumer (Price Monitoring—Domestic Air Passenger Transport) Direction 2020 into the Competition and Consumer Act 2010 . This item seeks to repeal the whole of the Direction which currently has no effect given that the reporting period ended in June 2023.

 



 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Competition and Consumer Amendment

(Continuing ACCC Monitoring of Domestic Airline Competition)

Bill 2023

 

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 .

 

Overview of the Bill

This Bill amends the Competition and Consumer Act 2010 to direct the Australian Competition and Consumer Commission (ACCC) to continue its monitoring program of prices, costs and profits relating to the supply of domestic air passenger transport services.

 

The Bill also requires the ACCC to report on its monitoring at least once every quarter. The monitoring will take into consideration the need for commercial confidentiality. The ACCC must publish each report on their website and Minister must cause the report to be tabled in Parliament.

 

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

 

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.

 

S enators Bridget McKenzie and Dean Smith