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Anti-competitive agreements and concerted practices

 

Overview

Note: The Harper Review Final Report recommended the introduction of a concerted practices prohibition to operate alongside the existing anti-competitive agreement provision. See Harper Report Recommendation 29.

Legislation was passed in October 2017 giving effect to this recommendation and the change commenced on 6 November 2017. View the Competition and Consumer (Competition Policy Reform) Act 2017.

cartels
General prohibition on anti-competitive agreements

Section 45 prohibits making or giving effect to a contract, arrangement or understanding (or a provision of a contract, arrangement or understanding) if it has the purpose, or is likely to have the effect, of substantially lessening competition.

Unlike the cartel provisions, there is no requirement that parties be competitors. As a result, section 45 will capture both horizontal and vertical agreements that substantially lessen competition, subject to some exemptions and anti-overlap provisions.

In addition, since 6 November 2017, section 45 has also prohibited engaging in concerted practices that have the purpose, effect or likely effect of substantially lessening competition.

Cartels

Cartel conduct is defined and prohibited in Division 1 of Part IV of the Act. Conduct falling outside the scope of that definition, or which benefits from an exemption, may still be prohibited by the general prohibition in section 45. For further details see the cartel conduct page.

Dual listed company arrangements

Dual listed company arrangements which substantially lessen competition are separately prohibited by section 49 of the Act.

Telecommunications

A separate telecommunications regime applies in relation to anti-competitive conduct in that industry.

Exclusionary provisions (repealed)

Exclusionary provisions (primary boycotts) between competitors are separately prohibited by a combination of s 45 and 4D of the Act. There is considerable overlap between this prohibition and the cartel laws and, for this reason, the Harper Report recommended that it be repealed. This recommendation was accepted and legislation giving effect to it has commenced. Consequently there is now no separate prohibition on exclusionary provisions in s 45 (they may still be caught by the cartel provisions or s 45 if they involve an agreement which substantially lessens competition)

Price signalling conduct (repealed)

Until they were repealed on 6 November 2017 price signalling laws applied only to the banking industry and were subject to numerous exceptions. The provisions were never litigated and were always controversial. The Harper Report 2015 recommended that they be repealed and replaced with a concerted practices prohibition of general application. This recommendation was accepted and legislation giving effect to this recommendation commenced on 6 November 2017.

 

The legislation

Part IV Division 2

Part XIB The telecommunications industry: Anti-competitive conduct and record-keeping rules

[The following contains select provisions from this part; for the full part see CCA]

Division 2 - Anti-competitive conduct

151AJ Anti-competitive conduct

151AK The Competition Rule

Key provision

Following the commencement of the Harper Reforms in November 2017 subsections 45(1)-(3) were repealed and replaced. Importantly, the change removed the separate prohibition on exclusionary provisions and introduced a new prohibition against anti-competitive concerted practices.

The new provision is reproduced below:

(1) A corporation must not:

(a) make a contract or arrangement, or arrive at an understanding, if a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b) give effect to a provision of a contract, arrangement or understanding, if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

(c) engage with one or more persons in a concerted practice that has the purpose, or has or is likely to have the effect, of substantially lessening competition.

(2) Paragraph (1)(b) applies in relation to contracts or arrangements made, or understandings arrived at, before or after the commencement of this section.

(3) For the purposes of this section, competition means:

(a) in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding—competition in any market in which:

(i) a corporation that is a party to the contract, arrangement or understanding, or would be a party to the proposed contract, arrangement or understanding; or

(ii) any body corporate related to such a corporation;

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services; or

(b) in relation to a concerted practice—competition in any market in which:

(i) a corporation that is a party to the practice; or

(ii) any body corporate related to such a corporation;

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the practice, supply or acquire, or be likely to supply or acquire, goods or services.

(4) For the purposes of the application of this section in relation to a particular corporation, a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding shall be deemed to have or to be likely to have the effect of substantially lessening competition if that provision and any one or more of the following provisions, namely:

(a) the other provisions of that contract, arrangement or understanding or proposed contract, arrangement or understanding; and

(b) the provisions of any other contract, arrangement or understanding or proposed contract, arrangement or understanding to which the corporation or a body corporate related to the corporation is or would be a party;

together have or are likely to have that effect.

(5) This section does not apply to or in relation to:

(a) a provision of a contract where the provision constitutes a covenant to which section 45B applies or, but for subsection 45B(9), would apply;

(b) a provision of a proposed contract where the provision would constitute a covenant to which section 45B would apply or, but for subsection 45B(9), would apply; or

(c) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding in so far as the provision relates to:

(i) conduct that contravenes section 48; or

(ii) conduct that would contravene section 48 but for the operation of subsection 88(8A); or

(iii) conduct that would contravene section 48 if this Act defined the acts constituting the practice of resale price maintenance by reference to the maximum price at which goods or services are to be sold or supplied or are to be advertised, displayed or offered for sale or supply.

(5A) The making of a contract, arrangement or understanding does not constitute a contravention of this section because the contract, arrangement or understanding contains a provision the giving effect to which would, or would apart from subsection 47(10) or section 88 or 93, constitute a contravention of section 47.

(6) This section does not apply to or in relation to the giving effect to a provision of a contract, arrangement or understanding, or to or in relation to engaging in a concerted practice, by way of:

(a) engaging in conduct that contravenes, or would but for the operation of subsection 47(10) or 88(8) or section 93 contravene, section 47; or

(b) doing an act by reason of a breach or threatened breach of a condition referred to in subsection 47(2), (4), (6) or (8), being an act done by a person at a time when:

(i) an authorization under subsection 88(8) is in force in relation to conduct engaged in by that person on that condition; or

(ii) by reason of subsection 93(7) conduct engaged in by that person on that condition is not to be taken to have the effect of substantially lessening competition within the meaning of section 47; or

(iii) a notice under subsection 93(1) is in force in relation to conduct engaged in by that person on that condition.

(6A) The following conduct:

(a) the making of a dual listed company arrangement;

(b) the giving effect to a provision of a dual listed company arrangement;

does not contravene this section if the conduct would, or would apart from subsection 88(8B), contravene section 49.

(7) This section does not apply to or in relation to:

(a) a contract, arrangement or understanding to the extent that the contract, arrangement or understanding directly or indirectly provides for; or

(b) a proposed contract, arrangement or understanding to the extent that the proposed contract, arrangement or understanding would directly or indirectly provide for; or

(c) a concerted practice to the extent that the practice directly involves;

the acquisition of any shares in the capital of a body corporate or any assets of a person.

(8) This section does not apply to or in relation to:

(a) a contract, arrangement or understanding, or

(b) a proposed contract, arrangement or understanding; or

(c) a concerted practice;

the only parties to which are or would be bodies corporate that are related to each other.

(8AA) This section does not apply to or in relation to a concerted practice if the only persons engaging in it are or would be:

(a) the Crown in right of the Commonwealth and one or more authorities of the Commonwealth; or

(b) the Crown in right of a State or Territory and one or more authorities of that State or Territory.

(8A) Subsection (2) does not apply to a corporation engaging in conduct described in that subsection if:

(a) the corporation has given the Commission a collective bargaining notice under subsection 93AB(1) describing the conduct; and

(b) the notice is in force under section 93AD.

(9) The making by a corporation of a contract that contains a provision in relation to which subsection 88(1) applies is not a contravention of subsection (2) of this section if:

(a) the contract is subject to a condition that the provision will not come into force unless and until the corporation is granted an authorization to give effect to the provision; and

(b) the corporation applies for the grant of such an authorization within 14 days after the contract is made;

but nothing in this subsection prevents the giving effect by a corporation to such a provision from constituting a contravention of subsection (2).

 

The prohibition: Anti-competitive agreements and concerted practices

Core provision

Section 45 prohibits anti-competitive agreements and concerted practices. Specifically, it prohibits:

(1) making a contract or arrangement, or arriving at an understanding, which has the purpose, effect or likely effect of substantially lessening competition

(2) giving effect to a provision of a contract or arrangement or understanding, if that provision has the purpose, effect or likely effect of substantially lessening competition; and

(3) engaging with one or more persons in a concerted practice that has the purpose, or has or is likely to have the effect, of substantially lessening competition.

Section 45 has the potential to overlap with a number of other provisions. In most cases those provisions are given priority via anti-overlap provisions; consequently, for example, conduct that constitutes resale price maintenance will be dealt with under s 48 and not s 45. However, there is no anti-overlap between s 45 and the cartel provisions with the result that cartel conduct might contravene both provisions.

Contract, arrangement or understanding

AgreementThe first two forms of prohibited conduct in s 45(1) require demonstration of a 'contract, arrangement or understanding'. Mere parallel conduct or concerted practice is insufficient.

In ACCC v Leahy Petroleum Pty Ltd [2007] FCA 794 the Federal Court held that in order for a 'contract, arrangement or understanding' to exist, the following elements must be present:

  • Communication
  • Consensus
  • Commitment

Communication may be express or implied; this requirement has not attracted much criticism. Similarly, it is not controversial that consent to engage in a course of action is required.

The final element, commitment, has proven controversial. Mere expectation or hope that another party will act (or refrain from acting) is insuffiicent).

Decisions in high profile petrol cases (Leahy and Apco), which failed because this element was not satisfied, led to a review of the 'meaning of understanding' and has featured in a number of other inquiries, most recently the Harper Review. To date, there has been no change in the law, save for the introduction of narrow, industry specific (banking), price signalling laws, which are likely to be repealed in the near future.

Concerted practices

The new concerted practices prohibition commenced on 6 November 2017.

The explanatory memorandum ot the Competition and Consumer (Competition Policy Reform) Act 2017 provides:

[Para 3.18] The concept of a ‘concerted practice’ under section 45 is to be distinguished from the concept of ‘acting in concert’ as it appears in section 45D. The concept of a ‘concerted practice’ is to be read and applied in the context of section 45 and with reference to the explanatory material that follows, and not in the context of section 45D or any case authority or explanatory material on section 45D. The following is intended to guide the interpretation of the term while retaining a flexible and principled application of the concept.

Characteristics of a concerted practice

[Para 3.19] A concerted practice is any form of cooperation between two or more firms (or people) or conduct that would be likely to establish such cooperation, where this conduct substitutes, or would be likely to substitute, cooperation in place of the uncertainty of competition.

[Para 3.20] It is not necessary that any (or all) of the parties to a concerted practice should act:

  • in the same manner;
  • in the same market; or
  • at the same time.

[Para 3.21] It is intended that the concept of a ‘concerted practice’ should capture conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45.

[Para 3.22] A concerted practice does not require, but may involve:

  • the formality or legally enforceable obligations characteristic of a contract;
  • the express communication characteristic of an arrangement. A concerted practice may be established in the absence of any direct contact between the firms, for example where firms communicate indirectly through an intermediary such as a peak industry body; or
  • the commitment characteristic of an understanding. A concerted practice may exist even if none of the parties is obliged, either legally or morally, to act in any particular way.

Example 3.1 – Concerted practice

In a small country town, there are three petrol stations: X, Y and Z. Immediately before adjusting its prices, X sends an email to Y and Z with a price. After several emails, it becomes clear to Y and Z that immediately after sending the email with the price, X changes its price to match the email. Y and Z join in, and each emails their own proposed price adjustments to the other two. A practice develops so that, with a few exceptions, where one petrol station emails their prices, the three stations all change their prices to match the price in the email.

At no point do any of them expressly or implicitly agree to reciprocate the communication or to change their prices accordingly. On some occasions after one of the stations announces a price rise, one of the other stations chooses not to match the price, and thereby gains extra customers on that occasion by increasing their price by less than the other two stations and having the lowest price. There are no consequences of this occasional divergence from the usual practice.

X, Y and Z are each likely to have contravened section 45 by engaging in a concerted practice with the purpose, effect or likely effect of substantially lessening competition. Even though none of the parties committed to communicate or change their prices, and even though there were some occasions where a petrol station did not change its prices in accordance with the email, the effect of the overall practice was that the petrol stations could increase their prices safe in the knowledge that this would be unlikely to result in a loss of customers as the others would most likely reciprocate. This practice has substantially reduced price competition for petrol in the town.

[Para 3.23] A concerted practice may exist in addition to, or ancillary to, a contract, arrangement or understanding.

[Para 3.24] It is not necessary that a concerted practice have an anti-competitive ‘provision’, as it is the practice itself which has the anti-competitive purpose, effect or likely effect.

[Para 3.25] The concept of a concerted practice is not intended to capture mere innocent parallel conduct, for example where two firms who are determining their prices independently happen to charge similar prices for the same product (see Example 3.4).

[Para 3.26] Similarly, it is not intended to capture conduct such as the public disclosure of pricing information which facilitates price comparison by consumers, as this conduct will increase rather than substantially lessen competition.

[Para 3.27] The following examples illustrate that a concerted practice:

  • does not necessarily involve regular or repeated conduct - a single instance of conduct may constitute a concerted practice (Example 3.2);
  • will typically, but not necessarily, involve the communication of commercial information either by one party to another, or between the parties, generally to reduce or eliminate uncertainty as to the future conduct of the firm making the communication; and
  • does not require that any (or all) of the parties to the practice reciprocate the actions of the first party or in any way change their conduct as a result of the first party’s actions – the actions of the first party will be sufficient to establish the concerted practice, and the culpability of each other party to the concerted practice will depend on the nature of their involvement and their subsequent action.

[Para 3.28] Once conduct has been found to be a concerted practice, the central issue, and the determinant of whether the relevant conduct is prohibited under section 45, is whether the concerted practice has the purpose, effect or likely effect of substantially lessening competition.

Example 3.2 – Concerted practice as a single instance of conduct

Salmon fishers in a small geographic region form an industry association that meets regularly, usually to discuss general industry issues. At one meeting, one fisher (X) states that they will restrict their output to a certain quantity for the next three months, in order to increase the price of salmon in the region. X shares this information in the hope that the other fishers will similarly restrict their output, so that X can adopt the strategy without fearing it will lose customers to the other fishers.

X has shared commercially sensitive information which reduces uncertainty as to X’s likely output over the next three months. X is likely to have contravened section 45, by engaging in a concerted practice with the purpose or likely effect of substantially lessening competition, even if X was unable to convince all of the other salmon fishers to adopt a similar strategy and even some or all of the others did not adopt such a strategy (that is, even if the ultimate effect was not a substantial lessening of competition).

Example 3.3 – Concerted practice as communication of commercial information, reciprocity not required

Bank X and Bank Y are two competing banks. A week before banks are expected to announce their respective interest rates for the next quarter, X sends Y a document setting out the interest rate it will announce the following week. Y did not ask for this information, and does not act on this information by either reciprocating with information about its own intended interest rate or changing its strategy to match X’s interest rate.

The different actions of X and Y will have different implications under section 45.

X is likely to have contravened section 45, by engaging in a concerted practice with the purpose or likely effect of substantially lessening competition, even if this was not the actual effect because Y did not act on the information.

X’s communication to Y has made Y a party to a concerted practice. However, Y is not likely to have contravened section 45, as Y did not use the information to inform a decision or change strategy, and this conduct did not have the purpose, effect or likely effect of substantially lessening competition. Y could further ensure it did not breach section 45 by expressly rejecting X’s approaches and requesting that X not communicate any further information of this nature.

Example 3.4 – Mere parallel conduct

Company X manufactures and distributes the most popular budget television, which is stocked by all major television retailers and two smaller retailers. X supplies the televisions to large retailers for $300 each, and charges the smaller retailers $320 each due to the lower quantity ordered.

The major retailers are able to sell the televisions for $320 and make a commercial profit. However, the two smaller retailers independently determine that they cannot sell the televisions for any less than $340 and still make a commercial profit.

The conduct of the two smaller retailers is unlikely to constitute a concerted practice. The two smaller retailers have a similar cost base, and have taken this cost base into account in independently determining the prices they will charge for the television. This is merely innocent parallel conduct, which the concerted practices prohibition in section 45 is not intended to capture.

The ACCC has also released guidance on the concept of concerted practices.

Purpose or effect of substantially lessening competition

The Competition and Consumer (Competition Policy Reform) Act 2017 introduces a new definition of competition for purposes of s 45 (effective 6 November 2017):

(3) For the purposes of this section, competition means:

(a) in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding—competition in any market in which:

(i) a corporation that is a party to the contract, arrangement or understanding, or would be a party to the proposed contract, arrangement or understanding; or

(ii) any body corporate related to such a corporation;

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services; or

(b) in relation to a concerted practice—competition in any market in which:

(i) a corporation that is a party to the practice; or

(ii) any body corporate related to such a corporation;

supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the practice, supply or acquire, or be likely to supply or acquire, goods or services.

The explanatory memorandum to the Competition and Consumer (Competition Policy Reform) Act 2017 states:

[Para 3.36] Subsection 45(3) contains a specific definition of ‘competition’ for the purposes of section 45, which focuses on the relevant markets in which competition is to be considered. When considering whether conduct substantially lessens competition for the purposes of section 45, the appropriate markets in which competition is to be assessed include any market in which a corporation (or related body corporate) that is party to the contract, arrangement or understanding containing the prohibited provision supplies or acquires goods or services (or would supply or acquire goods or services, but for the anti-competitive provision).

[Para 3.37] With the introduction of the concept of a concerted practice, the definition of competition is further extended, for the purposes of section 45, in relation to a concerted practice. This ensures that there is a consistent approach to determining the markets for analysis of any potential anti-competitive effects. ...

In addition, section 45(4) provides that a provision of a contract, arrangement or understanding will be deemed to substantially lessen competition if that provision, combined with other provisions of that contract, arrangement or understanding or provisions of any other contract, arrangement or understanding to which the corporation is party, would together have or be likely to have that effect.

 

The prohibition: Telecommunications

Anti-competitive conduct in the telecommunications industry is regulated by Part XIB CCA in addition to Part IV.  Section 151AJ(2) provides:

‘A carrier or carriage service provider engages in anti-competitive conduct if the carrier or carriage service provider:

(a) has a substantial degree of power in a telecommunications market; and

(b) either

(i) takes advantage of that power with the effect, or likely effect, of substantially lessening competition in that or any other telecommunications market; or

(ii) takes advantage of that power, and engages in other conduct on one or more occasions, with the combined effect, or likely combined effect, of substantially lessening competition in that or any other telecommunications market'.

Pursuant to s 151AJ(3) a carrier or carriage service provider also engages in anti-competitive conduct if they engage in conduct in contravention of ss 45, 47 or 48 and the conduct relates to a telecommunications market.

Section 151AK contains the 'competition rule', providing that a 'carrier or carriage service provider must not engage in anti-competitive conduct.'

This Part allows the ACCC to issue a 'competition notice' stating that a carrier or carriage service provider is engaging in anti-competitive conduct or that they have contravened the competition rule. Where a notice is given by the ACCC stating that a carrier or provider has contravened or is contravening the rule, that notice is prima facie evidence of the matters described in the notice. The ACCC may also provide exemptions from the definition of anti-competitive conduct for certain conduct.

 

The prohibition: Dual listed company arrangements

Until 2006 the conduct of dual listed companies was assessed under s 45. As a result of legislation introduced in 2006 dual listed companies are now assessed under s 49 which prohibits parties making (or giving effect to) a dual listed company arrangement if a provision of the proposed arrangement would have the purpose, effect or likely effect of substantially lessening competition.

Section 49

The key provision in relation to dual listed company arrangements (DLC) is section 49.  It provides that a corporation must not make (or give effect to) a DLC arrangement if a provision of that arrangement has the purpose, effect or likely effect of substantially lessening competition.   An exception is then provided by s 49(2) which states that the making (but not giving effect to) such a provision will not contravene s 49 if:

  • The provision will not come into operation unless/until authorisation is granted; and
  • Authorisation is sought within 14 days of the making of the provision.

Competition is defined for purposes of this section as competition in any market in which ‘a corporation that is a party to the arrangement or would be a party to the proposed arrangement’ or any related corporate body, ‘supplies or acquires, or is likely to supply or acquire, goods or services or would, apart from the provision, supply or acquire, or be likely to supply or acquire, goods or services.’

A provision will be taken to substantially lessen competition if it would have this effect when combined with other provisions of the arrangement or any other contract, arrangement or understanding (or proposed contract, arrangement or understanding) to which a party to the DLC (or related corporation) is or would be a party.

 

Exemptions and anti-overlap

There are a number of exceptions to Part IV, including the cartel provisions.

The general Part IV exceptions are contained in section 51.

 

Authorisation and notification

Parties may seek authorisation (on public benefit grounds) foragreements which might otherwise contravene s 45.

Small business may also provide a collective bargaining notification to the ACCC.

Authorisation

Parties may seek authorisation from the ACCC (on public benefit grounds) for proposed agreements which might otherwide contravene s 45.

While an authorisation is in force section 45 will not prevent a corporation entering into or giving effect to the provision in the contract, arrangement or understanding that has been authorised.

Notification (small business)

Approved stampParties may notify the ACCC if they wish to engage in collective bargaining for the supply or acquisition of goods or services (s 93AB(1A)); if the ACCC does not object to the notification then the parties may engage in the conduct without contravening section 45.

This collective bargaining notification option is only available where it is reasonably expected that the supply or acquisition contract (or contracts) involved will not exceed $3m (or such other sum as prescribed by regulation) within a 12 month period. Industries which currently benefit from higher thresholds under regulations are:

  • Petrol retailing ($15m)
  • New motor vehicle retailing ($20m)
  • Farm machinery retailing ($10m)
  • Primary production ($5m)

The ACCC may only object to a notification if 'satisfied that any benefit to the public that has resulted or is likely to result or would result or be likely to result from the provision does not or would not outweigh the detriment to the public that has resulted or is likely to result or would result or be likely to result from the provision', give the corporation a written notice (the objection notice) stating that it is so satisfied' (s 93AC)

 

Immunity and cooperation policy

Immunity - vaccinationThe ACCC has developed a policy to encourage cooperation and, in the case of cartels, an immunity policy to encourage whistleblowers.

See also MOU between CDPP and ACCC

For more details on the immunity and cooperation policy see the separate immunity page.

On 4 August 2017 the ACCC announced it would be conducting another review of its cartel immunity and cooperation policy in light of recent experiences with criminal cartel investigations: Rod Sims, Law Council of Australia Speech, 4 August 2017.

 

Penalties for contravention | Private remedies

cartelsApplication may be made to the Federal Court for the following:

  • Injunction (section 80)
  • Pecuniary penalties for breach (section 76)
  • Divestiture (section 81)
  • Damages (by persons who suffer loss and damage as a result) (six year limitation period) (section 82)
  • Disqualification from directorship (section 86E)
  • Non-punitive orders (such as community service order) (section 86C)
  • Other orders (Court may make 'such orders as it thinks appropriate' (section 87)

View penalties page for details

 

Guidance

Image of whiteboard guide

On 25 October 2017 the ACCC issued 'interim' guidelines addressing the introduction of a prohibition on concerted practices.

See Interim guidelines on concerted practices. These follow a draft framework released in October 2016 for consultation.

The concerted practices guidance has had a significant overhaul since the release of the draft framework. There is more detail (beyond just examples) of what might constitute a concerted practice and 'engaging in a concerted practice'. There's also more information and what might constitute having the purpose, effect or likely effect of substantially lessening competition.' Some of the 'examples' of risky conduct from the framework remain, but there are also new examples. The 'priority' factors for ACCC investigation and enforcement are the same, but some additional guidance about issues that may impact on the likelihood of enforcement action have been inserted; they include concerted practices 'considered as part of broader ACCC investigations', evidence 'beyond independent behaviour' and the information recipient's 'response to the receipt of information'.

 

Cases

Many of the cases dealing with section 45 involved price fixing and relied on (the now repealed) s 45A to deem that the conduct substantially lessened competition.

These cases and others remain relevant. Following the commencement of the amendments introduced by the Harper reform legislation, cases involving s 45 will continue to be relevant, given many of the essential elements remain the same.

High Court cases

Aeroplane

ACCC v Flight Centre Limited (No 2) [2016] HCA 49
Section 45/45A: Attempted price fixing - inducement - competitors - market definition - vertical supply arrangement (focus on whether Flight Centre was acting of agent of airlines and whether this prevented them being competitors; majority held it did not prevent them being competitors)

 

 

Air New Zealand plane

Air New Zealand Ltd v ACCC; PT Garuda Indonesia Ltd v ACCC [2017] HCA 21
Section 45/45A: Price fixing; 'market in Australia'; s 4E

 

Federal Court (Full bench) (chronological)

Piggy bank

ACCC v ANZ Ltd [2013] FCA 1206; [2015] FCAFC 103
Section 45/45A (Competitors)
Price fixing - competitors - market definition - vertical supply arrangement
Compare Flight Centre (High Court, above)

 

 

 

Service station

Apco Service Stations Pty Ltd v ACCC [2005] FCAFC 161
Meaning of arrangement or understanding

 

 

 

Data

ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No. 1) (1990) 27 FCR 460
Relevant market - exclusionary provisions - anti-competitive agreements

 

Radio

Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1983) 68 FLR 70 (external)
Section 45/45A (Fixing, controlling, maintaning price)
Joint advertising scheme - whether price fixing

 

TV

Seven Network Ltd v News Limited [2009] FCAFC 166
Markets - effect or likely effect of substantially lessening competition - purpose of substantially lessening competition - misuse of market power

 

Magazine rack

Stationers Supply Pty Ltd v Victorian Authorised Newsagents Associated Ltd (1993) 44 FCR 35
Purpose of substantially lessening competition; exclusive dealing

 

Beer

TPC v Nicholas Enterprises (1979) 40 FLR 83
Section 45/45A (Contract, arrangement or understanding)
Contract, arrangement or understanding

 

Petrol

TPC v Service Station Association Ltd (1993) 44 FCR 206
Section 45/45A (Contract, arrangement or understanding)
Contract, arrangement or understanding

 

Federal Court (alphabetical)

ACCC v Cement Australia [2013] FCA 909
Anti-competitive agreements - misuse of market power

 

Petrol pumps

ACCC v Leahy Petroleum Pty Ltd [2007] FCA 794
Meaning of arrangement or understanding (price fixing claim)

 

Construction

ACCC v TF Woollam & Son Pty Ltd [2011] FCA 973 (24 August 2011)
Section 45/45A - Price fixing
Price fixing - cover pricing in building tenders

 

 

Cardboard box

ACCC v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617
Section 45/45A - Price fixing
Price fixing - remedies

 

Substation - transformer

AW Tyree Transformers Pty Ltd and Wilson Transformer Co Pty Ltd (1997) ATPR (Com) 50–247
Substantial lessening of competition

 

 

Truck

Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159
Substantial lessening of competition

 

Cow

Dowling v Dalgety Australia Ltd (1992) 34 FCR 109
Substantial lessening of competition; purpose

 

Bed sheets

TPC v David Jones (Australia) Pty Ltd (1986) 13 FCR 446
Section 45/45A - Price fixing
Establishing collusion; price fixing

 

Electricity meter

TPC v Email Ltd (1980) 43 FLR 383
Section 45/45A - Price fixing
Establishing collusion; price fixing

 

History of the provision

HistoryUntil July 2009 when the separate cartel laws contained in Division 1A were introduced by the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009, price fixing was deemed to substantially lessen competition under s 45 (section 45A). That deeming provision was repealed when the cartel laws were introduced.

 

 

Price signalling (repealed)

Specific price signalling laws were introduced by the controversial Competition and Consumer Amendment Act (No 1) 2011 which passed through both Houses of Parliament on 24 November 2011. It received Royal Assent on 6 December 2011 and came into operation 6 months later on 6 June 2012. Controversially, its operation was limited to the banking sector.

The legislation included both 'per se' and competition-test prohibitions, the former predominantly for 'private' communications and the latter for public communications.

There were no cases brought under price price signalling provisions. The Harper Report recommended that it be repealed and replaced with a separate prohibition on concerted practices having general application. The Competition and Consumer (Competition Policy Reform) Act 2017 gave effect to that recommendation. The repeal of the price singalling laws (Part IV Division 1A) took effect on 6 November 2017.

Industry application

The relevant provisions are contained in Division 1A of Part IV of the Act legislation. Pursuant to s 44ZZT, the Division ' applies to goods and services of the classes (however described) that are prescribed by the regulations'. The first regulation dealing with price signalling, the Competition and Consumer Amendment Regulation 2012 (No 1) (SLI No 90 of 2012), came into operation on 6 June and applies the Division to banking services. This industry restriction has been controversial and applied to banking notwithstanding the general view that it was prompted by activity in the petrol industry.

Prohibited conduct

There are two key prohibitions relating to price signalling (in addition to the general anti-competitive conduct and cartel provisions).

Private disclosures to competitors (per se banned)

Section 44ZZW prohibits the making of private pricing disclosures to competitors It provides:

A corporation must not make a disclosure of information if:

(a) the information relates to a price for, or a discount, allowance, rebate or credit in relation to, Division 1A goods or services supplied or likely to be supplied, or acquired or likely to be acquired, by the corporation in a market (whether or not the information also relates to other matters); and

(b) the disclosure is a private disclosure to competitors in relation to that market; and

(c) the disclosure is not in the ordinary course of business.

Anti-competitive price signalling

Section 44ZZX prohibits corporations making pricing disclosures for the purpose of substantially lessening competition.

The prohibition

(1) A corporation must not make a disclosure of information if:

(a) the information relates to one or more of the following (whether or not it also relates to other matters):

(i) a price for, or a discount, allowance, rebate or credit in relation to, Division 1A goods or services supplied or likely to be supplied, or acquired or likely to be acquired, by the corporation;

(ii) the capacity, or likely capacity, of the corporation to supply or acquire Division 1A goods or services;

(iii) any aspect of the commercial strategy of the corporation that relates to Division 1A goods or services; and

(b) the corporation makes the disclosure for the purpose of substantially lessening competition in a market.

...

Determining whether disclosure made for purpose of substantially lessening competition

(2) In determining, for the purpose of this section, if a corporation has made a disclosure for the purpose of substantially lessening competition in a market, the matters to which the court may have regard include (but are not limited to):

(a) whether the disclosure was a private disclosure to competitors in relation to that market; and

(b) the degree of specificity of the information; and

(c) whether the information relates to past, current or future activities; and

(d) how readily available the information is to the public; and

(e) whether the disclosure is part of a pattern of similar disclosures by the corporation.

(3) Without limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have made a disclosure of information for the purpose of substantially lessening competition in a market even though, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.

Exemptions, authorisation and notification

There are a number of relevant exceptions, qualifications and definitions relating to Part IV, Division 1A (see full list of provisions below). Many are industry specific in nature. In addition, both authorisation (s 88(6A)) and notification is possible.

 

Reading

For a comprehensive discussion of Australia's cartel laws see: Beaton-Wells and Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (Cambridge University Press, 2011)

For research and commentary on cartel law in Australia see the reading room.

For commentary on the controversial price signalling laws see:

Bob Baxt AO, Nathan Kiratzis and Matthew Eglezoz, 'Price signalling legislation - the government releases its proposal' (2011) Issue 628, Australian Trade Practices News, 13 January 2011, page 6

Caron Beaton-Wells, 'Anti-cartel advocacy: how has the ACCC fared?' (December 2011) 33(4) Sydney Law Review 735

Sara Brooks, 'Regulation of anticompetitive "understandings" and price signalling in Australia - a European perspective' (2011) 39 Australian Business Law Review 309

Patrick Durkin, 'Banks irate over price signalling', The Australian Financial Review, Friday 14 January 2011, page 3

B Fisse, 'Misleading, Deceptive and Bankrupt: The Second Reading Speech on the Competition and Consumer Amendment Bill (No 1) 2011' (24 September 2011) (external link)

Brent Fisse, 'Private disclosure of price-related information to a competitor "in the ordinary course of business: A new slippery dip in the political playground of Australian competition law (working paper)

B Fisse and C Beaton-Wells, 'The Competition and Consumer Amendment Bill (No. 1) (Exposure Draft): A Problematic Attempt to Prohibit Information Disclosure' (2011) 39(1) Australian Business Law Review 28

Brent Fisse and Caron Beaton-Wells, 'Private disclosures of price-related information to a competitor "in the ordinary course of business": A new slippery dip in the political playground of Australian Competition Law' (2011) 39 Australian Business Law Review 367-379

Nick McHugh and Belinda Webster, 'Price signalling to be prohibited in the banking sector' (2012) 27(7) Competition and Consumer Law News 226

Kathryn Tomasic, 'Price signalling’ amendments to the Competition and Consumer Act 2010 (Cth): A principled response to the problem of tacit collusion?' (2012) 19 CCLJ 176

Nicholas Wendon, 'Division 1A of the Competition and Consumer Act 2010 (Cth): A critique' (2013) 21 AJCCL 181