Home Page | Law | Anti-competitive agreements | Price Signalling

Anti-competitive agreements
| Prohibited conduct (price signalling)

 

Prohibition of anti-competitive agreements in Australia

Price signal imageSpecific 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.

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

The ACCC has a page on its website which provides an overview of the price signalling laws.

 

Note: The current Harper Review Final Report has recommended that the price fixing provisions be repealed. See Harper Report Recommendation 29. In its place, it recommends that s 45 be extended to capture 'concerted practices'.

 

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: per se price signalling conduct

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.

Price signalling for purpose of substantially lessening competition

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.

Exceptions, 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.

 

Reports

 

Penalties and remedies for contravention

Application 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 remedies page for more details.

 

Case law

Details about the key cases relating to anti-competitive agreements in Australia can be found on my separate cases page.

 

Commentary

For research and commentary on anti-competitive agreements in Australia see the reading room.

See, for example: