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Legislation

Competition and Consumer Amendment Act (No 1) 2011

 

Overview

This Act introduced a new Division 1A of Part IV of the Act designed to prohibit certain forms of price signalling. By virtue of regulations, it will currently only applies to the banking sector.

Accroding to the EM:

The Competition and Consumer Amendment Bill (No. 1) 2011 (Bill) amends the Competition and Consumer Act 2010 (CC Act) to further the objective of the CC Act by addressing anti-competitive price signalling and information disclosures.

Anti-competitive price signalling and information disclosures are communications between competitors which facilitate prices above the competitive level and can lead to inefficient outcomes for the economy and reduce wellbeing for consumers. They fall short of cartel behaviour but can have similar effect. Anti-competitive price signalling and information disclosures can occur as part of a wider cooperation agreement, or as a stand-alone practice absent of an explicit cartel arrangement.

The Bill further safeguards competition in Australian markets by introducing two prohibitions directly targeting anti-competitive price signalling and information disclosures. The prohibitions will apply to classes of goods or services that are prescribed by regulations.

The introduction of this bill follows the released of an Exposure Draft Bill late in 2010. Key documents include:

 

Background

The House of Representatives Standing Committee on Economics considered this bill as part of its expanded inquiry into the opposition's price signalling bill (see inquiry page).

  • On 22 June 2011 it released its report recommending passage of the Government's bill and rejection of the opposition's bill.
  • The Government subsequently put forward a proposed amendment to the bill containing an exception relating to communications following borrower insolvency.
  • Debate resumed in the House on 23 June 2011 (view speech by Bruce Billson, then Shadow Minister for Small Business, Competition Policy and Consumer Affairs).
  • Debate later resumed in the House on 4 July 2011 and continued until 7 July when it passed with amendments.
  • The bill passed through the Senate without further debate on 24 November 2011.
  • The bill received Royal Assent on 6 December 2011.
  • On 22 December 2011 David Bradbury (then Parliamentary Secretary to the Treasurer) released the Government's price signalling regulations for consultation. The regulations make clear that the law will initially only apply to the banking sector. Consultation closed on 22 March 2012 (see press release and consultation draft regulations and explanatory note). Six submissions were received.
  • Regulations were passed in May 2012 (the Competition and Consumer Amendment Regulation 2012 (No 1) (SLI No 90 of 2012))
  • Regulations came into operation on 6 June 2012.

 

Key provisions and discussion

The Act inserts a new Division 1A - Anti-competitive disclosure of pricing and other information which includes the following provisions (only key provisions reproduced - it does not include all the exemptions that might apply - for the full set of provisions in Division 1A see the full Act):

44ZZS Definitions

In this Division:

disclose has a meaning affected by section 44ZZU.

Division 1A goods or services means goods or services to which this Division applies (see section 44ZZT).

evidential burden, in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.

intermediary
: see subsection 44ZZU(3).

private disclosure to competitors: see section 44ZZV.

 

44ZZT Goods and services to which this Division applies

(1) This Division applies to goods and services of the classes (however described) that are prescribed by the regulations for the purpose of this section.
...

 

44ZZV Meaning of private disclosure to competitors

Main definition

(1) A disclosure of information by a corporation is a private disclosure to competitors, in relation to a particular market, if the disclosure is to one or more competitors or potential competitors of the corporation in that market, and is not to any other person.

Note: The effect of section 44ZZU must be taken into account in working out whether the disclosure is to one or more competitors or potential competitors, and is not to any other person.

Anti avoidance

(2) For the purpose of determining whether a corporation has made a private disclosure to competitors in relation to a particular market, the fact that the disclosure is also made to a person who is not a competitor or potential competitor of the corporation in that market is to be disregarded if:

(a) for a disclosure that is not made through an intermediary— the corporation made the disclosure to the person for the purpose of avoiding the application of section 44ZZW to the disclosure; or

(b) for a disclosure that is made through an intermediary - either:

(i) the corporation directed or requested the intermediary to disclose the information to the person for the purpose of avoiding the application of section 44ZZW to the disclosure; or

(ii) the intermediary disclosed the information to the person for the purpose of avoiding the application of section 44ZZW to the disclosure

Fact that the information is otherwise available is not relevant

(3) The question whether a disclosure of information by a corporation is a private disclosure to competitors is not affected by the information otherwise being or becoming available to competitors or potential competitors of the corporation in the market, or to other persons.

 

44ZZW Corporation must not make private disclosure of pricing information etc. to competitors

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.

Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(6A).

 

44ZZX Corporation must not make disclosure of pricing information etc. for 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.

Note: Conduct that would otherwise contravene this section can be authorised under subsection 88(6A) or notified under subsection 93(1).

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.

 

Amendments

Government amendment

In late June the Government proposed an amendment to the bill containing an exception relating to communications following borrower insolvency. It inserts new subsections at the end of section 44ZZZ

Disclosure if borrower insolvent etc.

(5) Section 44ZZW does not apply to the disclosure of information between 2 or more corporations (the relevant corporations) if:

(a) at least one of the relevant corporations:

(i) has provided a loan or credit to another corporation (the borrower); and

(ii) has been notified of a borrower insolvency situation (see subsection (6)); and

(b) the information relates to services, being loans or credit, supplied, or likely to be supplied, by one or more of the relevant corporations; and

(c) the disclosure is for the purpose of one or more of the relevant corporations considering whether to take measures to return the borrower to solvency, or to avoid or reduce the risk of the borrower becoming insolvent.

(6) For the purpose of subsection (5), a relevant corporation is notified of a borrower insolvency situation if:

(a) the corporation is notified that there are reasonable grounds for suspecting that one or more of the following may be or become insolvent:

(i) the borrower;

(ii) a person who has given a guarantee or indemnity in respect of loans or credit provided to the borrower by one or more of the relevant corporations; and

(b) the notification is given by the borrower, or by a person referred to in subparagraph (a)(ii).

Further Government Amendments

[Note: on 7 July Mr Bradbury moved government amendments (1) and (2) on sheet CA206 and (1) to (5) on sheet CA209 [below] (House Hansard, 7 July 2011). Speaking on the amendments:

Mr Bradbury [Hansard p 35] These two sets of amendments will give the banking industry absolute certainty that it can continue to engage in legitimate business conduct without breaching these new prohibitions against anticompetitive price signalling. ... The first amendment will provide banks with certainty that certain disclosures made in the context of corporate work-out arrangements will not be subject to the private disclosure of pricing information prohibition. The government recognises that it is important that banks assist financially distressed businesses in avoiding insolvency. These discussions are often commercially sensitive and time critical, and it is vital that we allow banks to support businesses and the jobs of their workers.

The second amendment has four parts. Firstly, it confirms that disclosures made in the ordinary course of business will not be subject to the outright prohibition on the private disclosure of pricing information to competitors. Secondly, a specific exception is provided in relation to syndicated lending arrangements in addition to the joint venture exception already provided. This exception provides lenders with the surety that they need to continue to engage in discussions for the purposes of syndicated loan arrangements. Thirdly, an exception for disclosures as part of credit distribution arrangements will provide explicit protection for discussions between banks, mortgage brokers and financial planners. Lastly, we will set out the process which future governments will be required to follow if they are to consider extending the application of the prohibitions beyond the banking sector. ...

Mr Billson: I advise the House that the coalition will be supporting these amendments. ...

The government has made it clear that the banking sector is the first cab off the rank. I am not aware of any other markets. I acknowledge that the parliamentary secretary is shaking his head. He is slightly at odds there with the chairman of the ACCC, who has been repeatedly quoted as saying he can imagine any number of markets to which these provisions should apply. Mindful of that, we were keen to make sure that markets were not shirt-fronted in the middle of the night by a regulation that no-one knew quite where it had come from or why it was there and that process was just a tad too political, in that it did not provide a proper opportunity and proper process steps. So we think that is a constructive step. I note again the parliamentary secretary's advice that banking is all that is on the table at the moment. ...

The exceptions are very important. ...

I accept the advice from Treasury and the government on the 'white labelled' or 'vanilla' products in the banking sector, where one bank might provide certain services on behalf of other banks and the other bank puts its brand on them. I accept that a specific exemption for that is not necessary and that the notification and authorisation process will capture that.

... Above all, the ordinary-course-of-business exception is extraordinarily important. Whilst the government has publicly said and has just confirmed now that it is intending only to apply this competition regulatory framework to the banking sector, the machinery is in place for it to be expanded across any markets. The utility of the bill provides for that, yet the exceptions are overwhelmingly banking centric. They would mean basically nothing to other markets and to other areas of goods and services. So, without having some ordinary-course-of-business exception, if other markets were to be captured and prescribed under this bill, where would they go? They would not have any responsive exceptions for their particular industry. We would need to amend the law every time a new market was prescribed under the bill. That is not tidy, that is not reasonable and that brings no comfort to anybody wondering just how these new provisions might be applied. With those remarks, I indicate that the coalition will be supporting these amendments. ...

Question agreed to

Government [sheet CA209]

View government [Sheet CA209]

(1) Schedule 1, item 2, page 4 (after line 3), at the end of section 44ZZT, add:

(3) The regulations must prescribe a process to be gone through before regulations are made, for the purpose of subsection (1), prescribing a class of goods or services. Before the Governor-General makes regulations, for the purpose of subsection (1), prescribing a class of goods or services, the Minister must be satisfied that the prescribed process has been complied with.

(4) Subsection (3) does not apply in relation to the first regulations made for the purpose of subsection (1).

[prescribing classes of goods or services]

(2) Schedule 1, item 2, page 6 (after line 24), at the end of section 44ZZW (before the note), add:

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

[disclosure in ordinary course of business]

(3) Schedule 1, item 2, page 10 (after line 29), after subsection 44ZZZ(3), insert:

Disclosure relating to provision of loans etc. to same person

(3A) Section 44ZZW does not apply to the disclosure of information between 2 or more corporations (the relevant corporations ) if:

(a) the information relates to services, being loans or credit, supplied, or likely to be supplied, by one or more of the relevant corporations; and

(b) 2 or more of the relevant corporations are, in relation to the same person (the borrower ), doing either or both of the following:

(i) providing such services to the borrower;

(ii) considering whether to provide such services to the borrower;

(c) the disclosure is for the purpose of, or related to, providing services, or considering whether to provide services, to the borrower as mentioned in paragraph (b).

Disclosure between credit provider and provider of credit service

(3B) Section 44ZZW does not apply to the disclosure of information by a corporation to another person if:

(a) either:

(i) the corporation is a credit provider, and the other person provides a credit service, within the meaning of the National Consumer Credit Protection Act 2009; or

(ii) the corporation provides a credit service, and the other person is a credit provider, within the meaning of that Act; and

(b) the disclosure is made in the course of the relationship between the corporation and the other person in their capacities as credit provider and provider of a credit service.

[additional exceptions]

(4) Schedule 1, item 17, page 16 (after line 36), at the end of section 44ZZW (before the note), add:

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

[disclosure in ordinary course of business]

(5) Schedule 1, item 17, page 20 (after line 34), after subsection 44ZZZ(3), insert:

Disclosure relating to provision of loans etc. to same person

(3A) Section 44ZZW does not apply to the disclosure of information between 2 or more persons (the relevant persons ) if:

(a) the information relates to services, being loans or credit, supplied, or likely to be supplied, by one or more of the relevant persons; and

(b) 2 or more of the relevant persons are, in relation to the same person (the borrower ), doing either or both of the following:

(i) providing such services to the borrower;

(ii) considering whether to provide such services to the borrower;

(c) the disclosure is for the purpose of, or related to, providing services, or considering whether to provide services, to the borrower as mentioned in paragraph (b).

Disclosure between credit provider and provider of credit service

(3B) Section 44ZZW does not apply to the disclosure of information by a person to another person if:

(a) one of the persons is a credit provider, and the other person provides a credit service, within the meaning of the National Consumer Credit Protection Act 2009; and

(b) the disclosure is made in the course of the relationship between the persons in their capacities as credit provider and provider of a credit service.

[additional exceptions]

Government [sheet CA206]

View government [Sheet CA206]

(1) Schedule 1, item 2, page 11 (after line 2), at the end of section 44ZZZ, add:

Disclosure if borrower insolvent etc.

(5) Section 44ZZW does not apply to the disclosure of information between 2 or more corporations (the relevant corporations) if:

(a) at least one of the relevant corporations:

(i) has provided a loan or credit to another corporation (the borrower); and

(ii) has been notified of a borrower insolvency situation (see subsection (6)); and

(b) the information relates to services, being loans or credit, supplied, or likely to be supplied, by one or more of the relevant corporations; and

(c) the disclosure is for the purpose of one or more of the relevant corporations considering whether to take measures to return the borrower to solvency, or to avoid or reduce the risk of the borrower becoming insolvent.

(6) For the purpose of subsection (5), a relevant corporation is notified of a borrower insolvency situation if:

(a) the corporation is notified that there are reasonable grounds for suspecting that one or more of the following may be or become insolvent:

(i) the borrower;

(ii) a person who has given a guarantee or indemnity in respect of loans or credit provided to the borrower by one or more of the relevant corporations; and

(b) the notification is given by the borrower, or by a person referred to in subparagraph (a)(ii).

[insolvency of borrower]

(2) Schedule 1, item 17, page 21 (after line 10), at the end of section 44ZZZ, add:

Disclosure if borrower insolvent etc.

(5) Section 44ZZW does not apply to the disclosure of information between 2 or more persons (the relevant persons) if:

(a) at least one of the relevant persons:

(i) has provided a loan or credit to another person (the borrower); and

(ii) has been notified of a borrower insolvency situation (see subsection (6)); and

(b) the information relates to services, being loans or credit, supplied, or likely to be supplied, by one or more of the relevant persons; and

(c) the disclosure is for the purpose of one or more of the relevant persons considering whether to take measures to return the borrower to solvency, or to avoid or reduce the risk of the borrower becoming insolvent.

(6) For the purpose of subsection (5), a relevant person is notified of a borrower insolvency situation if:

(a) the person is notified that there are reasonable grounds for suspecting that one or more of the following may be or become insolvent:

(i) the borrower;

(ii) a person who has given a guarantee or indemnity in respect of loans or credit provided to the borrower by one or more of the relevant persons; and

(b) the notification is given by the borrower, or by a person referred to in subparagraph (a)(ii).

[insolvency of borrower]

Opposition amendment (Billson amendment)

The following amendments were proposed by Mr Billson - see Bill home page.

[Note: on 7 July Mr Billson withdrew all amendments other than amendment (2) (omission of s 44ZZW dealing with per se prohibition) (House Hansard, 7 July 2011) The question was negatived.]

(1) Schedule 1, item 2, page 4 (after line 3), insert:

(3) Before the date of commencement of this section, the government will prescribe by regulation the process of applying the provisions of this Division to other markets and other sectors.

[goods and services to which the Division applies]

 

(2) Schedule 1, item 2, page 6 (lines 15 to 26), section 44ZZW, omit the section.

[private disclosure of pricing information to competitors]


(Amendment no. (3) to be moved if amendment no. (2) is defeated):

(3) Schedule 1, item 2, page 6 (after line 24), insert:

(2) This section does not apply to the disclosure of information by a corporation if the information is disclosed:

(a) in the ordinary course of business; and

(b) not for the purpose of substantially lessening competition in a market.

[private disclosure of pricing information to competitors]

 

(Amendment no. (4) to be moved if amendments nos. (2) and (3) are defeated):

(4) Schedule 1, item 2, page 6 (after line 24), insert:

(2) This section does not apply to the disclosure of information between two or more corporations (the relevant corporations) if:

(a) the information relates to services, being loans, credit or other financial accommodation, supplied or likely to be supplied in common by the relevant corporations to another person (the borrower), including the terms of or fees for such services; and

(b) the disclosure relates to any of the relevant corporations’ participation in, or considering their participation in, the provision of such services.

(3) This section does not apply to the disclosure of information between a corporation and another person, where:

(a) the corporation is a credit provider within the meaning of the National Consumer Credit Protection Act 2009;

(b) the other person is a provider of a credit service within the meaning of the National Consumer Credit Protection Act 2009; and

(c) the relevant disclosure relates to the parties’ relationship as credit provider and provider of a credit service.

(4) This section does not apply to the disclosure of information between two or more corporations (the relevant corporations) if:

(a) the information relates to goods or services, supplied or likely to be supplied, by one of the relevant corporations to a client of the other relevant corporation, including the terms of or payments for such goods or services; and

(b) the relevant disclosure relates to an agreement to brand or co-brand the relevant goods or services with the name of the other relevant corporation, or any other words, phrases, initials or logo associated with the other relevant corporation, or to the supply or acquisition of products or services supplied or to be supplied under any such agreement.

[private disclosure of pricing information to competitors]

 

Greens amendment (Bandt amendment)

The following amendment was proposed by Adam Bandt MP - see Bill Home Page.

Note: on 7 July Mr Bandt moved the following amendment [below] (House Hansard, 7 July 2011, p 37). The following speeches were made on the amendment

Mr Bandt... if there were some seriousness about tackling anticompetitive behaviour we would be taking a more active role in preventing what are known to be some of the most blatant examples. Australia has one of the most concentrated banking sectors in the world, and it is killing competition for consumers. We know that the Australian banking market is more concentrated than it has been for a century. In 2007 the big four banks had a 68 per cent market share of the home loan market, but now the big four banks hold around three-quarters of Australia's deposits and assets and 88 per cent of home loans.

The provisions of this bill are only one piece in the puzzle. The Greens have provided support for the second reading as well as strong support for moves to end price signalling by the banks, but strengthening the powers of the ACCC on signalling will do little to help competition and nothing about growing concentration in the sector. If we are serious about ensuring real competition in the Australian banking industry, we should do more than flog them with a piece of damp lettuce.

My amendment will ensure that the big four banks are not able to take down their competitors by swallowing them up. It will ensure that the ACCC will prevent mergers such as Westpac's takeover of St George in 2008 and the Commonwealth Bank's takeover of Bankwest, resulting in the Commonwealth Bank being clearly the dominant bank in Western Australia. This amendment will protect smaller players and regional banks from the historically predatory actions of the big four, and in doing so it will bring about a healthy change in the culture of Australia's finance sector - and it will result in positive changes for consumers. I encourage all members to join me in addressing the most serious problem in Australia's arguably most anticompetitive sector, and I commend this amendment to the House.

Mr Bradbury: (Parliamentary Secretary to the Treasurer) The government will not be supporting this amendment brought forward by Mr Bandt. ...

In relation to the substance of the proposal that the member for Melbourne has brought forward, the government has concerns on a number of levels. The first and most significant concern we have is that there is in place a consistent and very effective framework for competition policy, particularly in relation to mergers and acquisitions. Section 50 of the Competition and Consumer Act is the vital provision that needs to be considered in this context. Section 50 has been in place in this country since 1993. It is representative of similar provisions that exist in similar [38] legislation elsewhere in the world. There has been a considerable amount of jurisprudence built up around section 50, and in addition to that jurisprudence has been the practice of the regulator in the way in which they have dealt with merger and acquisition proposals in the past. It provides the community, the business community and indeed individuals at large with some certainty around how these provisions will be dealt with when any future merger or acquisition is to be considered.

One aspect of the proposals within the amendment put forward by the member for Melbourne that the government has particular concern about is the impact of these provisions where an institution were to be in some financial distress. To seek to put in place a mechanism which would preclude or prohibit the ability of one of the larger institutions to enter into a merger or acquisition of a smaller institution may well lead to an outcome that is against the national interest and against the economic interest of the company concerned, the institution concerned. Certainly it may lead to an outcome that is against the interests of shareholders, employees of the company, depositors and other creditors. We think it is appropriate that there be flexibility available for mergers and acquisitions to be considered in those circumstances. We think that is adequately dealt with under the existing regime and we certainly support that continuing to be the case.

I will make a few further observations in relation to the way in which section 50 operates. I specifically draw the House's attention to a non-exhaustive list of items set out in section 50(3) of the Competition and Consumer Act. This sets out some of those matters to which regard should be had when a merger or acquisition is being considered in the context of the substantial lessening of competition test. Factors that need to be considered include the actual and potential level of import competition in the market, the height of barriers to entry to the market, the level of concentration in the market, the degree of countervailing power in the market, and it goes on. There are a range of factors that guide the deliberations of any court and indeed the regulator. We believe that they form part of an effective regime set out in the Competition and Consumer Act, and that is a regime we believe should be retained in its current form. So the government will be opposing this amendment.

Mr Billson: The opposition will not be supporting this amendment. We have just had a debate about good economic concepts and how competition law sees them applied across the whole economy. I wish I had been able to persuade the government about that on the price signalling bill and perhaps we would be debating my private member's bill, not the one that we are dealing with now. So the idea that we then go in and not only deal with a sector-specific but then a transaction-specific prohibition strikes me as an idea that really needs a lot of work to make that argument. We have not seen that argument. The parliamentary secretary has outlined the existing provisions in section 50. ...

Without dwelling on the subject, I would say that the example cited around St George and Westpac is probably not a good example. Because of the GFC, St George's credit rating meant that their access to wholesale funding offshore was quite expensive and much more expensive than Westpac. Gone are the days when a few slight differences in credit rating meant a very thin spread on the cost of your funds. That all changed with the GFC. If for no other reason but for the St George customers not to get a real smack in the chops over higher costs for their mortgages and the like, there was a reason that Westpac could take over St George and then use its wholesale funding machinery and its credit rating to deliver significant savings to consumers. That is the kind of market dynamic that the broad competition and consumer framework dealing with mergers and acquisitions should turn its mind to and that is where transactions of this kind, if any are proposed into the future, need to take account of the market and the consequences on consumers. So the opposition will not be supporting a blanket prohibition of the kind that is being proposed here. ...

The question was negatived.

(1) Schedule 1, after item 14, page 13 (after line 14), insert:

14A After subsection 95AC(1)

Insert:

(1A) The Commission must not grant a clearance to a body corporate that is, or is related to:

(a) National Australia Bank Limited; or

(b) Commonwealth Bank of Australia; or

(c) Westpac Banking Corporation; or

(d) Australia and New Zealand Banking Group Limited;

to acquire shares in the capital of a body corporate that is an ADI for the purposes of the Banking Act 1959, or is the holding company of such a body corporate.

14B After subsection 95AT(1)

Insert:

(1A) The Tribunal must not grant a clearance to a body corporate that is, or is related to:

(a) National Australia Bank Limited; or

(b) Commonwealth Bank of Australia; or

(c) Westpac Banking Corporation; or

(d) Australia and New Zealand Banking Group Limited;

to acquire shares in the capital of a body corporate that is an ADI for the purposes of the Banking Act 1959, or is the holding company of such a body corporate.

[No merger or acquisition approvals for major banks after commencement]

 

Explanatory Memoranda

Original Explanatory Memorandum

This is the explanatory memorandum to the bill as originally introduced. It was circulated by the authority of the Treasurer, the Hon Wayne Swan MP.

Supplementary Explanatory Memorandum 1

The Supplementary Explanatory Memorandum 1 was circulated by Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP. It relates to amendments which "provide that certain disclosures made in relation to corporate workouts will be explicitly exempt from the private disclosure of pricing information prohibition" (s 44ZZZ(5)). It states in full:

"These amendments provide that certain disclosures made in relation to corporate workouts will be explicitly exempt from the private disclosure of pricing information prohibition.

It is a contravention of the private disclosure of pricing information prohibition for a corporation to privately disclose, directly or indirectly to a competitor, information that relates to a price for, or a discount, allowance, rebate or credit in relation to, goods or services acquired or to be acquired, or supplied or to be supplied (pricing information), by the corporation in a market in which it competes with that competitor.

These amendments will amend the Competition and Consumer Amendment Bill (No. 1) 2011 to:

• provide for an explicit exception from the private disclosure of pricing information prohibition for a disclosure that is for the purpose of considering whether to take measures to return a borrower to solvency, or to avoid or reduce the risk of the borrower becoming insolvent [Schedule 1, item 2, subsection 44ZZZ(5)]; and

• make corresponding amendments to the Schedule version of Part IV (Schedule 1 of the CC Act) which contains the Competition Code, which applies to all persons in the States and Territories by virtue of application legislation in those jurisdictions. [Schedule 1, item 17, subsection 44ZZZ(5) of Schedule 1]"

Supplementary Explanatory Memorandum 2

The Supplementary Explanatory Memorandum 2 was circulated by Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP. It states:

"• These amendments provide:

– That the Government will prescribe by regulation the process which it will follow when making regulations in the future which extend the application of Division 1A beyond the banking sector [Schedule 1, item 2, subsections 44ZZT(3) and 44ZZT(4)].

– That disclosures made in the ordinary course of business will not be subject to the outright prohibition on the private disclosure of pricing information to competitors [Schedule 1, item 2, paragraph 44ZZW(c) and Schedule 1, item 17, paragraph 44ZZW(c)].

• These amendments also provide exceptions from the private disclosure of pricing information to competitors prohibition for:

– disclosures between 2 or more corporations if the information relates to loans or credit supplied, or likely to be supplied by one or more of the corporations, and those corporations are considering, or do provide such loans or credit to the same borrower [Schedule 1, item 2, subsection 44ZZZ(3A) and Schedule 1 item 17, subsection 44ZZZ(3A)]; and

– a disclosure to another person if one of the persons is a credit provider, and the other person provides a credit service, within the meaning of the National Consumer Credit Protection Act 2009, and the disclosure is made in the course of that relationship [Schedule 1, item 2, subsection 44ZZZ(3B) and Schedule 1 item 17, subsection 44ZZZ(3B)]."

Revised Explanatory Memorandum

The Revised Explanatory Memorandum was circulated by Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP, and takes account of amendments made by the House of Representatives. This EM runs to 85 pages (one more than the original)

 

Reading speeches

Mr Swan (Treasurer), 24 March 2011 (from p 3133 Hansard)

[Ed: see further: B Fisse, 'Misleading, Deceptive and Bankrupt: The Second Reading Speech on the Competition and Consumer Amendment Bill (No 1) 2011' (24 September 2011)]

[3133] ... Today I introduce amendments to the Competition and Consumer Act 2010 to crack down on anticompetitive price signalling and to get a better deal for consumers in the banking system.

These laws will be initially targeted at the banking sector, because the ACCC has told us there is strong evidence of banks signalling their pricing intentions to each other in a bid to undermine competition.

We have been very clear all along that we would only extend these laws to other sectors of the economy after further detailed consideration.

The ACCC advised me last year that it was concerned about the behaviour of ‘some of the banks in signalling in advance what their response will be to a change in interest rates by the Reserve Bank’.

In the Senate Economics References Committee’s banking competition inquiry, due to report this month, the ACCC gave testimony that:

The problem with that sort of comment - the evil of it, if you like - is that it says to the competitors, ‘If you increase your interest rates I will follow,’ which means you are signalling to the competitor that if they increased their interest rates they would not need to worry about being stuck out there on their own and losing market share.

This type of anti-competitive price signalling can be just as harmful to Australian consumers as an explicit price-fixing cartel.

So there is a gap in our competition law which has allowed the banks to escape the full force and discipline of competition.

The ACCC provided very strong advice that banks were giving each other a ‘nod and a wink’ that they would raise their rates together. However, because they were not actually writing it all down and signing in blood, or even agreeing verbally how they would act - they could get away with it.

This kind of conduct by the big end of town should never be allowed to continue when designed to dud Australian families.

That is why we are closing this gap in our competition law which is already dealt with in other major jurisdictions like the United States, the UK and the EU. That is why we are building on our 2009 reforms to strengthen Australia’s cartel laws, by banning signalling designed to keep interest rates higher.

Our tough new laws will give the ACCC the power to take action against banks who signal their prices to competitors to undermine competition.

Policy development process

The government has been carefully developing competition policy in this area for some time, and monitoring global comparisons.

The OECD’s roundtables on facilitating practices and information exchanges, in 2007 and 2010, have clearly highlighted the harm to consumers that can arise from anticompetitive price signalling.

[3134] Many stakeholders [notably, they are not identified] in Australia strongly agree that anticompetitive price signalling is not prevented by our existing competition law.

They have told us that this conduct is best targeted by providing new, specific prohibitions which prevent price signalling occurring.

This is precisely the approach that we have taken to provide certainty to the business community whilst ensuring robust protection for consumers.

Amendments to Competition and Consumer Act 2010

This bill is fundamentally about stamping out conspiratorial behaviour by the big banks which is not caught by our competition laws.

These tough new laws have two limbs.

First, the bill gives ACCC the power to take action against any bank which signals its pricing intentions to a competitor for the purpose of substantially lessening competition.

We are cracking down on banks who purposely signal to their competitors that they should all raise their mortgage rates together.

It is inherently damaging to consumers for any bank to essentially say to its competitors ‘don’t worry - if you raise your mortgage rates then I won’t undercut you or take your customers’.

It allows banks to move their interest rates higher without the full discipline of competition - and at the expense of the consumer, and it is unacceptable. This anticompetitive behaviour is a bad result for Australian families and small businesses.

This bill allows a court to infer the real purpose a bank has in making such a statement - so there is no need for a ‘smoking gun’.

Of course, we are not talking here about ordinary commercial communications. Every Australian bank will be able to communicate with its customers, shareholders, market analysts, employees and other stakeholders in the ordinary course of business - just like they always have been able to do.

What we are doing here is cracking down on the insidious practice of signalling between banks which is designed to undermine competition and which inevitably hurts consumers.

The second limb of the law will prevent banks from discussing their prices with each other behind closed doors. This prohibition is automatic because there can only ever be a limited range of situations where it is legitimate for competitors to discuss prices.

This prohibition is targeted at those disclosures which are the most clearly anticompetitive and which are most damaging to consumers.

For example, the ACCC can take action if one bank phones another bank privately to tell them about a planned mortgage interest rate rise. Of course, the bill recognises there will be situations where banks need to discuss pricing with their competitors in a private context.

Exceptions and defences

We recognise that businesses need certainty and appropriate guidance so that they can conduct legitimate activities on commercial time frames - and keep providing services to customers.

That is why we have worked closely with the ACCC since mid-2010 to carefully design these amendments, and have consulted extensively on draft legislation with industry, legal experts and other stakeholders.

Of course, all banks will be able to fully comply with any continuous disclosure obligations they have, such as discussing their funding costs.

And they will be able to fully comply with their broader legal or regulatory obligations.

The bill contains explicit exemptions for all of this. After consulting closely with the business community, we have also made amendments to ensure private disclosures of prices can continue for legitimate business activities.

This has been done largely by clarifying exemptions that were contained in the exposure draft legislation or by providing clear new exemptions.

For example, we have a clear exemption for banks who are considering forming a joint venture and need to discuss prices first to decide whether they should in fact enter a commercial arrangement.

Depending on the circumstances, an arrangement like a syndicated loan - when banks get together to lend to a business customer - would likely fit the definition of a joint venture.

[3135] That means that banks will be able to go ahead and get on with the business of lending provided they are not being anticompetitive.

We have got clear carve-outs in the bill so banks can distribute their products through financial planners or mortgage brokers.

There are then further exemptions so banks can keep talking to each other about trading financial market products such as bonds or currency.

The bill contains arrangements for banks to seek immunity when their conduct provides a net public benefit to the community.

This allows legitimate conduct to occur where it is not covered by one of the other explicit exemptions - some of which I have just mentioned.

Following consultation with the business community, the bill now includes a ‘notification’ regime to meet shorter commercial time frames.

Where a bank can demonstrate a net public benefit, they can obtain immunity by describing the conduct to the ACCC in a notice.

The ACCC then has a limited period of 14 days to respond if it has any concerns about the proposed behaviour.

This is significantly faster and more cost-effective than the ‘authorisation’ process that we had originally discussed with the business community.

Lenders could use this process to exempt a corporate ‘workout’ scenario - where they get together to resolve the finances of a troubled business.

Of course, robust confidentiality arrangements will be available for parties concerned about the commercial sensitivity of proposed conduct.

Conclusion

The bill I introduce today strikes an appropriate balance between allowing legitimate or procompetitive conduct, and cracking down on anticompetitive price signalling which harms consumers.

This important reform will help to ensure that banks can no longer avoid the full force of competition in the marketplace.

The Gillard government is absolutely committed to getting a better deal for Australian families and small businesses in the banking system.

The laws I introduce today are an important part of that. I encourage all members of the House to support the passage of this bill.

Debate ... adjourned.

Source: House Hansard (24 March 2011)

 

Mr Billson (Shadow Minister for Small Business, Competition Policy and Consumer Affairs), 23 June 2011 (from p 85 Hansard)

[85] (21:27): ... Colleagues might recall that it was some time back in November when our side of the chamber introduced a price-signalling bill to deal with the gap in the competition law. ...

... we got the job done and developed a new piece of competition law that tackled anti-competitive price signalling. I emphasise anti-competitive price signalling, because any members in this place who have ever had any interest whatsoever in competition law will know that price signalling can sometimes be advantageous to consumers and pro-competition; it can deliver better results for consumers and better results for the economy. There is no blanket evil on price signalling. It can be positive or it can be negative. What was required was carefully crafted legislation to take out and deal with the anti-competitive price signalling that may occur and may damage competition in our economy and is detrimental to the interests of consumers. That was what was needed, not the hamfisted, 'mine is bigger than yours' approach we ended up seeing from the Treasurer. After the introduction of the coalition's private member's bill the government came out and said yes, ... despite there being no minister for competition. Do you know, competition policy has been relegated to the unnaturally handsome, but still parliamentary secretary, David Bradbury, the extra on Sea Patrol ... They do not even have a minister for competition law. ...

So what does the Treasurer do? ... He comes out with this idea, months after the coalition has released its private member's bill, with an exposure draft. Even with all those resources, they drop out an exposure draft. But it takes a very special gift to be so incompetent and disengaged, as our Treasurer is, to drop out an exposure draft that lets loose with a tsunami of criticism from competition lawyers, and to then be able to ignore all of that advice and bring legislation into the chamber that is still deficient and less competent than the opposition's private member's bill. What kind of a gift does that take! Our Treasurer has managed to do that.

After all of the legwork that has been done for him by the coalition and after a process of asking people for their input, the Treasurer in a gifted way ignored all of that input and all of the processes that should be there to help collaboratively develop a piece of competition law that needs to be carefully thought through. What do we get from the Treasurer? There is a common position where both sides of parliament think this needs to be addressed ... an opposition that works with the Selection Committee to get a parliamentary inquiry to examine this carefully, because getting it wrong could have very substantial consequences for our economy. All of that goodwill, all of that legwork, all of that competent public policy work, and our Treasurer still manages to mess it up!

The Treasurer then takes his effort at the Competition and Consumer Amendment Bill, the exposure draft, and brings a bill into this chamber - and what does he manage to do? He manages to ignore some of the most recognised and competent competition academics in the country. He manages to ignore some of the most expert competition lawyers in the major law firms. He manages to ignore all the international best practice about how to deal with price signalling with facilitating concerted practices that may be anti-collusive. But the Treasurer manages to ignore all that wisdom and bring in here an undercooked, underdone, underdeveloped bill that deserves to be rejected by this parliament.

[86] But on top of that, we put in place a parliamentary inquiry to examine our private member's bill. And the government is keen to allow months for that to happen. We are even blessed with a visit from our excellent colleagues from the ACCC, on a very short leash about what they can actually say. They came along, we had the Bankers Association calmed a little bit - because they were apoplectic about what the government was doing. They had seen this exposure draft but not the government's final product, so they came along. It was all about everyone wanting to have a look at the coalition's private member's bill. And then what happens? The government brings in its bill. Do you know how many people got to appear before the committee on the government's bill? Zero! Not one person was given the courtesy of being heard by the House of Representatives Economics Committee.

And how many exchanges with those same policy experts, so available to examine my private member's bill, were made available to the committee to look at the government's bill? An egg: a big zero; nobody. So within a period of days the Treasurer comes in and goes, 'Here's my bill.' The business community was given about five days to deal with the Treasurer's finished product on changing the competition laws in our economy. Everyone works their tails off. They put in a submission. I get to look at them when? A couple of days ago. And what do we find? All of the wise counsel and the advice, the cautionary tales, the stories about how exemptions are not going to work - what happens with all that advice? The government ignores it. ... [The Treasurer then] comes up with a completely divisive approach to trying to tackle this challenge and produces defective legislation that fails any economic public policy and competition law test. And then he diminishes this parliament by saying, 'Well, the House economics committee can have a red hot crack at Billson's bill, but we won't let them get anywhere near the government's bill.'

The government should be condemned for the way it has handled this issue. It risks damage to the economy, it risks damage to the economic wellbeing of Australia - and the only upside is all of a sudden I have 21 more minutes to keep going! There is some upside to what is happening tonight!

What we have is a very poor piece of legislation. The government's bill before the House has two key categories in it. One is what is called a per se liability. That per se liability basically says: you do this stuff, you've broken the law. And it is justified on the basis that those offences have no redeeming quality whatsoever, that they should be a blanket prohibition and you have broken the law. That is the argument. But on these per se provisions, that are so clear-cut, so demonstrably evil in the eyes of the government, they have then come up with a shopping list of exemptions. Most people are thinking, 'Hang on, if it's so clear-cut that you should introduce a per se liability for conduct that might both be procompetitive and anticompetitive, we don't care.' The government say it is so evil you will immediately have committed an offence if you do any of those things. And what do the government also say? 'We don't care if it does or doesn't damage competition. We don't care if you did or didn't mean it.' That is what a per se liability is. If this bill passes we will have the rare of distinction of being the only jurisdiction in the world that has taken an area of near collusive behaviour that can both be procompetitive and anticompetitive, proconsumer and anticonsumer, and we have decided it is all bad. What a moronic way of drafting this legislation! All of this could have been overcome if the government were not so arrogant, so pigheaded, so politically motivated and if their mine-is-bigger-than-yours approach to this change to competition law had not driven them to this point now where we have a defective bill that should not pass this parliament. There is no way this bill should pass the parliament.

...

[Mr Bradbury] asks me, 'What about the amendment?' He has an amendment on one issue, and this per se area of prohibition deals with private communication. If you have a distressed business or a household that is insolvent and it owes money to more than one bank, do you know what happens? The banks have to talk to each other. They say, 'Hey, Bank, how much do they owe you?' And they say, 'They owe us this much. How much do they owe you?' They try and work out some way through this financially distressed or insolvent position to get that person out of the circumstances they are in. Under the government's original bill, they would have broken the law - a very standard business practice. That area, they realised belatedly, was something that should be addressed.

What happened yesterday? We got an amendment dropped on us. This bill was so magnificent that it did not even need to be reviewed, and we got an amendment dropped on us. What is that amendment? It partly goes towards dealing with one of a dozen problems with the bill. What about the other 11? Are we just going to let those go? What about issues of syndicated loans? What about issues of joint ventures that go beyond a project or an enterprise to joint venture or the joint acquisition of assets and goods? They have not managed to come up with those things. I want to share this with the parliament because I am sure everyone is absolutely gripped by this topic! Let me share with you an assessment. This is how one of the leading competition law experts in Australia characterised the government's bill:

The CCA Bill does not resolve the fundamental problems with the Exposure Draft.

They go on to say:

The CCA Bill is highly unsatisfactory and should not be enacted.

My particular favourite is the assessment that this bill is world's worst practice in dealing with price signalling and facilitating practices. Is that the hallmark of a good piece of legislation? ...

I do seek leave to continue my remarks. ...

Leave granted. Debate adjourned.

Source: House Hansard, 23 June 2011

Mr Billson (Shadow Minister for Small Business, Competition Policy and Consumer Affairs), 4 July 2011 (from p 41 Hansard)

... the government's bill is fundamentally flawed. It has a serious number of substantial deficiencies that are catalogued in the dissenting report of the House of Representatives Standing Committee on Economics, where we examine this bill. Quite remarkably, though, it has been characterised by a leading academic and competition law expert as 'international worst practice on information exchanges between competitors' - hardly a ringing endorsement, hardly a sense that the government has got this right. ...

The government, as I touched on earlier, reacted to the coalition leadership; it did not work up its own careful policy solution. It then sought to have the coalition's bill examined at great length by the House economics committee and then did a dishonour and the disservice to the House economics committee, treating it almost as an ornamental stopover on the way from the drafting room and the Treasurer's speech into this parliament. In fact it was quite offensive when you look at the way government members and the government generally have dealt with this process or lack of process as it involved consultation. There were a number of very considered, quite substantial and weighty submissions provided to the House economics committee, outlining with a great degree of care and precision all of the decisions, all of the choices and all of the legislative design options the government has gone with, and why so many of them failed the test of sound economic policy and competent competition law. It is quite telling if you look at the House economics committee report - and some loosely call it the majority report in that it was the casting vote of the Labor chairman that gave it majority report status - to see that it simply says, 'Go on, pass the government's bill.' None of the independent evidence presented to the House economics committee supports such an unequivocal recommendation to simply pass the government's bill. What is quite remarkable, notwithstanding that the position of government members was to simply pass the government's bill, is [42] that the government itself has identified that the bill has some flaws and has brought forward its own amendments to the bill that the majority of members on the House economics committee thought was just right - 'She'll be right, mate. Tick it through; send it through.' The government has come up with its own recommendations dealing with financial workouts for companies in difficulty where there is a need to discuss those financial arrangements between a number of credit providers.

This leads me to exactly what the bill is about. The government's bill has two key parts. The first seeks to prohibit private disclosures - known as a 'private disclosure prohibition' - of pricing information to competitors. That is the government statement. In the explanatory memorandum, and even in some of the commentary, the government has put forward this per se prohibition on private disclosure. It is there because there is apparently no redeeming quality to any private communication between competitors. That is the argument. Even in the explanatory memorandum, the government seeks to argue that things are so completely and clearly anticompetitive that they surely must be unlawful. That is a pretty bold statement. But what undermines that bold statement is that there are then pages and pages of exceptions. Things are so clear, so categorical and so obviously offensive that this provision seeks to make any kind of private communication between competitors unlawful. But apparently it is not so bad in a number of the circumstances that the government seeks to pick out. In seeking to pick out those exemptions and circumstances, it belies the very assertion that the government makes that these per se prohibitions are so categorically and comprehensively wrong that they must amount to a per se prohibition in the law. It then goes on to have a second category of prohibition relating to general disclosures. This is about information relating to the price of goods and services, the capacity of a business to acquire or supply goods and services and any aspects of the commercial strategy.

We want to focus on what is actually in the bill. What those out there would like to focus on is what is not in the bill and, more particularly, why the coalition's bill is not being discussed. In its 20 April bulletin, Mallesons assessed the coalition's bill as superior to the government's bill, yet the government has not seen fit to even bring on the coalition's bill - the very bill that gave rise to the government's getting off its backside in the first place. Quite remarkable! Mallesons said:

While the Coalition's draft Bill would need some revision and modification, it would appear to be the preferable alternative on the basis that it would require demonstration of an anti-competitive purpose and a substantial anti-competitive effect, rather than simply imposing a blanket prohibition on disclosure.

That is what the experts are saying. They did not have a chance to canvass any of those views with the House economics committee because the committee heard absolutely nobody in response to the submissions that were received. The per se prohibitions are the ones that are of particular concern because they seek to make something unlawful simply because it is. That is the argument the government is asserting, even though it undermines that argument, and I will come back to that point.

On the second area of the more general disclosure prohibition, a concern about the reach of that provision goes well beyond price disclosure and into what is known in a familiar sense by competition lawyers as 'concerted and facilitating practices' in which coordination can be enhanced between competitors to the detriment of the economy and to the detriment of consumers. Rather than go into that model that exists in European law and that has evolved through case law in the United States, the government thinks it can simply get this right, even though submission after submission draws attention to the concerns about this bill. It is for these reasons that I will be moving an amendment in this place which seeks to put on the record all of the concerns that the coalition has about this bill and to put forward some suggestions about how they might be remedied. In addition to our general amendment, we will be proposing some specific amendments to make the most offensive aspects of this bill a little less offensive and I am hopeful that the government might seriously take on board that constructive effort.

Bearing in mind that a number of provisions of this bill are a direct lift out of the coalition's bill, I am hopeful that the government might see fit to directly lift some of our remedies to the bill's greatest failings. We will be moving that the House declines to give this bill a second reading and that the House condemns the government for its belated action to address the anti-competitive pricing signalling gap in Australia's competition law. We will note that the bill only arose following the coalition's leadership to introduce the Competition and Consumer (Price Signalling) Amendment Bill 2010 as a private member's bill into this House, recognising the assessment of academics and leading competition law practitioners that the coalition's bill is superior to the government's bill and should be brought on for debate in the House.

We are looking for the parliament to record its concern about the government's failure to undertake proper and meaningful consultation in the preparation of this bill, and to allow the House economics committee to carry out its work to examine the bill and consider public submissions. We then hope the parliament will be honest enough to note the very clear [43] flaws that are in the bill. Our second reading amendment talks about recklessly creating a per se liability for private communications without adequately justifying this approach in terms of economic policy or competition law principle and how the bill ignores that sound competition law should, wherever possible, have an economy-wide application unless clear justification is provided to deviate from this settled approach.

The DEPUTY SPEAKER (Hon. Peter Slipper): Order! If the member for Dunkley is going to talk about his amendment, he should move the second reading amendment.

Mr BILLSON: I was building up to moving it. I notice I have got a little while to go, but I would like to move the second reading amendment and hope it will be seconded and supported by at least half a dozen other people. In the few minutes that are left, I will conclude some of the aspects of that amendment. The amendment is also about the sector specific application and the per se prohibition that gives rise to a need for the complex task of identifying all conceivable business transactions and conduct that may have a legitimate business justification and the exhaustive list that flies from there. It also talks about the risks to the consumer and the economic detriment from failing to adequately differentiate between information sharing that can be pro consumer and pro competitor.

[Debate adjourned]

Source: House Hansard, 4 July 2011

Mr Billson (Shadow Minister for Small Business, Competition Policy and Consumer Affairs), 6 July 2011 (from p 94 Hansard)

Close examination of the Competition and Consumer Amendment Bill (No. 1) 2011 is essential and incredibly important. The government's own explanatory memorandum concedes that the bill contains new concepts and key features that have no equivalent in the current law. By Labor's tactical manoeuvrings, the government's bill has been spared the kind of close assessment and analytical rigour a change of economic regulation of this kind warrants. The government has truncated the work of the appointed Standing Committee on Economics, disrespecting those who made considered submissions and dishonouring this parliament. Despite being denied any opportunity to properly consider the government's bill or submissions on it, government members recommended that the bill pass unaltered. This was either a sense of a parliamentary committee made of up of clairvoyants able to foresee what they might have thought had they bothered to examine the evidence or a compliant committee where government members simply do what their government masters direct them to do. Thankfully, though, good sense has prevailed. Just as the Treasurer left his Labor colleagues on Standing Committee on Economics hanging with his own amendment to the bill, we had some constructive discussions regarding the consideration in detail amendments to the bill that have been circulated in my name.

The amendments that the coalition brought forward showed an interest and a responsiveness to the serious concerns raised by stakeholders, expert competition lawyers, leading academics and practitioners. I am pleased to say that I think we found a meeting of minds with the government on a number of those amendments. I understand the government will be bringing forward its own version of those amendments, which will address a number of the concerns that we have raised. Those concerns include the need for an ordinary business justification response, ordinary course of business exception for conduct, a number of specific provisions relating to nominating the process where other markets may be captured by this law and also some specific amendments relating to the financial services sector. I am optimistic that we can find common ground in that area and move forward collaboratively on this bill. (Time expired) ...

Source: House Hansard, 6 July 2011

Mr Perrett (Moreton, ALP), 6 July 2011 (from p 94 Hansard)

I rise to speak in support of the Competition and Consumer Amendment Bill (No. 1) 2011. This is one of a number of bills that have come before the House recently to moderate the behaviour of Australia's banks - fine institutions that they are. However, one of the roles of government is to regulate and moderate our banks. This legislation says something about the Gillard government's commitment to ensure a better deal for Australian consumers and small businesses. Unfortunately, it might also reflect a general reluctance on the part of banks to always act in a competitive, consumer-friendly manner, without the gentle, moderating, guiding hand of the Gillard Labor government.

Where the market fails, responsible government must apply the law to ensure strength in our banking sector and a fair go for all Australian consumers. The banks have done very well for themselves from Australian consumers and businesses. There is no doubt about that. Consequently, they have a responsibility to act in the interests of their customers. This is their social licence. Our big four have reported first half-yearly profits of $11.9 billion. The [95] Commonwealth Bank posted a profit of $3.3 billion to December 2010; NAB, $2.67 billion; Westpac, a cool $3.16 billion; and ANZ's six-month profit was up a massive 38 per cent to $2.66 billion. Nice work if you can get it.

I will describe the landscape in which these profits were delivered. ... I caution those opposite that I cannot guarantee that some of this information was not prepared by economists. I am pretty sure some of it would have been prepared by economists ... This bill before the House will drive greater competition in the banking sector by empowering the ACCC to act against banks who signal their prices to competitors to undermine competition. ...

The ACCC has reported evidence of anti-competitive price signalling by the banks. We are not talking about collusion but behaviour where the banks communicate their pricing intentions to competitors. We have seen the announcements on the TV quite regularly. This is usually done via press release and media rounds. We are not talking about backroom boys type of behaviour, but nevertheless it has aspects of collusion because the banks indicate their pricing intentions to their competitors. For example, they may signal in advance what their response will be to a change in interest rates by the Reserve Bank. That is followed by what is almost a nod and a wink, with the understanding 'if you raise your mortgage rates we'll raise ours too'. Our banks, reliable as they are, have been able to get away with this behaviour because it is done with no formal price agreement and, like a three card trick, it is always done right before our eyes - as I said, through the media. Unfortunately, the losers from this behaviour are Australian consumers, who because of reduced competition face higher interest rates.

Under current laws there is nothing to stop banks behaving in this way - and I stress again that it is not illegal or unlawful; it is just the resulting squeeze on consumers that is wrong - and that is why the Gillard Labor government has acted. The bill before the House amends the Competition and Consumer Act 2010 to prohibit, firstly, the private disclosure of pricing information between competitors outright, which is called the per se prohibition, and, secondly, the disclosure of pricing or other information if made for the purpose of substantially lessening competition. Initially this will apply only to the banking sector, but it could be extended to other areas of the economy after further review.

The per se prohibition bans private communications between banks about their prices. This amendment targets disclosures that are clearly anticompetitive and damaging to consumers. For example, if one bank gets on the phone to another bank to tell them privately about a planned mortgage interest rate rise, the ACCC can take action. As I said, this bill also empowers the ACCC to prosecute a bank for communicating its pricing intentions to substantially lessen competition. This means a bank cannot inform its competitors that it will follow them if they raise mortgage rates.

These tough new laws are accompanied by strong civil penalties of up to $10 million, 10 per cent of a business's annual turnover or three times the benefit of the conduct - whichever is the higher. These are very, very strong civil penalties, but we are talking about banks; we are not talking about the local bowls club. These are significant institutions with significant resources. The prohibitions are, however, subject to specific exclusions to ensure pro-competitive behaviour is not restricted. These exemptions allow banks to comply fully with their disclosure and legal obligations.

There will also be occasions when banks need legitimately to discuss pricing with their competitors. This bill ensures that these business activities can continue through the joint venture exception, which captures actual and proposed joint ventures. Banks will also be able to obtain immunity from the prohibition from the ACCC.

It is important that we close this loophole in competition law. It brings Australian law into line with those of the United States, the United Kingdom and the European Union. These laws strike the right balance by enabling banks to get on with their legitimate business while providing the necessary protections for consumers by eliminating anticompetitive price signalling. I commend the bill to the House.

Source: House Hansard, 6 July 2011

Mr Flecther (Bradfield, Liberal), 6 July 2011 (from p 95 Hansard)

I am pleased to speak on the Competition and Consumer Amendment Bill (No. 1) 2011. On this side of the House we believe that this is a deeply flawed bill. We do not disagree that there is an issue which needs to be addressed, which is why the coalition brought forward our own bill, the Competition and Consumer (Price Signalling) Amendment Bill 2010. But we believe that the approach taken in the bill that the government has put before the House raises some very serious issues. [96]

The stated purpose of the bill is to give powers to the ACCC to deal with the issue of price signalling, and it does this in both a public and a private context. In the private context it creates a so-called per se prohibition on the private contains a general disclosure prohibition of the disclosure of pricing information. That is also, we will argue, a prohibition that raises significant policy issues.

The stated approach in this bill is to strike a balance. The explanatory note from Treasury states:

… it is recognised that any proposal to address anti-competitive price signalling and other information disclosures will need to carefully balance the potential anti-competitive impacts of particular information disclosures, with the benign and pro-competitive effects of other information disclosures.

On this side of the House we argue that this bill does not strike the right balance, and that argument is supported in the arguments made by many parties that made submissions in relation to this bill, including the Business Council of Australia and the Law Council of Australia. Unfortunately, the question of whether the balance has been properly struck is not the one which appears to be principally motivating the government in its approach to this piece of legislation. This legislation ultimately is being driven by political considerations and the desire of the Treasurer to be seen to be doing something. The result, unfortunately, is a piecemeal measure with, in its current form, many unintended consequences.

It is true, as has been noted, that some amendments are proposed, and to some extent that advances the position. But there remain many fundamentally troubling aspects of this piece of legislation, and the basis upon which the legislation has been developed is also extremely troubling. The consultation process that was employed in arriving at the introduction of this bill was seriously flawed. A draft exposure bill, for example, was provided for comment on 12 December last year, with comments due by 14 January. It really is very far from good practice in consultation with industry to require very detailed consideration of wide-ranging reforms to be provided in the middle of the Christmas holiday period.

Let me make a number of specific points in the brief time available to me. The first point is that one of the central provisions of this bill, the so-called per se prohibition, is bad policy. I secondly want to argue that a measure which is specific to one sector - in this case, the banking sector - is also bad policy. I thirdly want to argue that to give the Treasurer the capacity to extend, by regulation, the measures contained in this bill to other sectors without needing to come back to the parliament is also bad policy. I fourthly want to highlight the poor policy consequences of the inconsistency between the regime set out in this bill and the well-established continuous disclosure rules which apply to listed companies, including of course the major banks which are listed.

Let me turn firstly, therefore, to the question of the per se prohibition to remind the House what this means. It means that if the specified conduct is found to have occurred then it becomes irrelevant as to whether there was any anticompetitive purpose in carrying out that conduct. Indeed it is also irrelevant whether there was any anticompetitive effect. In other words, if the conduct occurs then it matters not whether there was any intention, any purpose, to lessen competition. Nor does it matter whether there was actually the effect of lessening competition. There is simply a blanket prohibition on private disclosure of the relevant pricing information.

The arguments that can be made that circumstances in which one bank or executives of one bank meet privately with another to discuss pricing information and the arguments that can be made about the anticompetitive consequences of that are clearly forceful. But if you say, 'We do not really care whether the conduct actually has an anticompetitive effect. We do not really care whether there was an intention, a purpose, of reducing competition in meeting to have these private discussions,' then you are missing the whole point of what policy ought to do in the case of seeking to maintain and strengthen competition. Policy ought to focus on conduct which has an effect of reducing competition; policy also ought to focus on conduct which is intended to reduce competition - that is to say, which has the purpose of reducing competition - even if, for reasons that are beyond the capacity of those who have joined together to have the conversation, it does not result ultimately in the anticompetitive effect. But there is another even more fundamental point, which is this: there are often circumstances in which private disclosures can be procompetitive, and there are certainly an extensive range of situations in which private disclosures can be necessary and desirable in the carrying on of business and are not harmful to competition. When you look at the provisions in the bill before the House, you will see that the scope of what is caught by this provision is very wide. It includes historic, aggregated and non-confidential data.

The submission from the Australian Bankers Association lists a range of situations in which the bill will create great difficulties. They cite syndicated lending, which of necessity involves more than one bank. Typically in a syndicate there are many banks. They talk about loan switching, where a customer switches a loan from one bank to another, or a situation where two or more lenders are dealing with a financially distressed business - perhaps a business which has received loans from a syndicate and some time later it transpires that the business is in financial distress and the banks need to engage in consultations to work out how they are to deal with this business. The approach which the government has taken to this [97] problem is to set out a specific range of exemptions in which the per se prohibition will not apply. But that is poor policy. It would be much more sensible not to start with a per se prohibition in the first place. It would be much more likely to produce a rational policy outcome.

Let me turn to the next point I want to make, which is that policy which is specific to one sector is bad policy. It is a very curious approach indeed to competition policy to say that certain conduct, if carried out by bankers, is anticompetitive; but, if carried out by airline executives or pharmaceutical industry executives or telecommunications sector executives or agricultural industry executives, is not anticompetitive. Under the provisions contained in this bill conduct in one industry will attract potentially criminal penalties, whereas conduct of exactly the same kind carried out by executives in different industries, carried out by companies in different industries, will not attract a penalty. It is impossible to see the policy rationale for such inconsistent treatment. The Swanson, Hilmer and Dawson reviews all found that competition law prohibitions as a general principal ought to apply across the board.

Let me quote from the submission by the Law Council:

Any prohibition on price signalling should apply universally and not just to selected business sectors. Selective application of the proposed prohibitions and undermines the general application of the Competition and Consumer Act 2010 across all industries on an equal basis.

It is interesting that the Australian Competition and Consumer Commission, the ACCC, also noted its scepticism of the approach of industry-specific competition prohibitions. The ACCC had the following to say:

… we would hope signalling laws would be of a general application rather than focusing on a particular sector, because we do not see that there is a reason for signalling out one sector as opposed to another.

Even Choice, the consumer advocacy group - they do very important work but are not known to be a friend of the big end of town - had this to say:

It is Choice's submission that legislation should be, to the extent possible, uniform in its approach to all industries across Australia.

So from first principles and in the submission of a wide range of parties the approach in this bill of establishing specific restrictions on price-signalling behaviour which apply only to the banking sector is extremely poor policy.

While it is poor policy to restrict this approach to one sector, another aspect of the bill which raises equally serious concerns is the fact that as a legal matter the bill empowers the Treasurer to extend this regulation to other sectors. This grants excessive discretion to the executive government. The perception, based upon what has been stated publicly by this government in seeking to justify the measures in this bill, is that this is a bill directed towards the banking sector. It is true that in its initial application it will apply only to the banking sector, but it also provides for other sectors to be specified by regulation and so the prohibitions in the bill will apply to them.

It is very hard to understand the policy rationale here. The preferred approach, as I have indicated, would be to have a legal regime in this area which applied uniformly. But if you are going to, as this government appears to be doing, introduce measures directed to one sector, it is then very hard to understand why you retain the flexibility, why you retain the discretion, to extend this to other sectors without coming back to the parliament. The imposition of the prohibitions contained in this bill is a substantial policy matter and it is one which ought to be considered by the parliament rather than imposed by regulation.

The fourth point I wish to make in the brief time available to me is that there is a tension between the provisions contained in this bill and the obligations imposed upon the major banks which are listed to meet their continuous disclosure obligations under the ASX listing rules. It is one of the many aspects of this bill which does not appear to have been very well thought through, no doubt because the bill has been rushed through largely to achieve a set of political objectives.

This is a poor piece of legislation which is based upon bad policy, selective policy, and driven largely by political motives. We on this side of the House certainly think that very substantial amendment is needed before it can be supported.

Source: House Hansard, 6 July 2011

Ms O'Neill (Robertson, ALP), 6 July 2011 (from p 97 Hansard)

I rise to speak in support of the Competition and Consumer Amendment Bill (No. 1). This bill once again demonstrates the government's commitment to competition and consumer law reform and to ensuring that ordinary Australians experience the benefits of a strong economy. Those opposite attempt to decry the word 'competition' as a Labor word. I assert that in a genuinely competitive economy consumers benefit because of lower prices and the economy benefits as a whole because of the need for business to be more efficient. A truly competitive economy is a Labor ideal that benefits working families. It benefits working families because a competitive economy can provide goods and services that are of a lower cost and better quality. Whilst those opposite may argue that they are the party of small business and competition, it is the Labor Party and Labor governments that have successively and truly achieved central reform in this area.

The main issue addressed in this bill is the competition between banks and other financial [98] institutions in home loan interest rates. The ideal of competition is that it lowers the ability of a business in a market where competition is ideal to increase or control prices. We have, sadly, been confronted with the issue that when the Reserve Bank increases its cash rate target the banks and other financial institutions increase their home loan interest rates beyond the Reserve Bank increase. This has occurred because banks are able to signal, before a potential increase in the cash rate targets, an intention to increase the home loan rate to a level beyond the cash rate. This lowers the fears of competitors that they might lose customers if they act in the same manner. The result of this signalling is a breakdown in the competitive forces in the provision of home loans and it negatively affects hardworking families for whom loan repayments can make up a really significant part of the family budget.

This bill will help address these issues by prohibiting banks from privately disclosing information on pricing policies to a competitor. Such disclosures are unfair and uncompetitive and result in home loan interest rates which are not reflective of the competitive ideal. This bill will prohibit outright a bank from disclosing privately to a competitor information regarding the market to which the price information relates. Additionally, this bill gives the ACCC vital powers to prosecute banks who communicate price intentions and other strategic information to a competitor for the purpose of substantially lessening competition.

I understand that regulation of the financial industry needs to be appropriate and cannot stifle the role of financial institutions in what is a healthy free market economy, but the regulations proposed in the bill are appropriate and needed because the banks need to be responsible when they are making their pricing decisions. The Australian banking sector remained stable during the global financial crisis. This was due to both good economic management by the Australian government and long-term good management of the banks. Despite this history of good management, the banks should not have the ability to engage in anticompetitive practices to the detriment of consumers. Indeed, our economy is greatly influenced by consumers who live in mortgage belt areas. ...

[Debate interrupted. House adjourned]

Source: House Hansard, 6 July 2011

Ms O'Neill (Robertson, ALP), 7 July 2011 (from p 26 Hansard)

... the Central Coast, as a mortgage belt, is significantly affected by unnecessary practices - if I were unkind I might even say collusive practices, at the very worst extent of behaviour - to the detriment of families in my electorate. [27] ...

The role of monetary policy is ... eroded when banks increase their interest rates beyond the increase in the Reserve Bank target. The banks in our economy are able to make their pricing decisions independently and, in my opinion, this is acceptable. What is not acceptable is the ability of banks and financial institutions to tacitly collude in their pricing decisions following a cash-rate increase. Such actions are uncompetitive; such actions are detrimental to working families; such actions may be beneficial to individual banks but they are certainly detrimental to the economy as a whole. To ensure that this situation cannot continue and to ensure competition remains very healthy in our banking sector this bill will address those issues. An important aspect of the bill is that it provides exceptions to the banks relating to the information that they can disclose. These exceptions are detailed and concern the legitimate sharing of information in a variety of circumstances. They include disclosures between related bodies, corporate disclosures and disclosures covered by exclusive dealing.

This bill also contains appropriate arrangements for banks to seek immunity where their conduct provides a net public benefit. The ACCC will have the appropriate power to determine if immunity from provisions is appropriate on the grounds of a net public benefit. This bill provides a balance between providing for a free and competitive banking sector and providing sensible regulation when it is needed.

... This legislation is about impacting positively on real Australians and ordinary lives.

... An effect of the global financial crisis has ... been the increased difficulty for smaller lenders to effectively compete in the Australian market. The ability to compete becomes even more difficult if the larger banks are allowed to collude in relation to their pricing policies.

This legislation provides protection for smaller lenders, many of whom are regionally based. This legislation allows for the reality that we need to construct a regime in which large banks are forced to act competitively. ... [28]

... the bill strikes an appropriate balance between allowing legitimate or pro-competitive conduct and cracking down on anticompetitive price signalling which harms consumers. It is an important reform and will help ensure that banks can no longer avoid the full force of competition in the marketplace. ...

Source: House Hansard, 7 July 2011

Mr Kelly (Hughes, Liberal), 7 July 2011 (from p 28 Hansard)

I rise to speak on the Competition and Consumer Amendment Bill (No.1) 2011 and to support the comments of ... the shadow minister for small business, competition policy and consumer affairs.... We all know the great wisdom of Adam Smith, who noted back in the year 1776:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

However, Adam Smith's famous quote continued:

It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.

Therefore, following on from the lead of American antitrust law, we rightfully have a provision in our Competition and Consumer Act, formerly known as the Trade Practices Act, which makes it unlawful for a person to make a contract, an arrangement or an understanding which has the purpose, or is likely to have the effect, of substantially lessening competition.

This bill aims to deal with the meaning of the words 'arrangement' and 'understanding' which can be achieved through price signalling. However, not only is this bill badly flawed in many ways but also it provides yet another case study of this government's mismanagement. But at least, thankfully through the work of the shadow minister for small business, competition policy and consumer affairs, some commonsense has prevailed and some of the obvious flaws of this bill look like they may be remedied with amendments.

Firstly, when considering the issue of price signalling, it also worth noting the comments of competition law expert Professor Frank Zumbo, who has insightfully noted that the problem of price signalling is merely a symptom of an illness. That illness is the duopolies and oligopolies that many of our markets in Australia have degenerated into as a result of the failed ideology that big is better. It is only in highly concentrated markets that price signalling becomes as problem. If you have laws that, as our competition laws currently do, mistakenly encourage and reward bigness and work to protect duopolies and oligopolies from their more efficient and smaller competitors, price signalling can become a problem.

The textbook might describe price signalling with the following example. Let us say supermarket A wants to jack up its prices, but before supermarket A jacks up its prices it wants to ensure that supermarket B will follow its lead and jack up its prices as well. In theory, supermarket A might not be confident that supermarket B will follow its lead and increase prices immediately. Also supermarket A may wish to send a message to its competitor, supermarket B, that supermarket B has nothing to fear if it raises its prices as supermarket A will respond immediately and match the same price increases. Therefore, to encourage supermarket B to raise its prices, supermarket A could engage in price signalling by making public statements whereby a wink is as good as nod. So, the very minute supermarket A jacks up its price, supermarket B will immediately follow and the cosy club is maintained.

Under the current interpretation of our laws, such tacit collusion falls short of an 'arrangement or understanding', as our courts have interpreted the words 'arrangement or understanding' as meaning that there must be 'a meeting of the minds'. It is difficult to address such tacit collusion with legislation, but in the above example the real problem is that there are only two supermarkets in the market -A and B. It is the type of duopoly which exists throughout most Australian suburbs. Therefore the best way to fix the problem of price signalling is to ensure that there are not only supermarkets A and B in the market but also supermarkets C, D, E, F and G and so on - all in vigorous competition with each other - as in such a highly diversified market, with many competitors, supermarket A can price signal until the cows come home and it will not influence its competitors.

The origins of this bill go back to the ACCC's bungled case against a group of Geelong petrol retailers. As amazing as it may seem, at the very same time as the ACCC were cheering on the supermarket duopoly to engage in third-line forcing by the use of shopper dockets to destroy competition from independent fuel retailers, and as the ACCC was watching on as the big oil companies were manipulating prices to create the weekly fuel price cycle, the ACCC unleashed their legal dogs of war against predominantly small family-owned businesses, petrol retailers in Geelong. What a debacle that was by the ACCC, with millions of taxpayer dollars wasted on futile legal proceedings against mainly small family businesses. [29]

The Age reported on 17 June 2005 that an ACCC analyst had fabricated data in a working paper, and that the regulator had omitted data showing when petrol prices fell and by how much. During the case, Justice Peter Gray said the ACCC should seriously examine the way it compiled evidence, and he said about that evidence:

t does not give anything like a complete picture of what is going on.

Justice Grey concluded:

The ACCC must certainly be made to pay the costs of all the respondents who defended the proceedings.

When he says the ACCC must be made to pay, that is the taxpayers - you and me, Madam Deputy Speaker. If the ACCC could not obtain direct evidence of an understanding, why it did start proceedings? Why did the ACCC not seek an enforceable undertaking, which would saved the taxpayers millions of dollars in wasted legal fees? The problem of price signalling, being just one of many loopholes in our competition laws, has been evident to this Labor government since the ACCC had their case against small petrol retailers in Geelong thrown out by the Federal Court in 2007 - and the ACCC has been complaining ever since. ...

.... As reported in the Financial Review of 23 May this year, the chairman of the Law Council's trade practices committee said, when referring to this government bill, that it had had the shortest consultation period he had ever seen and the time permitted for feedback was 'manifestly inadequate'.

One of the many problems with this bill is that it only applies to only one sector of our economy, the banking sector. It is even unclear if it applies just to retail banking, commercial banking or merchant banking. Either price signalling is an anticompetitive problem or it is not. It simply makes no sense for this government to limit this legislation tackling the problem of price signalling to just the banking sector, while leaving other dangerously concentrated sectors such as petrol, groceries and liquor free to engage in anticompetitive price signalling.

The next question is: why is the government seeking to limit this bill to the banking sector only? The Treasurer's second reading speech for this bill stated:

Today I introduce amendments to the Competition and Consumer Act 2010 to crack down on anticompetitive price signalling and to get a better deal for consumers in the banking system.

'Crack down' and 'better deal' - this language indicates that the Treasurer acknowledges that price signalling is a problem in the banking sector and that Australian consumers are being done over by our big banks. In the second reading speech, the Treasurer also noted:

… the ACCC has told us there is strong evidence of banks signalling their pricing intentions to each other in a bid to undermine competition.

The question to be asked of the ACCC is: if they believe there is 'strong evidence' that the banks are engaged in price signalling 'in a bid to undermine competition', why on earth did the ACCC allow the merger of St George Bank with Westpac?

The need for a bill on pricing signalling in the banking industry is a clear acknowledgment that the Treasurer and the ACCC made a tragic blunder when they allowed St George Bank to be taken over by Westpac and removed as an independent competitor in [30] the market, a tragic blunder that consumers and small businesses are paying for to this very day. As the ACCC appear to now belatedly admit that we have problems with competition in our banking sector, just look at the 2009 report by Fujitsu Consulting, which found that Australian bank customers pay the Western world's highest bank fees. The report states:

… a lack of competition in Australia meant local banks were collecting $5 billion in fees from consumers, making them the most expensive in the western world.

The report goes on:

The average household is, in our view, paying up to $200 more each year than they should thanks to the wide range of fees and charges levied in Australia, and to the lower levels of competition in the market.

But it is not only banking. Just have a look at the OECD's figures on food inflation and see how Australia rates. These figures simply show how Australian consumers are being punished by the grocery duopoly with some of the highest rates of food inflation in the developed world. These OECD figures are a damning indictment of the uncompetitive nature of our supermarket sector. So why is the government protecting the supermarket duopoly and exempting them from this legislation?

But this is not the first time we have seen this government work to protect the supermarket duopoly from competition. We witnessed the unedifying spectacle of this government closing down GroceryWatch to prevent the consumer organisation Choice from exposing the duopoly's use of geographic price discrimination.

The pitiful excuse given by the Treasurer for protecting the supermarket duopoly from this legislation - again, from his second reading speech - was:

We have been very clear all along that we would only extend these laws to other sectors of the economy after further detailed consideration.

At best, this is simply an admission that the government has failed to think this legislation through and consider all the unintended consequences. There is no doubt that the bill presented by the member for Dunkley is far superior, because it would prohibit anticompetitive price signalling in a measured and targeted manner and apply the law across the whole economy. More needs to be done to ensure we have more competition, more diversity and more choice for the benefit of consumers. We need effective competition laws which deal with the underlying disease that is eating away at the fabric of our free enterprise system. We need to stamp out all forms of anticompetitive conduct and ensure that mergers and acquisitions by dominant players in the market are not allowed to continue to knock out the efficient competitors that are so essential to a vibrant and competitive market.

I look forward to working with the coalition in the months and, hopefully, years ahead to bring in policies that deal with this underlying problem and give the Australian consumers the deal they deserve, which they are not currently getting.

Source: House Hansard, 7 July 2011

Dr Leigh (Fraser, ALP), 7 July 2011 (from p 30 Hansard)

I rise to speak on the Competition and Consumer Amendment Bill (No. 1) 2011. I wish to begin by rebutting a claim made by the member for Dunkley repeatedly in his various speeches on this legislation, of which I think there have been three. The member for Dunkley has repeatedly claimed that the House of Representatives Standing Committee on Economics did not have the opportunity to hear witnesses give evidence on the government's bill. The claim that he repeatedly made to this parliament was that the witnesses called before the House of Representatives economics committee inquiry only looked at his bill and did not give evidence on the government's bill. But that of course is false, and one can see quickly how false it is simply by going to the transcripts. Allow me to quote from a couple of points in the transcript of the hearing of the House of Representatives economics committee on 18 February 2011. In opening his evidence for the Australian Competition and Consumer Commission, Mr Brian Cassidy said:

… we are pleased to be here today to be able to provide comment and answer questions on the bills -

plural -

that have been proposed.

Later in the hearings the member for Dunkley himself asked the following question of the ACCC:

On the cases that you are considering - as it is explained in the EM for the government‘s bill …

And he went on to ask the question - clearly a question from the member for Dunkley, directed to a witness, about the government's bill. He himself was asking witnesses about the government's bill. That is not the impression one would have gained if one only had listened to what he said in this chamber.

The member for Dunkley later asked the same witness:

… why is your bill, the government bill, not weighing purpose …

Again, clearly he was asking witnesses to adduce evidence on the government's bill.

Later the member for Dunkley said to a witness 'in the two bills that we are discussing'. He then went on to say:

… essentially the difference is that in the government‘s bill there is a per se prohibition on private communication …

He then asked the witness to draw a comparison between the bills. Indeed, the member for Dunkley later, when hearing evidence from the Australian Banking Association, asked Mr Munchenberg: [31]

Can you just, for the benefit of the committee, contrast the two bills as you understand them …

So let us not have any suggestion, as the member Dunkley just made to members in this chamber, that somehow the House of Representatives economics committee left half of the job undone. We did not. We considered both bills and, by a majority, we found the government's bill to be superior to the bill put forward by the member for Dunkley.

[Ed note: this is entirely disingenuous. While witnesses called to discuss the Billson bill may have been asked some questions relating to the government bill, no witnesses where heard once the inquiry expanded beyond the opposition's bill and certainly none were specifically called or attended to speak specifically on the government bill - this opportunity was not offered; to claim otherwise is patently false]

As the committee's report makes absolutely clear, there is a wide range of areas in which the government's bill is superior to that of the member for Dunkley.

[Ed note: it is useful to keep in mind that the report was split down the middle - four members v four members of the committee - producing a majority report (by virtue only of the casting vote of the Chair) and a minority report - so when referring to the Committee report, Dr Leigh is referring to that of the (default) majority].

Allow me to go into some of the key reasons why the government's bill is superior to that of the member for Dunkley. As the committee's report pointed out, there are four chief areas of difference: whether the bills apply to prices or whether they apply to other market information, whether the bills require purpose and effect, the substantial lessening of competition test, and the coverage of the bills. I will deal with each of these in turn.

On the question of the price related information, the ACCC and other witnesses argued that there is a range of behaviour that, while not directly involving price, ultimately impacts on consumers. The ACCC gave examples: quantity based offences, collusive tendering, and market sharing in which a business discloses to the market or particular competitors that they are going to focus on part of the market and leave the rest to their competitors. Those kinds of activities work to undermine markets, but it is the government's bill that picks up the full range of information. The inferior bill put forward by the member for Dunkley captures only pricing information.

The next key difference goes to purpose and effect. The committee noted that the purpose and effect test required in the member for Dunkley's bill would be so onerous that the ACCC would, as they advised us in evidence, 'probably take very few cases'.

The committee noted that again, in this respect, the government's bill is superior, and that is because it places a strong prohibition on private price disclosures between competitors.

The next difference goes to industry coverage. As the committee recognised, there is a question of balance. There is general advantage in having widely applicable legislation but there is also significant community concern about the conduct of banks. Given that the ACCC is - like every part of the government - resource constrained, the government's bill has the key advantage that the ACCC can focus its resources on a high-priority area.

It gives the government the flexibility to make further regulations to apply the prohibitions to other sectors of the economy as called for but to do that with time for review, time for detailed consideration.

The House of Representatives economics committee rightly concluded by majority that the government's bill was superior, capturing the most serious conduct with a per se offence and thereby ensuring that we have the competitive markets which are so critical to raising productivity and boosting efficiency and innovation - those advantages of competitive markets which have underpinned substantial improvements in living standards for Australians.

This bill very much lies in a Labor economic reform tradition. ...

... I commend the bill to the House.

Source: House Hansard, 7 July 2011

Mrs Prentice (Ryan, Liberal), 7 July 2011 (from p 31 Hansard)

This bill attempts to prohibit price signalling, particularly between banks. It does so by claiming that the current status of the industry allows anticompetitive price disclosures that, while falling short of cartel measures, are detrimental to consumers. Anticompetitive price signalling refers to corporations revealing their future pricing strategy to their rivals and in so doing eliminating price uncertainty and reducing the functioning capacity of a competitive market. It has become a topical issue in Australia, particularly after last November's RBA decision to raise rates which prompted the four big banks to all act in a similar way. I understand the government's sentiment and its need to at least appear that it wants Australian markets to operate with transparency and efficiency. However, [32] this bill simply will not achieve this and, despite a huge backlash from industry, the Treasurer will not listen. He does not seem to be willing to make all of the changes required to bring this bill in line with sound economic principle. It is the industry, not the government and not government departments, that understand how regulation affects their business practice and how the cost of that regulation is passed on to consumers.

While the Treasurer announced this amendment in December last year, he closed public submissions in January. What is this Gillard government trying to hide? Transparent consultation is a crucial part of the process of good government. This government has failed in that process by leaving stakeholders with less than two months - a large portion of which was over Christmas - to make submissions regarding legislation that substantially affects their lives.

The government had an opportunity to rectify this in May this year when the bill was sent to the House Standing Committee on Economics. However, true to form, the government gave only a two-day period in which submissions could be made. This demonstrates yet again that the government is simply not interested in consultation with stakeholders. It appears that the Treasurer is very set on pushing this policy through regardless of the consequences.

This is particularly disappointing as in recent sittings we have seen that some of the Treasurer's colleagues were able to address the faults of their legislation through consultation .... It seems that the Treasurer is complicit in this government's standard approach - big ideas and rushed announcements but, as usual, no thought for the consequences of its implementation.

The government has failed to ground this bill in sound competition policy concepts. To quote the Hansard record of the Treasurer's introduction of this bill to parliament, he stated that:

This important reform will help to ensure that banks can no longer avoid the full force of competition in the marketplace.

This is concerning as a government cannot simply stand over an industry and demand it to be competitive. Market forces need to be allowed to act in order for competition to thrive. Simply introducing one-size-fits-all regulation is unlikely to achieve what the government is aiming for, and coupling that with the lack of consultation, poor drafting, ambiguity, and a less than solid competition policy base has resulted in legislation that could really have disastrous effects on the industry. In fact, the Business Council of Australia has warned that this policy could:

… actually result in poor outcomes for consumers and act as an impediment on legitimate and pro-competitive commercial behaviour.

This reflects what I believe to be one of this government's greatest failings. They fail to understand the ripple effect. They fail to realise that their policies and legislation affect all industry and all members of society.

They seem to approach legislation with the view that they can implement policy that affects only one sector of the economy. ...

By not thinking through the policies of the bill we are debating today, the government seems to have overlooked that the amendment over-reaches into disclosures with legitimate business justification. The private disclosure clause of this bill seeks to prevent corporations from making a private disclosure to their competitors of any information relating to their price, from discounts to strategy. The broad nature of this prohibition makes the legislation ambiguous and illogical when followed through. The government may intend for this legislation to simply stop one bank manager picking up the phone to their counterpart at another bank; however, the drafting of this bill is solely focused on who and how this information is disclosed. It does not focus on the type of information or its purpose in its assessment of anticompetitive behaviour. Not all price discussion is inherently anticompetitive, but this broadbrush policy does not allow for this assessment to be made - you breach the prohibition by disclosing price information to a competitor in any sense. The proposed legislation before us takes the stance that any price disclosure whatsoever is so serious that it need not even be anticompetitive in its nature to be a punishable issue. There is no provision that competitors must be acting strategically. It is unclear as to whether this is the government's intention, it is an unintended consequence or it is simply poor drafting, but the end result is that this legislation has huge scope to overreach - indeed, unjustifiably overreach.

Furthermore, by making these per se prohibitions, the government is opening a door for the legislation to be easily circumvented by institutions simply making these disclosures more public, lifting it out of the per se category. In this situation, the objective of stopping anticompetitive price signalling would not occur even if the legislation were in place. [33]

It is also concerning that the legislation is so industry specific. From my understanding of what the Treasurer has put forth in relation to this bill, the focus is to prohibit the banking system from disclosing price strategies to each other. In fact, the Treasurer stated that this is the primary aim of the bill when he said:

Today I introduce amendments to the Competition and Consumer Act 2010 to crack down on anticompetitive price signalling and to get a better deal for consumers in the banking system.

The Treasurer went on in his speech to solely discuss the banking sector, with a particular focus on the big four banks, and the amendment itself, at least initially, will only target the banking sector. This seems contradictory as the amendments themselves are quite general.

The government's position seems to be that price signalling is only bad in the banking sector, but not bad elsewhere - that is, the bill is market specific rather than economy wide, which introduces ambiguity at best and, at worst, uncertainty, into the entire industry. It also goes against the general intention of bills of this nature, such as the Trade Practices Act. As the ACCC said:

The general principle of the Trade Practices Act … is that it should apply with very rare exceptions, such as telecommunications, across all sectors of industry and commerce. We consider that this is an issue that will affect a variety of sectors in industry and commerce in Australia and ought to apply across the board.

This bill, however, is solely focused on the banking sector.

The industry is highly critical of this bill. From the government's arrogance in the consultation process to its blind determination to dig its heels in and not make changes, this bill is simply not up to scratch. I implore the government to consult properly, consult with stakeholders and address the issues raised by the member for Dunkley in his amendment. This is legislation which will have a significant impact on consumers through producer regulation and it is vitally important that the government gets it right.

Source: House Hansard, 7 July 2011

Mr Bradbury (Lindsay, Parliamentary Secretary to the Treasurer, ALP), 7 July 2011 (from p 33 Hansard)

I would like to take this opportunity to thank honourable members who have taken part in this debate on the government's Competition and Consumer Amendment Bill (No.1) 2011. The government's intention to introduce these new laws was announced in December last year as part of its comprehensive package of reforms to the banking sector to empower families, support smaller lenders and secure the flow of credit to our economy. We have worked closely with the Australian Competition and Consumer Commission since mid 2010 to carefully design these amendments and we have consulted extensively on draft legislation with businesses, legal experts and other stakeholders. The government's bill reflects the results of these consultations and is an effective and targeted way to address anticompetitive price signalling in the banking sector.

The bill closes a gap in the anticompetitive conduct provisions of the Competition and Consumer Act 2010, fulfilling the government's commitment to crack down on anticompetitive price signalling and get a better deal for consumers in the banking sector. These laws will build on our 2009 reforms to strengthen Australia's cartel laws by banning signalling designed to keep interest rates higher. These laws will be initially applied to the banking sector, where the ACCC has told us there is strong evidence of banks signalling their pricing intentions to each other in a bid to undermine competition.

The bill adds two new prohibitions to the act to address anticompetitive price signalling and information disclosures. First, the bill prohibits outright the private disclosure of pricing information to one or more actual or likely competitors. This prohibition is targeted at those disclosures which are the most clearly anticompetitive and harmful to consumers. Second, the bill gives the ACCC the power to take action against any bank which signals its pricing intentions to a competitor for the purpose of substantially lessening competition.

The bill provides a comprehensive set of exceptions to ensure that legitimate business activities are not captured by the prohibitions and today I will move amendments so that further exceptions are provided that give clear guidance to business around what conduct is and is not subject to the prohibitions. More specifically, disclosures made in the ordinary course of business will not be subject to the outright prohibition. Disclosures in relation to corporate workouts, syndicated lending arrangements and credit distribution arrangements will also be explicitly exempt from the outright prohibition.

Consistent with the existing anticompetitive conduct provisions in the act, the bill also provides notification and authorisation arrangements for businesses to seek immunity from action under the new prohibitions where they can demonstrate that their conduct provides a net public benefit. Like other prohibitions in the act, breaches of the prohibitions will be subject to civil penalties of up to $10 million, 10 per cent of a business's annual turnover or three times the benefit of the conduct, whichever is higher. The bill demonstrates the government's strong, ongoing commitment to promoting competition in the banking sector. Anticompetitive price signalling and information disclosures are used by competitors to facilitate prices above the competitive level. They can lead to inefficient outcomes for the economy and ultimately higher prices for consumers. The government's bill will [34] provide the ACCC with effective and targeted tools to ensure that banks who signal their prices to competitors to undermine competition, to the detriment of Australian consumers, can no longer get away with it.

Again, I wish to thank all members for their contribution to this debate. I commend the bill to the House.

Source: House Hansard, 7 July 2011

 

Changes from draft bill to bill presented

The changes from the Draft Bill are relatively modest - and to the extent change exists it has further complicated and extended the provisions. The amendment provisions run to 14 pages of very dense statutory text (admittedly, half of that is for duplication in Schedule 1 for purposes of the Competition Code, but even 7 pages is too long). For example, we will, if passed, have a new section 44ZZZA, amongst other equally attractive looking provisions.

The changes include a couple more exemptions and the ability to notify conduct to the ACCC.

However, the bill still applies only to goods and services of the class 'prescribed by regulation' - which, we are told, will initially involve the banking sector, but is likely to expand and can due so without the normal parliamentary processes required for legislative change.

The most significant change between presentation of the bill and its passage through the House was the introduction of the ordinary course of business exemption.

 

Senate Standing Committee for the Scrutiny of Bills

On 11 May the Senate Standing Committee for the Scrutiny of Bills raised concern about the delegation of legislation in the bill (that is, that regulations would determine the industries to be subjec to the bill). In Senate Standing Committee for the Scrutiny of Bills Altert Digest 4 (pages 19-20) the Committee noted that 'it is of concern that this scope of the prohibitions introduced by this bill are to be determined entirely through delegated legislation.' Treasury advice is sought about the possibility of defining the scope of the law in primary legislation, and it is noted that in the meantime 'the Committee draws Senators’ attention to the provisions, as they may be considered to delegate legislative powers inappropriately'. The full extract from the digest is set out below:

Competition and Consumer Amendment Bill (No.1) 2011

Introduced into the House of Representatives on 24 March 2011
Portfolio: Treasury

Background

This bill amends the Competition and Consumer Act 2010 to:

• prohibit the private disclosure of pricing information to a competitor;

• prohibit disclosure of that or other information if the disclosure is made to substantially lessen competition;

• provide that prohibitions only apply to goods and services prescribed by regulations;

• provide exceptions to the prohibitions; and

• extend existing authorisation and notification regimes to enable businesses to obtain immunity from the Australian Competition and Consumer Commission from the prohibitions where a public net benefit results.

Delegation of legislative power
Schedule 1, item 2, section 44ZZT

This bill prohibits businesses from disclosing pricing information to competitors in various circumstances. The prohibitions in the bill will only apply to classes of goods and services prescribed by the regulations (see Schedule 1, item 2, proposed section 44ZZT). The explanatory memorandum states at page 11 that this ‘allows an assessment to be undertaken [by the Minister] as to the potential impacts of the new prohibitions on specific goods or services before they are applied to those goods or services’. Although the making of regulations reflecting such assessments will continue to be subject to Parliamentary scrutiny through the disallowance procedure under the Legislative Instruments Act, it is of concern that this scope of the prohibitions introduced by this bill are to be determined entirely through delegated legislation. Regrettably, the explanatory memorandum merely states the effect of the provisions rather than justifying the need to leave the scope of operation of these new provisions to be determined by the regulations. The Committee therefore seeks the Treasurer’s advice about this approach and in particular whether consideration has been given to the possibility of defining the scope of operation of the laws (such as the intended areas of operation, guidance as to the types of industries to which it will apply or relevant considerations that will be examined before a decision is made) in the primary legislation.

Pending the Minister’s advice, the Committee draws Senators’ attention to the provisions, as they may be considered to delegate legislative powers inappropriately, in breach of principle 1(a)(iv) of the Committee’s terms of reference.

Reversal of onus
Schedule 1, item 2, section 44ZZZA

Section 44ZZZA,which would also be inserted by item 1 of Schedule 1, places an evidential burden on a person who wishes to rely on various exceptions and defences from the prohibitions on disclosure which are being introduced by the bill. The explanatory memorandum at page 28 indicates that the ‘intention for imposing an evidential burden is to ensure the party bringing the action does not have to disprove all imaginable defences, only those properly supported by sufficient evidence’. It is also the case that the exceptions appear to relate to matters which are within the knowledge of the party wishing to rely on the exception. In the circumstances the appropriateness of this approach is a matter which is left to the consideration of the Senate as a whole.

In the circumstances, the Committee makes no further comment on this provision.

 

House Report

The House of Representatives Standing Committee on Economics considered this bill as part of its expanded inquiry into the opposition's price signalling bill.

On 22 June 2011 it released its report recommending passage of the Government's bill and rejection of the opposition's bill.

View inquiry page for more details - including a list of - and links to - submissions made to the inquiry on the government and opposition bills.

 

Regulation impact statement

4 April 2011 - Non-compliance with best practice regulation requirements – anti-competitive price signalling - Treasury

View regulation impact statement

[Page 2] This analysis considers the relative merits of proceeding with option 3, as outlined in the RIS published on 21 December 2010, with Option 3A, which incorporates amendments to the exposure draft legislation to address concerns identified by stakeholders.

...

[Page 4] Sector specific application and regulation making power

The prohibitions will only apply to classes of goods and services that are prescribed by regulations for the purpose of the prohibitions.

The Government has decided that in the first instance, a regulation should be made to proscribe banks to the prohibitions. There is capacity for regulations to be made to apply to prohibitions to other sectors after further review and detailed consideration.

The provision of a regulation-making power allows the Government to target the proposed prohibitions towards sectors where conduct of concern has been identified, without raising unintended consequences in other sectors.

The majority of submissions considered that selective application of competition law prohibitions is undesirable, in particular noting that the case had not been clearly made for limiting the application to the banking sector. There was concern doing so would move away from the long-standing approach of applying competition law across the economy. Submitters indicated that if the prohibitions are to be introduced, there would be a preference for economy-wide application.

[Page 5] Stakeholders were not supportive of the scope and application of the prohibitions being determined by regulation, submitting that the use of regulations, rather than legislation, to determine the application of the proposed prohibitions does not follow standard legislative processes, and would reduce the scrutiny and debate that arises from Parliamentary and democratic processes.

In response to the ACCC’s concern expressed in relation to specific anti-competitive price signalling behaviour in the banking sector, and in the context of the broader banking package, this option allows for the prohibitions to be targeted towards particular sectors. The incorporation of a regulation-making power gives effect to this approach. There is the capacity in the regulation-making power for other sectors to be specified in future, after further review and detailed consideration.

The use of regulations to give effect to the sector specific application of the prohibitions gives greater flexibility in applying the prohibitions to other sectors in the future. All regulations made under the new Division 1A of the CCA will be disallowable instruments and therefore subject to Parliamentary oversight.

...

[Page 10] Conclusion on Option 3A

Option 3A, through amendments to the model proposed in the exposure draft legislation and as set out in Option 3, clarifies and addresses concerns raised by stakeholders around the potential for Option 3 to create unintended consequences. Consequently, Option 3A is considered to be superior to Option 3, and is the preferred Option.

Implementation RIS - Conclusion and Recommended Option

Both options give effect to the Government’s decision to address anti-competitive price signalling and other information exchanges through amendments to the CCA.

After consideration of the views of stakeholders, it is concluded that Option 3A is the preferred option to give effect to the Government’s decision to address anti-competitive price signalling and information disclosures through amendments to the CCA, and is therefore the recommended option.

...

 

21 December 2010 - Competitive and Sustainable Banking System - anti-competitive price signalling - Treasury

View regulation impact statement

Note: this relates to the Exposure Draft rather than the modified Bill as introduced.

 

Problem

Summary

[P 1] Collusive behaviour is detrimental to the economy and consumers and is prohibited under the long-standing cartel provisions and the new criminal cartel provisions in Part IV of the TPA.

Anti-competitive price signalling and other information exchanges are communications between competitors which facilitate prices above the competitive level and can lead to inefficient outcomes for the economy and lower wellbeing for consumers. The Australian Competition and Consumer Commission (ACCC) has recently expressed concerns about this type of conduct and its inability to adequately address the problem.

It is apparent from numerous judicial decisions that these existing cartel provisions do not effectively address anti-competitive information exchanges that occur outside of a 'contract, arrangement or understanding'. Conversely, most comparable jurisdictions, including the UK, EU and US all have laws which are capable of dealing with anti-competitive price signalling and other information exchanges.

Information exchanges play a vital role in the economy; they increase transparency in the market to the benefit of consumers and the competitive process. With the exception of anti-competitive price signalling and other information exchanges, such communications are perfectly legitimate, pro-competitive and efficiency enhancing.

Addressing this problem will need to carefully balance the prohibition of anti-competitive, and continuation of legitimate information exchanges.

...

Options

[P 9] In considering possible reforms in this area, the 2009 Treasury Discussion Paper sought the community's views on the case for reform and in particular on Option 2. The views of a range of submitters expressed have been considered in developing options for addressing the problem have been considered, as well as the views expressed by business, OECD members, economists, legal scholars and other parties in relation to Australia and overseas. The Options that are considered in this RIS are:

• Option 1: No amendments to the TPA to address anti-competitive price signalling and other information exchanges.

• Option 2: Amend the TPA to expand the meaning of 'understanding' in the cartel prohibitions (sections 44ZZRF, 44ZZRG, 44ZZRJ, 44ZZRK and 45) to ensure that activities such as anti-competitive price signalling and information exchange are captured by these provisions.

• Option 3: Amend the TPA to include new, specific provisions to prohibit anti-competitive price signalling and information exchange, with consultation to take place on exposure draft legislation.

Targeted consultation will be undertaken on exposure draft legislation to ensure that the provisions introduced to deal with anti-competitive price signalling and other information exchanges prevent the most detrimental anti-competitive conduct, while minimising the risk of unintentionally prohibiting benign conduct and the regulatory burden on businesses. A decision on the final form of the legislation will be taken after this consultation process has been completed.

...

Conclusion and Recommended Option

[P 18] Following careful consideration of this issue, it has been concluded that there is an identified problem in Australian markets with respect to anti-competitive price signalling and other information exchanges. The available evidence, overseas experience, and consultation in 2009 indicates that these practices can be effectively addressed by well targeted legislation, but the TPA as it stands does not deal adequately with this problem. As such, Option 1 would not be feasible as it would leave the problem unaddressed.

Option 2 (canvassed in Treasury's discussion paper) proposes to amend the cartel prohibitions (sections 44ZZRF, 44ZZRG, 44ZZRJ, 44ZZRK and 45) to clarify and expand the meaning of „understanding‟ under the TPA. Taking into account the potential problems and shortcomings of this option as well as the lack of support for it, it is considered an inferior option to Option 3.

By comparison, Option 3 has significant advantages in increasing the welfare of consumers by promoting competitive markets and ensuring that anti-competitive price signalling and information exchanges are targeted explicitly and directly. Undertaking targeted consultation on the exposure draft legislation for the model outlined in Option 3 will allow the any risks associated with unintended consequences to be identified and addressed.

A decision on the final form of legislation will be taken by Government after this consultation process has been completed. This decision will be accompanied by a further Regulation Impact Statement.

 

FOI Disclosures

Following an FOI request information was released by Treasury on 8 November relating to this bill:

Competition and Consumer Amendment Bill (No.1) 2011 and Continuous Disclosure

 

Articles and commentary

Commentary

Compare the bill introduced by the opposition in 2010; the Competition and Consumer (Price Signalling) Amendment Bill 2010.

Perhaps the most troubling aspect of this legislation (and there are several) is its industry specific focus. The Government has indicated it will not extend (through regulation) the application of the price signalling prohibitions until further consideration is given to them. But if further consideration is needed to determine whether it is wise to prohibit price signalling in the way proposed then this legislation should be deferred to allow that consideration. If determined legislation of this nature is needed because there are good economic and policy grounds for prohibiting price signalling in this way then it should apply across the board. Either the conduct is anti-competitive or it is not. If it is, then there is no justification for limiting it to specific sectors.

On 15 April 2011 the Australian Financial Review included a piece (Duncan Hughes, 'ACCC boss stands firm on cartels', AFR, page 48) in which ACCC Chairman, Graeme Samuel, claimed that the 'proposed government reforms to ban price signalling are entirely consistent with best practice in Europe and the US'. In response, Brent Fisse provided his analysis (available on his web site) of why he considers this to be incorrect and highly misleading. Never one to mince words, Fisse claims that the proposed bill 'represents international worst practice on information exchanges between competitors' and refers to the bill as 'mindless proposed legislation'. See also the abstract of a forthcoming article by Brent Fisse, The Competition and Consumer Amendment Bill (No 1) 2011: International Worst Practice on Information Exchanges Between Competitors (abstract) (PDF)

Articles

Articles - firm summaries