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Competition and Consumer Amendment (Competition Policy Review) Act 2017

See also Competition and Consumer Amendment (Misuse of Market Power) Act 2017

 

Overview of bill

In brief

The Government introduced the Competition and Consumer Amendment (Competition Policy Review ) Bill 2017 into the House of Representatives, two days after the House passed the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016. The latter bill passed in the form of the Competition and Consumer Amendment (Misuse of Market Power) Act 2017 in August 2017.

The Act implements key Harper recommendations in relation to competition law, including those relating to cartels, price signalling and concerted practices, exclusionary provisions, secondary boycotts, third line forcing, resale price maintenance, authorisations notifications and class exemptions, access and evidentiary provisions.

The changes appear largely in line with the Exposure Draft Bill released last year; there has been some modification in response to consultation on the Exposure Draft Bill (details below).

See the Treasurer's media release, 'Strengthening Competition - Harper Review Legislation Introduced' (30 March 2017)

Quick links to changes

Debate in the House

Second reading of the Bill was moved on 30 March 2017 and the Treasurer's second reading speech was delivered. Debate was then adjourned and resumed on 5 September 2017. Debate focussed on the secondary boycott changes, which were the only changes opposed by the ALP. Following debate the bill passed and was sent to the Senate. It is expected to pass in October.

Debate in the Senate

The Senate debated the Bill on 16 October 2017 and it passed with amendment (removing the increased penalties for secondary boycotts contained in Schedule 6).

Return to the House

The return of the bill to the House was noted on 16 October 2017 with the amendment to be considered at the next sitting.

On 18 October 2017 Mr Morrison moved that the Senate amendment be agreed to by the House. Dr Leigh (Shadow Assistant Treasurer and Shadow Minister for Competition and Productivity) spoke briefly on the amendment. The motion subsequently passed. The bill has now been agreed to by both Houses.

Royal assent and commencement

The Act received Royal Assent on 27 October 2017. Commencement of most provisions is to be a single day fixed by Proclamation or six months after the Assent of both Acts (Harper and MMP).

On 2 November 2017 the date of 6 November 2017 was proclaimed as the day on which Schedule 1 would commence (the other relevant schedules commence at the same time or immediately after Schedule 1)

Changes from Exposure Draft

See Elizabeth Avery, 'Competition and Consumer Act Amendment Bills introduced into Parliament, but with further changes' (G+T, Insights, 12 April 2017) for overview of changes from Exposure Draft bill.

 

Overview of changes

Details of the proposed changes will follow shortly. Briefly, the Explanatory Memorandum contains the following overview of the propsed changes to the law:

Definition of competition

Schedule 1 to this Bill amends the definition of ‘competition’ in section 4 of the Act, to clarify that competition includes competition from goods and services that are capable of importation, in addition to those actually imported.

...

Cartels

Schedule 2 to this Bill makes a number of amendments to the Act to simplify the provisions on cartel conduct and better target anti-competitive conduct, including:

  • confining the application of the provisions to cartel conduct affecting competition in Australian markets; and
  • changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures.

...

Price signalling and concerted practices

Schedule 3 to this Bill repeals Division 1A of Part IV of the Act, the price signalling provisions.

Schedule 3 also extends section 45 to prohibit a corporation from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition, and inserts an exception for where the only parties to a concerted practice are the Crown and one or more government authorities.

Schedule 3 also repeals the separate prohibition on exclusionary provisions from the Act.

...

Exclusionary provisions

Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by Schedule 3.

As detailed in Chapter 2, a related amendment is made by Schedule 2 to the provisions on cartel conduct, to ensure there is no gap following the repeal of the prohibition on exclusionary provisions.

...

Secondary boycotts

Schedule 6 amends the Act to increase the maximum penalty applying to breaches of the secondary boycott provisions. This aligns the penalty with penalties for other breaches of the competition law.

...

Third line forcing

Schedule 7 to this Bill amends the Act to prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition.

...

Resale price maintenance

Schedule 8 to this Bill amends the resale price maintenance (RPM) and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct.

Schedule 8 also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

...

Authorisations, notifications and class exemptions

Schedule 9 to this Bill amends Part VII and Part IX of the Act to:

  • consolidate the various authorisation provisions, including those relating to mergers, into a single authorisation process;
  • grant the Commission a ‘class exemption’ power;
  • allow the Commission to impose conditions on notifications for resale price maintenance and collective bargaining that involves collective boycott conduct;
  • grant the Commission a power to issue a ‘stop notice’ requiring notified collective boycott conduct that is the subject of a notification to cease; and
  • provide for Tribunal review of Commission merger authorisation determinations.

...

Admissions of fact

Schedule 10 to this Bill extends section 83 of the Act so that a party bringing certain proceedings may rely on both admissions of fact and findings of fact made in certain other proceedings.

...

Power to obtain information, documents and evidence

Schedule 11 to this Bill extends the Commission’s power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

Schedule 11 also introduces a ‘reasonable search’ defence to the offence of refusing or failing to comply with section 155, and increases the fine for non-compliance with section 155.

...

Access to services

Schedule 12 amends Part IIIA of the Act, which contains the National Access Regime (Regime), to ensure that it better addresses the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

...

Other amendments

Schedule 14 to this Bill makes various amendments to streamline the administration of the Act, to reduce compliance burdens for business, individuals and within Government, while preserving the protections available under the Act.

 

Details of changes

Competition (Schedule 1)

Comparison of new and current law (from EM)

New law Current law
Competition expressly includes goods and services that are capable of being imported, in addition to goods and services that are imported. Competition includes goods and services that are imported.

 

Harper recommendation

Follows Harper Recommendation 25 that 'the current definition of ‘competition’ in section 4 should be amended to ensure that competition in Australian markets includes competition from goods imported or capable of being imported, or from services rendered or capable of being rendered, by persons not resident or not carrying on business in Australia.'

Proposed change

Subsection 4(1) definition fo competition will be repealed and the following substituted:

competition includes:

(a) competition from goods that are, or are capable of being, imported into Australia; and

(b) competition from services that are rendered, or are capable of being rendered, in Australia by persons not resident or not carrying on business in Australia.

Existing provision

competition includes competition from imported goods or from services rendered by persons not resident or not carrying on business in Australia

Change from 2016 Exposure Draft Bill

No change

Explanatory Memorandum

Para 1.6: the 'Harper Review found that although the current definition of market appropriately focuses on Australian markets, the definition of competition should be amended so there is no doubt it includes competition from potential imports of goods and services, not just actual imports.'

Para 1.7: 'Schedule 1 amends the definition of ‘competition’ to clarify that it includes potential imports of goods and services and is not limited to actual imports of goods and services'

Para 1.9: 'The express inclusion of goods and services that are ‘capable’ ofbeing imported does not require consideration of every product and service that could conceivably be imported into Australia. Rather, this change clarifies that a credible threat of import competition is a relevant component of competition analysis.'

Para 1.10: 'Where there is only a remote possibility of importation, for example because importation would not be commercially viable, this possibility would not constitute a credible threat of import competition and should not form part of a competition analysis as the goods or services are not ‘capable’ of being imported.

 

Cartels (Schedule 2)

Comparison of new and current law (from EM)

New law Current law
The cartel conduct provisions apply to conduct ‘in trade or commerce’, i.e. conduct occurring within Australia, or between Australia and places outside Australia. The cartel conduct provisions are not expressly confined to conduct ‘in trade or commerce’.
The joint venture exceptions apply to contracts, arrangements or understandings. The joint venture exceptions apply only to contracts or intended contracts.
The joint venture exceptions apply to joint ventures for the acquisition of goods, in addition to joint ventures for the production and/or supply of goods or services. The joint venture exceptions apply to joint ventures for the production and/or supply of goods or services.
The joint venture exceptions apply to cartel provisions that are for the purposes of a joint venture and reasonably necessary for undertaking a joint venture. The joint venture exceptions apply to cartel provisions that are for the purposes of a joint venture.
The joint venture exceptions do not apply to joint ventures that are carried on for the purpose of substantially lessening competition. The joint venture exceptions are available to any joint venture within the definition of section 4J of the Act.
The defendant bears a legal burden of proof, in establishing the joint venture exceptions. The defendant bears an evidential burden of proof, in establishing the joint venture exceptions.
The ‘output restriction’ purpose condition refers to production, capacity, supply and acquisition. The ‘output restriction’ purpose condition refers to production, capacity and supply.
 

Harper recommendation

Based on Harper Recommendation 27 to simplify cartel provisions, make amendments in relaiton to meaning of 'likely' competitors and extend joint venture exemption. Does not include the recommendation that '[a]n exemption should be included for trading restrictions that are imposed by one firm on another in connection with the supply or acquisition of goods or services (including intellectual property licensing), recognising that such conduct will be prohibited by section 45 of the CCA (or section 47 if retained) if it has the purpose, effect or likely effect of substantially lessening competition.'

Proposed changes

Subsection 6(2C)

Omit “likely and production have”, substitute “production has”.

Section 44ZZRB (definition of likely)

Repeal the definition.

At the end of paragraph 44ZZRD(3)(a)

Add:

(iv) the acquisition, or likely acquisition, of goods or services from persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or

Paragraphs 44ZZRD(4)(c) to (e)

After “services” (last occurring), insert “in trade or commerce”.

After paragraph 44ZZRD(4)(h)

Insert:

(ha) if subparagraph (3)(a)(iv) applies in relation to preventing, restricting or limiting the acquisition, or likely acquisition, of goods or services—the acquisition of those goods or services in trade or commerce; or

Paragraphs 44ZZRD(4)(i) and (j)

After “services” (last occurring), insert “in trade or commerce”.

Subsection 44ZZRD(4) (note)

Repeal the note, substitute:

Note 1: Party has an extended meaning—see section 44ZZRC.

Note 2: Trade or commerce is defined in section 4 to mean trade or commerce within Australia or between Australia and places outside Australia.

Subsection 44ZZRD(5)

Omit “subparagraph (3)(a)(iii),”, substitute “subparagraph (3)(a)(iii) or 9 (iv) or”.

Paragraph 44ZZRD(7)(a)

Omit “subparagraph (3)(a)(iii)”, substitute “subparagraphs (3)(a)(iii) 12 and (iv)”.

Subsection 44ZZRO(1)

After “a contract”, insert “, arrangement or understanding”.

Paragraphs 44ZZRO(1)(a) and (b)

Repeal the paragraphs, substitute:

(a) the cartel provision is:

(i) for the purposes of a joint venture; or

(ii) reasonably necessary for undertaking a joint venture; and

(b) the joint venture is for any one or more of the following:

(i) production of goods;

(ii) supply of goods or services;

(iii) acquisition of goods or services; and

Paragraphs 44ZZRO(1)(c) and (d)

After “the contract”, insert “, arrangement or understanding”.

Subsections 44ZZRO(1A) and (1B)

Repeal the subsections.

Subsection 44ZZRO(2)

Omit “, (1A) or (1B)” (first occurring).

Subparagraphs 44ZZRO(2)(a)(i) and (ii)

Omit “, (1A) or (1B), as the case may be”.

Paragraph 44ZZRO(2)(b)

Omit “, (1A) or (1B), as the case may be”.

Subsection 44ZZRP(1)

After “a contract”, insert “, arrangement or understanding”.

Paragraphs 44ZZRP(1)(a) and (b)

Repeal the paragraphs, substitute:

(a) the cartel provision is:

(i) for the purposes of a joint venture; or

(ii) reasonably necessary for undertaking a joint venture; and

(b) the joint venture is for any one or more of the following:

(i) production of goods;

(ii) supply of goods or services;

(iii) acquisition of goods or services; and

Paragraphs 44ZZRP(1)(c) and (d)

After “the contract”, insert “, arrangement or understanding”.

Subsections 44ZZRP(1A) and (1B)

Repeal the subsections.

Subsection 44ZZRP(2)

Omit “, (1A) or (1B)”.

Section 44ZZRS

Repeal the section, substitute:

44ZZRS Restrictions on supplies and acquisitions

(1) Sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK do not apply in relation to making, or giving effect to, a contract, arrangement or understanding that contains a cartel provision to the extent that the cartel provision:

(a) imposes, on a party to the contract, arrangement or understanding (the acquirer) acquiring goods or services from another party to the contract, arrangement or understanding, an obligation that relates to:

(i) the acquisition by the acquirer of the goods or services; or

(ii) the acquisition by the acquirer, from any person, of other goods or services that are substitutable for, or otherwise competitive with, the goods or services; or

(iii) the supply by the acquirer of the goods or services or of other goods or services that are substitutable for, or otherwise competitive with, the goods or services; or

(b) imposes, on a party to the contract, arrangement or understanding (the supplier) supplying goods or services to another party to the contract, arrangement or understanding, an obligation that relates to:

(i) the supply by the supplier of the goods or services; or

(ii) the supply by the supplier, to any person, of other goods or services that are substitutable for, or otherwise competitive with, the goods or services.

Note: A defendant bears an evidential burden in relation to the matter in subsection (1) (see subsection 13.3(3) of the Criminal Code and subsection (2) of this section).

(2) A person who wishes to rely on subsection (1) in relation to a contravention of section 44ZZRJ or 44ZZRK bears an evidential 30 burden in relation to that matter.

(3) This section does not affect the operation of section 45 or 47.

[Equivalent changes are made to Schedule 1]

 

Renumbering Division 1 of Part IV of the Competition and 4 Consumer Act 2010

(1) In this item:

Division 1 means Division 1 of Part IV of the Competition and Consumer Act 2010.

(2) The sections of Division 1 are renumbered in a single series so that each section referred to in column 1 of an item in the following table has the number stated in column 2 of that item:

Renumbering Division 1 of Part IV
Item Column 1
Current section number
Column 2
New section number
1 44ZZRA 45AA
2 44ZZRB 45AB
3 44ZZRC 45AC
4 44ZZRD 45AD
5 44ZZRE 45AE
6 44ZZRF 45AF
7 44ZZRG 45AG
8 44ZZRH 45AH
9 44ZZRI 45AI
10 44ZZRJ 45AJ
11 44ZZRK 45AK
12 44ZZRL 45AL
13 44ZZRM 45AM
14 44ZZRN 45AN
15 44ZZRO 45AO
16 44ZZRP 45AP
17 44ZZRR 45AQ
18 44ZZRS 45AR
19 44ZZRT 45AS
20 44ZZRU 45AT
21 44ZZRV 45AU

 

(3) The subsections of each section of Division 1 that has more than one subsection are renumbered so that they bear consecutive Arabic numerals enclosed in parentheses starting with “(1)”.

(4) The paragraphs of each section or subsection, or of each definition, of Division 1 are relettered so that they bear lower-case letters in alphabetical order enclosed in parentheses starting with “(a)”.

(5) The subparagraphs of each paragraph of each section or subsection, or of each paragraph of each definition, of Division 1 are renumbered so that they bear consecutive lower-case Roman numerals enclosed in parentheses starting with “(i)”.

(6) Subject to subitem (7), each provision of the Competition and Consumer Act 2010 that refers to a provision that has been renumbered or relettered under this item is amended by omitting the reference and substituting a reference to the last-mentioned provision as renumbered or relettered.

(7) Subitem (6) does not apply to a reference that is expressed as a reference to a provision as in force at a time that is before the commencement of this item.

Explanatory Memorandum

Para 2.1: 'Schedule 2 to this Bill makes a number of amendments to the Act to simplify the provisions on cartel conduct and better target anti-competitive conduct, including:

  • confining the application of the provisions to cartel conduct affecting competition in Australian markets; and
  • changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures.

Para 2.5: 'A number of specific changes were recommended by the Harper Review, which were intended to simplify the cartel conduct provisions and better target them at anti-competitive conduct. These included broadening the exceptions for joint ventures, which the Harper Review considered were too narrow and potentially captured pro-competitive conduct.'

Trade or commerce

Para 2.7: 'The defined term ‘trade or commerce’ is incorporated into various provisions within Division 1 of Part IV, to expressly confine the application of the provisions to cartel conduct affecting competition in Australia or between Australia and other places.'

Para 2.12: 'The Harper Review was of the view that, for cartel conduct to be an offence within Australia, it should have an effect on trade or commerce within, to or from Australia, consistent with the treatment of cartel conduct in comparable overseas jurisdictions.'

Para 2.13: 'Schedule 2 amends a number of provisions in Division 1 of Part IV to include a specific requirement that cartel conduct must be ‘in trade or commerce’. Trade or commerce is defined in section 4 to mean trade or commerce within Australia, or between Australia and places outside Australia. ...

Parr 2.14: 'The intention of this amendment is to expressly confine the application of the provisions to cartel conduct that affects businesses or consumers in Australia.'

Para 2.15: 'This amendment aligns the cartel conduct provisions with the Act’s objective of enhancing the welfare of Australians.'

Joint venture exemption

Para 2.16: 'The Harper Review’s view was that the narrow framing of the joint venture exceptions to the cartel provisions may have the effect of limiting legitimate commercial transactions and increasing business compliance costs.'

Para 2.17: 'The Harper Review also noted that broadening the joint venture exception for cartel conduct will not put joint ventures beyond the reach of the competition law, as section 45 prohibits joint venture arrangements that have the purpose, effect or likely effect of substantially lessening competition.'

Para 2.8: 'The joint venture exceptions are broadened to apply to:

  • arrangements or understandings (in addition to contracts); and
  • joint ventures for the acquisition of goods and services (in addition to the production or supply of goods and services).'

Para 2.19: 'Firstly, the amended joint venture exceptions apply to arrangements and understandings containing cartel provisions, in addition to contracts containing such provisions. This recognises that not all features of a joint venture will be contained in a formal written contract. ...'

Para 2.20: 'Secondly, the amended joint venture exceptions are extended to 2.20apply to joint ventures for the acquisition of goods or services. The amended exceptions apply to one or more of the production, supply or acquisition of goods or services. ...'

Par 2.21: 'Joint ventures for the acquisition of goods or services are common, and may encourage pro-competitive economic activity, for example by allowing smaller businesses to increase their bargaining power, decrease their cost base and become more price-competitive.'

Para 2.9: 'The joint venture exceptions are also amended so that they only apply to:

  • cartel provisions that are for the purposes of, and reasonably necessary for, undertaking the joint venture; and
  • joint ventures that are not carried on for the purpose of substantially lessening competition.

Para 2.22: 'Thirdly, the amended joint venture exceptions only apply to 2.22cartel provisions that are both for the purposes of the joint venture and reasonably necessary for undertaking the joint venture (where the reference to ‘purpose’ should be read in the context of section 4F of the Act). ...'

Para 2.23: 'The addition of the ‘reasonably necessary’ element tightens the exceptions to ensure that they exclude cartel provisions that are not reasonably necessary for the joint venture.'

Para 2.24: 'For example, a provision that specified the price at which outputs of a mining joint venture should be sold may be reasonably necessary for undertaking a mining joint venture. However a provision that similarly specified that output from mines not part of the joint venture must be sold at the same price may be for the purposes of, but is unlikely to be reasonably necessary for, the joint venture.'

Para 2.25: 'Fourthly, the amended joint venture exceptions only apply to joint ventures that are not carried on for the purpose of substantially lessening competition. This amendment confines the exceptions to joint ventures established for genuine commercial purposes.'

Para 2.27: 'The reference to ‘purpose’ should also be read in the context of section 4F of the Act, such that a defendant will be unable to rely on the joint venture exceptions if the purpose of substantially lessening competition is a substantial purpose, even if it is not the only purpose or the primary purpose.'

Standard of proof re: joint ventures

Para 2.10: 'The burdens of proof for the joint venture exceptions are also amended to require the defendant to prove the elements of the relevant exception on the balance of probabilities.'

Para 2.28: 'Finally, the joint venture exceptions are amended to increase the standard of proof that a defendant must discharge in raising the relevant exception. To raise the joint venture exception in a civil action (section 44ZZRP), the defendant must prove the relevant matters on the ‘balance of probabilities’. To raise the joint venture exception in a criminal action (section 44ZZRO), the defendant is under a ‘legal burden’ and this must also be discharged on the balance of probabilities.'

Para 2.29: 'In either case, the defendant must meet the standard of a ‘balance of probabilities’ to raise the relevant joint venture exception, as opposed to the standard of proof for the current evidential burden (‘a reasonable possibility’). Given this practical similarity, the two exceptions are discussed together below.'

Para 2.30: 'The increase in the burden of proof on the defendant is appropriate and justifiable in light of the extension of the exceptions to arrangements or understandings containing a cartel provision.'

Para 2.31: 'Currently, for either of the exceptions to apply, the relevant cartel provision must be contained in a contract and the defendant must satisfy an evidential burden – that is, the defendant must produce evidence suggesting a reasonable possibility that the matters in section 44ZZRO or 44ZZRP exist. It is likely that the production of the contract, which should be readily available to the defendant if it exists, would satisfy this evidential burden. It would then fall to the prosecution to prove on the balance of probabilities (in a civil action) or beyond reasonable doubt (in a criminal action), that the evidence produced does not establish the relevant exception – for example, by proving that the cartel provision is not for the purposes of the joint venture. Under the current exceptions, an evidential burden on the defendant is reasonable as the primary evidence as to the nature of the claimed joint venture would be before the court.'

Para 2.32: 'In contrast, under the amended joint venture exceptions which extend to arrangements or understandings, the relevant element of the joint venture may be contained across several documents of greater or lesser formality, and may not be contained in any form of written documentation (for example, it may have been established through a series of conversations or agreed in a meeting). In this circumstance, it is likely to be relatively easy and inexpensive for a defendant to produce evidence suggesting a reasonable possibility that their joint venture falls within the relevant exception, even if this were not the case.'

Para 2.33: 'However, it would be extremely difficult and expensive for the prosecution to obtain sufficient evidence to prove in the first instance, to the applicable standard, that the relevant exception did not apply, as the evidence needed to do this may be known only to, and be held by, the defendant. This practical difficulty may create scope for abuse of the joint venture exceptions by parties who are not genuinely engaged in a joint venture to which the exceptions apply.'

Para 2.34: 'Increasing the standard of proof which the defendant must meet improves this situation as, in practice, the defendant is required to provide stronger evidence to the court in order to prove on the balance of probabilities that the relevant exception applies. The defendant will be in a unique position to easily and cheaply produce such evidence, having ready access to the full range of formal and informal correspondence between the parties.'

Para 2.35: 'With the additional information before the court, the prosecution would then have sufficient information to determine whether to make a case in reply and thereby seek to prove to the requisite standard that the exception does not apply (for example, to argue based on that evidence that the joint venture was, in fact, carried on for the purpose of substantially lessening competition).'

Para 2.36: 'Widening the application of the exceptions will decrease the ongoing business compliance costs for genuine commercial joint venture undertakings, by increasing certainty that genuine joint venture activities will not contravene the cartel conduct prohibition. However, without the higher burden of proof on the defendant, it is likely that the practical difficulties for the prosecutor would be such that anti-competitive, collusive conduct would be able to avoid the cartel conduct prohibitions. The higher burden is therefore necessary in order to broaden exceptions in the manner described above.'

Output restriction - Exclusionary provisions

Para 2.11: 'The ‘output restriction’ purpose condition in paragraph 44ZZRD(3)(a) is broadened to include restrictions on acquisitions of goods or services, to address any gap resulting from the repeal of the separate prohibition on exclusionary provisions.'

Para 2.37: 'The ‘output restriction’ purpose condition is amended to prohibit cartel provisions with the purpose of directly or indirectly preventing, restricting or limiting production, capacity, supply or acquisition. The inclusion of acquisition is achieved by adding a fourth subparagraph to paragraph 44ZZRD(3)(a). ...'

Para 2.38: 'This change is made as a result of the repeal of the separate prohibition on exclusionary provisions, as detailed in Chapters 3 and 4, and addresses a possible gap in the law following that repeal.'

 

Price signalling and concerted practices (Schedule 3)

Comparison of new and current law (from EM p 27)

New law Current law
The anti-competitive disclosure of pricing and other information is dealt with under the more general prohibitions in the competition law The anti-competitive disclosure of pricing and other information is separately and specifically prohibited.
A corporation is prohibited from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition. No equivalent.
An exemption from the prohibition on concerted practices is added where the only parties are a government and one or more authorities of that government. No equivalent.
There is no separate prohibition on contracts, arrangements or understandings containing exclusionary provisions. There is a separate prohibition on contracts, arrangements or understandings containing exclusionary provisions.
Section 51 provides a range of additional exceptions related to specific contracts, arrangements, understandings and concerted practices. Section 51 provides a range of additional exceptions related to specific contracts, arrangements and understandings.

 

Harper recommendation

Based on Harper Recommendation 29 to repeal existing price signalling provisions and extend s 45 to prohibit anti-competitive concerted practices.

Proposed change

  • Repeal Division 1A of Part IV (the price signalling provisions)
  • Extend s 45 to 'prohibit a corporation from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition' while allowing an exception where the only parties are the 'Crown and one or more government authorities' (EM para 3.2; new ss 45(8AA))
  • Repeal separate prohibition on exclusionary provisions (primary boycotts)

Existing provision (s 45(2))

A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if:

(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or

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

(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:

(i) is an exclusionary provision; or

(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.

Proposed new provision

Subsections 45(1)-(3) will be repealed and replaced with the following:

(1) A corporation must not:

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

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

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

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

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

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

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

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

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

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

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

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

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

Many of the other sub-subsections in s 45 repealed and replaced or amended

Change from 2016 Exposure Draft Bill

There is a new exemption contained in sub-section 8AA that did not appear in the Exposure Draft:

Section 45 (8AA) This section does not apply to or in relation to a concerted practice if the only persons engaging in it are or would be:

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

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

Explanatory Memorandum

Price signalling

Observes that it only applies to banking and no cases have been brought for contravention since it was added in 2012. The provisions are complex and public disclosure of pricing information is unlikely to harm competition. Private disclosures may facilitate anti-competitive collusion, but may also be pro-competitive in some cases, such as joint ventures or similar collaborations (para 3.5). To the extent such conduct is anti-competitive it should be dealt with by s 45, if that provision was expanded to include a prohibition on anti-competitive concerted practices (para 3.6 and 3.8).

Concerted practices

[Para 3.16]: Schedule 3 amends section 45 to prohibit corporations from engaging in a ‘concerted practice’ that has the purpose, effect or likely effect of substantially lessening competition.

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

Characteristics of a concerted practice

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

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

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

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

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

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

Example 3.1 – Concerted practice

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

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

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

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

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

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

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

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

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

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

Example 3.2 – Concerted practice as a single instance of conduct

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

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

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

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

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

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

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

Example 3.4 – Mere parallel conduct

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

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

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

Crown exemption

[Para 3.29] An exemption is inserted at subsection 45(8AA), so that section 45 does not apply to a concerted practice where the only persons engaging in it are, or would be:

  • the Crown in right of the Commonwealth, and one or more authorities of the Commonwealth; or
  • the Crown in right of a State or Territory, and one or more authorities of that State or Territory. ...

[Para 3.30] This exemption is similar to the exemption for related bodies corporate in subsection 45(8), and recognises that although the Crown can engage in market activities through government authorities, the Crown and its authorities cannot benefit from the exemption for related bodies corporate.

[Para 3.31] This exemption ensures that the prohibition against concerted practices does not unnecessarily hinder the social policy objectives that the Commonwealth, a State or a Territory may pursue through market activities. In particular, the exemption exists to ensure that cooperation by authorities to fulfil community service obligations is not hindered.

Example 3.5 – Exemption for related bodies corporate

A State government is responsible for the governance of two State-owned electricity corporations. Each year, the State government asks the providers to coordinate which geographical areas each corporation will agree to service over the next year. This information allows the State government to ensure that community service obligations are met and there is no area left without an electricity provider if no private provider is available.

While this conduct may constitute a concerted practice, this would not contravene section 45 due to the exemption in subsection 45(8AA). Although the two electricity corporations have shared what would ordinarily be commercially sensitive information, the only parties to this concerted practice are a State government and two authorities of that State government.

Operation of section 45

[Para 3.32] The following is intended to clarify the operation of section 45 as amended. Where provisions are amended for simplification, their operation is not intended to change except as described in this Chapter.

[Para 3.33] Paragraphs 45(1)(a) and 45(1)(b) set out that a corporation must not enter into or give effect to a contract, arrangement or understanding, if the contract, arrangement or understanding (or a provision thereof) has the purpose, or would have or be likely to have the effect, of substantially lessening competition. ...

[Para 3.34] Paragraph 45(1)(c) sets out that a corporation must not engage with one or more persons in a concerted practice that has the purpose, or has or is likely to have the effect, of substantially lessening competition. ...

[Para 3.35] Subsection 45(2) makes it clear that a corporation must not give effect to a prohibited provision of a contract, arrangement or understanding that was made or arrived at before the commencement of section 45 as amended. ...

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

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

[Para 3.38] Subsection 45(5A) is inserted to prevent the application of section 45 to conduct which would also contravene section 47, or would do so aside from subsection 47(10), an authorisation under section 88 or a notification under section 93. This applies only to contracts, arrangements and understandings, and not to concerted practices. This provision replaces the former subsection 45(6) insofar as it referred to conduct under section 47.

[Para 3.39] In addition to the new exception in subsection 45(8AA), section 45 contains a number of existing exceptions, which are amended to incorporate concerted practices:

  • an anti-overlap provision which prevents section 45 capturing conduct which would contravene more specific prohibitions (subsection 45(6));
  • an exception for the acquisition of shares in the capital of a body corporate or any assets of a person (subsection 45(7)); and
  • an exception where the only parties to the contract, arrangement, understanding or concerted practice are related bodies corporate (subsection 45(8)). ...

[Para 3.40] Similarly, the exception in subsection 51(2) is amended to extend the exception to concerted practices. This means that in determining whether a contravention of Part IV (other than sections 45D, 45DA, 45DB, 45E, 45EA or 48) has been committed, regard shall not be had to concerted practices which meet the applicable requirements of subsection 51(2) as amended. ...

Exclusionary provisions

Repeal separate prohibition.

 

Exclusionary provisions (Schedule 4)

Comparison of new and current law (from EM)

As the separate prohibition on exclusionary provisions is removed, consequential amendments to remove references to the definition of exclusionary provisions (currently in 4D) have been made.

New law Current law
‘Exclusionary provision’ is not defined in the Act. ‘Exclusionary provision’ is defined in the Act.
There is no defence as there is no longer a separate prohibition on exclusionary provisions. There is a defence to the prohibition against exclusionary provisions.

 

Harper recommendation

Based on Harper Recommendation 28 to remove separate prohibition of exclusioanry provisions in s 45.

Proposed change

Building on the repeal of the prohibition on exclusionary provisions in s 45 (above), section 4D (definition) and 76C (defence) are to be repealed. Subsection 93AC(1) to be repealed and substituted with:

Commission’s objection notice—cartel provisions

(1) If:

(a) a corporation gives the Commission a collective bargaining notice under subsection 93AB(1A) in relation to a contract, or proposed contract, containing a cartel provision of the kind referred to in that subsection; and

(b) the Commission is satisfied that any benefit to the public that has resulted or is likely to result or would result or be likely to result from the provision does not or would not outweigh the detriment to the public that has resulted or is likely to result or would result or be likely to result from the provision;

the Commission may give the corporation a written notice (the objection notice) stating that it is so satisfied.

Paragraph 10.08(1)(a) to be repealed and subsection 10.08(1) to omit ", (a)".

Existing provisions

Section 4D

(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b) the provision has the purpose of preventing, restricting or limiting:

(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.

(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first‑mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.

Section 76C

Defence

(1) In proceedings against a person in relation to a contravention of subparagraph 45(2)(a)(i) or (b)(i) in relation to an exclusionary provision, it is a defence if the person establishes that the provision:

(a) is for the purposes of a joint venture; and

(b) does not have the purpose, and does not have and is not likely to have the effect, of substantially lessening competition.

Application of subsections 45(3) and (4)

(2) Subsections 45(3) and (4) apply for the purposes of subsection (1) in the same way as they apply for the purposes of section 45.

Definitions

(3) In this section:

contravention of subparagraph 45(2)(a)(i) or (b)(i) includes conduct referred to in paragraph 76(1)(b), (c), (d), (e) or (f) that relates to a contravention of subparagraph 45(2)(a)(i) or (b)(i).

proceedings means proceedings instituted under:

(a) this Part or section 163A; or

(b) section 21 or 23 of the Federal Court of Australia Act 1976; or

(c) section 39B of the Judiciary Act 1903.

Subsection 93AC(1)

Commission’s objection notice - cartel provisions or per se provisions

(1) If a corporation gives the Commission:

(aa) a collective bargaining notice under subsection 93AB(1A) in relation to a contract, or proposed contract, containing a cartel provision of the kind referred to in that subsection; or

(a) a collective bargaining notice under subsection 93AB(1) in relation to a contract, or proposed contract, containing a provision of the kind referred to in subparagraph 45(2)(a)(i) or (b)(i) (exclusionary provisions);

then the Commission may, if it is satisfied that any benefit to the public that has resulted or is likely to result or would result or be likely to result from the provision does not or would not outweigh the detriment to the public that has resulted or is likely to result or would result or be likely to result from the provision, give the corporation a written notice (the objection notice) stating that it is so satisfied.

Change from 2016 Exposure Draft Bill

No change

Explanatory Memorandum

Chapter 2 EM

Note also change to definition of output restriction in s 44ZZRD designed to address any gaps to the law created by the repeal of the separate prohibition on exclusionary provisions (discussed above)

Chapter 3 EM

[para 3.41] Schedule 3 to this Bill also repeals subparagraphs 45(2)(a)(i) and 45(2)(b)(i) to remove the separate prohibition on exclusionary provisions from the Act. This is achieved by repealing subsections 45(1) to 45(3) and rewriting the provisions without the separate prohibition on exclusionary provisions. [Schedule 3, item 2, subsections 45(1) to 45(3)]

[para 3.42] As detailed in Chapter 4, section 4D, which contains the definition of exclusionary provision, is repealed as the repeal of the separate prohibition on exclusionary provisions makes the definition redundant. [Schedule 4, item 1, section 4D]

[para 3.43] As detailed in Chapter 2, a consequential amendment is made to the cartel conduct provisions to address any gap in the law as a result of the repeal of the separate prohibition on exclusionary provisions. [Schedule 2, item 2, subparagraph 44ZZRD(3)(a)(iv)]

Chapter 4 EM

Outline of chapter

[para 4.1] Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by Schedule 3.

[para 4.2]] As detailed in Chapter 2, a related amendment is made by Schedule 2 to the provisions on cartel conduct, to ensure there is no gap following the repeal of the prohibition on exclusionary provisions.

Context of amendments

[para 4.3] Sub-paragraphs 45(2)(a)(i) and 45(2)(b)(i) of the Act respectively, prohibit making a contract or arrangement, arriving at an understanding, or giving effect to a contract, arrangement or understanding, containing an exclusionary provision.

[para 4.4] Exclusionary provision is defined in section 4D, and broadly means a provision of an actual or proposed contract, arrangement or understanding between competitors, where the provision has the purpose of preventing, restricting or limiting supplies of goods and services to, or acquisitions from, particular persons or classes of persons.

[para 4.5] Section 76C contains a defence to proceedings relating to an exclusionary provision where the provision is for the purposes of a joint venture and does not have the purpose, effect or likely effect of substantially lessening competition.

[para 4.6] The prohibition on exclusionary provisions substantially overlaps with the prohibition on cartel provisions, particularly where a provision in a contract, arrangement or understanding between competitors has the purpose of:

• restricting the actual or likely production of goods, supply of goods or services, or the capacity to supply services (i.e. output restriction) (paragraph 44ZZRD(3)(a)); or

• allocating customers or geographical areas of supply or acquisition between the parties (i.e. market sharing or division) (paragraph 44ZZRD(3)(b).

[para 4.7] Where a provision has the purpose of output restriction or market sharing or division, that provision is likely to constitute both a cartel provision and an exclusionary provision.

[para 4.8] Section 45 contains a number of anti-overlap provisions which prevent the application of section 45 to conduct which contravenes one of several other provisions. However, there is no anti-overlap provision preventing the application of section 45 to conduct which contravenes the prohibition on cartel provisions.

[para 4.9] The Harper Review considered that this overlap is unnecessary and increases the complexity of the law, and recommended that the separate prohibition on exclusionary provisions be repealed, with an amendment to the provisions on cartel conduct to address any resulting gap in the law.

Summary of new law

[para 4.10] Schedule 4 to this Bill repeals the definition of ‘exclusionary provision’ in section 4D and makes consequential amendments to remove references to section 4D throughout the Act.

[para 4.11] The defence to the exclusionary provision prohibition is also repealed as it is no longer needed.

Detailed explanation of new law

[para 4.12] Schedule 4 repeals the definition of ‘exclusionary provision’, in section 4D. [Schedule 4, item 1, section 4D]

[para 4.13] The definition of ‘exclusionary provision’ is redundant following the repeal of the separate prohibition on exclusionary provisions (as detailed in Chapter 3).

[para 4.14] Schedule 4 to this Bill also repeals section 76C, the defence to the prohibition on exclusionary provisions, as it is made redundant by the repeal of the separate prohibition. [Schedule 4, item 2, section 76C]

 

Covenants affecting competition (Schedule 5)

Comparison of new and current law (from EM)

New law Current law
Competition expressly includes goods and services that are capable of being imported, in addition to goods and services that are imported. Competition includes goods and services that are imported.

 

Harper recommendation

Based on Harper Recommendation 23 to simplify the competitin law provisions, including by removing sections 45B and 45C concerning covenants.

Key changes to law

Subsection 4(1)

Insert:

contract includes a covenant.

party, to a contract that is a covenant, includes a person bound by, or entitled to the benefit of, the covenant.

Sections 44ZZRQ, 45B and 45C are repealed and consequential amendments are made removing references to specific covenant provisions

Explanatory Memorandum

'Schedule 5 to this Bill simplifies the provisions of the Act by defining ‘contract’ and ‘party’ to include covenants, and repealing redundant provisions which separately deal with covenants.'

5.2 Section 45 concerns contracts, arrangements or understandings that restrict dealings or affect competition. ...

5.3 Sections 45B and 45C relate to covenants and largely duplicate the concepts of section 45. Covenants are a form of agreement in which one or more parties promise to do, or refrain from doing, some action. The distinction between contracts and covenants appears throughout the Act, for example in section 87 which details the orders the Court may make and contains separate references to contracts and covenants.

5.4 In a legal sense, there are technical differences between contracts and covenants. However, the Harper Review found that these technical differences have little to no impact on the agreement’s effect on competition.

5.5 The Harper Review recommended that provisions which are redundant or unnecessarily duplicate other provisions could be removed, and identified the provisions relating to covenants as one example of unnecessary duplication.

5.6 Schedule 5 to this Bill simplifies the provisions of the Act by inserting definitions of ‘contract’ and ‘party’ and defining those terms to include covenants.

5.7 Provisions which deal separately with covenants, which are now redundant, are repealed.

 

Secondary boycotts (Schedule 6)

NOTE: An amendment to this Schedule (which removed the Schedule) was passed in the Senate

Comparison of new and current law (from EM)

New law Current law
Contract is defined, to include a covenant. Contract is not defined.
Party to a contract that is a covenant, is defined to include a person bound by or entitled to the benefit of a covenant. Party is not defined.
Covenants are dealt with under the provisions of the Act referring to contracts. Throughout the Act, contracts and covenants are dealt with under separate provisions.

 

Harper recommendation

Based on Harper Recommendation 36 to maintain and effectively enforce the secondary boycott provisions and set maximum penalty at same level as that applying to other competition law breaches.

Proposed change

Amend para 76(1A)9A0 to omit '45D, 45DB,'

Explanatory Memorandum

'Schedule 6 amends the Act to increase the maximum penalty applying to breaches of the secondary boycott provisions. This aligns the penalty with penalties for other breaches of the competition law.'

'6.2 Broadly, a secondary boycott involves one person, in concert with another person, engaging in conduct that hinders or prevents a third person supplying goods or services to, or acquiring goods or services from, a fourth person.

6.3 Sections 45D and 45DB prohibit secondary boycotts, where the purpose and actual or likely effect of the conduct is respectively: to cause substantial loss or damage to the fourth person’s business; or to prevent or substantially hinder the third person from engaging in trade or commerce involving the movement of goods between Australia and overseas.

6.4 Section 76 details the maximum pecuniary (monetary) penalties for breaches of the Act. Under paragraph 76(1A)(a), a corporation that breaches the secondary boycott provisions (section 45D or 45DB) is liable to a civil penalty not exceeding $750,000. By comparison, other breaches of the Act attract maximum penalties of $10 million or higher depending on the benefit obtained and the body corporate’s annual turnover.

6.5 Secondary boycotts are harmful to trading freedom and therefore harmful to competition. The Harper Review saw no reason for the significant variation in maximum penalties, and recommended aligning the maximum penalty for breaches of secondary boycott provisions with the maximum penalty for other breaches of the competition law.

6.6 Schedule 6 to this Bill increases the maximum pecuniary penalty that applies for secondary boycotts, in line with the maximum penalty for other breaches of the competition law.

 

Third line forcing (Schedule 7)

Comparison of new and current law (from EM)

New law Current law
Third line forcing is prohibited only where it has the purpose, effect or likely effect of substantially lessening competition. Third line forcing is prohibited on a per se basis.

 

Harper recommendation

Based on Harper Recommendation 32 that third line forcing only be prohibited where it has the purpose or effect of substantially lessening competition (rec 33 was that s 47 be repealed entirely and conduct addressed through combination of s 45 and amended s 46 or alternatively simplify the provision; there have been no moves to implement this recommendation - the Government response indicated that it would be considered in light of the decisions made in relation to s 46 - however, there appears to be no move to do this.)

Proposed change

Subsection 47(10)

Omit “constituted by a corporation engaging in conduct of a kind referred to in subsection (2), (3), (4) or (5) or paragraph (8)(a) or (b) or (9)(a), (b) or (c)”, substitute “by a corporation”.

Paragraph 47(10)(a)

Omit “that conduct”, substitute “the conduct that constitutes the practice of exclusive dealing”.

Paragraph 47(10)(b)

Omit “that conduct”, substitute “the conduct that constitutes the practice of exclusive dealing”.

Subsection 47(10A)

Repeal the subsection.

Existing provision

Third line forcing is a defined form of exclusive dealing (prohibited by s 47(1)). Third line forcing conduct is defined in sub-sections 47(6) and (7). In the existing law these sub-sections are exempt from the requirement to demonstrate a purpose or effect of substantially lessening competition; the proposed change ensures that all forms of exclusive dealing are subject to the requirement that the conduct have the purpose or effect of substantially lessening competition.

Section 47(10) Subsection (1) does not apply to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in subsection (2), (3), (4) or (5) or paragraph (8)(a) or (b) or (9)(a), (b) or (c) unless:

(a) the engaging by the corporation in that conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

(b) the engaging by the corporation in that conduct, and the engaging by the corporation, or by a body corporate related to the corporation, in other conduct of the same or a similar kind, together have or are likely to have the effect of substantially lessening competition.

Change from 2016 Exposure Draft Bill

No change

Explanatory Memorandum

Outline of chapter

[para 7.1] Schedule 7 to this Bill amends the Act to prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition.

Context of amendments

[para 7.2] Third line forcing is a form of exclusive dealing (also known as a vertical trading restriction) and involves the supply of goods or services, or the giving of a particular price or discount, on the condition that the purchaser also acquire goods or services from another unrelated person, or a refusal to supply because the purchaser will not agree to such a condition.

[para 7.3] Third line forcing is prohibited under subsections 47(6) and 47(7) and paragraphs 47(8)(c) and 47(9)(d) of the Act. It is prohibited on a per se basis, that is, it is prohibited irrespective of its purpose, effect or likely effect.

[para 7.4] Third line forcing may be exempted from the prohibition, and protected from legal action under the Act, for example, by filing a notification with the Commission under section 93 of the Act. The Commission may revoke the notification if it considers that the likely public detriment from the conduct outweighs the likely any public benefit from the conduct.

[para 7.5] Australia is the only comparable jurisdiction that prohibits third line forcing on a per se basis. Other jurisdictions, including the United States, Canada, the European Union and New Zealand, assess similar conduct under a test that looks at the effect of the conduct on competition.

[para 7.6] The Harper Review noted that third line forcing is similar to second line forcing, in which a corporation supplies a product on the condition that the purchaser acquires another product from the same corporation (or a related corporation). Second line forcing is also known as ‘bundling’ or ‘tying’, and is not prohibited on a per se basis. Rather, it is prohibited where the conduct has the purpose, effect or likely effect of substantially lessening competition.

[para 7.7] The Harper Review found there was no need for third line forcing to be prohibited on a per se basis and singled out from other forms of vertical trading restriction which are subject to a competition test. The Harper Review acknowledged the availability of an exemption through the notification process, but found that the regulatory cost of lodging a notification is unnecessary, because in most cases the notification will be allowed.

[para 7.8] The Harper Review recommended that third line forcing be prohibited only where the conduct has the purpose, effect or likely effect of substantially lessening competition.

Summary of new law

[para 7.9] Schedule 7 to this Bill amends section 47 of the Act so that third line forcing is only prohibited where it has the purpose, effect or likely effect of substantially lessening competition.

Detailed explanation of new law

[para 7.20] Subsection 47(1) of the Act prohibits a corporation engaging in exclusive dealing in trade or commerce. Subsections 47(2) to 47(9) set out various forms of conduct which constitute exclusive dealing, including third line forcing in subsections 47(6) and 47(7) and paragraphs 47(8)(c) and 47(9)(d).

[para 7.11] Subsection 47(10) provides that the forms of exclusive dealing listed in that subsection are only prohibited where they have the purpose, effect or likely effect of substantially lessening competition. Forms of exclusive dealing not listed in subsection 47(10) are prohibited on a per se basis.

[para 7.12] Schedule 7 amends subsection 47(10) so that all forms of exclusive dealing are prohibited where the conduct has the purpose, effect or likely effect of substantially lessening competition. The references to the specific types of exclusive dealing conduct to which the test currently applies are removed. [Schedule 7, item 1, subsection 47(10)]

[para 7.13] As all third line forcing conduct is now subject to a substantial lessening of competition test, Schedule 9 makes consequential amendments to the notification provisions. These amendments are detailed in Chapter 9, and ensure the grounds on which the Commission is able to consider a notification are consistent for all forms of exclusive dealing that may be notified.

[para 7.14] Following the amendment to the provisions for notification of exclusive dealing, subsection 47(10A), which specifically deals with notifications for third line forcing, is repealed. [Schedule 7, item 4, subsection 47(10A)]

 

Resale price maintenance (Schedule 8)

Briefly ...

Changes to the law will ensure it is possible to notify RPM to the ACCC of proposed RPM conduct and, while that notification is in force, the notified RPM conduct will not contravene section 48 (RPM) of the Act. The notification may be revoked by the ACCC if it is satisfied that the public benefits of the notified conduct will not outweigh the detriments.

Amendments also clarify that actions between related bodies corporate will not constitute RPM.

Comparison of new and current law (from EM)

New law Current law
A corporation or other person may notify the Commission of RPM conduct. Notification is not available for RPM conduct.
Actions between related bodies corporate do not constitute engaging in RPM conduct. Acts between related bodies corporate may constitute engaging in RPM conduct.

 

Harper recommendation

Based on Harper Recommendation 34 to retain existing prohibition but make notification available for RPM.

Proposed change

Section 48

Before “A corporation”, insert “(1)”.

At the end of section 48

Add:

(2) Subsection (1) does not apply to a corporation or other person engaging in conduct that constitutes the practice of resale price maintenance if:

(a) the corporation or other person has given the Commission a notice under subsection 93(1) describing the conduct; and

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

Subdivision A of Division 2 of Part VII (heading)

Repeal the heading, substitute:

Subdivision A—Exclusive dealing and resale price maintenance

Section 93 (heading)

Repeal the heading, substitute:

93 Notification of exclusive dealing or resale price maintenance

Subsection 93(1)

Repeal the subsection, substitute:

(1) Subject to subsection (2):

(a) a corporation that engages, or proposes to engage, in conduct of a kind referred to in subsection 47(2), (3), (4), (5), (6), (7), (8) or (9); or

(b) a corporation or other person who engages, or proposes to engage, in conduct of a kind referred to in section 48;

may give to the Commission a notice setting out particulars of the 1 conduct or proposed conduct.

Subsection 93(2)

Omit “may not give a notice”, substitute “or other person may not give a notice under subsection (1)”.

Paragraph 93(2)(a)

After “corporation”, insert “or other person”.

Paragraph 93(3A)(a)

After “corporation”, insert “or other person”.

Paragraph 93(3A)(a)

Omit “section 44ZZW, subsection 47(6) or (7) or paragraph 47(8)(c) or (9)(d)”, substitute “section 48”.

Subsection 93(3A)

After “the corporation”, insert “or other person”.

Subsections 93(5) and (6)

After “corporation” (wherever occurring), insert “or other person”.

Subsection 93(7)

After “subsection (1)”, insert “describing conduct or proposed conduct referred to in subsection 47(2), (3), (4), (5), (6), (7), (8) or (9)”.

Subsection 93(7A)

Repeal the subsection, substitute:

(7A) A notice under subsection (1) describing conduct or proposed conduct referred to in section 48 comes into force:

(a) at the end of the period of 60 days, or such other period as is prescribed by the regulations, starting on the day when the corporation or other person gave the Commission the notice; or

(b) if the Commission gives notice to the corporation or other person under subsection 93A(2) during that period—when the Commission decides not to give the corporation or other 1 person a notice under subsection (3A) of this section.

Subsection 93(7B)

Omit “section 44ZZW, subsection 47(6) or (7) or paragraph 47(8)(c) or (9)(d)”, substitute “section 48”.

Subparagraphs 93(7B)(b)(i) and (ii)

After “corporation”, insert “or other person”.

Subsection 93(7C)

Omit “section 44ZZW, subsection 47(6) or (7) or paragraph 47(8)(c) or (9)(d)”, substitute “section 48”.

Paragraph 93(7C)(b)

After “corporation”, insert “or other person”.

Paragraphs 93(8)(a) and (b)

After “corporation”, insert “or other person”.

Subsection 93(10)

After “corporation” (wherever occurring), insert “or other person”.

Subsection 93A(2)

Omit “to the conduct or proposed conduct of which”, substitute “or other person to whose conduct or proposed conduct”.

At the end of section 96

Add:

(8) Subsection (1) does not apply with respect to any act referred to in a paragraph of subsection (3) if the supplier and the second person referred to in that paragraph are bodies corporate that are related to each other.

Existing provision

There is no provision for notification of RPM

Explanatory Memorandum

Outline of chapter

[para 8.1] Schedule 8 to this Bill amends the resale price maintenance (RPM) and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct.

[para 8.2] Schedule 8 also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

Context of amendments

[para 8.3] Broadly, RPM involves the supply of goods on the condition that the goods not be sold below a price specified by the supplier. RPM is a form of vertical restraint concerning resale prices, and is prohibited under section 48 on a per se basis. Section 96 specifies conduct that constitutes RPM.

[para 8.4] The Harper Review noted that RPM may have varied impacts oncompetition. In some circumstances, RPM may facilitate anti-competitive collusion. However, RPM will not have a substantial effect on competition in a market if the good or service is subject to strong competition. RPM may be pro-competitive and beneficial for consumers where, for example, it creates an incentive for retailers to invest in training their staff on the use of a complex product.

[para 8.5] The Harper Review also noted that RPM is becoming more commonplace in online markets, which are an increasingly significant part of the economy. A number of online business models now use distribution arrangements which may constitute RPM, but provide benefits such as expanding the range of product sold in Australia.

[para 8.6] The Commission may grant authorisation for RPM conduct where it would result in a net public benefit. Authorisation for RPM has been available since 1995, but is seldom used relative to authorisations for other prohibited conduct. The Harper Review noted a concern that the cost and delay of the authorisation process is a deterrent to businesses seeking exemption for a retailing or distribution strategy involving RPM, particularly where this would delay the launch of a new product.

[para 8.7] Notification is available for other forms of vertical restriction, including third line forcing, but is not available for RPM. Notification is generally a quicker and less expensive means of obtaining an exemption.

[para 8.8] The Harper Review considered it prudent to retain a per se prohibition on RPM, but recommended that notification be made available for RPM. The Panel noted that the Commission could withdraw the exemption if it considered that the anti-competitive harm of the conduct outweighed any public benefit.

[para 8.9] The Harper Review also recommended that the prohibition on RPM should not apply to related bodies corporate.

Summary of new law

[para 8.10] Schedule 8 amends the resale price maintenance and notification provisions to allow a corporation or person to notify the Commission of RPM conduct, as an alternative to seeking authorisation from the Commission for RPM conduct.

[para 8.11] Schedule 8 also provides an exemption from the RPM prohibition for conduct between related bodies corporate.

Detailed explanation of new law

Notification

[para 8.12] Schedule 8 amends section 48 to provide that the prohibition against RPM does not apply to a corporation or other person engaging in conduct that constitutes RPM if the corporation or other person has given the Commission a notice under section 93(1), and that notice is in force. [Schedule 8, items 1 and 2, subsections 48(1) and 48(2)]

[para 8.13] Section 93 is renamed to indicate that notification is now available under that section for RPM conduct. Subsection 93(1) sets out the types of conduct or proposed conduct for which a corporation or other person may give a notice to the Commission. Schedule 8 amends subsection 93(1) to include conduct of the kind referred to in section 48 (that is, RPM). The subsection is also split into two paragraphs for simplification. [Schedule 8, items 3 to 5, Subdivision A of Division 2 of Part VII, subsection 93(1)]

[para 8.14] Subsection 93(3A), which allows the Commission to give a written notice to revoke a notification if it is satisfied that the public benefits of the notified conduct will not outweigh the detriments, is also amended to incorporate conduct of the kind referred to in section 48. [Schedule 8, item 9, paragraph 93(3A)(a)]

[para 8.15] Subsection 93(7A) is amended so that subsection 93(1) notices for conduct referred to in section 48 come into force:

– at the end of the period of 60 days, or such other period as is prescribed by the regulations, starting on the day when the corporation or other person gave the Commission notice; or

– if the Commission gives notice to the corporation or other person under subsection 93A(2) during that period – when the Commission decides not to give the corporation or other person a notice under subsection 93(3A). [Schedule 8, item 13, subsection 93(7A)]

[para 8.16] The latter timing applies where, within the initial 60 day or otherwise prescribed period, the Commission issues a draft notice proposing to revoke a notification under subsection 93(3A) and invites the corporation and other interested persons to request a conference with the Commission (under subsection 93A(2)) but then decides not to give a notice under subsection 93(3A).

[para 8.17] Subsections 93(7B) and 93(7C), respectively outline when certain types of notifications do not come into force or cease to be in force. Each of these subsections is amended to apply to conduct under section 48 (that is, RPM). [Schedule 8, items 14 and 16, subsections 93(7B) and 93(7C)]

[para 8.18] Section 48 applies to a ‘corporation or other person’, and so provisions of section 93 relating to section 48 are amended to refer to a ‘corporation or other person’. Provisions within section 93 relating to other sections of the Act remain applicable to corporations only. The application of these other sections to persons occurs through the operation of Schedule 1 to the Act. [Schedule 8, items 6, 7, 8, 10, 11, 15, 17, 18, 19 and 20, subsections 93(2), 93(3A), 93(5), 93(6), 93(10) and 93A(2), paragraphs 93(2)(a), 93(3A)(a), 93(7C)(b), 93(8)(a) and 93(8)(b) and subparagraphs 93(7B)(b)(i) and 93(7B)(b)(ii)]

[para 8.19] Section 93 is further amended by Schedule 9 to allow the Commission to impose conditions on a notification for RPM conduct. If the Commission reasonably believes that it would have grounds to give the corporation or person a notice under subsection 93(3A) (that the conduct is not approved), but that those grounds would not exist if particular conditions relating to the proposed conduct were complied with, then the Commission may impose those conditions. [Schedule 9, item 7, section 93AAA]

[para 8.20] If the Commission is satisfied that the corporation or other person has failed to comply with those conditions, the Commission may at any time revoke the RPM notification by issuing a written notice that sets out the reasons the Commission is so satisfied. [Schedule 9, item 6, subsection 93(3B)]

[para 8.21] The decision of the Commission to impose conditions on a notification given under section 93 is subject to Tribunal review. If the person satisfies the Tribunal either that the Commission would not have had grounds to object to the notice under subsection 93(3A), or that the conditions imposed would not have addressed those grounds, the Tribunal must set aside the notice. If the Tribunal is not so satisfied, it must affirm the notice. [Schedule 9, item 25, subsection 105(5AAB)]

[para 8.22] The decision of the Commission to revoke a notification, on the basis that a person has not complied with conditions, is also subject to Tribunal review. If a person satisfies the Tribunal that they have in fact complied with the conditions, the Tribunal must set aside the notice revoking the notification. If the Tribunal is not so satisfied, it must affirm the notice. [Schedule 9, item 25, subsection 105(5AAA)]

[para 8.23] Further amendments to the notification provisions are made by Schedule 9 and detailed below in Chapter 9.

Related bodies corporate

[para 8.24] A new subsection is added to section 96, so that the actions listed in subsection 96(3) do not constitute engaging in RPM if the supplier and second person are related bodies corporate. [Schedule 8, item 21, subsection 96(8)]

[para 8.25] This change reflects the general tenet of competition law that companies within a corporate group are treated as a single economic entity and are not considered to be competitors. This also brings section 48 in line with the prohibitions in sections 45 and 47, which do not apply to trading arrangements entered into between related companies.

 

Authorisations, notifications and class exemptions (Schedule 9)

Comparison of new and current law (from EM)

New law Current law
The Commission can grant an authorisation if it is satisfied that conduct:
- will not (or is not likely to) substantially lessen competition or
- is likely to result in a net public benefit.
The Commission can grant an authorisation only if it is satisfied the conduct is likely to result in a net public benefit.
There is a single authorisation provision for all types of authorisations, with some procedural differences between merger and non-merger authorisations. There are separate authorisation provisions applying to mergers and other types of authorisations.
The decision-maker at first instance for merger authorisations is the Commission. The decision-maker at first instance for merger authorisations is the Tribunal.
No separate merger clearance provision. The Commission can grant a merger clearance if it is satisfied the merger will not (or is not likely to) substantially lessen competition.
The Commission’s determination on a merger authorisation is subject to merits review by the Tribunal. The Tribunal’s determination on a merger authorisation is not subject to merits review.
The Commission may impose conditions on collective boycott and RPM notifications. The Commission can only approve or reject collective boycott notifications. Notification is not available for RPM conduct.
A collective boycott must cease when the Commission gives a ‘stop notice’. There is no provision for a ‘stop notice’.

 

Harper recommendation

Based on Harper Recommendation 38 regarding authorisations and notification, rec 39 regarding block exemption powers and recommendation 35 regarding mergers.

Explanatory memorandum

9.1 Schedule 9 to this Bill amends Part VII and Part IX of the Act to:

  • consolidate the various authorisation provisions, including those relating to mergers, into a single authorisation process;
  • grant the Commission a ‘class exemption’ power;
  • allow the Commission to impose conditions on notifications for resale price maintenance and collective bargaining that involves collective boycott conduct;
  • grant the Commission a power to issue a ‘stop notice’ requiring collective boycott conduct that is the subject of a notification to cease; and
  • provide for Tribunal review of Commission merger authorisation determinations.

9.2 Part VII of the Act covers authorisations (Division 1), notifications (Division 2) and merger clearances and authorisations (Division 3). While these processes have different features, each provides an exemption from the application of Part IV of the Act.

Simplification

9.3 The Harper Review considered that the authorisations and notifications provisions were unnecessarily complex, generating excessive regulatory and administrative costs and creating a focus on technicalities over issues of substance.

9.4 The Harper Review recommended two principal changes to simplify the authorisations and notifications provisions:

  • ensuring that only a single authorisation application is required for a single business arrangement or transaction; and
  • empowering the Commission to grant authorisation on the basis that the conduct would not be likely to substantially lessen competition.

Mergers

9.5 Submissions to the Harper Review raised concerns about the Commission’s formal merger clearance process and the merger authorisation processes undertaken by the Tribunal. A merger clearance can only be granted if the Commission is satisfied that the merger will not substantially lessen competition. A merger authorisation can only be granted if the Tribunal is satisfied that there will be net public benefits from the merger.

9.6 The Harper Review noted that the formal clearance process has not been used since it was introduced in 2007, and that the merger authorisation process has been used only a few times since it was reformed in 2007.

9.7 Unlike authorisations for other conduct prohibited under Part IV, the Commission is not currently the decision-maker at first instance for merger authorisations. Instead, the Tribunal makes the decision at first instance and there is no avenue for review of these decisions other than seeking judicial review by the Federal Court.

9.8 The Harper Review recommended combining the formal clearance process with the merger authorisation process to create a single, streamlined authorisation process with the following features:

  • the Commission should be the decision-maker at first instance (as it is better suited to undertaking investigations);
  • the Commission should be empowered to authorise a merger if satisfied the merger would not substantially lessen competition or would result, or be likely to result, in a net public benefit;
  • the formal process should not be subject to prescriptive information requirements, but the Commission should be empowered to require the production of business and market information;
  • the formal process should be subject to strict timelines that cannot be extended except with the consent of the merger parties;
  • decisions of the Commission should be subject to review by the Tribunal under a process that is also governed by strict timelines; and
  • the review by the Tribunal should be based upon the material that was before the Commission, but the Tribunal should have the discretion to allow a party to adduce further evidence, or to call and question a witness, if the Tribunal is satisfied there is sufficient reason.

Class exemptions

9.9 The Harper Review recommended granting the Commission the power to issue a ‘class exemption’ for business practices (types or kinds of conduct) that are unlikely to generate competition concerns, or are likely to generate a net public benefit. Such exemptions would remove the need to make individual applications by creating ‘safe harbours’ for business and thereby reduce compliance and administration costs and increase certainty.

Collective Bargaining

9.10 Collective bargaining by businesses may be detrimental to competition and consumer welfare. Such behaviour may allow firms to exploit consumers, force out competition, and reduce general economic welfare. The same is true of collective boycotts, where a bargaining group refuses to deal with suppliers or customers. However, in certain circumstances collective bargaining conduct can be beneficial for competition. Similarly, in some circumstances a collective boycott can be an appropriate and useful tool to support collective bargaining.

9.11 For example, small businesses will typically have less bargaining power than one large supplier, putting them at a disadvantage in individual negotiations. By negotiating as a collective, small business may be able to negotiate with bargaining power equal to a larger firm, and achieve a more efficient and pro-competitive outcome.

9.12 The Harper Review considered that the collective bargaining notification process is potentially of significant benefit to small business and could be more widely used. It recommended reforms to introduce greater flexibility into the collective bargaining notification process, including:

  • enabling notifications to cover future members of the bargaining group and multiple counterparties;
  • enabling the Commission to impose conditions on notifications involving collective boycotts;
  • extending the time allowed for the Commission to consider notifications involving collective boycotts before they come into force; and
  • giving the Commission a ‘stop power’ to require collective boycotts to cease in exceptional circumstances.

9.13 Schedule 9 simplifies the various authorisation provisions into a single authorisation provision that allows the Commission to authorise conduct that would otherwise be prohibited under Part IV.

9.14 Schedule 9 also repeals the formal merger clearance and authorisation processes contained in Division 3 of Part VII. Mergers will now be subject to the general authorisation process in section 88. Among other things, this means the decision-maker at first instance for merger authorisations will change from the Tribunal to the Commission.

9.15 Schedule 9 introduces a ‘class exemption’ power, allowing the Commission to exempt conduct or categories of conduct if it is unlikely to raise competition concerns or is likely to generate net public benefits.

9.16 Schedule 9 also amends the notification process for collective bargaining, including by allowing the Commission to impose conditions on notifications which include collective boycott activity, and granting the Commission the power to issue a ‘stop notice’ requiring collective boycott conduct to cease.

Repeal of the formal merger clearance and authorisation processes

9.17 Schedule 9 broadly adopts the recommendations of the Harper Review in relation to merger authorisations, with some slight differences in detail as discussed below.

9.18 Schedule 9 repeals the existing Division 3 of Part VII. This includes the formal merger clearance process, and the separate merger authorisation process. [Schedule 9, item 22, Division 3 of Part VII]

9.19 The general authorisation provisions are amended to incorporatemerger authorisations and also to simplify the provisions.

9.20 The following paragraphs outline the authorisation process as applicable to all authorisations, followed by detail of several provisions which are specific to merger authorisations.

Simplification of the general authorisation process

9.21 Schedule 9 significantly simplifies the authorisation provisions by removing separate provisions applicable to specific types of authorisations, and instead including a single provision under which conduct may be authorised (section 88) and a single test for authorisation (section 90).

9.22 The following paragraphs explain the operation of the amended provisions, which apply to all types of authorisations (both merger and non-merger). Except as described below, these amendments are not intended to change the authorisation process itself. Rather, they are intended to reduce the complexity of the provisions of the Act that set out the authorisation process.

Power to grant authorisation

9.23 Section 88 no longer contains several provisions allowing authorisation to be granted for different types of conduct prohibited by Part IV. Instead, subsection 88(1) allows the Commission to grant an authorisation to a person to engage in conduct to which one or more provisions of Part IV would or might apply. This power is discretionary and is exercisable on application by a person. [Schedule 9, item 1, subsection 88(1)]

9.24 The power to grant authorisation under section 88(1) now extends to conduct under section 46 (misuse of market power) and section 50 (mergers).

9.25 The Commission may grant a single authorisation for several types of conduct, or separate authorisations for any of the conduct to which the application relates. [Schedule 9, item 1, subsection 88(5)]

9.26 ‘Engage in conduct’ is defined in subsection 4(2) of the Act as ‘doing or refusing to do any act’. Although subsection 4(2) of the Act does not expressly include the acquisition of shares or assets, these are ‘acts’ and mergers may now be authorised under section 88 on the basis that sections 50 or 50A, which are contained in Part IV, would or might apply to such acquisitions.

9.27 The Commission may still only prospectively authorise conduct. The Commission does not have the power to grant authorisation for past conduct, that is, conduct (including mergers) engaged in before the Commission determined the application for authorisation. This replaces the former subsections 88(6B), (8D) and (12) with a general rule for all types of authorisation. [Schedule 9, item 1, subsection 88(6)]

Authorisation subject to conditions

9.28 The Commission may continue to grant an authorisation subject to conditions specified in the authorisation, and the protection of an authorisation does not apply if any of the conditions are not complied with. [Schedule 9, item 1, subsection 88(3)]

9.29 For example, where a merger authorisation is granted on the basis of a condition that is to be complied with before the merger takes place, and the merger is completed without the condition having been complied with, the merger will not be in accordance with the authorisation. This means the merger will not benefit from the protection afforded by the authorisation and the merger may contravene section 50.

9.30 The ability to grant an authorisation subject to conditions allows the Commission to address elements of the conduct which are a cause for concern, rather than denying the application outright on the basis of those concerns.

Effect of an authorisation

9.31 While an authorisation is in force, the provisions of Part IV specified in the authorisation do not apply to the conduct specified in the authorisation, to the extent it is engaged in by:

  • the applicant;
  • any other person named or referred to in the application as a person who is engaged in, or proposed to be engaged in, the conduct; and
  • any particular person or class of persons, as specified in the authorisation, who become engaged in the conduct. [Schedule 9, item 1, subsection 88(2)]

9.32 An authorisation provides protection only for the conduct and provisions specified in that authorisation. This protection does not extend to conduct not specified in the authorisation or to provisions of Part IV that may also apply to the conduct but which have not been specified in the authorisation.

Applications for authorisation

9.33 An application for authorisation must specify both the relevant conduct that is to be engaged in, and the provisions of Part IV that would or might apply to the specified conduct. [Schedule 9, item 1, subsection 88(1)]

9.34 Where a single application for authorisation deals with a merger and other conduct under Part IV, the application is only considered to be a ‘merger authorisation’ insofar as it relates to the merger. Where the procedure for merger authorisations differs from the procedure for non-merger authorisations, the procedure applicable to each type of authorisation applies to the corresponding component of the authorisation.

9.35 The requirements for an application for authorisation (including a minor variation, revocation or revocation and substitution) are set out in subsection 89(1). Schedule 9 to the Bill removes the requirement that the application must be in the form prescribed by the regulations, and instead requires that the application be in the form approved by the Commission in writing. An application must be accompanied by any other information or documents required by the form. [Schedule 9, item 77, paragraph 89(1)(a)]

9.36 This change introduces greater flexibility into the authorisation process by allowing the Commission to determine which information is likely to be required to assess proposed conduct.

9.37 The application fee will continue to be prescribed by the regulations.

9.38 The applicant may withdraw their application for authorisation at any time, by writing to the Commission. [Schedule 9, item 1, subsection 88(7)]

Test for authorisation

9.39 Section 90 is amended to incorporate merger authorisations and simplify the provision. It no longer contains separate tests for granting authorisation for different types of conduct prohibited by Part IV.

9.40 Subsection 90(7) now contains a single ‘authorisation test’ which applies to all types of authorisations. The new test provides that the Commission must not grant an authorisation unless it is satisfied in all the circumstances either:

  • that the conduct would not have the effect, or would not be likely to have the effect, of substantially lessening competition; or
  • that the conduct would result, or be likely to result, in a benefit to the public which would outweigh the detriment to the public that would result, or be likely to result, from the conduct. [Schedule 9, item 3, subsection 90(7)]

9.41 The first limb of the test is a new basis for granting authorisation. The second limb is consistent with the tests previously contained in section 90.

9.42 Section 90(8) specifies that the first limb is not applicable to the extent that the conduct specified in an application for authorisation is prohibited on a per se basis. [Schedule 9, item 3, subsection 90(8)]

9.43 This means that authorisations for cartel conduct (Division 1 of Part IV), secondary boycotts (sections 45D or 45DB) or resale price maintenance (section 48) may only be granted if the Commission is satisfied of the second limb of the test.

9.44 This avoids a mismatch between the basis on which the conduct is prohibited, which does not look to whether the purpose, effect or likely effect of the conduct is a substantial lessening of competition, and the basis on which authorisation for that conduct may be granted.

9.45 Subsections 90(8A), (8B) and (9), which contain specific tests for authorisation of dual-listed company arrangements and overseas mergers, are repealed. [Schedule 9, item 3, subsections 90(8A) to 90(9)]

Power to seek additional information

9.46 Currently, the Commission may consult with interested parties before making an authorisation determination. Under section 90(2), it is required to take all submissions received from the applicant, the Commonwealth, a State or any other person into account.

9.47 The new subsection 90(6) replaces 90(2) and explicitly provides that the Commission may invite written submissions from interested persons within a specified period, and give the applicant or another person written notice to provide further or particular information, or consult with persons as reasonable and appropriate. The Commission may consult with persons as it considers reasonable and appropriate [Schedule 9, item 3, subsection 90(6)]

9.48 The new subsection 90(6A) provides that before making its determination, the Commission must take into account submissions and information received under subsection 90(6) within the period specified in the written notice (if any), but is not required to take into account submissions and information received after the specified period. This does not prevent the Commission taking such information into consideration if it wishes to do so. [Schedule 9, item 3, subsection 90(6A)]

Period for consideration and default determination

9.49 Schedule 9 does not change the period for consideration, or default determination, of a non-merger application. Under subsection 90(10), if the Commission does not determine an application for a non-merger application within the ‘relevant period’ (as set out in subsection 90(10A)), it is taken to have granted the authorisation.

Tribunal review of general authorisations

Currently, a person dissatisfied with a Commission authorisation 9.50determination may apply to the Tribunal for a review under section 101 of the Act. Schedule 9 continues the position that the Tribunal conducts a rehearing of non-merger authorisations. [Schedule 9, item 118, subsection 101(2)]

Minor variation, revocation, and revocation and substitution

9.51 Sections 91A, 91B and 91C, respectively, deal with minor variations, revocation, and revocation and substitution of an authorisation. Schedule 9 sets out powers of the Commission and the requirements related to these processes. The powers and requirements are broadly consistent with those that apply for the original application for authorisation.

9.52 Subsection 91A(4) is amended so that the test for granting a minor variation of an authorisation corresponds to the new test applying to the original grant of authorisation.

9.53 If the Commission granted the authorisation on the grounds (in paragraph 90(7)(a)) that the conduct would not, or would not be likely to substantially lessen competition, then it must not grant the minor variation unless it is satisfied in all the circumstances that the variation would not, or would not be likely to increase the extent to which the conduct lessens competition. [Schedule 9, item 92, paragraph 91A(4)(a)]

9.54 If the Commission granted the authorisation on the grounds (in paragraph 90(7)(b)) that the conduct would, or would be likely to generate a net public benefit, then it must not grant the minor variation unless it is satisfied in all the circumstances that the variation would not, or would not be likely to, reduce the net public benefit of the conduct. [Schedule 9, item 92, paragraph 91A(4)(b)]

9.55 Subsection 91A(4A) makes clear that this test does not require the Commission to complete a fresh assessment of the conduct in its entirety. The Commission need not have regard to conduct that is unaffected by the variation. This is intended to ensure the focus is on the effect of the minor variation, and to ensure applications for minor variations can be efficiently determined by the Commission. [Schedule 9, item 92, subsection 91A(4A)]

9.56 Prior to making its determination in relation to a minor variation, revocation or revocation and substitution of an authorisation the Commission may seek additional information from, or consult with, persons in accordance with subsection 90(6). The requirements for the Commission to consult in relation to a minor variation, revocation or revocation and substitution of an authorisation are included elsewhere in sections 91A, 91B and 91B. [Schedule 9, items 92 to 94, subsections 91A(2A), 91B(3A), 91B(3B), 91C(3A) and 91C(3B)]

9.57 Subsections 91A(3), 91B(4) and 91C(4) respectively set out the information the Commission must consider before it may make a determination granting or refusing a minor variation, revocation or revocation and substitution. Where the Commission seeks certain information within a specified period, because of the application of subsection 90(6) to section 91A, 91B or 91C, the Commission is only required to consider information received within that period. The Commission may consider late information if it wishes to do so. [Schedule 9, items 92 to 94, subsections 91A(3), 91B(4) and 91C(4)]

9.58 The tests for revocation and revocation and substitution of an authorisation remain the same, although minor amendments are made within sections 91B and 91C to reflect the other amendments made by Schedule 9 (such as the move to a single test for authorisation under subsection 90(7)). [Schedule 9, items 93 and 98, subsections 91B(5) and 91C( 7)]

Merger authorisations

9.59 The paragraphs below refer to merger authorisations generally, except where they distinguish between domestic and overseas merger authorisation.

New defined terms

9.60 The definition of ‘clearance’ is repealed, as merger clearances no longer exist under the Act. [Schedule 9, item 28, subsection 4(1)]

9.61 Similarly, the definition of ‘authorisation’ is amended to reflect the repeal of Division 3 of Part VII. [Schedule 9, item 27, subsection 4(1)]

9.62 Definitions are inserted into subsection 4(1), to distinguish between a ‘merger authorisation’ and an ‘overseas merger authorisation’. [Schedule 9, item 29, subsection 4(1)]

9.63 A merger authorisation is defined as:

  • an authorisation for a person to engage in conduct to which section 50 or 50A would or might apply; but
  • not authorisation for a person to engage in conduct to which any provision of Part IV, other than section 50 or section 50A, would or might apply. [Schedule 9, item 29, subsection 4(1)]

9.64 An overseas merger authorisation is defined to mean a merger authorisation that is not an authorisation for conduct to which section 50 would or might apply. By implication, a merger authorisation that is not an overseas merger authorisation is a ‘domestic merger authorisation’. [Schedule 9, item 29, subsection 4(1)]

9.65 A domestic merger authorisation is an authorisation that is not an overseas merger authorisation. [Schedule 9, item 122, paragraph 102(1AA)(1)(a)]

Authorisation subject to conditions

9.66 The Commission may make it a condition of granting a merger authorisation that a person must give, and comply with, an undertaking under section 87B. If the person does not comply with this condition, the protection of the merger authorisation will not apply. Subsection 87B(4) sets out additional consequences for failure to comply with a section 87B undertaking. [Schedule 9, item 1, subsection 88(4)]

9.67 The application form for a merger application, as approved by the Commission, may contain a section 87B undertaking not to make the acquisition while the Commission is considering the application. [Schedule 9, item 78, subsection 89(1AA)]

Period for consideration and default determinations

9.68 Given their commercial sensitivity, the Act sets shortertimeframes for considering merger authorisations than for non-merger authorisations. Schedule 9 preserves the existing period for consideration of a domestic merger authorisation, as well as the default position in the event the Commission has not made a determination by the end of that period.

9.69 Under subsection 90(10B), the Commission has 90 days to determine a domestic merger authorisation, beginning on the day the Commission receives the application. [Schedule 9, item 82, subsection 90(10B)]

9.70 The 90 day period may be extended under subsection 90(12) if the applicant informs the Commission in writing, before the end of the initial 90 day period (or other base period as applicable), that they agree to the Commission taking a specified longer period. [Schedule 9, item 84, subsection 90(12)]

9.71 If the Commission has not determined an application for a domestic merger authorisation by the end of the 90 day period (or the longer period, if extended under subsection 90(12)), the Commission is taken to have refused the application. [Schedule 9, item 82, subsection 90(10B)]

9.72 Similarly, no changes are made to the timing for, or default decision on, overseas merger authorisations under subsection 90(11). The Commission continues to have 30 days, from the day on which the application is received, to determine the application. If the Commission has not determined an application for an overseas merger authorisation by the end of the 30 day period, the Commission is taken to have granted the application.

Period for determining minor variations, revocations or revocation and substitutions of domestic merger authorisations

9.73 Subsections 90(10B), 90(12) and 90(13) carry over the timing for determining an original application for a domestic merger authorisation to an application for a minor variation, revocation or revocation and substitution of that domestic merger authorisation. [Schedule 9, items 82, 92, 93 and 99, subsections 91A(5), 91B(5) and 91C(7A)]

9.74 This means that the Commission will be deemed to have refused to grant the minor variation, revocation or revocation and substitution if it has not determined the application within 90 days (or longer period if extended in accordance with those subsections).

9.75 This does not apply in relation to overseas merger authorisations.

Tribunal review of merger authorisations

9.76 The Tribunal may review a determination of the Commission in relation to:

  • an application for a merger authorisation;
  • an application for a minor variation of a merger authorisation;
  • an application for, or the Commission’s proposal for, the revocation of a merger authorisation; and
  • an application for, or the Commission’s proposal for, the revocation of a merger authorisation and the substitution of another merger authorisation. [Schedule 9, items 118 and 128, subsections 101(2) and 102(8)]

9.77 Under subsection 101(2), the Tribunal’s review is not a rehearing of the matter where it relates to a determination of any of these applications. [Schedule 9, item 118, subsection 101(2)]

9.78 Subsection 102(10) provides that when conducting a review in relation to a domestic merger authorisation, the Tribunal must not have regard to any information, documents or evidence other than:

  • information referred to in the Commission’s reasons for its determination;
  • any information or report given to the Tribunal under subsection 102(6);
  • the information, documents or evidence referred to in subsection 102(7);
  • information given to the Tribunal as a result of the Tribunal seeking such information, and consulting with such persons, as it considers reasonable and appropriate for the sole purpose of clarifying the information, documents or evidence referred to in subsection 102(7); and
  • any information, documents or evidence referred to in subsection 102(9). [Schedule 9, item 128, subsection 102(10)]

9.79 Subsection 102(9) grants the Tribunal a power to allow a person to provide new information, documents or evidence that the Tribunal is satisfied was not in existence at the time of the Commission’s determination. This allows the Tribunal to take account of a change in circumstances that has occurred since the Commission’s determination. For example, if there is a new entry to the relevant market after the Commission’s determination is made, the Tribunal may allow a person to provide new information about the entrant so this change in circumstances can be taken into account in the Tribunal’s review. [Schedule 9, item 128, subsection 102(9)]

9.80 The limitations on the information that may be considered by the Tribunal appropriately balance the interests of all parties to a review of a merger authorisation matter. In particular, they are intended to ensure that applicants for merger authorisation provide the Commission with all relevant material at the time of the application, and do not delay production of that material until later in the process or until Tribunal review. The limitations also facilitate the Tribunal conducting its review expeditiously, given the time sensitive nature of merger transactions.

9.81 Subsection 102(9) ensures that the parties to an application for review are not unfairly prejudiced by the limitations of the Tribunal review where there is genuinely new relevant information, documents or evidence that was not in existence at the time of the Commission’s determination.

9.82 Subsection 102(1AA) provides that the Tribunal must determine an application for review of a domestic merger authorisation within the relevant period. This ‘relevant period’ is 90 days, beginning on the day the Tribunal receives the application, unless:

  • the Tribunal allows new information, documents or evidence under subsection 102(9), in which case the period is extended to 120 days. This extension allows the Tribunal sufficient time to consider the new material.; or
  • the Tribunal determines in writing before the end of the initial 90 or 120 day period (as applicable) that the matter cannot be dealt with properly within that initial period, either due to its complexity or other special circumstances, and that an extended period of up to a further 90 days in addition to the initial period applies. [Schedule 9, item 122, subsections 102(1AA), 102(1AC) and 102(1AD)]

9.83 If the Tribunal determines to extend its period of consideration under subsection 102(1AD), it must notify the applicant and the Commission of the determination before the end of the initial 90 or 120 day period (as applicable). [Schedule 9, item 122, paragraph 102(1AD)]

9.84 If the Tribunal does not make a determination on a domestic merger authorisation matter within the applicable period, it is taken to have affirmed the Commission’s determination. [Schedule 9, item 122, subsection 102(1AB)]

9.85 Schedule 9 continues the requirement that the Tribunal must make a determination on the review of overseas merger authorisations within 60 days unless it considers that the matter cannot be dealt with properly within that period (in accordance with subsection 102(1AA)).

Providing false or misleading information

A new section 92 replaces former section 95AZN. Section 92 9.86prohibits a person giving false or misleading information to the Commission or Tribunal under Division 1 of Part VII or Part XIB, in connection with:

  • an application for merger authorisation;
  • an application for a minor variation of a merger authorisation;
  • an application for, or the Commission’s proposal for, the revocation or revocation and substitution of a merger authorisation; or
  • the Tribunal’s review in relation to any of the above applications or proposals. [Schedule 9, item 100, subsection 92(1)]

9.87 Section 92 will be contravened where a person is negligent as towhether the information is false or misleading in a material particular. The requirement of negligence will also be satisfied by proof that the person knew, or was reckless as to whether, the information was false or misleading in a material particular. [Schedule 9, item 100, subsection 92(2)]

9.88 Consequential amendments are made throughout the Act to replace references to section 95AZN with references to section 92. [Schedule 9, items 54-62, 69 and 72, sections 76A and 76B, subsections 75B(1), 76A(2), 76B(2) to 76B(4), paragraphs 76(1A)(c), 76(1B)(a),76B(5)(a), 81A(1)(d) and 89(1)(a), and subparagraph 76(1)(a)(iii)]

Class exemption power

9.89 Schedule 9 inserts a new Division 3 of Part VII that allows the Commission to create class exemptions for particular kinds of conduct, so as to create ‘safe harbours’ for business and thereby reduce compliance and administration costs associated with individual authorisations. [Schedule 9, item 22, Division 3 of Part VII]

9.90 The new subsection 95AA grants the Commission a power to determine that one or more specified provisions of Part IV do not apply to conduct of a kind specified in the determination. [Schedule 9, item 22, section 95AA]

9.91 Parties will need to self-assess whether their conduct falls within a class exemption.

Test for determination of a class exemption

9.92 The Commission may only determine a class exemption if it is satisfied in all the circumstances that conduct of that type satisfies one limb of the two-limb test in subsection 95AA(1). That is, that the conduct of that kind would:

  • not have the effect or would not be likely to have the effect, of substantially lessening competition; or
  • result, or be likely to result, in a benefit to the public which would outweigh the detriment that would result, or be likely to result, from the conduct. [Schedule 9, item 22, subsection 95AA(1)]

9.93 This test for the Commission to determine a class exemption is therefore the same as the test that the Commission would apply when authorising a particular instance of conduct. Parties will need to self-assess whether their conduct falls within a particular class exemption.

Form of a class exemption

9.94 A class exemption is a legislative instrument within the meaning of section 8 of the Legislation Act 2003, and must be registered on the Federal Register of Legislation. [Schedule 9, item 22, subsection 95AA(1)]

9.95 Under subsection 33(3) of the Acts Interpretation Act 1901, the Commission’s power to make a class exemption includes a power to revoke or vary a class exemption. The power to revoke or vary a class exemption is subject to the same conditions as the power to make the initial class exemption, including that the Commission must be satisfied with respect to the matters listed in subsection 95AA(1). [Schedule 9, item 22, note at subsection 95AA(1)]

9.96 It is expected that the Commission will conduct appropriate consultation prior to any decision to vary or revoke a class exemption.

When a class exemption commences and ceases to be in force

9.97 A class exemption enters into force on the day it is made or a later date as specified in the determination. A class exemption remains in force until the end of the period specified in the determination, or until the Commission revokes the determination (whichever is earliest). [Schedule 9, item 22, subsection 95AA(4)]

9.98 To ensure that class exemptions remain relevant and appropriate, the Commission’s determination must specify a period for which the class exemption is to be in force. This period cannot be more than 10 years, which is consistent with the general rule in the Legislation Act 2003 that legislative instruments automatically ‘sunset’ after they have been in force for 10 years. [Schedule 9, item 22, subsection 95AA(3)]

Limitation and withdrawal of the benefit of a class exemption

9.99 A class exemption exempts ‘conduct of a kind’ rather than a particular instance of that conduct. As a result, the Commission may not be made aware of, be able to anticipate, every circumstance of future conduct to which the exemption may apply before it determines a class exemption. As a result, there may be some circumstances in which it would not be appropriate for particular conduct to be exempted, despite falling within the class exemption.

9.100 Where the Commission does identify particular circumstances in which a class exemption should not apply, it may specify a number of limitations. These limitations allow the Commission to restrict the application of the class exemption to:

  • persons of a specified kind;
  • circumstances of a specified kind;
  • conduct that complies with specified conditions. [Schedule 9, item 22, subsection 95AA(2)]

9.101 Where the Commission later forms the view, based on the facts and circumstances of a particular case, that the class exemption should not apply in that particular case, section 95AB allows the Commission to withdraw the benefit of a class exemption in that if it is satisfied that the particular conduct would not meet either of the two limbs of the test in subsection 95AA(1). [Schedule 9, item 22, subsection 95AB(1)]

9.102 To withdraw the benefit of the class exemption in a particular case, the Commission must give a person written notice and must, in or with the notice, give a written statement of its reasons for withdrawing the benefit of the class exemption. [Schedule 9, item 22, subsections 95AB(1) and 95AB(2)]

9.103 A notice of withdrawal comes into force when the Commission gives it to the person, and therefore the benefit of a class exemption can only be withdrawn on a prospective basis. The Commission cannot retrospectively withdraw the benefit of a class exemption. [Schedule 9, item 22, paragraph 95AB(4)(a)]

9.104 While a notice of withdrawal is in force, the class exemption does not apply to the specified conduct engaged in by the recipient of the notice. [Schedule 9, item 22, subsection 95AC(3)]

9.105 A notice of withdrawal ceases to be in force (and the benefit of the class exemption is reinstated) at the earliest of the following times:

  • if the Tribunal sets aside the notice under subsection 102(5G), at the end of the day the Tribunal sets it aside;
  • when the Commission revokes the notice; or
  • the time the specified under subsection 95AA(3). [Schedule 9, item 22, paragraph 95AB(4)(b)]

Tribunal review in relation to a class exemption

9.106 As a class exemption is a legislative instrument, it is subject to disallowance by Parliament. The Commission’s decision to determine the class exemption is not subject to merits review by the Tribunal.

9.107 However, the Commission’s decision to withdraw the benefit of a class exemption in a particular case is reviewable by the Tribunal. A person dissatisfied with the giving of a notice under section 95AB may apply to the Tribunal for a review. An application for review must be made within the time prescribed under the regulations. The Tribunal must review the giving of the notice if the applicant for review is the recipient of the notice or the Tribunal is satisfied the person has a sufficient interest. [Schedule 9, item 23, subsection 101B]

9.108 The Tribunal must make a determination setting aside the notice of withdrawal if the applicant for review satisfies the Tribunal that the conduct specified in the notice of withdrawal would satisfy one of the limbs of the test in subsection 95AA(1). [Schedule 9, item 26, paragraph 102(5G)(a)]

9.109 If the Tribunal is not so satisfied, then it must make a determination affirming the Commission’s notice of withdrawal. [Schedule 9, item 26, paragraph 102(5G)(b)]

Collective bargaining notifications and collective boycott conduct

9.110 Schedule 9 makes a number of changes to the provisions related to the notification of collective bargaining and collective boycotts, in order to make the notification process easier and allow greater flexibility in the bargaining process, particularly for small businesses.

New defined term

9.111 A definition of collective boycott conduct is inserted into subsection 4(1), to mean conduct that has a purpose referred to in subsection 44ZZRD(3) in relation to a contract, arrangement or understanding. This definition applies across the Act, wherever there is a reference to ‘collective boycott conduct’. [Schedule 9, item 29, subsection 4(1)]

Scope of a collective bargaining notification

9.112 A corporation may give a notification of collective bargaining conduct, if the requirements of section 93AB are satisfied. A notice of collective bargaining may include collective boycott conduct. [Schedule 9, item 17, paragraph 93AD(1)(a)]

9.113 A new subsection 93AB(7A) is inserted, to allow the protection of a collective bargaining notice to extend to include people who join the bargaining group after the notice is given to the Commission. However, future members are only covered if the notice is expressed in such a way as to allow future members, and if those future members could have given the notice on their own behalf at the time they became members of the collective bargaining group. [Schedule 9, items 14 and 17 to 19, subsections 93AD(3)(note) and 93AB(7A), and paragraphs 93AD(1)(a) and 93AD(3)(c)]

9.114 This means that, at the time of joining the bargaining group, the relevant future member(s) must meet the requirements set out in section 93AB.

9.115 These amendments ensure that the protection afforded by a collective bargaining notification can be appropriately extended if the membership of the bargaining group changes.

9.116 Amendments are also made throughout section 93AB to allow one notice by the bargaining group to deal with multiple counterparties. This removes the need for the group to give the Commission separate notices for each counterparty it intends to deal with. [Schedule 9, items 8 to 13, subsections 93AB(2) to 93AB(4) and paragraphs 93AB(4)(a) and 93AB(4)(b)]
Commission may impose conditions on a collective bargaining notification

9.117 Schedule 9 also adds a new section 93ACA, to allow the Commission to impose conditions on collective bargaining notifications which wholly or partially relate to collective boycott conduct. [Schedule 9, item 16, subsection 93ACA(1)]

9.118 The Commission may only impose conditions where it reasonably believes that it would have grounds to issue an objection notice relating to the collective bargaining notification, but that those grounds would not exist if particular conditions relating to the proposed conduct were complied with. The Commission may only impose conditions that would remove the grounds for issuing an objection notice. [Schedule 9, item 16, subsection 93ACA(1)]

9.119 The Commission must impose the conditions by written notice, and must give the corporation a written statement of its reasons for imposing the conditions. [Schedule 9, item 16, subsection 93ACA(2)]

9.120 The Commission’s decision to impose conditions on a collective bargaining notice (which includes collective boycott conduct) is reviewable by the Tribunal. If the person satisfies the Tribunal either that the Commission would not have had grounds to object to the notice, or that the conditions imposed would not have addressed those grounds, the Tribunal must set aside the notice. If the Tribunal is not so satisfied, it must affirm the notice. [Schedule 9, item 26, subsection 102(5D)]

9.121 If the Commission imposes conditions on a collective bargaining notice which includes collective boycott conduct, and the Commission is satisfied the corporation has failed to comply with those conditions, the Commission may give the corporation an objection notice. [Schedule 9, item 15, subsection 93AC(2A)]

9.122 If the Commission gives an objection notice under subsection 93AC(2A), this is reviewable by the Tribunal. If the Tribunal is satisfied that the person did not fail to comply with the conditions, it must set aside the objection notice and the notification remains effective. If the Tribunal is not so satisfied, it must affirm the objection notice. [Schedule 9, item 25, subsection 102(5AB)]

When a collective bargaining notice commences and ceases to be in force

9.123 A collective bargaining notice, which does not relate to collective boycott conduct, comes into force 14 days after the corporation gives the Commission the notice. The regulations may prescribe a longer or shorter period than this. [Schedule 9, item 17, paragraph 93AD(1)(a)]

9.124 Where a collective bargaining notice incorporates collective boycott conduct, it will come into force 60 days after the corporation gave the Commission the notice. The regulations may prescribe a longer or shorter period. This longer period recognises the greater level of harm that may be caused by collective boycott activity and the need to allow the Commission a longer period to consult with relevant parties and to consider the proposed conduct and whether to object to the notice. [Schedule 9, item 17, paragraph 93AD(1)(a)]

9.125 A collective bargaining notice ceases to be in force at the earliest of the following times:

  • When it is withdrawn or taken to be withdrawn; or
  • If the Commission gives the Corporation an objection notice, 31 days after the ‘relevant day’ (as set out in subsection 93AD(4)) or a later day specified in writing by the Commission; or
  • At the end of:

    – The period of three years, beginning on the day the corporation gave the collective bargaining notice; or
    – An alternative period determined by the Commission under subsection 93AD(5). [Schedule 9, item 18, paragraph 93AD(3)(c)]

9.126 New subsection 93AD(5) allows the Commission to determine an alternative period for a collective bargaining notice to expire, if it determines that the 3 year period is not appropriate in all the circumstances. The alternative period set by the Commission may be any period up to 10 years, beginning on the day the corporation gives the Commission the collective bargaining notice. The Commission must give the corporation a written notice determining the alternative period and stating its reasons. [Schedule 9, item 20, subsections 93AD(5) and 93AD(6)]

9.127 The Commission’s decision to set an alternate period under subsection 93AD(5) is reviewable by the Tribunal. If the Tribunal is satisfied that the default period of 3 years is appropriate in all the circumstances, or the alternate period set by the Commission is not appropriate in all the circumstances, it must set aside the notice under subsection 93AD(5). If it is not so satisfied, it must affirm the notice. [Schedule 9, item 26, subsection 102(5E)]

Stop notices for collective boycott activity

9.128 Where a corporation has given the Commission a notice of collective bargaining that relates to collective boycott conduct, and that notice remains in force, Schedule 9 grants the Commission a power to issue a ‘stop notice’ requiring the collective boycott conduct to cease. [Schedule 9, item 21, section 93AG]

9.129 A stop notice may only be given by the Commission where the following conditions are met:

  • there has been a material change of circumstances since the Commission previously gave a stop notice (if applicable) or since the collective bargaining notice came into force; and
  • the Commission reasonably believes that:

– the collective boycott conduct has resulted in serious detriment to the public; or
– serious detriment to the public is imminent as a result of the collective boycott conduct. [Schedule 9, item 21, subsection 93AG(1)]

9.130 This ensures that once a notification is in force, the Commission has the flexibility to respond to changing circumstances where the conduct poses harm which is different to, or greater than, the actual or likely harm that was apparent at the time of the notification. This allows the Commission to intervene and stop serious, harmful conduct while it prepares a final objection or conditions notice.

9.131 The Commission must, at the time it gives the corporation the stop notice, give the corporation a written statement of its reasons for giving the stop notice. [Schedule 9, item 21,subsection 93AG(2)]

9.132 The effect of a stop notice is that the collective bargaining notification is taken not to be in force under section 93AD and that the legal protection available for a collective boycott is temporarily suspended, to the extent the notification relates to collective boycott conduct. [Schedule 9, item 21, subsection 93AG(3)]

9.133 Despite a stop notice, collective bargaining may continue whilst the collective bargaining notification remains in force, provided it does not involve collective boycott conduct.

9.134 The stop notice comes into force at the time the Commission gives the corporation the stop notice. [Schedule 9, item 21, subsection 93AG(4)]

9.135 The Commission may extend a stop notice by up to 90 days, if it is satisfied that in all the circumstances it is reasonable to do so. If the Commission extends the stop notice, it must do so by giving the corporation a written notice which must include, or be accompanied by, a written statement of the Commission’s reasons for the extension. [Schedule 9, item 21, subsections 93AG(7) and 93AG(8)]

9.136 The stop notice ceases to be in force at the earliest of the following times:

– the end of 90 days (or the end of up to 180 days, if the Commission extends the stop notice); or

– when the Commission issues a final objection notice under subsections 93AC(1) or 93AC(2); or

– when the Commission issues notice under subsection 93ACA(1) imposing conditions; or

– when the Commission withdraws the stop notice (if it is withdrawn). [Schedule 9, item 21, subsection 93AG(5)]

9.137 The Commission’s decision to issue a stop notice is not reviewable by the Tribunal. This is because a stop notice can only be issued in order to prevent actual or imminent serious detriment to the public. The prevention of such detriment would be undermined by a merits review process, which would divert the Commission’s resources away from assessing the conduct itself and onto the review. The lack of merits review is appropriate as a stop notice can only be in place for a maximum of 90 days before the Commission must either: extend the notice, issue a final objection notice or final conditions notice, or withdraw the stop notice. A final objection notice or final conditions notice is reviewable by the Tribunal.

9.138 The Commission’s decision to extend the stop notice is reviewable by the Tribunal under subsection 102(5F). If the applicant for review satisfies the Tribunal that in all the circumstances it was not reasonable to extend the stop notice, the Tribunal must make a determination setting aside the notice of extension. If the Tribunal is not so satisfied, it must make a determination affirming the notice of extension. [Schedule 9, item 26, subsection 102(5F)]

Consequential amendments

Notification amendments

9.139 As detailed in Chapter 8, Schedule 9 makes consequential amendments to the notification provisions of Part VII to reflect related amendments detailed in this Chapter, Chapter 7 and Chapter 8 (allowing notification for RPM, allowing for conditions to be imposed on RPM notifications, and simplifying the assessment of all forms of exclusive dealing under a single test).

Radiocommunications Act 1992

[changes to update references to provisions in CCA amended by Schedule 9]

Other consequential amendments

9.144 Schedule 9 makes a number of consequential amendments throughout the Act to update references in the Act to new, amended or repealed provisions of Part VII. ...

Commencement, application and transitional provisions

9.146 Items 1 to 103 of Schedule 9 commence at the same time as Schedule 1. Item 104 commences immediately after items 1 to 103. Items 105 to 132 commence at the same time as Schedule 1. Item 133 commences immediately after Schedule 1. Items 134 to 163 commence at the same time as Schedule 1.

 

Admissions of fact (Schedule 10)

Comparison of new and current law (from EM)

New law Current law
Admissions of fact made by a person, and findings of fact made by a court, in certain proceedings against a person may be used in certain other proceedings against that person under the Act. Findings of fact made by a court in certain proceedings against a person may be used in certain other proceedings against that person under the Act.

 

Harper recommendation

Follows Harper Recommendation 41 that s 83 be amended to extend 'admissions of fact made by the person against whom the proceedings are brought in addition to findings of fact made by the court.'

Change to section 83

Section 83 is repealed and replaced with:

83 Findings and admissions of fact in proceedings to be evidence

(1) In a proceeding against a person under section 82 or in an application under subsection 51ADB(1) or 87(1A) for an order against a person, a finding of any fact made by a court, or an admission of any fact made by the person, is prima facie evidence of that fact if the finding or admission is made in proceedings:

(a) that are proceedings:

(i) under section 77, 80, 81, 86C, 86D or 86E; or

(ii) for an offence against section 44ZZRF or 44ZZRG; and

(b) in which that person has been found to have contravened, or to have been involved in a contravention of, a provision of Part IV or IVB, or of section 55B, 60C or 60K.

(2) The finding or admission may be proved by production of:

(a) in any case—a document under the seal of the court from which the finding or admission appears; or

(b) in the case of an admission—a document from which the admission appears that is filed in the court.

Explanatory memorandum

10.1 Schedule 10 to this Bill extends section 83 of the Act so that a party bringing certain proceedings may rely on both admissions of fact and findings of fact made in certain other proceedings.

10.2 Consumers or businesses harmed by a contravention of the competition law can seek relief by commencing a private action before the Federal Court (for example, a person may commence an action for damages under section 82).

10.3 Section 83 of the Act is intended to facilitate private actions by enabling findings of fact made in certain proceedings against a corporation to be used as prima facie evidence against that corporation in certain other proceedings. For example, if the Commission brings an action against a corporation seeking pecuniary penalties under section 77 or an injunction under section 80 for a contravention of the Act, and during that proceeding the court makes a finding of fact, that finding may be relied upon by a person later bringing a private action.

10.4 This mechanism helps to reduce the cost of private actions, as a person relying on a previous finding of fact as prima facie evidence does not need to establish that fact.

10.5 Many proceedings brought by the Commission are resolved by a corporation making admissions of fact that establish the contravention. However, it is uncertain whether section 83 also applies to admissions of fact, and the extent to which litigants in subsequent proceedings may rely on these admissions.

10.6 The Harper Review noted this lack of clarity was an impediment to the right to private enforcement of the competition law, and recommended amending section 83 to clarify that it applies to admissions of fact as well as findings of fact. This would enhance the effectiveness of section 83 as a means of reducing the cost of private actions, and thereby facilitating access to justice.

10.7 Schedule 10 amends section 83 so that a party bringing certain proceedings (such as an action for damages under section 82) may rely on both admissions of fact and findings of fact made in certain other proceedings (such as an action by the Commission seeking pecuniary penalties under section 77 or an injunction under section 80).

Detailed explanation of the new law

10.8 The scope of section 83 is broadened so that where a person has made an admission of fact in certain proceedings against that person, and that person was found in those proceedings to have contravened or been involved in a contravention of certain provisions of the Act, that admission can be used as prima facie evidence of that fact in certain other proceedings against that person. [Schedule 10, item 1, subsection 83(1)]

10.9 An admission of fact can only be used against the person who made the admission. [Schedule 10, item 1, subsection 83(1)]

10.10 Both admissions of fact and findings of fact may be proved by a document under the seal of the court from which the finding or admission appears. Admissions of fact may also be proved by a document from which the admission appears that is filed in the court. [Schedule 10, item 1, subsection 83(2)]

10.11 Subsections 83(1) and (2) together ensure that admissions cannot be relied upon as prima facie evidence in subsequent proceedings unless they have first been tested by a court and have therefore been taken into consideration in that court finding that the person contravened or was involved in a contravention of the Act.

10.12 As with findings of fact, an admission of fact proved in accordance with subsection 83(2) is only prima facie evidence of that fact, meaning that the defendant is not precluded from producing contrary evidence to disprove that fact.

10.13 Section 83 is also rewritten for simplification. The operation of section 83 is not intended to change except as detailed in this Chapter. [Schedule 10, item 1, section 83]

 

Power to obtain information, documents and evidence (Schedule 11)

Comparison of new and current law (from EM)

New law Current law
If a person has refused or failed to comply with a notice to produce documents it is a defence if, after a reasonable search, the person is not aware of the documents. No equivalent.
A section 155 notice may be issued in relation to alleged contraventions of court-enforceable undertakings given under section 87B of the Act or section 218 of the Australian Consumer Law, and in relation to a merger authorisation decision. A section 155 notice may not be issued in relation to alleged contraventions of court-enforceable undertakings.
The maximum penalty for non-compliance with a section 155 notice is 100 penalty units or 2 years imprisonment (for an individual). The maximum penalty for non-compliance with a section 155 notice is 20 penalty units or 12 months imprisonment (for an individual).

 

Harper recommendation

Based on Harper Recommendation 40 to extend s 155 powers to investigations of breaches of court-enforceable undertakings and to increase fine for non-compliance.

Proposed change

Various amendments made to s 155 to implement this change

Explanatory memorandum

The EM provides some background to the changes and provides a summary as well as detailed explanation fo the new law - the summary follows:

Summary of new law

11.18 Section 155 is broadened, so that a notice may be issued in relation to an alleged contravention of a court-enforceable undertaking made to the Commission under section 87B or section 218 of the Australian Consumer Law or in relation to an application for merger authorisation.

11.19 A defence is introduced to section 155, so that a person who is not aware of the requested documents after undertaking a reasonable search is taken not to have contravened subsection 155(5).

11.20 The maximum penalty for non-compliance with a section 155 notice is increased.

 

Access to services (Schedule 12)

Comparison of new and current law (from EM)

New law Current law
Declaration criteria
The declaration criteria that must be considered by the Council and Minister are contained in a single section. The declaration criteria that must be considered by the Council and Minister are replicated across multiple sections.
The decision maker must consider whether access (or increased access) on reasonable terms and conditions as a result of declaration would promote a material increase in competition. Declaration criterion (a) requires the decision maker to consider whether access (or increased access) would promote a material increase in competition.
The decision maker must consider whether total foreseeable market demand could be met by the facility over the declaration period at least cost when compared to two or more facilities. The decision maker must consider whether it is uneconomical for anyone to develop another facility to provide the service.
No change. The decision maker must consider whether the facility is of national significance, having regard to its size, importance to constitutional trade or commerce and to the national economy.
The decision maker must consider whether access (or increased access) would promote the public interest. The decision maker must consider whether access (or increased access) would not be contrary to the public interest.
The decision maker cannot declare a service if it is subject to an effective access regime. (No longer a criterion – now a threshold question). The decision maker must consider whether the service is subject to an effective access regime as part of the declaration criteria.
Power of the Minister and the Commission
The Minister may revoke the certification on recommendation by the Council, if the regime ceases to be effective. The Council may make a recommendation on its own initiative or on application. No equivalent.
The Commission’s power to make a determination requiring a facility operator to extend or expand the facility, and the safeguards on that power, are clarified to include capacity and geographical expansions. The Commission’s power to make a determination requiring a facility operator to extend the facility, and the safeguards on that power, has been interpreted to include the power to order ‘expansions’.
Default declaration decision
The Minister is taken to have accepted the Council’s recommendation if he or she does not publish a decision on a declaration within the 60 day time limit The Minister is taken to have not made a declaration if they have not published a decision within the 60 day time limit.

 

Harper recommendation

Related Harper Recommendation was rec 42, which was supported in part by the government.

Explanatory Memorandum

12.1 Schedule 12 to this Bill amends Part IIIA of the Act, which contains the National Access Regime (Regime), to ensure it better promotes effective competition in dependent markets. It does this by addressing the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

The EM goes on to discuss the context of the amendments

12.13 Schedule 12 amends the Regime to ensure that it remains an accessible and effective regulatory option, which can boost competition in the economy and create predictable outcomes. The primary changes included in this Schedule are:

– amend and clarify the declaration criteria that must be used by the Council and designated Minister;

– amend the default position, whereby the Minister is now deemed to have made a decision in accordance with the declaration recommendation of the Council if the Minister has not responded within 60 days; and

– amend and clarify the scope of a determination made by the Commission to ‘extend’ a facility in an access dispute.

– provide the Minister with power to revoke certification on recommendation by the Council, if the regime ceases to be effective.

A more detailed explanation is also available in the EM

 

Application and transitional provisions (Schedule 13)

Comparison of new and current law (from EM)

New law Current law
A new Division 3 is inserted into Part XIII of the Act, containing transitional provisions related to amendments made by other Schedules to this Bill. Transitional provisions are not required.

 

 

Other amendments (Schedule 14)

Comparison of new and current law (from EM)

New law Current law
Removes the requirement for private litigants to seek Ministerial consent to bring action for a breach of the Act that takes place overseas. The Act requires Ministerial consent to bring action for a breach of the Act that takes place overseas.
Extends the jurisdiction of State and Territory courts to hear actions under the Act for pyramid selling and unsafe goods liability. State and Territory courts cannot hear actions for pyramid selling and unsafe goods liability.
Removes the requirement for the ACCC to keep a register of records of proceedings at certain conferences or recommendations under the product safety requirements. Paragraphs 95(1)(h) and (j) require the ACCC to maintain certain records, that relate to sections of the Act that have been repealed and superseded by Div 3 of Part XI of the Act.
Permits the disclosure of certain confidential information by the ACCC to specific agencies where it is reasonably necessary to protect public safety. Section 132A of the ACL permits the ACCC to provide certain confidential information to any other person only in limited circumstances.
Rectifies a drafting error so that the offence of conspiracy is carved out of the Act, ensuring there is no overlap with the Criminal Code Act 1995. Both the Act and subsection 11.5 of the Criminal Code Act 1995 apply to a relevant offence against the cartel offence provisions in the Act.
Clarifies that the cooling-off period for unsolicited consumer agreements begin on the day the agreement is entered into. The current drafting of subsection 86(1) of the ACL may inadvertently raise confusion about whether traders can supply unsolicited goods or services and accept or require payment after an unsolicited consumer agreement is entered into but before the ten business days commence for the cooling-off period.
Rectifies a drafting error by extending to any person the application of the ACL, as a law of the Commonwealth, regarding conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods. Section 131 of the Act provides that section 33 of the ACL applies only to the conduct of corporations in trade or commerce, as a law of the Commonwealth, regarding conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods.
Permit the ACCC to seek a court order directing a person to comply with a notice given under section 155 of the Act to furnish information, produce documents or give evidence. Section 155 of the Act does not permit the ACCC to seek a court order to compel a person to comply with a notice given under that section to furnish information, produce documents or give evidence.

 

 

Changes from Exposure Draft Legislation

Details forthcoming

Notably the exemption from cartel laws for restrictions relating to supply and acquisitions (vertical supply/acquisition restrictions), which appeared as s 44ZZRS in the Exposure Draft, has been removed from the Bill as introduced. The exemption in the Exposure Draft was in response to a Harper Report recommendation (rec 27) that:

'An exemption should be included for trading restrictions that are imposed by one firm on another in connection with the supply or acquisition of goods or services (including intellectual property licensing), recognising that such conduct will be prohibited by section 45 of the CCA (or section 47 if retained) if it has the purpose, effect or likely effect of substantially lessening competition.'

This would have captured agency-type arrangements which currently risk capture by the cartel laws (see Flight Centre) even in circumstances where they would not - or would not be likely to - SLC.

 

Explanatory memorandum

The explanatory memorandum runs to 180 pages and is divided into the following chapters:

Chapter 1 Definition of competition

Chapter 2 Cartels

Chapter 3 Price signalling and concerted practices

Chapter 4 Exclusionary provisions

Chapter 5 Covenants affecting competition

Chapter 6 Secondary boycotts

Chapter 7 Third line forcing

Chapter 8 Resale price maintenance

Chapter 9 Authorisations, notifications and class exemptions

Chapter 10 Admissions of fact

Chapter 11 Power to obtain information, documents and evidence

Chapter 12 Access to services

Chapter 13 Application and transitional provisions

Chapter 14 Other amendments

Chapter 15 Regulation impact statement

Chapter 16 Statement of Compatibility with Human Rights

Relevant extracts are set out above in relation to each issue.

 

Second reading speeches (House)

Scott Morrison MP (Treasurer) (30 March 2017)

Mr MORRISON (Cook—Treasurer) (09:32): I move:

That this bill be now read a second time.

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

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

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

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

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

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

This prohibition will capture anticompetitive conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45. An exception is provided where the only parties to a concerted practice are the Crown and one or more government authorities.

Schedule 3 also repeals the separate prohibition on exclusionary provisions from the act, which substantially overlaps with the cartel prohibitions in the act.

Schedule 4 to this bill repeals the definition of 'exclusionary provision' and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by schedule 3.

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

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

Schedule 7 to this bill amends the act to prohibit third-line forcing only where it has the purpose, effect or likely effect of substantially lessening competition. This will bring the prohibition on third-line forcing in line with the similar prohibition on second-line forcing and with other comparable jurisdictions, including the United States, Canada, the European Union and New Zealand.

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

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

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

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

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

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

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

Schedule 11 to this bill extends the commission's power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

Schedule 11 also introduces a 'reasonable search' defence to the offence of refusing or failing to comply with section 155. This reflects the increasing cost of documentary searches as businesses retain many more documents, such as emails, than in the past.

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

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

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

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

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

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

Debate adjourned.

Link to Mr Morrison second reading speech in Hansard

Dr Andrew Leigh MP (Shadow Treasurer) (5 September 2017) (Labor Party)

Andrew LeighDr LEIGH (Fenner) (12:21):

I move:

That all the words after 'That' be omitted with a view to substituting the following words:

'whilst not declining to give the bill a second reading, the House condemns the Government for pushing ahead with its agenda that will worsen inequality, including increasing penalties for sympathy strikes to hundreds of times the size of other industrial action penalties.'

It is timely for this House to be debating competition policy given the increasing concern internationally about the impact of rising market concentration on growing inequality around the world. The importance of competition policy has not always been appreciated by the economics profession. In a recent speech, Rod Sims quoted from a number of doyens of the economics profession, including Milton Friedman, who was sceptical of the role that antitrust has to play. But, as he noted, the economics profession has come around on that issue.

The notion that firms will always demand a competitive environment in which to operate is not borne out by the evidence. Indeed, one only has to look to the strategy literature to see precisely that. In his speech, Rod Sims quoted from perhaps the most famous paper in the strategy literature, Michael Porter's 1979 Harvard Business Review piece, 'How competitive forces shape strategy', in which Professor Porter laid out five focuses of firms that will drive commercial success: 'erect high entry barriers', 'keep suppliers weak and dispersed', 'reduce competition', 'curb buyer power—for example, with high loyalty', and 'reduce the likelihood of substitutes'. In other words, as Rod Sims notes, competition policy equals corporate strategy multiplied by minus one.

The Economist magazine has recently analysed the extent of market concentration in the United States across 900-odd sectors, comparing concentration in 1997 with concentration in 2012. They found that the weighted share of the top four firms in each sector had risen from 26 per cent to 32 per cent. Inspired by their analysis, last year Adam Triggs and I published a paper in The Australian Economic Review, 'Markets, monopolies and moguls: the relationship between inequality and competition', in which we used private market research data to estimate the degree of market concentration across 481 industries. We found that the largest four firms controlled 36 per cent of the market—a higher degree of market concentration than in the United States. In a number of industries, the big four controlled more than 80 per cent of the market, including department stores, newspapers, banking, health insurance, supermarkets, domestic airlines, internet service providers, baby food and beer.

The impact of this emerging research on the growth of market concentration has been significant within the economics profession. As The Economist noted on 12 April this year:

ONE sign that monopolies are a problem in America is that the University of Chicago has just held a summit on the threat that they may pose to the world’s biggest economy. Until recently, convening a conference supporting antitrust concerns in the Windy City was like holding a symposium on sobriety in New Orleans. In the 1970s economists from the "Chicago school" argued that big firms were not a threat to growth and prosperity. Their views went mainstream, which led courts and regulators to adopt a relaxed attitude towards antitrust laws for decades.

But the mood is changing. There is an emerging consensus among economists that competition in the economy has weakened significantly.

Increasingly, researchers are suggesting this is not just a problem for growth but also a problem for equity with the increase in market concentration potentially behind the rise in the profit share, the fall in the labour share, stagnant wage growth, and sluggish research and development and productivity statistics. Indeed, the overall rise in inequality has been well documented and the Leader of the Opposition, the shadow Treasurer and many others on the Labor side have spoken about it.

With regard to this bill, Labor opposes schedule 6 and supports the remaining 13 schedules. Were the government to remove schedule 6 from this bill, Labor would support it in this House and in the other place. The bill is largely uncontroversial. It flows from a panel led by Professor Ian Harper that was commissioned in 2014 and reported in March 2015. It has been 2½ years since the Harper review was handed to the government, and the parliament could have acted with much greater alacrity to implement the recommendations. As the shadow Treasurer has made clear, Labor engaged constructively with the Harper review throughout and would have been happy to support these recommendations in 2015 when the Harper review finished its work. We won't be supporting schedule 6 of the bill since that schedule proposes to increase the maximum penalty for breaches of secondary boycott provisions—also known as sympathy strikes—from $750,000 to $10 million. I will detail later in my remarks the reason that Labor won't be supporting this largely industrial relations measure.

Labor has been the party of competition for decades. We recognise that competition means lower prices, higher wages and better-quality products for Australian families. It brings about a more productive and innovative economy and increases the standard of living. Labor backs competition law because Labor backs the little guy. We believe in an economy in which start-ups are able to break into new markets. For us, supporting competition is about supporting consumers over vested interests. It is about supporting the little guy over the rent seekers.

Labor introduced the Trade Practices Act in 1974. Prior to that, there was no act of parliament dedicated to competition matters. The original act is now known as the Competition and Consumer Act 2010 and remains the backbone of competition law in Australia. Under Prime Minister Keating, Professor Fred Hilmer was commissioned to chair a comprehensive review into competition policy. The Hilmer report set the agenda for the next two decades of competition policy reform in Australia. The Grattan Institute has described national competition policy as one of 10 big reforms which has underpinned recent decades of strong economic growth in Australia. The Productivity Commission found that the reforms from the Hilmer review led to a significant and permanent increase in Australia's economic capacity.

Under the Rudd and Gillard governments, further changes were made to competition and consumer policy settings. The introduction of the Australian Consumer Law in 2011 was a cooperative reform between the states, territories and the Commonwealth government that created a consistent approach to a range of consumer issues, such as unfair contract terms, consumer rights and product safety.

Labor went to the last election with a suite of policies to strengthen the Competition and Consumer Act, including increasing the penalties for anticompetitive and anticonsumer conduct—one of which we're pleased to see was picked up in the government's budget this year—and to use some of the additional revenues generated by those higher penalties to increase the competition watchdog's litigation budget from $24.5 million to a maximum of twice that level. We welcome the government's budget announcement, as I said, but we urge the government to adopt policies that are in line with international best practice, such as making fines for anticompetitive conduct referable to total turnover.

Labor is also committed to giving the competition watchdog a completely independent market studies function, which would allow the competition watchdog to use investigatory powers to look at particular industries, rather than waiting for a reference from the government on a sector such as the electricity distribution industry. This market studies power would help the ACCC identify competition challenges before they become systemic. Labor criminalised cartels back in 2009 and, prior to that, this form of white-collar crime was merely a civil offence. We did so because, again, it brought Australia in line with international best practice.

Labor understands that reducing barriers to entry and protecting consumers is fundamental to a stronger economy. We have consulted widely to ensure that this bill does not water down cartel provisions. We certainly don't want legitimate joint ventures to be unintentionally prohibited by the cartel provisions under the act. This bill broadens the exemption so that it covers not just contracts but also agreements and understandings. The bill also extends the joint venture exemption to include provisions that are 'for the purposes of and reasonably necessary for undertaking the joint venture' and extends the exemption to the acquisition of goods and services, not just the production of goods and services.

Another measure worthy of special consideration is the introduction of a reasonable search defence. Labor's consulted widely to ensure this measure wouldn't allow companies or individuals under investigation to use this defence in refusing or failing to comply with a compulsory information request by the competition watchdog under section 155. Section 155 is the foundation of the Australian Competition and Consumer Commission's ability to investigate alleged breaches of the act.

Labor is also committed to ensuring that sensible measures in this bill receive bipartisan support. Schedule 1 of the bill, which Labor will be supporting, defines 'competition' to include competition from goods and services that are capable of being imported, in addition to those actually imported. The ACCC says it already considers potential imports, so this change merely provides greater clarity than any substantive alteration to the law. We support schedule 2, the changes to the cartel conduct provisions, which I've mentioned already. Confining the application of the provisions to cartel conduct affecting competition in Australian markets is a logical reform which reinforces other parts of the act to prevent extraterritorial application. We support schedule 3, dealing with concerted practice; and creating a new offence in section 45, prohibiting a corporation from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition. Section 45 continues to also prohibit making, arriving at or giving effect to a contract, agreement or understanding with a purpose, effect or likely effect of substantially lessening competition.

As recommended by the Harper review, 'concerted' isn't defined because it has a clear and practical meaning. However, there is more information in the explanatory memorandum. An example of concerted practice would be where petrol stations communicate their prices to each other whereby—short of creating a contract, arrangement or understanding—a common practice develops where they then set their prices in unison. A recent academic study into the Perth petrol markets suggests that this kind of behaviour may be increasingly widespread in a big-data era.

Schedules 3 and 4 repeal provisions on price signalling and exclusionary provisions—and Labor will be supporting them—as those provisions are made redundant because of the introduction of the above concerted practice offence. Exclusionary provisions are defined as an actual or proposed contract, arrangement or understanding between competitors where the provision has the purpose of preventing, restricting or limiting supplies of goods and services to, or acquisitions from, particular persons or classes of persons. The concerted practice provisions capture this conduct and prohibit it across all industries. The existing price signalling provisions apply only to the banking sector. They were introduced by Labor in 2012 and relate to the private disclosure of pricing information to a competitor on a per se basis and the general disclosure of information where the purpose of the disclosure is to substantially lessen competition in the market. The concerted practice provisions capture this conduct and prohibit it across all industries—not just banking.

We support schedule 5, which deals with covenants affecting competition, simplifies the act by defining 'contract' and 'party' to include covenants. This allows for the repeal of redundant provisions which separately deal with covenants. I'll return in a moment to schedule 6, which Labor opposes. Schedule 7, which Labor supports, deals with third-line forcing—effectively, the behaviour of saying, 'I'll sell you this pen as long as you buy the ink from my sister.' It is prohibited per se, meaning that it's prohibited regardless of its effect on competition. Schedule 7 changes this, such that third-line forcing is only prohibited when it has the purpose, effect or likely effect of substantially lessening competition, which is consistent with other parts of the act and other jurisdictions.

Schedule 8, which Labor supports, deals with resale price maintenance and the supply of goods on the condition that goods not be sold below a price specified by the supplier. Currently, a supplier can seek an authorisation from the ACCC to engage in conduct that would otherwise be prohibited as resale price maintenance when it is in the public interest. The Harper review noted that the seeking of such authorisation is seldom done due to cost and delay and that notification is generally a quicker and less expensive means of obtaining an exemption and is available for other forms of vertical restriction.

Schedule 9, which Labor supports, consolidates the ACCC's various authorisation provisions, including those relating to mergers, into a single authorisation process. It also grants the ACCC a class exemption power, which allows it to provide its usual exemption but across a class of kinds of conduct rather than individually. It also allows the ACCC to impose conditions on notifications for resale price maintenance.

Schedule 9 allows the ACCC to impose conditions on notifications for collective boycotts and to introduce a stop notice requiring collective boycott conduct that is the subject of a notification to cease. Schedule 9 also provides for tribunal review of merger authorisation decisions made by the ACCC, and Labor supports that.

Schedule 10 deals with admissions of fact and allows a party bringing certain proceedings under the act to rely on admissions of fact, in addition to findings of fact, made in other proceedings. This makes it easier for parties to bring proceedings under the act and provides clarity in an area that was particularly unclear. Schedule 11 extends the ACCC's power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations. This has been a gap in the ACCC's powers and is strongly supported by Labor. The bill also introduces a reasonable search defence. Stakeholders in our consultations have assured us that this would not allow companies and individuals under investigation to use this defence in refusing or failing to comply with a compulsory information request by the ACCC under section 155. The bill also increases the fine from noncompliance with section 155.

Schedule 12 amends provisions relating to the National Access Regime, which allows access to nationally significant infrastructure services. The bill's aim is to make it easier to access infrastructure to compete in the provision of services. Its changes include that the declaration criteria that must be considered by the council and minister are contained in a single section; the promotion of public interest in access declarations; and that the minister is taken to have accepted the council's recommendation if he or she doesn't publish a decision on the declaration with the 60-day limit. Schedule 13 inserts a new division 3 into part XIII of the act, which deals with the transitional application of amendments made by a number of other schedules, and schedule 14 includes eight minor amendments, which Labor will be supporting.

I return now to schedule 6—which Labor will not be supporting—which deals with secondary boycotts. Those who are familiar with this issue will know that it has a long history. Following the 1974 introduction of the Trade Practices Act by the Whitlam government, the Fraser government came to power and, with then Treasurer John Howard, introduced section 45D and later section 45E into the Trade Practices Act. Those sections outlawed secondary boycotts, also known as sympathy strikes, and were particularly targeted at trade unions. The Hawke government attempted to repeal sections 45D and 45E in 1984, but the legislation was defeated in the Senate. The Hawke government's view was that these were essentially industrial matters, best resolved through specialist industrial courts or tribunals rather than through competition law and the competition regulator. The repeal attempt was defeated in the Senate, as I said, in 1984, and another attempt by the Hawke government to repeal these provisions was dropped in 1987.

In 1993 the Keating government repealed secondary boycott provisions, modified section 45D and deleted section 45E. The effect of the amendment to section 45D was that the prohibition covering secondary boycotts in the Trade Practices Act was restricted to boycotts that involved a substantial lessening of competition. Other secondary boycott provisions were re-enacted in a much modified form in the Industrial Relations Act of 1988, which limited the operation of the prohibitions on secondary boycott actions and made relief available only if conciliation of the dispute was first attempted through the commission. The effect of this was that, if an employer wanted to commence legal action in respect of a secondary boycott, they had to first go through the conciliation and arbitration process.

Sadly, however, the Howard government, in 1996, introduced the Workplace Relations and Other Legislation Amendment Act, which reformed enterprise bargaining, removing secondary boycott provisions from industrial relations legislation and returning them to the Trade Practices Act.

A secondary boycott, as members will be aware, involves one person in concert with another person engaging in conduct that hinders or prevents a third person from supplying or acquiring goods and services to or from a fourth person. Schedule 6 of this bill attempts to increase the penalty for breaching those provisions from $750,000 to $10 million. International Labour Organization convention No. 87 says that sympathy strikes should be permitted, provided the original industrial action was lawful. The International Labour Organization has indeed turned its attention specifically to Australian law and noted that the prohibition of secondary boycotts in Australian law is beyond what they regard as permissible prohibitions. The higher penalties would move Australia even further away from international best practice.

Unsurprisingly, as befits this government's agenda, secondary boycott laws are typically used against unions that engage in sympathy strikes. They are not as prevalent as they have been in the past, which makes one wonder what the policy case for higher penalties might be. There has been one instance of the ACCC undertaking action on secondary boycotts in the last decade.

This is a move that would put Australia out of step with international best practice. I mentioned previously the criminalising of cartels and Labor's move to increase penalties for anticonsumer conduct and anticompetitive conduct—these have all been done in the knowledge that Australia was out of step with international best practice. But international best practice would not see us increase the penalties on secondary boycotts; indeed, quite the opposite. For more than four decades Labor has held the view that secondary boycotts are primarily an industrial issue rather than a competition issue, and that is reflected in the legislative history to which I have referred.

It is worth, therefore, comparing the penalties that the government proposes to impose on sympathy strikes to penalties for unprotected industrial relations activity under the Fair Work Act 2009. The maximum penalty there is 60 penalty units, which is $12,600. If schedule 6 of this bill were to become law, the maximum penalty for a secondary boycott would be nearly 800 times higher than the maximum penalty for unprotected industrial action. We can also compare this to the proposed penalties associated with noncompliance with a section 155 order—20 penalty unites, $4,200. Yet the government thinks that a $10 million penalty is appropriate for a sympathy strike.

The government is pushing ahead with measures that will not improve competition in Australia. We've got the government at the moment still pushing ahead with an effects test, with their proposed changes to section 46. In the words of Peter Costello:

The so-called effects test is designed to protect competitors, particularly less efficient ones, from a competitive challenge.

Since 1974, 10 of the 12 inquiries into Australian competition laws have considered the proposal of an effects test and rejected it. In submissions to the Harper review, an effects test has been described as 'legally unworkable', something that will 'chill competition' and something that 'will create uncertainty for business'. That's why, when an effects test came to the cabinet, the now Prime Minister, Malcolm Turnbull, argued against it, as did other colleagues, including Senator Brandis and, we're told, Senator Cormann. The attempt to put in place an effects test is the National Party tail wagging the Liberal Party dog. This is not good competition reform. This is a smokescreen attempt to suggest that the Turnbull government are serious about competition.

If they were serious about competition, they would be supporting Labor's small-business access-to-justice reforms. Those reforms recently passed the Senate, and we believe that, now that they have passed the Senate, they should come before the House of Representatives for a vote. Labor's access-to-justice proposal will overcome the basic problem that small business have when considering whether they have the ability to take on anticompetitive conduct by the big guys. They're willing to pay their own legal costs but what they're scared about is the prospect that, if they lose, they could be bankrupted by an adverse costs order—that they might have to pay for the armada of QCs engaged by the big end of town.

Labor's access-to-justice bill allows court cases in the public interest to seek a no-adverse-costs order from the Small Business and Family Enterprise Ombudsman. Such an order would allow the litigant to go ahead in the public interest, knowing that, if they lose, they'll pay their own costs but not those of the other side. This would supplement the work that's being done by the ACCC. Having private parties litigate breaches of the competition law in the public interest is indeed a pro-small-business measure. It's rumoured that there are many within the National Party who support Labor's access-to-justice reforms, who recognise that to support access to justice is to support small business. That's why many small-business organisations, and the Ombudsman, have come out supporting Labor's position on access to justice. An effects test will simply create additional confusion. Access to justice will create new powers for small business, to level the playing field.

In conclusion, Labor supports good competition policy reform. We are the party of competition law. We are the party that recognises the market concentration challenge that Australia faces today and that is dragging down the productivity and the equity of the Australian economy. We are the party that has constantly been proposing constructive solutions to rein in monopolies and ensure that the Australian economy operates as productively as possible. But we will not support the attempt, under the cover of competition reform, by the government to further attack unions. The attack on unions through the massive increase in penalties for sympathy strikes doesn't make our economy more productive, but it is to be expected from a government which has supported cutting penalty rates for up to 700,000 Australians in the retail, hospitality, fast-food and pharmacy sectors. Despite some positive signs on wage growth in the last quarter, these sectors have seen sluggish wage growth over recent years.

In an environment of sluggish wage growth, Australians don't need further laws that will demonise unions, because we know from careful economic studies that unions are one of the strongest forces for equity in the labour market. A study by Jeff Borland suggests that about a third of the rise in Australian inequality over recent decades can be attributed to the declining share of unions. Other work in the United Kingdom by John Pencavel and Richard Freeman and others in the United States have shown a similar picture: an attack on unions is an attack on equity.

Labor will stand up for penalty rates and will stand up for working Australians. Labor will stand up for Australian egalitarianism. At the same time, we have a government that is denying that Australia even has an inequality problem. No wonder, if you deny that Australia has an inequality problem, you look to bash the representatives of working people. Labor will oppose schedule 6 of this bill and, unless it is removed, we will vote against the bill.

[The Amendment proposed by Minister Leigh was seconded by Mr Thistlethwaite MP. The Amendment was later negatived and the original question agreed to]

See Hansard

Ms Nola Marino MP (5 September 2017) (Liberal Party)

Nola Marino MPMs MARINO (Forrest—Chief Government Whip) (12:52):

I actually rise to support the government's changes to the Competition and Consumer Act as defined by the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. It's interesting to hear the previous member talk about studies and all sorts of other things. I can talk about a lived experience, because it was the actual access to justice issue that helped to bring me into this place through a lived experience, not through some study. That is why competition policy and this bill is so important to small businesses just like my own. As someone who owns and built—absolutely built—a small business from the ground up, part of the reason that I came to this place was the access to justice issue and that is why I support the government's bill. We were typical of the majority of small businesses right around Australia.

We actually bought our first business, a dairy farm, on the day that we got married. Yes, it was run-down. Yes, it had very little infrastructure, and it had a pretty mixed old herd. And, of course, it was tough going. We lived in two army huts joined together, and the simple economics of it were very interesting for us. We received about $2,000 a month, and our interest and payments were $1,300 a month. We basically had to grow a business, do all the development and live with that income. We bought this on the day we got married with just $12,000 worth of equity between us. We had $118,000 worth of debt. We took a huge risk as two young people—I was 18 and he was 21. I would really like a dollar for everyone who laughed at us and for everyone who said we would go broke and fail.

But like most small-business owners know only too well: it takes courage; it takes debt, as the great motivator; and it takes sleepless nights. This is the real lived experience—not a study. It takes those sleepless nights wondering how you're going to pay your bills and getting up to calve cows in the middle of the night, especially when at the time interest rates went from 17 per cent to 23 per cent. It takes hard work over many, many years. This is not a short-term investment when you're a small-business person. And, in fact, it was actually a separate contract hay-baling round, that my husband did in between milkings—with me raking and at times baling and mowing hay, as well as my husband—that kept us afloat. In fact, it was eight years before my husband and I could actually afford a holiday.

The Competition and Consumer Act was called the Trade Practices Act at that time. I saw immediately how competition, or the lack thereof, affected our business. We sold culled cows and sometimes dairy store cattle at the cattle sales. There was a limited number of buyers and they would frequently decide well in advance of the sale which pens of cattle each would buy and, therefore, they would not compete with each other. This of course meant that we, as the sellers, received far less than we should have in what should have been an open and fair marketplace. They were even brazen enough in those days to call out across the pens as to whose turn it was to buy and to not bid on my pen.

I learnt very early as a dairy farmer in a regulated environment. I learnt that government decisions had a major impact on my business, which is why I got so involved early. Following deregulation of the industry in 2000, there was the vulnerability of being a producer of one of the most perishable products in what is a majority domestic market in WA, with very few buyers and a lot of sellers. One thing I learnt was that we actually had no bargaining power. In fact, we became absolute price-takers, as we see today with current contracts. That's why measures in this bill continue to be so important. As chair and a member of Dairy Western Australia, we worked with dairy farmers to set up a milk negotiating agency, with the voluntary membership of the same dairy farmers. We applied to the ACCC for authorisation through a collective bargaining process. What blew me away was the attitude of the ACCC at that time. I remember vividly a meeting in Perth. I walked in to present the case for around 300 dairy farmers. I was really concerned about the need to change the ACCC because their disdain was palpable. A comment was made that they were particularly disappointed with the submission by me and Dairy WA because they'd previously had an inquiry into Air New Zealand and Qantas and expected something along those lines. I was representing a group of dairy farmers who were going through very tough times. I reminded the ACCC that they were small business people and that this was the best that we could do. When we walked out of that meeting, I knew that we were done. Our plans to set up the agency and then potentially attract manufacturing and export investment simply would not happen because, not surprisingly, the ACCC said that the action would substantially affect competition, and they refused to let us set up a milk negotiating agency.

I look at where the dairy industry in WA is today. Three farmers were put out of business last year when their contracts were not renewed: Graham Manning, Tony Ferraro and Dale Hanks. I wonder where the industry would have been today had the ACCC approved the application that we made back in 2005. I would suggest it would look entirely different. To add insult to injury, I presented to the ACCC some information about breaches to the Trade Practices Act that made us even more vulnerable, which is why I support so strongly the work of the government on this bill. There were four breaches of the Trade Practices Act that included third-line forcing. At the time, they were not acted on. One very salutary lesson for me was the fact that one of the processors who gave me information about what was actually going on in the marketplace with their interaction wouldn't meet me unless it could be at a parking lot in Perth where there were no cameras. That told me a lot about where we were as an industry, and that is why we need the changes that the government is making.

I note that the Harper review considered that secondary boycotts had not been vigorously enforced by the ACCC compared with other offences. In fact, the Harper review stated that, as with all competition laws, the secondary boycott laws will only act as a deterrent to unlawful behaviour if the laws are enforced consistently and effectively, which is what the government is intending to do.

I'm counting on the ACCC to be a completely different entity today. It has moved on—and with a lot of action from this government. I want to see the ACCC actually focused on small business. I'm looking forward to some very strong recommendations from their current inquiry into the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry. And, of course, it is subject to intense focus by my dairy farmers. There are a number of the inquiry considerations that they'll be very interested in, such as: the nature of competition between processors for both acquisition of raw milk and supply of processed milk and dairy products; the nature of the commercial relationship between dairy producers and acquirers of raw milk; the terms on which raw milk is acquired from dairy producers and the means by which such terms are agreed; and the existence of, or potential for, anticompetitive conduct and the possible impacts of any such conduct on businesses in the supply and dairy chain.

I want to talk, also, about other measures that this government is taking, not just the measures within this bill that I support. The government set up the Office of the Australian Small Business and Family Enterprise Ombudsman—not the Labor Party but our government set this up—as an independent advocate for small businesses like my own that went through those challenges. It supports small business efforts to be innovative, to employ and to thrive. That's what it should be about. That's what this agency is about. The key principles of a fair and competitive trading framework is exactly what I want to see as a small business owner and someone who has built a business.

One of the Small Business and Family Enterprise Ombudsman's principles is adequate access to justice for small business where there is likely to be a significant imbalance of bargaining power. I look at the assistance, the pre-mediation and the alternative dispute resolution available through that office. It is looking at the payment times and practices inquiry, the small-business loans inquiry and, of course, the impact of the Road Safety Remuneration Tribunal payments order. This had a huge impact—the RSRT—on small businesses in my electorate. I saw so many small businesses in absolute dire straits. These are small, family-owned enterprises.

What were some of the key findings of the Small Business and Family Enterprise Ombudsman's inquiry? One was that the payments order resulted in owner-drivers in the long-distance and supermarket distribution sectors being made uncompetitive. There was uncertainty and anxiety for owner-drivers about the impact of these. They were extremely complex and had a short implementation time. I note, with great regret and sympathy, that it was reported to the inquiry that some owner-drivers who found they were unable to cope with further hardship caused by the payments order took their own lives. When we talk about the real world of how decisions made in this place actually impact on small-business people and individuals, there is no greater indication than this one.

I want to thank every small-business owner, particularly those owner truck drivers, who came out and supported us while, often, under significant pressure from unions. And there was significant pressure from unions on those small-business owners at the time. They had courage—the courage that it took them to actually start their own business in the first place, invest and mortgage their home. And they've been consistent in their efforts ever since. They understand exactly that it is this coalition government, the Turnbull government, that stood up for small businesses in the RSRT issue. It was a very significant one, putting small business owners actually out of business and worse. I saw so many of them in my electorate, and I want to acknowledge the work they do as a transport industry. We take them for granted, but they are small businesses who do it tough and who are on the road. And, basically, Australia pretty well runs on the back of the trucks of those small business owners, and I want to acknowledge their efforts. I also want to, again, support the measures that the government is taking with this bill.

Small business is a key part of the reason the amendments in this bill are so important. As I have said, from personal experience and from building and developing a small business and facing the challenges that go with it, I want to acknowledge every small business out there that is investing and that is having a go. They know that this government is there supporting them through the changes in this bill.

See Hansard

Mr Matt Thistlethwaite MP (Kingsford Smith) (5 September 2017) (Labor)

Mr ThistlethwaiteMr THISTLETHWAITE (Kingsford Smith) (13:05):

I am speaking in support of the second reading amendment moved by the member for Fenner in relation to the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. Labor support the majority of the schedules contained in this important legislation; however, we do oppose schedule 6, which seeks to increase the maximum penalty for breach of secondary boycott provisions by a substantial, and we would say unreasonable, amount.

Labor, of course, is the party of competition. It was the Whitlam government that introduced the first Trade Practices Act into Australian law in 1974. That reform was brought in with the aim of promoting competition and producing productivity and efficiency outcomes in our economy. The aim was to prevent monopolistic and cartel behaviour that was stifling competition in numerous Australian markets. It was also to prohibit practices and policies which reduce competition in a market.

So it was a Labor government that established the foundations for competition policy in this country and it has been successive Labor governments, after the Whitlam government, that have built on that competition legacy. Probably the most important reforms in modernising our economy and promoting productivity, efficiency and competition were introduced by the Keating government, when Prime Minister Paul Keating commissioned Fred Hilmer to review Australia's competition policies. This led to massive sweeping reforms in a number of industries, but particularly in aviation, banking and financial services, and utilities, most notably in electricity by the establishment of the east coast electricity market. These have laid the foundations for decades of successive and uninterrupted economic growth in Australia.

This was again built upon by the Rudd and Gillard governments in 2011, when they instituted a wholesale reform—an overview of Australia's consumer law through a COAG process. The aim of that was to harmonise Australia's consumer and competition laws, to produce a consistent national approach when it came to consumer issues associated with unfair contracts, consumer rights, product safety and of course competition reform. Those laws and those changes criminalised cartel conduct, which up until that particular point in time in 2009 had been a civil penalty. They also brought Australia into line with international best practice that mandated jail time for people and organisations that were caught fixing prices through unfair and uncompetitive behaviour and also through cartel conduct.

When it comes to competition policy and ensuring that we're promoting competition and efficiency in markets, those opposite tend to have a different approach and a different philosophy to the Labor Party. They seek to use this platform of competition review and reform as a means of reducing wages, working conditions and safety in particular industries in Australia. They've used competition laws as a smokescreen for reforms to what essentially are workplace laws and worker health and safety laws. They have used this to reduce collective bargaining rights and collective action in support of fair incomes and safe workplaces. The way they do it—and it's not just this government; there have been successive Liberal coalition governments in the past—is by seeking to have secondary boycott provisions within Australia's competition and consumer laws when they probably rightfully should be within workplace relations legislation. When they have it in this particular piece of legislation, they massively increase the penalties. That is what schedule 6 of this bill does today, by introducing, quite simply, unreasonable and unrealistic penalties for breaches of secondary boycott provisions.

It's all to do with their core philosophy of making life harder for workers and their families. We've seen this over recent years with the policies that have been introduced by this government and their recent support for cuts to penalty rates for weekend workers in Australia. This is the Turnbull government that's stood by and done absolutely nothing when it comes to ensuring that workers' penalty rates for working on Sundays in retail and hospitality industries are protected. Malcolm Turnbull, the member for Wentworth, as Prime Minister, could have stepped in and supported Labor's bills to stop cuts to penalty rates but chose not to. They've sought to restrict collective bargaining in workplaces. They seek to restrict union rights to enter workplaces and they seek to introduce unreasonable and unrealistic penalties that are not internationally consistent for breaches of workplace laws. This bill contains one of those in the increases in penalties for secondary boycotts.

In respect of that particular piece of legislation, what this bill is seeking to do in relation to schedule 6, which Labor is opposing, is introduce and increase massively the penalties for secondary boycotts. A secondary boycott involves one person in concert with another person engaging in conduct that hinders or prevents a third person supplying or acquiring goods and services from a fourth person. Schedule 6 of this bill will increase the penalty for breaching those provisions from $750,000 to the greater of $10 million or three times the total value of the benefits obtained from the secondary boycott or, if the court cannot determine the total value of these benefits, 10 per cent of the annual turnover of the corporate for the 12 months leading up to when the secondary boycott occurred.

This is an unreasonable approach from this government and puts us out of step with what's occurring internationally in respect of competition and consumer provisions and secondary boycotts. The International Labour Organization's convention No. 87 does permit sympathy action. This change is inconsistent with that approach. It will introduce higher penalties for anticompetitive and anticonsumer conduct in terms of international best practice. Penalties for unlawful conduct under the Fair Work Act attract a maximum penalty of $12,600. That's for a breach of industrial and workplace laws, where these provisions should be. But under this reform of schedule 6 the penalty will be 800 times that, at $10 million, for a secondary boycott penalty. In our view, that is unfair. It's inconsistent with Australia's obligations that we've signed up to through the International Labour Organization. It's not something that Labor will be committing to.

I have some brief comments in respect of the effects test. That's been another hotly contested issue in respect of changes to competition and consumer laws. The original draft bill that we're debating here today included the effects test amendments to the misuse of market power provisions in the act. It was removed by the coalition government and introduced separately, because they know that the effects test is the very definition of dangerous economic policy. As the member for Fenner pointed out, the Prime Minister has argued against an effects test in cabinet. We know, through leaks from cabinet, that the Prime Minister argued against this policy when he was the Minister for Communications. Senator Brandis argued against this policy. But, because the member for Warringah wanted to keep the National Party onside, they agreed to this effects test.

God help us when the National Party is determining economic policy in Australia! God help Australia! But that is exactly what is occurring with this introduction of an effects test into the parliament in separate legislation to this. It's dangerous because the major effect of an effects test will be to create a climate of fear for businesses looking to compete through reductions to prices. Every time a business reduces its prices, it will be creating a legal risk for itself if there is an effects test. We know that, since 1974, at least 10 inquiries into Australia's competition laws have considered a proposal for an effects test, and all of them have rejected it, apart from Professor Harper's review, which is the only one that's recommended the effects test. In the words of the former Treasurer, Peter Costello:

The so-called effects test is designed to protect competitors, particularly less efficient ones, from a competitive challenge.

That's the antithesis of what we're trying to do with an effective competition policy in this country. We all know that the government's own former Minister for Trade and Investment, Andrew Robb, was also opposed to an effects test. An effects test is bad economic policy. It will end up being a lawyer's picnic when it's up to them to argue before the Competition and Consumer Commission or before the Federal Court whether or not there has been an effect, or a likely effect, on competition by an organisation reducing its prices.

This bill also seeks to introduce a reasonable search defence. We've consulted widely to ensure that this measure wouldn't allow companies and individuals under investigation to use this defence in refusing or failing to comply with compulsory information requests by the ACCC under section 155. Section 155 is the foundation of the ACCC's ability to investigate alleged breaches of the act, and Labor went to the last election with a suite of policies to strengthen it. We're committed to increasing penalties for anticompetitive and anticonsumer conduct to ensure revenue to increase the ACCC's litigation budget from $24½ million to a maximum of twice that level. We welcome the government's announcement to align Australian consumer law penalties with the rest of the act but urge them to adopt Labor's other policies that are in line with international best practice.

In conclusion, Labor has long recognised that an effective competition policy is at the heart of a well functioning economy, but it's also at the heart of a fair society that protects the interests of consumers over rent-seeking monopolists. Our record on this could not be stronger.

See Hansard

MP Craig Kelly MP (5 September 2017) (Liberal Party)

Mr CRAIG KELLY (Hughes) (13:17):

I am pleased to rise to speak on the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. I'd like to make some comments on what the member for Kingsford Smith said about the effects test back in section 46 of what was previously known as the Trade Practices Act and is now known as the Australian competition law.

The effects test has long been debated, and some of the things that the member for Kingsford Smith said about criticism of the effects test in the past were correct. But he is confused. The effects test that has been put in recent legislation is not the effects test that has been debated over many decades. To explain further, previously under section 46, for there to be a violation, the company had to firstly have what is called a substantial degree of market power. Unless it could show that it had a substantial degree of market power, it could not be in breach of section 46. And that was the basic problem with the law. In fact, in the Boral decision, one of the learned judges highlighted the issue in predatory pricing cases. He said the problem with the law was that it's not applicable at the time that the conduct is engaged in, even if a substantial degree of market power is obtained. His words in that case were that section 46 was ill drawn because of that first-up 'substantial degree of market power' test. The second test under section 46 was that a company had to take advantage of that power. 'Take advantage of' is simply defined as 'used', which is fair enough—you have to use your market power to be in breach. The third section—the section to which the effects test debate relates—previously said it had to be for the purpose of damaging a competitor, restricting entry into a market or limiting a supply. Basically, it was about having a substantial degree of market power and taking advantage of that power for the purpose of damaging a competitor.

The effects test debate over many years was about replacing the word 'purpose' with the word 'effect', so the act would say that a corporation that has a substantial degree of power in a market shall not take advantage of that power for the 'effect' of damaging a competitor. But the change that was made was not just replacing the word 'purpose' with 'effect'. Firstly, there was a strong case that that was not required, because another section in our competition law, section 46(7) said that the purpose could be ascertained from the conduct. In proving purpose, you did not need a smoking gun, you did not need an admission from the company accused that they actually went out for the purpose of damaging their smaller competitor and wiping them out, because a specific section, section 46(7), enabled purpose to be ascertained not by direct evidence but simply by inference of the purpose of the conduct. So much of the debate over the effects test over many years was simply a debate about nothing, because the purpose could be inferred.

We are not just substituting 'effect' for 'purpose'. That was one thing that the member for Kingsford Smith seemed to be confused about. But we're not just changing the word from 'purpose' to 'effect'. We are changing the test from 'damaging a competitor' or 'limiting a competitor's opportunity to enter the market' to 'a substantial lessening of competition'. So it is no longer the purpose of damaging a competitor; it is the effect of substantially lessening competition. Those words may not mean very much, but 'a substantially lessening of competition' and 'damaging a competitor' are two completely different concepts. For there to be a substantial lessening of competition, you almost need a case where the act of substantially lessening the competition results in a near monopoly in a market, or where one player is able, as the court said, to increase their prices without losing business to their competitors.

Under the new effects test, if a small business has been damaged or has been the victim of a predatory scheme of a company taking advantage of their market power—not using their greater efficiencies, not using a superior product or a superior marketing platform but simply using a predatory scheme, using the weight of their market power to eliminate a smaller competitor—that will not be an offence unless there is also a substantial lessening of competition. You have the test up-front that that company must also have a substantial degree of market power and it must engage in conduct that involves a substantial lessening of competition. It's almost like being pregnant and engaging in an act to get yourself pregnant again. The concepts simply do not make sense. Yet this is what the Labor Party are accusing the coalition of not understanding. Clearly, it is the Labor Party who do not understand the effects test. They do not understand the significant change from 'damaging a competitor' to 'a substantial lessening of competition'. If they did, we would not hear speeches like we've heard from the member for Kingsford Smith, who clearly does not understand the concept. I hope I am wrong in this, but my prediction is that we will see even fewer cases and less ability for small business to take advantage of section 46 with that change.

We're doing many great things for small business—lowering the rate of corporate tax and extending the instant asset write-off. We have encouraged small business to invest in this economy, and we have seen that in the numbers. We have seen substantial increases in the number of people being employed by small business in this country. We will see what effect the change to the effects test and section 46 will have. But there is one thing that I can assure you. The concerns about the effects test raised by the Labor Party simply will not come to fruition.

This bill makes numerous changes. One of the changes is to the law on resale price maintenance. I would have preferred to do what they have done in the USA and actually eliminate our resale price maintenance laws. That is what they have done in the USA. Resale price maintenance is the concept where the supplier of a good, a wholesaler or a manufacturer sets out to the retailer the minimum price that he can sell his goods for. We've seen numerous examples over the years. It could be a retailer of jewellery or of perfumes setting a minimum retail price that their goods can be sold for. That may very well be anticompetitive in highly concentrated markets where there's not much interbrand competition, but in markets today, where they are highly competitive, a law on retail price maintenance simply no longer makes sense. That's what they discovered about a decade ago, because there is interbrand competition. I believe that a wholesaler or a manufacturer in a highly competitive market should be able to determine the retailers that stock their product and ensure that their product is sold under certain conditions which enable them to set a resale price. If they set that price too high, there is such competition from so many other brands, they could actually be harming themselves.

This law was introduced into the Trade Practices Act in 1974. Since that time we've seen this law used against very small businesses in the wholesale sector and in the manufacturing sector that simply haven't been aware of the law and have done something that they thought they could do in a free market—that is, they selected the retailers that they distribute their goods through on the basis of the price and the quality that they sell for. Many of these small companies have found themselves before the ACCC, before the courts, and fined hundreds of thousands of dollars, when all they have done is try to protect their brand.

So I welcome the change in this legislation that allows a business that wishes to set the retail price amongst their retailers to obtain an authorisation from the ACCC. This is good policy. This is pro-competitive policy. This is pro-small business policy. I hope that the ACCC understand the intent of the parliament in allowing businesses to obtain this authorisation, and that they grant those authorisations where they practically can, because we've seen many cases where the law has been unfairly and very harshly used against many, many small businesses.

See Hansard

Ms Terri Butler MP (Griffith) (5 September 2017) (Labor Party)

Ms BUTLER (Griffith) (16:32):

This bill, the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, seeks to further erode Australian's right to strike by amending laws that are presently in the competition and consumer law but are, inherently, industrial in character. We have a serious problem in this country. Working people are becoming less powerful. This is reflected in increased profit share of national income at the expense of the labour share and in persistently low wages growth. This year, we saw a situation where the wage price index was less than CPI. Wages grew more slowly than consumer prices did. This meant that Australians took a real pay cut. Far from the wages explosion that the coalition warned of when they were first elected, Australia has the opposite problem.

For working people to be able to fairly share in this nation's prosperity, they need power. It's not power for the sake of power but the ability to influence what sorts of workplaces we have and what sort of society we have. Most people on salary or wages don't have much in the way of wealth. Some own a home—or, more likely, have a mortgage. For many, house prices put home ownership just out of reach. So their power cannot and does not come from money. It comes from the value that they provide through working. It comes from the laws passed by governments that those workers contribute to electing and that the institutions created. That makes the right to strike important. It also makes our system of conciliation and arbitration important—to avoid situations where people actually exercise their right to strike by empowering them in other ways.

Conciliation and arbitration of industrial disputes is an idiosyncratically Australian approach to settling disputes. Writing in 1916, the then president of the Commonwealth Court of Conciliation and Arbitration, HB Higgins, said:

… the process of conciliation with arbitration in the background is substituted for the rude and barbarous processes of strike and lockout. Reason is to displace force; the might of the State is to enforce peace between industrial combatants as well as between other combatants; and all in the interests of the public.

But, in recent times, and particularly since WorkChoices, access to conciliation and arbitration has been limited. Without access to conciliation and arbitration, then of course the right to strike becomes more important. I don't say this to imply there is no role for collective bargaining. On the contrary, we've had informal collective bargaining in this country throughout the history of the Federation—albeit, it was largely unregulated and informal until the 1993 Brereton reforms.

In the same article that I just mentioned, HB Higgins said—pretty dryly, actually—it was surprising how often the possibility of arbitration led participants to make friendly collective agreements rather than press for an award. Even after collective bargaining became central to wage setting in Australia after 1993, conciliation and arbitration remained important features of our system, but, as I said, access became more limited under the conservatives' WorkChoices. The erosion of access to conciliation and arbitration of industrial disputes in this country has contributed to the erosion of working people's power.

With less access to conciliation, the thing that was there to avoid people having to use their right to strike is not there anymore—or it's not there to the same extent—so of course people have less recourse to public institutions when they're not getting a fair go than they had when conciliation and arbitration were more readily available.

That arguably makes the right to strike more important than it has been since Federation. In a 2008 paper for the Parliamentary Library, Jane Romeyn wrote:

Strikes and other forms of industrial action represent the further expression of collective voice by employees and may help to balance their bargaining power vis a vis the employer. Indeed, strike action has been recognised as playing such an indispensable role in resolving deadlocks in collective bargaining relationships as to be regarded as an essential ingredient of free collective bargaining …

She notes that Paul Weiler has argued that 'banning strikes would effectively end collective bargaining'. She also notes that another academic, Professor Antoine Jacobs, has argued that 'in the absence of a right to strike collective bargaining would amount to collective begging'.

Of course, WorkChoices also saw a range of substantial impediments being introduced in relation to the right to strike. It wasn't just conciliation and arbitration that were substantially eroded under WorkChoices; the right to strike also came under substantial attack, as it also had in the preceding Building and Construction Industry Improvement Act 2005, which had outright prohibited almost all industrial action in the building and construction industries. In her paper, Jane Romeyn wrote:

Academic commentators have agreed that the Work Choices amendments, while stopping just short of an outright ban on protected industrial action substantially restricted the availability of protected industrial action.

This bill, which seeks to further curtail the right to strike in Australia, continues the conservatives' history of undermining the right to strike.

It is worth noting the history of the secondary boycott provisions in trade practices law in Australia. As you'd be aware, it was the Whitlam government that introduced the modern Trade Practices Act in 1974, a landmark piece of legislation that introduced genuine competition policy into this nation. Just that piece of legislation alone made a massive contribution to improvements in our gross domestic product. Shortly thereafter, in 1977, the year I was born, the Fraser government introduced section 45D, the secondary boycotts provision, into the Trade Practices Act. They did that to directly impact on unions' ability to strike; that was the purpose of the introduction of section 45D.

It was the then member of the Fraser government, John Howard, who introduced section 45D and, later, 45E, which explicitly referred to unions, into the Trade Practices Act. They were targeted. The provision which referred to agreements with unions, section 45E, was introduced in 1980. Then, in 1984, once they had been elected, the Hawke government attempted to repeal those provisions—sections 45D and 45E—but they were defeated in the Senate. The attempt to repeal was based on the, I think, quite clear fact that these are provisions that are, as I said earlier, inherently industrial in nature. They don't belong in competition laws; they belong in industrial relations laws.

Further attempts to repeal were not successful, but, in 1993, you'll remember that the then minister, Laurie Brereton, introduced a suite of reforms into workplace relations laws in this country. There had been criticism by the ILO in relation to our industrial laws and in relation to the secondary boycott provisions in the then Trade Practices Act. You saw, through the 1993 reforms, for the first time a positive right to strike in Australia. There had been strikes in Australia but there was, for the first time, what was called protected action in the industrial relations legislation.

But, relevantly for this bill, that was the year in which the Keating government was able to repeal the secondary boycott provisions from the Trade Practices Act through modifying section 45D and deleting section 45E. The amendment was to ensure that the Trade Practices Act provision was aimed at the purpose of the Trade Practices Act, which was to deal with competition and to promote competition. That provision dealt with situations where there had been a substantial lessening of competition, and there was a limitation of the provision so that it effectively applied only to non-industrial secondary boycotts. But of course in 1996, when we had a change of government again, the Howard government moved the secondary boycotts provisions from the industrial relations laws back into the trade practices legislation. Why? So that a more onerous obligation could be imposed, to better prevent secondary boycotts, or, in other words, to better erode Australians' right to strike.

Mr Deputy Speaker, I have a range of concerns about this attempt to erode Australians' right to strike, as I'm sure you appreciate from the comments that I've made. One of the particular ways in which this legislation will seek to make it harder for people to engage in their right to strike is by imposing massive penalties on secondary boycotts. The legislation already proscribes secondary boycotts. This will introduce massive penalties. It will take the penalties from $750,000 to $10 million, or, if the amount that's three times the total value of the benefits obtained from the secondary boycott is greater than that, then that greater amount, or, if the court cannot determine the total value of these benefits, 10 per cent of the annual turnover of the corporation for the 12 months leading up to when the secondary boycott occurred. It's an attempt to crack down on sympathy strikes. It's an attempt to proscribe sympathy strikes, or to make it even harder to exercise your right to strike in Australia.

We have a right to strike. We're a signatory to and we've ratified the International Covenant on Economic, Social and Cultural Rights, which expressly recognises the right to strike, at article 8. That's been in force in Australia since 1976. As the former president of the Industrial Relations Commission Justice Giudice has acknowledged, the High Court found, in the Victoria v the Commonwealth case, following the 1993 legislation, that does give rise to an obligation for there to be a right to strike provided for in Australia.

We're also party to two International Labour Organization conventions that give rise to a right to strike. They are the Freedom of Association and Protection of the Right to Organise Convention, 1948, No. 87, and the Right to Organise and Collective Bargaining Convention, 1949, No. 98. The Committee on Freedom of Association and the committee of experts from the ILO have repeatedly found that these instruments give rise to a right to strike. As I said earlier, the ILO has been critical, over and over again, of Australian restrictions on the right to strike included in the Workplace Relations Act, in the building and construction legislation and in the trade practices legislation. It has been specifically and expressly quite concerned about our secondary boycott prohibitions in this country. The committee of experts has expressed concern that those provisions rendered unlawful a wide range of boycott activity and most, if not all, sympathy action.

[Mr Wallace interjected]

Ms BUTLER: I hear the member for Fisher saying that it's a good thing too. It's really indicative of the view of members opposite, who don't support the right to strike and are happy with the low-wage paradigm that we're now living in. I think it is worth acknowledging that we've had an international body, which is the body that oversees conventions to which we are a signatory, criticising us repeatedly from 1989 right through until at least 2014, for this failure to protect the right to strike, criticising us for this specific provision, the secondary boycott provision. And members opposite say, 'A good thing too!' They're happy for people to be deprived of their power, but I'm not happy for that. I think that it is very, very disappointing, and, quite frankly, flouting our international obligations, that this government is now seeking to impose $10 million in penalties on sympathy strikes in a further blatant and naked attempt to attack unionism in this country.

This bill, to the extent that it seeks to increase the practical impediments to Australians exercising their right to strike, is not just disappointing; it's dangerous. The ultimate consequence of reducing working people's power is the reduction in pay and conditions that we're already experiencing. I'm sure you remember that I quoted earlier the idea that, without your rights, without your empowerment, without institutions, without regulation and without rights to withdraw your labour, it's not collective bargaining but collective begging. There is a real problem with bargaining in this country when people don't get wage rises for years and when wages go backwards compared to consumer prices. We have to come to terms with this. It's not just a problem for the households; it's a problem for the economy. It hits consumption, which slows down GDP growth, and—possibly more saliently for this place—it affects the income tax take and therefore the revenue that the Treasurer has to deal with when it comes to seeking to balance the budget.

So slow wages growth is a problem, and dealing with that problem needs to come to terms with the fact that collective bargaining needs to work. It needs to work, and wage fixing in this country clearly needs improvement. So instead of doing what it should be doing and focusing on that, it's regrettable that the government is trying to crack down on strikes and to reduce working people's power. Of course when that happens, when you reduce working people's power and slow down wages growth or even have wages going backwards, that increases the inequality that we face in this country. It feeds into greater economic inequality. More importantly, it feeds into the sense that the system is rigged against you. When you can't get a fair go at work, when you don't have any power in the workplace, it feeds into the sense that the system is rigged against you, and that's not just bad for our workplaces, our economic rights, our wages and our salaries; it's bad for our democracy and civic engagement. Because if people think the whole show is rigged, then they're at risk of giving up, and we shouldn't allow that to happen.

See Hansard

Mr Craig Kelly (Hughes) MP (5 September 2017) (Liberal Party)

Mr CRAIG KELLY (Hughes) (16:47):

by leave—I just want to sum up in the few minutes left. Schedule 8 of the bill allows a corporation or a person to notify the ACCC of a resale price maintenance agreement as an alternative to seeking authorisation from the commission. It is clear that in today's marketplace this is an appropriate change, because the notification available for resale price maintenance conduct in many circumstances is actually procompetitive and the notification process is a much quicker and less expensive means of obtaining an exemption for the authorisation. This is a very welcome step—another step that this coalition government is taking to support small business.

Also in schedule 6 are increased penalties for secondary boycotts. Secondary boycotts clearly have nothing to do with the right to strike. Secondary boycotts by themselves are harmful to trading freedom, they are harmful to competition and they warrant a very significant penalty. If we want to drive up wage growth in this country, it's about becoming more productive. We need to become a more productive nation. If groups are able to engage in secondary boycotts, that will dampen the productivity of this nation.

As I said, this is not about stopping someone's right to strike. A secondary boycott is where someone coerces and threatens a third party, which is often an employer, and puts pressure on them to cease trading with a fourth person—and that is often a small business. This damages the economy. It is absolutely correct that we increase penalties for that activity if we want to have a productive economy where people will put their money on the line—put their capital on the line—take business risks and employ people without fear that they are going to be victim of a secondary boycott. So I commend that section of this bill to the House.

However, I would note we still have some more work to do. We still have no effective provisions to prevent anticompetitive price discrimination in this nation. The US has had the Robinson-Patman Act for many, many years, which gives small business an opportunity. The US Federal Trade Commission said of that Robinson-Patman Act:

… unfair business practices, price discrimination most directly denies to small business an equal opportunity to live and grow on the basis of efficiency. Such opportunity is the very essence of the competitive economic system which our antitrust laws—

(Time expired)

See Hansard

Ms Madeleine King MP (Brand) (5 September 2017) (Labor)

Ms MADELEINE KING (Brand) (16:51):

I rise today to speak to the amendment as moved by the member for Fenner to the Competition and Consumer Amendment (Competition Policy Review) Bill 2017 that would have the effect that, whilst not declining to give the bill a second reading, condemns the government for pushing ahead with its agenda that will worsen inequality, including increasing penalties for sympathy strikes to hundreds of times the size of other unprotected industrial action penalties.

At the heart of it, the difficulty I find with this legislation—as other members have mentioned—is the extraordinary attack it makes on the right to strike and impedes the right of workers to strike and withhold their labour. Though I support the general nature of the legislation, I cannot support schedule 6, a measure which will increase the maximum penalty for breaches of secondary boycott provisions. This government's proposal, specifically schedule 6 of the bill, seeks to increase the penalty for breaching these provisions from the current value of $750,000 to:

… the greatest of:

  • $10,000,000;
  • three times the total value of the benefits obtained from the secondary boycott; or
  • if the court cannot determine the total value of these benefits, 10 per cent of the annual turnover of the corporation for the twelve months leading up to when the secondary boycott occurred.

Despite the wordy definition, in essence, this means unions will be punished for sympathy strikes—for standing in solidarity with their fellow Australians and their fellow workers. This legislation will disallow collective action by unions and employee associations across sectors and further constrain their ability to organise. If we can break that down for a moment: if a union downs tools in a sympathy strike, despite being an industrial action, they are not protected by industrial law. This government—like right wing, antiworker Liberal governments before it—is seeking to play politics with consumer and industrial law, weaken the union movement and disenfranchise workers.

I'm very glad the member for Fisher is here today. Often, he and others on the government side of the chamber like to assume that many of us on this side were union officials in a past life. I have not been. I've worked in the university sector, worked as a commercial lawyer and also ran an international think tank, but I am very proud to stand with my union officials and sisters and brothers in the union movement. They do a great deal of great work for workers across this country. I will always take the time to remind the member for Fisher of that fact.

If I could return to the bill, this government is inconsistent. This increase to the maximum penalty for a secondary boycott is out of step with similar legislation concerning unprotected industrial relations activity. In fact, comparing this proposal with the maximum penalty as stipulated in the Fair Work Act 2009, it's 800 times higher. As I previously stated, I support the crux of the bill. I support 11 of the 12 schedules to it, and that's because I believe in competition.

Labor has always been the party of competition. It was Labor who floated the dollar and deregulated the banks when the conservatives on the other side could not muster up the courage. They didn't have the mettle. Labor believes in competition, meaning strong wages, low prices and high-quality production for Australians. We believe in an innovative and fair economy with a high standard of living and a focus on jobs. In order for the economy to be competitive, vested interest and rent-seeking monopolists must be defeated and consumers must be protected and encouraged to engage with the market. Legislation that's worked toward this end promotes fairness and equity—in my opinion, two cornerstones of our Australian way of life.

Labor has always valued competition because it values fairness. It was the Labor Party that introduced the Trade Practices Act in 1974. Before this, there was nothing. There was no act of parliament whatsoever dedicated to competition matters. This Labor brainchild—the act which we now know as the Competition and Consumer Act—remains the backbone of Australian competition law. It was also Labor which in 2009 criminalised cartels. Labor supports equity in business and backs in any measures which will cut unnecessary red tape and improve the ease of business, as long as such measures are sensible and fair to the consumer. I understand that you can't have upward social mobility without a strong economy and without innovation and business. Labor has always understood this.

In Labor, we continue to stand against monopolies and cartels, as those who primarily lose out to cartels are the everyday Australian consumers and small and family businesses. We don't want local business to lose out at the hands of these cartels who seek to violate competition law and the integrity of the Australian market. Our team has consulted widely. I commend the members for Fenner and Gorton on their extensive work in this process. We have ensured this bill does not water down cartel provisions. At the same time, we have seen that the bill seeks to continue to encourage legitimate joint ventures by making sure they aren't affected unintentionally by the cartel provisions. This bill broadens exemptions so that they cover both contracts and agreements and understandings. This bill extends the joint venture exemption, including provisions for the purposes of, and reasonably necessary for, undertaking the joint venture, and also extends the exemption to the acquisition of goods and services in addition to the production of goods and services.

Our Labor team has also consulted widely as to the reasonable search defence this bill seeks to introduce. We have found, thankfully, that the measure will not allow companies and individuals under investigation to use this defence in refusing or failing to comply with a compulsory information request by the ACCC under section 155 of their act. Section 155 of the act is integral. It is the foundation of the ACCC's ability to investigate any perceived breaches of the act. At the last election Labor, which nearly won government, of course, sought to strengthen section 155 with a suite of policies. We committed to increase the penalties for anticompetitive or anticonsumer conduct and to use some of the revenues to increase the ACCC's litigation budget from $24.5 million to a maximum of twice that level. At the last election we also committed to give the ACCC a market studies function—a measure that it's been in dire need of for years—to help the body identify competition challenges before they become systemic.

Labor will always support measures that boost competition because Labor is the party of competition. It was Keating who commissioned Professor Fred Hilmer to chair a comprehensive review of competition policy. The Hilmer report set the agenda for competition policy in Australia. The Productivity Commission found that reforms implemented as a result of the report led to a significant and permanent increase in the Australian economy's productive capacity. Similarly, the Grattan Institute found that National Competition Policy was one of the 10 big reforms which led to 24 years of uninterrupted economic growth in Australia. The Rudd and Gillard governments furthered important changes to competition and consumer policy settings. In 2011 Labor introduced the Australian Consumer Law, a cooperative reform between the states, territories and Commonwealth governments that created a consistent national approach across a range of consumer issues, such as unfair contract terms, product safety and consumer rights.

The white-collar crime of cartel conduct, where businesses come together to fix prices and rip off consumers, was just a civil offence before Labor's intervention in 2009. This was inconsistent with international best practice. It meant that the appropriate disincentives were not in place to deter such crimes. Under Labor, cartel conduct was criminalised. It brought Australia into line internationally and meant that offenders could now face imprisonment if caught fixing prices with their competitors.

The Labor team has long understood that effective competition policy is at the heart of a productive, innovative and well-functioning economy. At the same time, it is fair. Competition policy is integral in a fair society. It protects the interests of consumers over rent seekers and monopolists. On this, our record could not be stronger. We understand that well-functioning, strong economies are a means to an end. For Labor, the development of competition policy will always be seen through this prism. For Labor, competition remains a vessel not just delivering lower prices to Australian consumers and families but spreading equality of opportunity throughout the community. We believe that, in certain circumstances, there is a need for government intervention where markets fail. We believe in creating and maintaining consumer protections to ensure markets work for all Australian consumers. Lower barriers to entry lead to more competition and therefore greater participation. In light of this we oppose any measures that will hinder genuine economic competition in Australia, such as the government's dangerous effects test legislation.

However, Labor welcome the government's announcement to align Australian consumer law penalties with the rest of the act, but we urge it to adopt Labor's other policies which are in line with international best practice. Sympathy strikes or secondary boycotts, proposed to be outlawed in schedule 6 of this bill, are permissible under international law. As per convention 87 of the International Labour Organization, such strikes are permitted providing the original strike is lawful. Thus, the prohibition of secondary boycotts in Australian law is not permissible. Therefore, this increase in maximum penalties is inconsistent with Labor's push for higher penalties for anticompetitive or anticonsumer conduct, in line with international best practice. Australia is already internationally out of step with best practice, and any increase would push us even further away from that goal.

Competition policy should never be used as an excuse for blind, ideological and prejudiced cuts and privatisations; yet this government is blinded in its dogmatic anti-union agenda. This is the same rabble that dropped $46 million on a political witch-hunt into the unions in the last parliament in the form of a royal commission—but, then, they don't really care about how much money they drop on a ridiculous thing like a $122 million survey. This measure is just another brick in the wall of the Liberal Party's rich history of abusing the powers of government in order to attack the union movement and their ability to organise. When labour is involved—and when I say 'labour' I mean people's right to work—sometimes all they have in the end is the right to withdraw that labour and they should be able to do that.

Someone needs to tell the Prime Minister that these attacks on unions have been done before. The Fraser government tried to remove secondary boycotts from the accountability of industrial relations law in the 1970s. The Hawke government then sought to repeal the measures in the belief that secondary boycott provisions were best mediated through industrial courts and tribunals, not through the competition regulator—but the Senate blocked this. Though the Keating government managed to get some secondary boycott measures through the Industrial Relations Act in 1988, Howard then removed them, of course, from the scope of industrial relations in the 1990s. As evidence, this measure, this schedule 6, is pure dogma. It is a symbolic, ideological rehashing of the same argument that has been spewed out in this chamber for over 40 years. It, like so many Liberal Party nonsenses, is a wedge, a delaying tactic, designed to mask the fact that they have no agenda and that, since limping into government last year, they've achieved barely anything.

The union movement has built up over years of fighting for workers' rights many of the institutions we take for granted today—the fight for the eight-hour working day; rest breaks; award rates; penalty rates, which this government won't protect; superannuation; equal pay for women; workers compensation; annual leave; sick leave; long service leave; maternity leave; hopefully soon domestic violence leave; redundancy pay; and unfair dismissal protections. They are just some of the battles our union representatives have fought for for us and for workers across the country.

I'd personally like to note in this House the work of the progressive Labor union branches in Western Australia and their tireless secretaries: Tim Dawson of the Transport Workers Union; Peter O'Keefe of the Shop Distributive and Allied Employees' Association—or, as the Prime Minister likes to call them, 'shoppos', though we call them the 'shoppies'; Mike Zoetbrood of the AWU; Christy Cain from the Maritime Union of Australia; Mick Buchan from the Construction, Forestry, Mining and Energy Union; and Philip Woodcock of the Rail, Tram and Bus Union. They always act in the interests of their members, in the interests of the workers and in the interests of Western Australia, and they will continue to do so. I also acknowledge the tireless work of the union officials of United Voice in Western Australia.

Despite all the hard work of unions, the Liberal Party continues to attack the union movement. The national income of employees is going to 50-year lows. The IMF found that one of the significant reasons that workers are getting less overall out of the economic pie is a drop in union membership. In fact, union membership is low. It is at around 15 per cent. It's at its lowest level in 110 years. Inequality is increasing, with earnings over the past generation rising three times as fast for the top 10th of income earners than for those at the bottom. The IMF has stated that declining union membership is responsible for 19 per cent of the fall in workers' income. The government do not want the workers united. They do not want to see your unions strong. They're happy to corroborate with the bosses while your unions are kept in silos and treated like criminals for showing solidarity with their colleagues.

The government is content with cutting penalty rates for up to 700,000 for people in the retail, hospitality, fast-food and pharmacy sectors. Ten thousand workers in my electorate have had their penalty rates cut, and the government is more than happy to push ahead with its budget for millionaires and multinationals, including a $65 billion tax cut for banks and multinationals. They don't have the political courage to allow a free vote and legislate on marriage equality, but they have plenty of time for union bashing and tax concessions for the wealthiest. I ask you: who exactly in this place is playing class warfare?

See Hansard

Mr Tim Hammond MP (Perth) (5 September 2017) (Labor)

Mr HAMMOND (Perth) (17:05):

I am delighted to rise in support of the position put by the shadow assistant Treasurer and just as delighted to support the very eloquent speech made by my good friend and colleague, the member for Brand, who, as usual, was centimetre perfect in her remarks, both in the substance and content of her analysis, as well as her true Labor passion for a great labour movement that involves not only the parliamentary wing of this great party but also the industrial wing and the trade union movement.

I must say what I find really curious about this faux endearment that the conservatives have for the trade union movement is that they love to preface their remarks with: 'Look, I think the trade union movement is great, but.. .' Then they insert a defamatory phrase about a particular militant union here: 'I think trade unionism is fine, but you're all bikies.' Or 'I think the trade union movement is fine, but you're all corrupt.' It's a bit like saying, 'I'm not racist, but…' and then we inevitably know what's going to happen next—a blatantly racist remark uttered from the mouth of the aforementioned racist. It's the same here. What you find when you hear 'I think trade unionism is fine, but…' is that you never actually hear anyone on the conservative side in this place go any further as to why the trade union movement has made so many valuable contributions to our community.

It goes so much further than simply protecting the rights and entitlements of workers all over the country and has done so for hundreds and hundreds of years. It goes so much further than paying homage to the fact that the trade union movement helped create the eight-hour day—eight hours' sleep, eight hours' recreation and family time. It goes so much further than that. The reason we are quite right to be celebrating the role of the trade union movement in this country is that the trade union movement speaks to the values that come from collective action done well in protecting fundamental workplace rights and entitlements of Australians. And you often hear these remarks again by ill-informed conservatives to say, 'Well, how much can it really be reflective of either (a) the Labor Party or (b) the community at large if we see the numbers of those who join the trade union movement shrinking? How much say—

The DEPUTY SPEAKER (Mr Irons): Order! I remind the member for Perth to concentrate on the substance of the legislation. You've had three minutes of entry. That's why we have members' statements.

Mr HAMMOND: I'd be delighted to. The subject matter of the trade union movement goes hand in glove with the substance of this legislation as to why the Labor Party opposes schedule 6 of this legislation in relation to secondary boycotts. At its heart it talks about how the trade union movement espouses values of collective action, collective strength and a fearless fight for rights and obligations and entitlements for working Australians. Just as this government loves to try and dress up their faux defence of the ideals of the trade union movement, what we see in this legislation is a veiled attempt by this government to try and espouse a phoney notion by introducing these incredibly onerous penalties under the secondary boycott provision—schedule 6 of the act—on the basis of fairness. Well, it's not fairness at all. We all know what it is, and it's appropriate that we call it out for what it is. It's a subversive attempt, through backdoor means, to subvert the aims of the trade union movement when it comes to notions of sympathy strikes. That's why I am delighted to stand up here and support the shadow Assistant Treasurer and those who speak so eloquently, like the member for Brand, in relation to the amendment, which, at a substance, makes clear that the House ought to condemn the government for pushing ahead with its agenda, which will worsen inequality, including increasing penalties for sympathy strikes to hundreds of times the size of other industrial action penalties.

The devil is in the detail here. This is not in any way, shape or form legislation that is designed to do what they propose it does, which is actually serve as a deterrent to all corporations or third persons from trading with a fourth person—that is, secondary boycott. It is increased from $750,000 to $10 million. All we need to do is go to comparisons for similar activity under the Fair Work Act. This is really where the rubber hits the road in relation to why this provision in schedule 6 is so rightly opposed by the Labor Party. It's because in the Fair Work Act at least we see penalties for what they are. Equivalent provisions under the Fair Work Act are subject to far less severe penalties, with a maximum of 60 penalty units—that is, about $12,600.

What we see here, in this veiled attempt at nobbling the trade union movement through the secondary boycott provision increase in penalty, is that the maximum penalty for a secondary boycott is almost 800 times higher than the maximum penalty for unprotected industrial action. So why don't we just call this for what it is—an attempt to take out from under the feet of the trade union movement an approach which is simply about exercising an industrial right that has existed for decades. These laws are typically used against unions that are engaged in sympathy strikes. The numbers speak for themselves in relation to the results as published by the Australian Competition and Consumer Commission.

We are not opposing for opposing's sake. We are supporting 11 of 12 schedules to the bill, but what we do not do, will not do and will not let pass in this place is any policy that moves Australia further away from not only international law and best practice but fundamentally something that looks at protecting rights and entitlements of working men and women in this country. We have taken significant steps, which this government have adopted somewhat belatedly, in relation to bringing into parity with international best practice appropriate penalties for breaches of consumer law and anticompetition law. We've made it very clear that we think that the penalties imposed for misleading and deceptive conduct under the Australian Consumer Law ought be in line with the other provisions of the Competition and Consumer Act and be increased to $10 million.

We are also, quite proudly, the party of competition, because competition fundamentally means better outcomes for Australian families. It means lower prices, higher wages and better quality products for Australian families. It means a more productive, more innovative and job-rich economy. But we will not stand here and take any part in endorsing legislation which has the practical effect of hindering genuine economic competition in this country, including the secondary boycott provisions and the government's dangerous effects test legislation.

I'd like to come back to the secondary boycotts because I really am of the view that this is where the proposed legislation is at its most insidious. As we know, a secondary boycott involves a person in concert with another person engaging in conduct that hinders or prevents a third person from supplying or acquiring goods and services to or from that fourth person. The schedule that is the subject of contention increases that penalty to an enormous amount—$10 million, which is three times the total value of the benefits obtained. And the International Labour Organization permitting sympathy strikes means that this change is entirely inconsistent with our party's policies to have high penalties for anticompetitive and anticonsumer conduct in line with international best practice.

Again, I just can't help but see a most consistent pattern of egregious behaviour by this government in the many and varied ways it seeks to dud Australian workers. Not only does it seek to usurp a fundamental international legal right in relation to sympathy strikes or secondary boycotts through this schedule, but also we know well that this government will not move an inch—out of ignorance, out of obstinacy or by just plain being completely off the Richter scale when it comes to anything remotely like an ethical compass—in relation to penalty rates. This government stands here and pretends to back in this legislation on the basis of levelling the playing field, when we know perfectly well that that's not the case. It is designed to try to subvert the rights of the trade union movement at the same time that it is perfectly content to cut penalty rates for up to 700,000 Australians in the retail, hospitality, fast-food and pharmacy sector. That is, at last count, over 120,000 to 150,000 Western Australians and something in the range of about 15,000 workers in my federal electorate of Perth.

So, get this: at the same time that we're seeing the rug pulled out from under the feet of Australian workers we see this government being completely consistent in its hypocrisy in relation to deciding its okay to find the money in the budget to dole out $65 billion worth of tax cuts, of which we know that at least $7 billion—probably closer to $10 billion—goes to the big four banks. We see a government entirely content to prop up its current cabinet in a manner that is inconsistent with the way it has treated former ministers of this cabinet. We see a government that is entirely content to back in the big end of town in relation to these tax cuts and at the same time jeopardise the rights and entitlements of working Australians.

The great shame in relation to this proposed legislation is that it does a complete disservice to an otherwise noble aim of this great party, the Australian Labor Party, in relation to measures that have consistently boosted competition since the Whitlam government was elected back in 1974. We see from the Labor Party a genuine and honest attempt, every single step of the way, to introduce measures into legislation that actually promote competition. We saw it in the Trade Practices Act. We saw it under Prime Minister Keating, with Professor Fred Hilmer's comprehensive review of competition policy, known of course as the Hilmer review. Under the Rudd and Gillard governments there were further important changes to competition and consumer settings and an enormously significant change in the replacement of the Trade Practices Act, which had served us tremendously well for over 35 years, with the Australian Consumer Law. The Australian Consumer Law is not only a groundbreaking piece of legislation in this place but also something achieved by way of cooperative reform between the states and territories, creating a consistent national approach across a range of consumer issues such as unfair contract terms, consumer rights and product safety. So, we have long recognised that effective competition policy lies at the heart of not only a well-functioning economy but also, fundamentally, a playing field and safety net that protects Australian families.

We have always understood that a well-functioning economy is the best vehicle for ensuring that we lift the living standards and lift the prosperity levels of everyday working Australians. We know this government has it wrong every single step of the way, as demonstrated daily by its almost breathtaking levels of hypocrisy. Schedule 6 to this bill is no better than that and no better than a sneaky backdoor subversive attempt to detract from the rights and entitlements of everyday working Australians.

See Hansard

Mr Brendan O'Connor (Gorton) (5 September 2017) (Labor)

Mr BRENDAN O'CONNOR (Gorton) (17:20):

I rise to support the Competition and Consumer Amendment (Competition Policy Review) Bill 2017 and the amendment moved by the shadow Assistant Treasurer. The member for Perth is right. The government always find a way—whatever they do, in whatever area of public policy—to target workers and organised labour in this country. They cannot help themselves. The fact is that we support overwhelmingly the recommendations of the Harper review. I might add that the review was handed down 2½ years ago, in March 2015. The speed with which the government move is remarkable!

Mr Hammond: Glacial!

Mr BRENDAN O'CONNOR: Yes, glacier-like, as the member for Perth reminds me. And yet we could have agreed to this bill in its entirety if 13 of the 14 schedules of the bill had been introduced into this House. But, of course, the government wanted to move on to secondary boycotts and change fundamentally the way they operate in this country. That's interesting, given that the incidence of secondary boycotts is very, very low in this country and by comparison internationally.

Secondary boycotts have a long history in this place. It was the Fraser government who sought to amend the Trade Practices Act 40 years ago this year, in 1977, to introduce significant penalties for unions who engage in any form of sympathy strikes and really move the laws away from the industrial relations regime and into commercial and corporate law, in order to make it harder for unions to organise. If there had been a prevalence of secondary boycott conduct that needed to be reviewed, if wages were going through the roof—oh, if only they were rising, but we have a situation where wages are falling in real terms—

Mr Howarth interjecting—

Mr BRENDAN O'CONNOR: In your electorate and in mine, Honourable Member, wages have been falling now over a two-year period, and they are at a lower rate of growth than they have been for 20 years. As a result, people are feeling the pinch. Cost-of-living pressures are acute. Of course, it's always difficult to make ends meet for families that struggle on medium and low incomes, but it's always more difficult when wages are falling in real terms, and that hadn't happened for a very long time, until this government took the reins. It hadn't happened for at least 20 years, arguably longer.

So the idea that the government has to use this piece of legislation to recommend increasing penalties on unions for secondary boycotts by—as the shadow Assistant Treasurer reminds me—800 times the current penalty does smack of some excessiveness on behalf of even this government. We just recently had the amendments to the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 back from the Senate, where it was passed last night. We made that bill better. It's not a perfect bill. It's not even a good bill. It's just a better bill. But there was even an effort in that legislation that was being proposed by the government to ensure that we would see coercive powers used against workers rather than used against employers who were intentionally underpaying those workers or other workers in the labour market. We limited those coercive powers, I'm happy to say—not with any help from the government, because the government voted against the amendment to limit the coercive powers, which was ostensibly the intended purpose of the bill.

In relation to this bill there are no questions whatsoever with 13 of the 14 schedules of the Harper review. I must say, it is very tardy on behalf of the government and the Treasurer to take this long to actually bring this matter to the parliament. My main concern—and the concern that's reflected in the amendment moved by the shadow Assistant Treasurer, Dr Leigh—is that there is an excessive and extreme approach to secondary boycotts; the idea that you would, for example, propose an increase to the maximum penalty for breaches of secondary boycott provisions from $750,000 to $10 million. For comparison, under the Fair Work Act, penalties related to unprotected industrial relations activity are subject to far less severe penalties of a maximum of 60 penalty units—that is, $12,600. If enacted, the maximum penalty for a secondary boycott would be nearly 800 times higher than the maximum penalty for unprotected industrial action. That is extreme, and 'extreme' is exactly the word we must apply to the way in which this government goes about dealing with workers and unions in this country.

It is relentless in its pursuit of undermining the capacity of working people in the country to organise in workplaces, whether there's a union presence or not. At every turn, in every area of public policy, if it suits them, the government will find a way to attack unions and workers because that is in their DNA. In fact, the only things that seem to unify this government are their attacks on unions and their enmity towards working people generally. It's reflected in one of the schedules of this bill, where they've gone very extreme in increasing penalties for a particular type of industrial action that is, in fact, consistent with International Labour Organization conventions that this country's ratified and extreme insofar as the penalty is concerned—and there is no evidence. Even if you were to agree with the contention that there was a problem and we should deal with this matter in this particular way, there is no evidence of a prevalence of secondary boycotts in the first place to justify—even in the conservative government's mind—that it should take this route. But, indeed, it has chosen to do so, and that's why I rise to support the amendment moved by the opposition in this place.

This has a very long history. This area of public policy is not new. Indeed, as I've mentioned, 40 years ago, the Fraser government introduced secondary boycott provisions into the Trade Practices Act and then again further provisions in 1980. The Hawke government sought to remove those provisions and failed at the time. Finally, the Keating government removed most of the provisions from the Trade Practices Act and referred these matters to where they should be placed—that is, in industrial relations legislation, if they're to be contained at all.

It is Labor's view that, yes, we need to have regulations around industrial action and, yes, we need to have limits and have requirements of employers, unions and workers to be governed within a particular regime. But we need to make sure that people have the democratic right to withdraw their labour pursuant to rules so they're consistent with International Labour Organization principles. Indeed, that includes employers, who have similar rights. We shouldn't be looking to criminalise matters that should be dealt with in the civil jurisdiction. We shouldn't be seeking to refer matters that should be within industrial legislation into the area of corporate law. That is not the view of Labor. It has never led to fewer disputes; in fact, it's led to the escalation of disputes. This sort of thinking goes right back to the HR Nicholls Society and the Institute of Public Affairs, which have a world view that unions should not exist or should be strangled to the extent that they cannot operate effectively in workplaces in this country. They do not believe there's a role for unions in workplaces in this country, and it's reflected in this one provision.

Having said that, and having emphasised that particular problem—and I wanted to do that, if you like, as the shadow employment minister—I want to finish by saying how long overdue these matters are. The review was handed down in March 2015, and 2½ years later the government is responding to its own review. It's very tardy at the very least. We will be voting against the schedule that refers to secondary boycotts and we will do our very best to make sure that this particular part of the bill before us is not enacted into law. It is not fair on working people and it's not fair on unions. For that reason we moved our amendment, and I'll be supporting that amendment when the vote comes up.

See Hansard

Mr Scott Morrison (Treasurer) (5 September 2017) (Liberal)

Mr MORRISON (Cook—Treasurer) (17:30):

Firstly, I would like to thank those members who have contributed to this debate. This bill contains a significant package of reforms to the Competition and Consumer Act 2010. These reforms are designed to simplify the law and better deal with anticompetitive conduct while supporting pro-competitive behaviour. These reforms will strengthen Australia's competition law to ultimately improve the long-term welfare of consumers, businesses and the economy. This bill implements a significant number of the competition law reforms recommended by the independent Harper Competition policy review, initiated by this government, and agreed to by the government in its response. It also implements the recommendations made by the Productivity Commission in its 2013 inquiry into the National Access Regime, which the government accepted in its response to the Harper review.

The reforms in this bill are sensible and should not be controversial. Unfortunately, however, the Labor Party, at the last minute, have chosen, cynically, to oppose schedule 6 of this bill. Schedule 6 simply does this: it proposes to align the penalties for the breaches of secondary boycott provisions of the Competition and Consumer Act to the same level as other breaches of competition law—that's all—as recommended by the Harper review and the Royal Commission into Trade Union Governance and Corruption. What the Labor Party are seeking to do is maintain a special deal for secondary boycotts in competition law. We're used to the Labor Party wanting special deals for unions. They voted against ending corrupt payments to unions, in this chamber and in the other, and now they're looking for another special deal. They want to lock in secondary boycott penalties at a lower level than that which applies to any other breaches of competition law, and they want to do so against the recommendations of the Harper review and against the recommendations of the Royal Commission into Trade Union Governance and Corruption. They're happy to protect unions that want to go down this path at the expense of small businesses, workers, consumers and the wider economy.

Workers are customers. Workers benefit from strong competition laws that make our markets work well for all customers, and they should be protected against the sorts of practices that unions engage in to frustrate small business, large business and their customers in getting the best deal possible in competitive markets. I remain hopeful that the rest of the parliament will support these sensible reforms to align the penalties for illegal secondary boycotts with other breaches of the act. No special deals for the unions will come from this side of the chamber. But for the Labor Party it is core business to continue to enshrine the sorts of protections that they seek to simply pursue their own agendas.

I note that the commencement of this bill is linked to the commencement of the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016, which enacts significant reforms to section 46 of the Competition and Consumer Act 2010—the misuse of market power provision, as it is known. I look forward to this bill passing the parliament, allowing that new section 46 to come into effect as soon as possible. The new section 46 will ensure that our laws promote strong competition in our markets and a level playing field for businesses, including over two million small businesses, to the ultimate benefit of Australian consumers. It will better target anticompetitive conduct, better support pro-competitive conduct and facilitate more-reliable enforcement. Overall, the new section 46 will benefit customers and the economy by giving all businesses a better opportunity to compete on their merits.

Once again, I am disappointed that the Labor Party chose not to side with small business when it came to this matter and chose to work against competition reforms that have been a generation in coming and are being delivered by this government. Once again, the Labor Party are standing in the way of strong competition laws that protect Australian customers, because they like a big, cosy deal between big unions and big business. That's the big deal: big unions, big business and big Labor. That's what it means, and that's what they're going to want to vote for in this place, as they always do. But the Turnbull government will get on with the job of delivering these sensible reforms, ploughing on with these sensible reforms and looking forward to the support of the other place to ensure that this new change to section 46 becomes law.

As recommended by the Senate Scrutiny of Bills Committee, I take this opportunity to table an addendum to the explanatory memorandum of the bill, which includes additional information relating to schedule 11 of the bill. I present a copy of the addendum for the information of members. With that, I commend this bill to the House.

See Hansard

 

Second reading speeches (Senate)

Second reading debate commenced in the Senate on 6 September 2017.

Debate resumed on 16 October with Senators Mathias Cormann (Liberal Party), Peter Whish-Wilson (Greens), Patrick Dodson (ALP) all speaking. The bill passed with amendment.

Senator Ruston (Liberal)

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (18:04):

COMPETITION AND CONSUMER AMENDMENT (COMPETITION POLICY REVIEW) BILL 2017

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

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

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

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

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

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

This prohibition will capture anti-competitive conduct that falls short of a contract, arrangement or understanding as the courts have interpreted each of those terms in section 45. An exception is provided where the only parties to a concerted practice are the Crown and one or more government authorities. Schedule 3 also repeals the separate prohibition on exclusionary provisions from the Act, which substantially overlaps with the cartel prohibitions in the Act.

Schedule 4 to this Bill repeals the definition of 'exclusionary provision' and a defence to the prohibition on exclusionary provisions, following the repeal of this prohibition by Schedule 3.

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

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

Schedule 7 to this Bill amends the Act to prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition. This will bring the prohibition on third line forcing in line with the similar prohibition on second line forcing and with other comparable jurisdictions, including the United States, Canada, the European Union and New Zealand.

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

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

Schedule 9 to this Bill makes a number of amendments to the Act. It simplifies the complex provisions governing the authorisation process. It makes the Commission the decision maker at first instance for merger authorisations, as it is best suited to make these decisions. It also grants the Commission the power to issue a 'class exemption' for business practices that are unlikely to raise competition concerns, or are likely to generate a net public benefit. This will remove the need for individual applications for authorisation by creating 'safe harbours' for business and thereby reduce compliance and administration costs and increase certainty.

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

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

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

Schedule 11 to this Bill extends the Commission's power to obtain information, documents and evidence in section 155 to cover investigations of alleged contraventions of court enforceable undertakings and merger authorisation determinations.

Schedule 11 also introduces a 'reasonable search' defence to the offence of refusing or failing to comply with section 155. This reflects the increasing cost of documentary searches as businesses retain many more documents, such as emails, than in the past.

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

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

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

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

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

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

See Hansard

Senator Dodson (ALP)

Senator DODSON (Western Australia) (13:12):

I rise to speak on the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. I will detail why Labor will oppose schedule 6 of this bill. Our proposed amendment is to remove that schedule. We are willing to support the remaining 13 schedules of the bill.

In 2014, the government commissioned the panel led by Professor Ian Harper to review Australia's competition laws, policies and institutions. That review reported in March 2015. Two and a half years later, the Turnbull government has brought to parliament a bill containing 14 schedules amending the Competition and Consumer Act 2010 to implement some of the recommendations from the Harper review. Labor supports 13 of the 14 schedules; they're largely uncontroversial. Indeed, we would have been happy to support them in 2015, when the Harper review finished its work. However, schedule 6 of the bill proposes to increase the maximum penalty for breaches of the secondary boycott provisions, also known as the sympathy strikes, from $750,000 to $10 million. Labor will not support that measure, for reasons I will detail later.

Labor is the party of competition. Competition means lower prices, higher wages, and better quality products for Australian families. It means a more productive and more innovative economy, with more jobs and higher standards of living. Strengthening competition is about defeating vested interest. It is about promoting a fair and equal society. More than anything else, promoting competition is about supporting the interests of Australian consumers over the interests of rent-seeking monopolists. It was Labor that introduced the Trade Practices Act 1974. Prior to that time, this was no act of parliament dedicated to competition matters. This original act, now known as the Competition and Consumer Act 2010, remains the backbone of competition law in Australia.

Under Prime Minister Keating, Professor Fred Hilmer was commissioned to chair a comprehensive review into competition policy. His report, known as the Hilmer report, set the agenda for competition policy in Australia for the two decades that followed. The Productivity Commission found that reforms implemented as a result of the report led to a significant and permanent increase in Australia's productive capacity. Likewise, the Grattan Institute has found that National Competition Policy is one of the 10 big reforms that led to 24 years of uninterrupted economic growth in Australia.

Under the Rudd and Gillard governments, further important changes were made to competition and consumer policy settings. In 2011, the Australian Consumer Law, or ACL, was introduced. The ACL was a cooperative reform between the states and the territories and the Commonwealth government. It created a consistent, national approach across a range of consumer issues, such as unfair contract terms, consumer rights and product safety.

Labor went to the last election with a suite of policies to strengthen the Competition and Consumer Act. Labor committed to increase the penalties for anticompetitive and anticonsumer conduct and to use some of the revenues to increase the ACCC's litigation budget from $24.5 million to a maximum of twice that level. We welcome the government's announcement that it will align the Australian Consumer Law penalties with the rest of the act but urge it to adopt Labor's other policies that are in line with international best practice. Labor has also committed to giving the ACCC a completely independent market-studies function—something it has been begging for, for years now, to help it to identify competition challenges before they become systemic.

Labor will support measures that boost competition, because Labor is the party of competition. It was the Labor Party that criminalised cartels back in 2009. Cartel conduct is a form of white-collar crime where businesses come together to fix prices against the interests of consumers. It was a civil offence prior to 2009. This was inconsistent with international best practice and meant that the appropriate disincentives were not in place to deter such conduct. Under Labor, cartel conduct was criminalised, bringing Australia into line with international best practice and meaning that offenders could face jail if caught fixing prices with their competitors.

Labor has long recognised that effective competition policy is at the heart of productivity and a well-functioning economy. But it's also at the heart of a fair society that protects the interests of consumers over those of rent-seeking monopolists. Our record could not be any stronger.

Labor also understands that well-functioning economies are a means to an end, and, for Labor, the development of competition policy will always be seen through this lens. For Labor, competition remains a vehicle to not just deliver lower prices to consumers and families but spread opportunity throughout the community. Lower barriers to entry lead to more competition and therefore greater participation. Labor believes in the need for government intervention when markets fail in consumer protection, to ensure that markets work for Australian consumers. Competition policy should not be used as an excuse for blind, ideological or prejudiced cuts to and privatisations of important human services.

The people who lose out from cartels are Australian consumers and other Australian businesses, particularly small businesses, which are playing by the rules. Cartel conduct is widely regarded as the most serious and harmful violation of competition law. We have consulted widely to ensure that this bill does not water down cartel provisions. We don't want legitimate joint ventures to be unintentionally prohibited by the cartel provisions under the act. The bill broadens the exemption so it covers not just contracts but agreements and understandings. The bill also extends the joint venture exemptions to include provisions that are for the purposes of, and reasonably necessary for, undertaking the joint venture and to extend the exemptions to the acquisition of goods and services not just the production of goods and services.

Another measure worthy of special consideration was the introduction of a 'reasonable search' defence. We have consulted widely to ensure this measure would not allow companies and individuals under investigation to use this defence in refusing or failing to comply with a compulsory information request by the ACCC under section 155. Section 155 is the foundation of the ACCC's ability to investigate alleged breaches of the act. The government's effects test bill is a separate bill but from the same review. Let's contrast this with the passage of the effects test. 'Effects test' is shorthand for the test introduced under section 46 of the Competition and Consumer Act, which looks at whether conduct engaged in by a firm with a substantial degree of market power has the purpose, effect or likely effect of substantially lessening competition. This is dangerous economic policy. The effects test will make businesses afraid to compete, which ultimately hurts consumers. This will create a legal risk every time a business seeks to lower prices for their consumers. Consumers are the losers here.

Labor welcomes strong competition policy but it must be informed and enforced—the government's package is neither. What we saw in the parliament earlier this year was the passing of dangerous legislative proposals without addressing the resources of the ACCC or making it easier for small businesses to litigate in their own private capacity. In the words of Peter Costello, the so-called effects test protects competitors, especially the less efficient ones, from competition. Since 1974, at least 10 inquiries into Australia's competition laws have considered the proposal of an effects test and rejected it. Apart from Professor Harper's review, only one other inquiry has ever recommended it. In submissions to the Harper review, the effects test has been described as 'legally unworkable, something that will chill competition and something that will create uncertainty for business'. These changes will deter job-creating investment in Australia by adding to a new layer of red tape and barriers to investment that has already been imposed by the Liberal-National government.

As a majority of the schedules in this bill are technical and uncontroversial, I don't think it's necessary to detail each section for the Senate. But I will articulate Labor's position on schedule 6, which increases the maximum penalty on secondary boycotts. In doing so, I wish to reaffirm Labor's support for the remainder of the bill and assure all parties in this place that we will support the bill should our amendment to remove schedule 6 be agreed to.

In 1974, the Trade Practices Act was introduced by the Whitlam government. When Malcolm Fraser's coalition government came into power, it was inspired by John Howard to introduce sections 45D and, later, 45E. These sections outlawing secondary boycotts particularly targeted trade unions. The Hawke government attempted to repeal sections 45D and 45E in 1984. However, the legislation was defeated in the Senate. This was based on the view that industrial relations matters are best resolved in specialist industrial courts or tribunals rather than through competition law or by the competition regulator. This repeal attempt was defeated by the Senate, and another attempt in 1987 was ultimately dropped.

In 1993, the Keating government repealed the secondary boycott provisions that had operated since 1977 within the Trade Practices Act 1974. The government modified section 45D and depleted section 45E. The effect of the amendments to section 45D was that the prohibition covering secondary boycotts to the TPA was restricted to boycotts involving a substantial lessening of competition. The secondary boycott provisions were then reintroduced in a much modified form into the Industrial Relations Act 1988. This change limited the operations of the provisions on secondary boycott actions and made relief available, and conciliation on dispute was first attempted through the commission. The effect of this was that, if an employer wanted to commence legal action in respect of a secondary boycott, it had to go through the conciliation and arbitration process first.

In 1996, the Howard government introduced Workplace Relations and Other Legislation Amendment Act 1996, which reformed enterprise bargaining. The secondary boycott provisions were removed from the industrial relations legislation and returned to the TPA in 1974. This was on the basis that stronger protection could be provided under this act.

Secondary boycott involves persons, in concert with another person, engaging in conduct that hinders or prevents a third person supplying or acquiring goods or services from a fourth person. Schedule 6 increases the penalties for breaching these provisions from $750,000 to $10 million. The International Labour Organization convention No. 87 permits sympathy strikes, provided the original industrial action was lawful. The International Labour Organization has noted the prohibition of secondary boycotts in Australian law as beyond what it regards as permissible prohibitions. Under international law, the ILO convention No. 87 sympathy strikes are permitted provided the original strike was lawful. Higher penalties would move Australia further away from international best practice.

As benefits this government's agenda, secondary boycott laws are typically against trade unions that are engaged in sympathy strikes. Secondary boycotts are not as prevalent as in the past, which undermines the policy case to recommend higher penalties. There has been one instance of the ACCC undertaking action on secondary boycotts in the last decade. The proposed changes are inconsistent with Labor policy to have higher penalties for anticompetitive and anticonsumer conduct in line with international best practice.

For more than 40 years, Labor has held the view that secondary boycotts are primarily an industrial matter rather than a competition issue. As I detailed before, it was the Fraser government in 1977 that introduced secondary boycotts into the Trade Practices Act, with the intention of targeting trade unions. In the 1980s, the Hawke government sought to remove these provisions from the Trade Practices Act, but the Senate defeated the attempt. The Keating government in 1993 moved some secondary boycott provisions into the Industrial Relations Act, only for the Howard government to return them to the Trade Practices Act in 1996.

For comparison, unprotected industrial relations activity under the Fair Work Act 2009 is subject to far less penalties, a maximum of 60 penalty units—that is, $12,600. If enacted, the maximum penalties for a secondary boycott would be nearly 800 times the maximum penalty for unprotected industrial action. Compare this to the proposed penalty of 20 penalty units or $4,200 for noncompliance with a section 155 order.

The government remains steadfast in its support of cutting penalty rates for up to 700,000 Australians in the retail, hospitality, fast-food and pharmacy sectors. The government wants to push ahead with its budget for millionaires and multinationals, including a $65 billion tax cut for banks and multinationals.

In conclusion, as I've said, Labor supports the majority of this bill. We do not seek to be obstructionist, but we do not believe a policy case has been made for the changes to secondary boycotts. We urge senators to support our amendment to remove schedule 6. If the amendment is carried then Labor will vote for the bill, ensuring its speedy passage.

See Hansard segment (Dodson)

Senator Whish-Wilson (Greens)

Senator WHISH-WILSON (Tasmania) (13:30):

I rise on behalf of the Australian Greens to speak on the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. The Greens, like Labor, will also be supporting this bill today, subject to an amendment that essentially removes the provision for secondary boycotts from this bill. The 13 or so other issues that are dealt with in this bill are essentially coupled to the effects test, as part of legislation that was passed by this place only a few weeks ago. In a sense, they enable an effects test to come into law and come into practice. I'm grateful that Labor have come to their senses and supported the legislation that's necessary for an effects test, and I'm grateful also for the amendment on secondary boycotts they have put up to have that removed from the bill.

The issue of secondary boycotts really has nothing to do with an effects test. As with the effects test, it was recommended by the Harper review, but it's an entirely different matter. I did urge the government to remove it from the bill before they brought it to this place, so that it could be debated in a separate piece of legislation and so as not to necessarily complicate matters on the effects test. I congratulate the government for working with the Greens and the crossbench to pass an effects test. I know this is something that the National Party were very keen on, and it is something that the Greens have campaigned on now for many, many years, starting with Christine Milne prior to my taking over the competition portfolio.

An effects test is going to be one of the biggest reforms to competition policy that Australia has seen in nearly a decade. Essentially, it will make it much easier for small businesses and farmers and aggrieved parties to tackle the power of monopolies and cartels. It is interesting that Senator Dodson said that Labor want to stand up to monopolies and cartels, and yet they have thumbed their noses at an effects test primarily because vested interests within the Labor Party—the shoppies union primarily—are big donors to the Labor Party and they are in bed with big companies like Coles and Woolworths. Nevertheless, what we have here today is the enabling legislation for an effects test. It's high time that we got on with this. This is something that I know the rural community in my home state of Tasmania has been campaigning on for some time, and we are very, very close.

I have a couple of things to say about secondary boycotts. The Greens don't believe that the chamber should be supporting this provision. We see this as simply an attack on the rights of workers and their right to strike. We do believe, like Labor, that this is an industrial matter; it's not a competition issue. Cases of prosecutions for secondary boycotts are very rare. The penalties issued by courts, as opposed to settlements, don't go anywhere near the current $750,000 limit, let alone the $10 million limit that would be set by this bill if it were to pass unamended.

The ACCC, in their submission to the Senate inquiry—an inquiry that I initiated into penalties for white-collar crime—didn't raise the issue of secondary boycotts as a matter of concern or urgency for them. I also note that when Mr Peter Costello, when he was Treasurer of this country, reviewed competition penalties in the Howard government's final term—when, incidentally, the Liberal government had the numbers in this place—he didn't seek to equalise penalties for secondary boycotts, like this legislation recommends, when he introduced the penalties that are currently in place, including $10 million penalties for other compensation-related penalties.

We do believe that unions are not-for-profit organisations—they serve a very important purpose representing workers—and that there is a very good case to be mounted as to why they should be treated differently to profit-seeking corporations. We feel that this is yet another attempt by this government to hold up a paper and say that they've taken on the union movement in this country. It unnecessarily complicates what is essentially really important legislation that passes an effects test into law and makes it a lot easier for farmers and small businesses in this country to tackle the strength and the power of big corporations—especially in the case of farmers—who have exercised that market power in the past in what certainly looks to small businesses and farmers to be unconscionable conduct and anticompetitive behaviour. There is a very good reason why Professor Harper recommended an effects test. It makes it a lot easier for them to prosecute a case. All they need to do is prove that the effects of anticompetitive behaviour are there, rather than the intent and purpose.

Anyway, I spoke at length on the effects test when the legislation passed. There is no more to say about that except to say that it is good legislation that is very important for small businesses and farmers in this country and I look forward to supporting Labor's amendment on the secondary boycotts. I hope that the government in the other place supports the amended legislation and passes an effects test into law.

View Hansard Fragment (Whish-Wilson)

Senator Cormann (Liberal)

Senator CormannSenator CORMANN (Western Australia—Minister for Finance and Deputy Leader of the Government in the Senate) (13:37):

I would like to thank all of those senators who have contributed to this debate. This bill contains a significant package of reforms to the Competition and Consumer Act 2010. These reforms are designed to simplify the law and address anticompetitive conduct while encouraging procompetitive behaviour. These reforms will strengthen Australia's competition laws and will deliver benefits to consumers, businesses and the economy.

The bill implements a substantial number of the competition law reforms recommended by the independent Harper Competition policy review and agreed to by the government in its response to the review. It also implements the recommendations made by the Productivity Commission in the 2013 inquiry into the National access regime, which the government accepted in its Harper review response. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.

View Hansard Fragment (Cormann)

 

Amendment

Senate (Schedule 6)

On 16 October the ALP (via Senator Doson) moved an amendment; the ALP opposed Schedule 6 providing for an increase in penalties for secondary boycotts. In Committee, Senator Dodson noted:

Labor moves this amendment to the bill because of the matters I have spoken of: that is, that this is raising a substantial fine for any strikes deemed to be a boycott. It doesn't really allow for consideration of those situations where trade union movements support very good causes outside of what is strictly considered an industrial competition situation. So we're opposed to that schedule, and, unless there are some amendments to it, we'll be opposing the bill. (See Hansard Committee Dodson)

Senator Cormann responded:

Senator CORMANN (Western Australia—Minister for Finance and Deputy Leader of the Government in the Senate) (13:40): I was listening very carefully then, and I think Senator Dodson might want to clarify that last sentence—that Labor would oppose the bill if there was no amendment moved to this bill by the government. The government will be opposing this amendment. It's obviously up to the Senate to determine the Senate's position, but the government will oppose the amendment. We believe all the reforms in this bill are sensible and should not be controversial.

Since the government responded to the Harper review in late 2015, we have not heard anything from the opposition against any of these reforms, and now, suddenly, without notice, the opposition has chosen to oppose schedule 6 of this bill. Schedule 6 simply proposes to align the penalties for breaches of the secondary boycott provisions of the Competition and Consumer Act 2010 to the same level as other breaches of the competition law, as recommended by the Harper review and the Royal Commission into Trade Union Governance and Corruption. Instead of supporting this sensible reform, Labor is seeking to create a special carve-out for unions that commit serious breaches of the law that are completely unrelated to industrial conditions that affect their members. Again, this is Labor, under Mr Shorten's leadership, running a protection racket for unions that break the law at the expense of small businesses, workers, consumers and the wider economy. The government will not be supporting this Labor amendment and will instead propose that schedule 6 stand as printed.

The TEMPORARY CHAIR ( Senator Gallacher ): The question is that schedule 6 stand as printed.

[See Hansard Fragment Cormann]

The Committee divided. Noes 33; Ayes 25 (Noes had majority of 8; amendment agreed to - Schedule 6 was removed from the bill) [see Hansard Fragment]

The Bill, as amended, was agreed to.

The amendment was contained in sheet 8223.

House

On 18 October the House considered the Senate amendment.

Mr Morrison moved that the amendment be agreed to.

Dr Leigh spoke briefly.

The motion subsequently passed.

 

Third Reading

House

The Bill was read a third time on 5 September 2017

Senate

The Bill was read a third time on motion of Senator Cormann on 16 October 2017

 

Press release

Treasurer

Strengthening Competition – Harper Review legislation introduced

Today the Turnbull Government has introduced a significant package of legislation to simplify and strengthen Australia’s competition law. These reforms are designed to better target anti‑competitive conduct while supporting pro-competitive behaviour.

Together with reforms to the misuse of market power provision, which are already before the Parliament, this package moves towards the Turnbull Government’s aim of stronger competition in our markets, to improve the long-term welfare of consumers, businesses and ultimately the economy.

This legislation is also a major step towards implementing the competition law recommendations of the Harper Competition Policy Review which include:

  • replacing the never-used and unworkable price-signalling provisions with a general prohibition on concerted practices with the purpose, effect or likely effect of substantially lessening competition;
  • folding the merger clearance and authorisation processes into the general authorisation process. This means the ACCC will now hear applications for merger authorisation, and its decisions will be reviewable by the Australian Competition Tribunal;
  • enabling the ACCC to issue class exemptions, which will provide safe harbours for conduct that does not raise competition concerns. Where a class exemption has been issued, businesses will not need to make individual applications to the ACCC for authorisation or notification;
  • simplifying complex provisions relating to authorisations;
  • broadening the joint venture exemptions to the cartel conduct prohibitions, to better reflect the reality of how joint ventures operate, while strengthening the safeguards around the exemptions; and
  • changing declaration criteria to make the National Access Regime more effective.

Consumers will benefit from greater choice and the availability of the best quality goods and services at the lowest prices. Businesses will benefit from a competitive environment in which new and innovative firms can enter existing markets, and new markets are created. The Australian economy will benefit from the introduction of new technologies into Australia, and more agile local firms which are better able to compete in international markets.

The Bill is a key step towards ensuring strong competition, which drives businesses to operate more efficiently, improve quality, lower prices, innovate and invest in new technology.

Source: Treasurer's media release, 'Strengthening Competition - Harper Review Legislation Introduced' (30 March 2017)

ACCC

ACCC Media Release, 'ACCC welcomes new era in competition law' (18 October 2017)

The ACCC welcomes two important legislative amendments to Australian competition law that have passed Parliament, following recommendations from the 2015 Harper Competition Policy Review.

The Competition and Consumer Amendment (Competition Policy Review) Bill passed Parliament today, following the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017 (Cth) which was passed on 23 August 2017.

The Competition Policy Review legislation contains a broad range of amendments to the Competition and Consumer Act 2010 in areas such as cartels, price signalling and concerted practices, exclusionary provisions, third line forcing, resale price maintenance, merger authorisations and non-merger authorisations, notifications and class exemptions, access and evidentiary provisions.

The Misuse of Market Power legislation is intended to strengthen the prohibition on the misuse of market power by corporations. The current ‘purpose’ test will be replaced with a ‘purpose or effects test’, prohibiting a corporation with a substantial degree of market power from engaging in conduct with the ‘purpose, effect or likely effect’ of substantially lessening competition.

“I am pleased to see these important reforms pass through the Parliament. The reforms to the misuse of market power prohibition and the new prohibition of anti-competitive concerted practices will improve our ability to target conduct harming the Australian economy,” ACCC Chairman Rod Sims said.

“The reforms also bring changes to the options available to merger parties to have their transactions cleared on either competition or net public benefit grounds. The merger authorisation and formal clearance processes will now be combined and streamlined, with the ACCC as the first-instance decision maker.”

“These new laws have far reaching implications for the Australian economy and should significantly boost growth. The Harper Review recommended these changes to enhance the benefits that should flow to consumers and businesses when markets operate efficiently,” Mr Sims said.

To facilitate effective compliance with, and enforcement of the legislation, the ACCC has established a Substantial Lessening of Competition Unit (SLC Unit), which will be responsible for misuse of market power and concerted practices investigations and litigation within the ACCC.

The SLC Unit will soon release guidance on the new misuse of market power and concerted practice provisions to help businesses understand and comply with these new laws.

“A dedicated team within the ACCC will work with businesses to ensure they have a clear understanding of how the changes to the law will affect them. The ACCC looks forward to the challenges and opportunities that will come with enforcing this legislation for the benefit of Australia’s economy and consumers,” Mr Sims said.

The Competition Policy Review legislation and the Misuse of Market Power legislation are scheduled to come into effect in the coming weeks.

Background

The Prime Minister and the Minister for Small Business announced a review of competition policy on 4 December 2013

The Harper Competition Policy Review Draft Report was released on 22 September 2014.The Final Report was released on 31 March 2015.

On 24 November 2015, the Treasurer released the Government’s response to the Competition Policy Review and the Government’s response on the National Access Regime.

Release number
MR 175/17

 

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