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Thursday, 30 March 2017
Page: 3787

Mr MORRISON (CookTreasurer) (09:32): I move:

That this bill be now read a second time.

This bill contains a significant package of reforms to the Competition and Consumer Act 2010. These reforms are designed to simplify the law and better deal with anticompetitive conduct while supporting procompetitive behaviour. They will strengthen Australia's competition law to improve the long term welfare of consumers, businesses and the economy.

In 2014, the government commissioned an independent 'root and branch' review into Australia's competition framework: the Harper Competition Policy Review. Professor Ian Harper and the review panel consulted extensively with businesses, consumers, regulators and legal experts and found that, while our competition laws have served Australia well, they should be reformed to enhance their effectiveness. This bill implements a significant number of the competition law reforms recommended by the Harper review and agreed to by the government in its response. It also implements the recommendations made by the Productivity Commission in its 2013 inquiry into the National Access Regime, which the government accepted in its response to the Harper review.

Schedule 1 to this bill amends the definition of 'competition' in section 4 of the act to confirm that competition includes competition from goods and services that are capable of importation, as well as those actually imported. This change clarifies that a credible threat of import competition is relevant to competition analysis.

Schedule 2 to this bill amends the act to simplify and better target the provisions on cartel conduct. This includes changes to confine the application of the provisions to cartel conduct affecting competition in Australian markets and to change the scope of the joint venture exceptions to ensure that they do not limit legitimate commercial transactions or increase business compliance costs.

Schedule 3 to this bill repeals the price signalling provisions. Since their introduction in 2012, no cases have been brought under these provisions.

The price signalling provisions are replaced with a general prohibition on corporations engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition.

This prohibition will capture anticompetitive conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45. An exception is provided 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, which substantially overlaps with the cartel prohibitions in the act.

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.

Schedule 5 to this bill simplifies the provisions of the act by removing separate, complex prohibitions on covenants that substantially lessen competition and expanding the general prohibition on contracts that substantially lessen competition to include covenants.

Schedule 6 amends the act to increase the maximum penalty for breaching the secondary boycott provisions so that it aligns with penalties for other breaches of the competition law. As secondary boycotts are harmful to trading freedom and therefore harmful to competition, they warrant a significant penalty.

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. This will bring the prohibition on third-line forcing in line with the similar prohibition on second-line forcing and with other comparable jurisdictions, including the United States, Canada, the European Union and New Zealand.

Schedule 8 to this bill amends the act to allow a corporation or person to notify the Australian Competition and Consumer Commission of resale price maintenance conduct as an alternative to seeking authorisation from the commission for such conduct. It is appropriate to make notification available for resale price maintenance conduct because this conduct may in some circumstances be procompetitive, and notification is a quicker and less expensive means of obtaining an exemption than authorisation.

Schedule 8 also provides an exemption from the resale price maintenance prohibition for conduct between related bodies corporate, reflecting that companies within a corporate group are not considered to be competitors.

Schedule 9 to this bill makes a number of amendments to the act. It simplifies the complex provisions governing the authorisation process. It makes the commission the decision maker at first instance for merger authorisations, as it is best suited to make these decisions. It also grants the commission the power to issue a 'class exemption' for business practices that are unlikely to raise competition concerns or are likely to generate a net public benefit.

This will remove the need for individual applications for authorisation by creating 'safe harbours' for business and thereby reduce compliance and administration costs and increase certainty.

Schedule 9 also allows the commission to impose conditions on notifications for collective bargaining that involves collective boycott conduct, and grants the commission a power to issue a 'stop notice' requiring notified collective boycott conduct to cease.

These reforms will introduce greater flexibility into the collective bargaining notification process to ensure that it is more widely used. This is likely to be of particular benefit to small businesses, given their lack of bargaining power relative to larger suppliers. The commission may also impose conditions on notifications for resale price maintenance.

Schedule 10 to this bill extends section 83 of the act so that a party bringing certain proceedings may rely on admissions of fact as well as findings of fact made in certain other proceedings. This will help to reduce the cost of private actions, as a person relying on a previous admission of fact as prima facie evidence will not need to establish that fact.

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. This reflects the increasing cost of documentary searches as businesses retain many more documents, such as emails, than in the past.

Schedule 11 also increases the fine for noncompliance with section 155 to bring it into line with penalties for similar notice-based investigative powers.

Schedule 12 amends part IIIA of the act, which contains the National Access Regime, to implement the recommendations made by the Productivity Commission in its inquiry into the regime. This will ensure that the regime better targets the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services. Schedule 12 amends and clarifies the declaration criteria that must be used by the National Competition Council and the designated minister in determining whether a service should be declared. Notably, the current 'private profitability' test is replaced by a 'natural monopoly' test. Schedule 12 also introduces a new power for the minister to revoke certification of a state access regime.

Schedule 13 to this bill deals with the transitional application of amendments made by the bill.

Schedule 14 to this bill makes various amendments to streamline the administration of the act, to reduce compliance burdens for business, individuals and government, while preserving the protections available under the act. These amendments focus on the requirements of the Australian Consumer Law.

Together, these reforms contained in the bill will strengthen, simplify and modernise our competition laws. The reforms will support the enforcement role of our national competition regulator and facilitate pro-competitive conduct to the long-term benefit of Australian businesses, consumers and the economy.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.