Swanson Report 1976
Trade Practices Act Review Committee
Report to the Minister for Business and Consumer Affairs
Length: 101 pages
View full report (PDF: 2.42mb - fully searchable)
Copyright for PDF
© Commonwealth of Australia, Attorney-General’s Department.
Material reproduced pursuant to Creative Commons By Attribution 3.0 Australia licence
Concept of competition
Noted that the concept of 'competition' is not defined in the Act and to attempt to do so could mean a 'substantial loss of many of the dynamic features of the concept'. The Committee did, however, express their views of what competition meant; in this respect they considered that the Trade Practices Tribunal's discussion of the concept in Re Queensland Co-operative Milling Association Ltd, Defiance Holdings Ltd (1976) ATPR 40-012 was appropriate.
Chapter 4 - Sections 45 and 47, Agreements in Restraint of Trade and Certain Vertical Practices
Recommended that the phrase 'restraint of trade' as adopted in the original s 45 should be removed and replaced with 'a notion or notions more closely related to the concept of competition'.
Para 4.8: While it would not be wise to attempt to draw from the Quadramain decision too many general conclusions as to the future approach likely to be adopted by Australian courts in the interpretation of section 45, we feel that the decision has the potentiality for the introduction of undesirable technical distinctions into the interpretation of section 45 - based largely on matters of form, not substance. The Committee, therefore, recommends that the phrase 'restraint of trade' should be eliminated from the Act, and be replaced by a notion or notions more closely related to the concept of competition without the limiting common law connotations. Our precise recommendations on this matter are set out later in this chapter.
Para 4.12: The Committee agrees with submissions put to it that the use of different tests to measure quantum of effect upon competition, as currently adopted by the Act, is confusing and unnecessarily complex. Accordingly, the Committee recommends the adoption of a single test of effect upon competition wherever there is a competitive test in Part IV of the Act, namely the test of '... a substantial adverse effect on competition ...' We also recommend the total repeal of sub-section 45(3) ...
Para 4.59 The Committee recommends that, subject to exceptions relating to joint venture and joint acquisition pricing (see paragraph 4.63),. there should be an absolute prohibition of agreements between competitors, having the purpose or effect, or likely to have the effect, of fixing or controlling, or providing for the fixing or controlling of the price for, or any discount, allowance, or rebate, in relation to, any goods or services supplied by the parties, or any of them, in competition with each other, to persons not being parties to the agreement. They should be incapable of authorisation. The Committee considers that these price agreements between competitors are at the very heart of anti-competitive behaviour and should be clearly prohibited. It is our firm belief that such agreements will so rarely be in the public interest that the costs in time and money, both for industry and Government, involved in allowing attempts to justify such agreements far outweigh the social benefits which might flow from the possibility of an occasional successful justification in terms of the de minimis exception stated in the present sub-section 45(3).
Para 4.60 The abovementioned prohibition should in our view be directed to substance, not form, ... Thus an agreement called a 'recommended price agreement', but which, in fact, has the purpose or effect of fixing or controlling prices would be prohibited.
Para 4.70 The Committee accepts that there are circumstances in which the issuance of recommended price lists amongst competitors may achieve desirable effects in public interest terms, particularly where they are offering an advisory service for small businesses which operates simply in this manner. However the Committee is of the opinion that each recommended price agreement should be subject to authorisation prior to implementation, to ensure that public interest considerations (particularly in this context, the viability of small businesses) outweigh possible anti-competitive effects such as insulation of parties from competitive forces which could otherwise affect prices.
Para 4.14: In our view, the competitive effects of most agreements and practices should be tested by reference to a market for goods or services (the present test of sub-section 47(5)). However, we do not consider that adopting a single definition of area, for all purposes, would be an improvement to the Act. We consider that there are certain agreements in respect of which competitive effects will basically be felt between parties to the agreement, or particular competitors thereof (e.g. collective boycotts, which often affect small business). These latter-mentioned competitive effects should, in our view, be tested according to effect on competition between the parties and other persons (the present test of sub-section 45(4)). We consider that unless the Trade Practices Act recognises these distinctions it will be ineffectual and discredited in many circumstances in which it should have force.
Para 4.22: The Committee ... recommends that the Act should require that, in the determination of a 'market' for particular purposes, regard shall be had to substitute products, being products which have a reasonable interchangeability of use and which have high cross-elasticity of demand, i.e. where a small decrease in the price of a particular product would cause a significant quantum of demand for a similar product to switch to the product in question.
Agreements between holding companies concerning subsidiaries
Para 4.36: the competition test in sub-section 45(4) is too limited in its operation, in the circumstances where there is an agreement between holding companies to restrict the dealings of their subsidiaries. It was submitted that in this circumstance, if the holding companies take care that the subsidiaries are not themselves party to the contract, arrangement or understanding, the prohibitions of section 45 do not apply. Of course, that is an anomalous result; the Act should apply to this situation. The same considerations should apply to restrictions applicable to a subsidiary company, agreed between its holding company and a third party.
Restrictions involving land
Para 4.40 The Committee recommends that the Act should extend, as far as is constitutionally possible, to all covenants running with the land as to the uses to which the land itself may be put which have, or are likely to have, a substantial adverse effect on competition in a market for goods or services. To the extent that a covenant deals with any other matter, we consider it should be subject to the general rules referred to elsewhere in this report. This recommendation is designed to deal solely with substantial anti-competitive effects in a market. Accordingly, it will leave untouched the vast majority of restrictive covenants being those designed solely to protect lawful proprietary interests in land, unrelated to competition in trade and commerce. ...
Para 4.45 The Committee sees some merit in making certain distinctions in relation to the operation of the Act on commercial leases. We feel that the present test provided by sub-section 45(4) (of competitive effect upon parties and persons) can operate too harshly in relation to some aspects of commercial leases. In our view many 'usual' lease restrictions should be tested by their effect upon competition in a market for goods and services, and not by the narrower test of effect upon parties and persons. However we consider that there are some types of restrictions, often contained in commercial leases, that should continue to be tested by reference to their effect upon competition between the parties thereto and the persons with whom they are competitive. In this category we place restrictions in commercial leases as to the commercial use to which the land can be put, restrictions on advertising by the lessee, and restrictions relating to merchants association membership and rules. We see this as being of considerable assistance to small businesses which we believe are most affected by the restrictions in these categories. All other restrictions contained in leases should, in our view, be subject to a 'market' test of competitive effect except, of course, where those restrictions would otherwise fall within a prohibition specifically stated elsewhere in the Act (e.g. price fixing).
Relationship Between Sub-sections 45(3) and 45(4)
Para 4.48: we recommend the repeal of sub-section 45(3) which does not fit easily with our recommendations on the structure of prohibitions in this part of the Act.
Sub-section 45(6) - Relationship Between Sections 45 and 50
Para 4.49 It was submitted to the Committee that sub-section 45(6) created an anomaly in that unless a clearance had been obtained in relation to a merger the sub-section allowed section 45, with its allegedly stricter competition test to apply to that acquisition, although the acquisition would not constitute a contravention of section 50. It appears to the Committee that this result does flow from the present wording of sub-section 45(6). We agree that this position is anomalous. We consider that mergers are most appropriately treated in the context of section 50. Those elements of transactions which involve mergers and which do not fall within the scope of section 50 should not then be subject to the provisions of section 45, irrespective of whether or not a clearance has been obtained. We recommend that the section be amended by deleting from sub-section 45(6) the words '. . . by reason that an authorisation is in force in respect of the acquisition or by reason of the operation of section 94'.
Chapter 6 - Section 46, Monopolisation
para 6.9 The Committee believes that the phrase 'take advantage of when read with the word 'to' imports an element of intent. However, to place the matter beyond doubt, we recommend that the matter be clarified by replacing the above mentioned word 'to' by a reference to a purpose, or purposes which include a purpose. In our view it is not necessary that the purpose behind the particular course of conduct should be the sole or predominant purpose. It is sufficient if it is one of the purposes, beyond normal competitive behaviour, underlying the conduct. For this reason the Committee does not agree with the use of words and phrases suggested in the submissions (notably, but not exclusively, 'wilfully') which would or could lead to a narrower interpretation of the element of intent than the Committee considers desirable.
para 6.10 In relation to the second basic issue, the Committee considers that the rationale of the section would be largely negated if a contravention required proof that one of the matters in paragraphs (a), (b) or (c) had occurred. It is hardly appropriate to allow the conduct to be checked only after the damage has occurred. The Committee recommends that the section should apply when:
- the corporation is in a position substantially to control a market; and
- the corporation has used, otherwise than in normal competitive behaviour, the power it has by virtue of being in that position; and
- that use of power involved taking advantage of market power for the purpose of, or for purposes that include the purpose of, achieving any of the effects set out in paragraphs (a), (b) or (c).
It should be possible to halt such conduct of a monopolist without proof that the conduct has already achieved the object.
6.11 Concern was expressed in the submissions that a monopolist who invested in new capital plant and equipment might be regarded as contravening the section. Cases of predatory investment will inevitably be rare. However, we consider it desirable to ensure that the section is not used as an excuse for failure to invest. Accordingly, to remove any doubts, we believe the section should make it clear that monopolisation does not occur by reason only of investment in new capital plant and equipment.
6.14 The Committee notes that sub-section 46(3) is an inclusive definition derived from the holding of the Commission of the European Communities in Re Continental Can Co. Inc. (1973) CMLR D11. The definition indicates some of the empirical factors which may be taken into account in determining whether the corporation is in a position substantially to control the market. In determining the market it may be necessary to go beyond those factors and to undertake a full and complete economic evaluation of the structure of the market and its functioning in order to determine! whether, considering all factors, including the relative size and strength of competitors, freedom of entry, pricing terms and practices, profits, and consumer demand, the corporation has the requisite power.
Chapter 7 - Section 49, Price Discrimination
7.1 This section of the present Act drew more criticism in submissions than any other.
7.2 At the time of its introduction the section was widely regarded as being designed to advantage small business especially small retailers. Yet all submissions from small business interests, with two notable exceptions, thought the section had either worsened the relative position of small business or not assisted them in any way.
7.12 After February 1975, when section 49 came into effect, some suppliers, either through ignorance or desire to do so, took the law to mean that they were required to charge similar prices to all customers or at least to competing customers. This led to price rigidity, which was the subject of comment by a number of submissions, and the reduction in or abolition of many discounts which in turn resulted in overall price increases. Some of the discounts which were abolished or reduced at that time were substantial. Apart from that initial round of increases of price, the Committee is unable to determine what the net effect has been since that time of the operation of this section on prices.
7.13 It is a widely-accepted view that in a market where there are individual published price lists, or prices are well known to buyers, competitive behaviour may diminish because each seller is able to anticipate that his rival will react to an across-the-board price reduction. The seller will therefore limit across-the-board price reductions of his goods because he will fear price cutting by his competitors. In these circumstances price discrimination which takes the form of price cuts to one or a few buyers will increase price competition. It is desirable in these circumstances that price discrimination be available. The Committee considers that this is a particularly relevant matter in the Australian situation since much of industry is oligopolistic because of the need to achieve economies of scale in a relatively small domestic market.
7.17 Laws such as section 49 are usually said to be necessary to protect the interest of small business, particularly small retailers. Certainly the Robinson-Patman Act (US) was historically based on this premise. However there has been much dissatisfaction with the operation of that law in the United States of America, to the point where substantial amendment (or possible repeal) is now seriously canvassed by many eminent authorities.
7.21. ... the prohibition on price discrimination in section 49 has, in our view, operated substantially to limit price flexibility. The Committee believes that in the Australian context, section 49 has produced such price inflexibility that the detriment to the economy as a whole from the operation of the section outweighs assistance which small business may have derived from it. It is price flexibility which is at the very heart of competitive behaviour. The Committee thus recommends that section 49 should be repealed.
Chapter 8 - Section 50, Mergers, including Assets Acquisition
8.7 Our view is that merger law is needed but that its application should not be as sweeping as that of the present law. In particular the law should not apply to the smaller acquisitions; damage to competition is much more likely to occur where larger companies are involved. We deal below with a proposal to have a monetary threshold. If our recommendations are adopted the law would not in future apply to the small business type mergers to which it now applies.
8.11 In the view of the Committee it is preferable in this field to have a prohibition-type law rather than a registration plus examination-type law. A good reason for this is that, given the existence of a prohibition-type law and some experience of its workings, the business community can arrange its affairs in mergers (and for that matter in relation to other types of conduct) in a way which it believes complies with the law.
8.12 The present system of clearance and authorisation offers a reasonable opportunity for parties who believe that they have complied with the law, or are entitled to the benefit of the exception which the authorisation procedure provides, to obtain assurance of their position by application to the Commission. 'This is not to say that the Committee believes that the business community should apply for clearance or authorisation in respect of all mergers.
8.18 Some of the submissions to the Committee pointed out that the term 'acquisition' was not defined and that in the case of acquisition of assets there was some doubt as to whether it covered acquisitions of certain kinds. After considering these submissions we see no reason why the law should not clearly cover acquisitions of assets even where the full legal and equitable interests in the whole of the assets is not acquired. The law should thus apply to acquisition of assets by lease or by hire or by hire-purchase or by exchange or by comparable means (for example a charter-party). This paragraph should not affect sub-section 50(2).
8.19 Consistent with the section being directed to economic effect rather than form, it should also apply to mergers of corporations effected by operation of law. This can happen for example in the case of amalgamations occurring by way of a scheme of arrangement under the various Companies Acts.
8.21 The question of the treatment of acquisitions of failing companies is an important one, ... We understand that, in fact, the Trade Practices Commission has until now always granted a clearance for the acquisition of a failing company when it has been satisfied that the company is, in fact, 'failing'. The question we were asked to consider was whether the law should expressly deal with the position of failing companies.
8.22 The Committee believes that a statutory defence should be available, rather than creating an exception. However in our view a failing company must be genuinely failing and the concept must be strictly defined. One submission suggested that 'failing' company should be defined so as to cover only those companies imminently likely to go out of business, for which there have been no alternative buyers on similar terms to those offered by the offeror. This definition seems appropriate for the simple case where the company conducts one business which is failing. The definition will, however, also have to deal with the situation where a multi-business company is selling a part of the business. In this latter situation, in our view, determination of whether the company is a failing company must be by reference only to that part of the business which is the subject of the sale. Any definition must relate to the relevant business of the company and there must have been reasonable efforts to find an alternative buyer.
8.25 Many submissions to the Committee have urged that there should be a threshold test written into section 50 so that the provision should not apply to mergers involving at least one relatively small company. What the submissions had in mind is a monetary threshold criterion easily understood by the parties to the likely merger. Other submissions were opposed to a threshold. Nevertheless we favour the introduction of such a test. One effect will be that small companies, usually of a private nature, will be able to carry on their activities and negotiate the sale of assets or of their whole enterprise without being much concerned about the operation of section 50. A number of submissions to the Committee cited the case of a proprietary company, virtually carried on either by one man or as a family business, which is faced with the decision as to how or whether it should be continued upon the retirement or the death of the key personality. In many cases the most obvious purchaser of such a business is a larger company engaged in the same line of business. The submissions claim that section 50 has stood in the way of such small businesses being sold. We have a great deal of sympathy for this type of case.
8.29 Our recommendation is that such a threshold test be based upon the turnover of the target company. ...
8.31 ... After examining the various statistical data, the committee is of the view that a suitable level of turnover to be used as the uppe limit for the threshold should be $3 million. We would be concerned if the threshold at this time were significantly above that level.
8.34 There is one exception to the case in which a threshold test should operate. There have been instances where a large company sets about establishing a pattern of acquisition of small companies each of which is in the same industry. The committee would propose that this form of pattern-buying should not escape the operation of section 50 irrespective of whether each of the target companies were under or over the threshold turnovers. Such acquisitions should be subject to the present test of section 50 as if the threshold provisions had not been enacted.
Clearance and authorisation
8.35 ... the availability of the clearance procedures should be retained for merger matters ...
8.50 At present the law allows political intervention in merger authorisation matters. Where a merger authorisation application has been made, the Minister may inform the Commission by notice in writing that the Government considers that there are special considerations relating to the acquisition that make it desirable in the interest of national economic policy that an authorisation be granted for the particular acquisition. In such a case the Commission is bound by law to grant the authorisation.
8.52 Although the power has been exercised on only three occasions and not at all by the present government, we are of the view that the existence of the power is bad in principle and should be abolished by repealing the relevant provision (sub-section 90(9)).
Chapter 10 - The Scope of the Act and Exemptions
10.11 the Act should leave no doubt that it applies to restrictive conduct of organisations of employees which is carried out by agreement, arrangement or understanding with another person engaged in trade or commerce.
10.19 ... we recommend that the law provide an effective avenue of recourse for the trader directly affected, by allowing him access to an independent deliberative body. That some procedures for solving the matter should be available was something on which submissions of interested parties were virtually unanimous.
10.25 We take the view that the Commonwealth Government should be prepared to accept for itself, in relation to its commercial activities, restrictions which it places on others. ...
10.26 The Committee believes that it would also be desirable for the Act to apply to State Governments and their instrumentalities in the same fashion. ...
10.31 ... the Act should apply in a general fashion to those in the community engaged in trade or commerce. We regard as unrealistic the proposition that members of professions are not part of the business community.
Chapter 11 - Procedures, including Clearance and Authorisation
11.10 The Committee is of the view that the clearance provisions of the Act should be repealed, except in relation to mergers.
11.15 The Committee is firmly of the view that the thrust of the restrictive trade practices provisions of the Act is, and should remain, that competitive behaviour is its primary aim. The Committee accepts that it is fundamental to our present economic and political ideals and our social system of maximum freedom, including freedom of enterprise, that opportunities for competition should remain amongst various enterprises in as wide a field as possible. This is because competitive behaviour is to be valued for the benefits that it brings to the community at large. However, if in a given case it can be shown that public benefits, i.e. not merely benefits to the parties to the restrictive conduct, are available, and that those benefits outweigh the benefits to the public foregone by the absence or restriction of competition, then that conduct should be permitted to continue. In other words we still favour the maintenance of the primary position that competitive behaviour is to be preferred, but that many who engage in restrictions of competition should be able to obtain an authorisation if they can show that on balance there are public benefits that outweigh the effects on the public of the restrictions of competition. In a few cases detailed in Chapter 4, all related to price restrictions, we agree that authorisation opportunities should not be available. We therefore recommend that the authorisation test be changed as indicated.
11.20 It has been submitted to the Committee that the Commission's power to hold public hearings in respect of authorisation matters should not be continued. Some submissions draw attention to the heavy cost to the applicants of their involvement in public hearings. Public hearings are also very costly in the use of Commission resources.... The possibility of two public hearings on the one matter (one in the Commission and the second starting afresh in the Tribunal), and the cost of two such hearings in terms of both monetary outlay and time and effort of business executives, reinforces us in the view that it would be desirable to discontinue public hearings by the Trade Practices Commission.
11.31 We recommend that a general four-month time limit be legislated for in relation to authorisation applications, with a commencement date for this provision to be proclaimed. For joint venture applications, the time limit should run immediately upon the commencement of the amending Act. Other applications relating to sections 45 and 47 agreements or conduct should become subject to time limits from the earliest date when it is practicable to have applications considered promptly, in light of the volume of applications which would remain if the law were amended as we have recommended.
11.35 We recommend that the law provide for an opportunity for applicants to have discussions with one or more Commissioners, (but preferably, we think, one), before a final decision is taken by the Commission ...
11.39 In striking a balance between confidentiality and publication, we consider that there are some categories of sensitive business information where confidentiality should be available as of right, subject to what is set out in paragraph 11.41, and we recommend that:
(a) trade secrets and 'know-how';
(b) in merger cases, details of the money price offered; and
(c) details of current costings;
should be afforded confidentiality on this basis.
The report contained an appendix which provides a 'finding guide to certain recommendations' - it is expressly 'not intended to be a summary of recommendations'.
"Chapter 4 - Sections 45 and 47, Agreements in Restraint of Trade and Certain Vertical Practices
4.8 the phrase 'restraint of trade' should be eliminated from the Act and replaced by a notion more closely related to the concept of competition;
4.12 there should be a single test of effect upon competition, namely 'a substantial adverse effect on competition';
4.14 the competitive effects of most agreements and practices should be tested by reference to a market for goods or services; but in a few cases, as set out in the Report, should be tested by reference to the parties to the agreement or their competitors;
4.22 in the determination of a 'market', regard should be had to substitute products having a reasonable inter-changeability of use and high cross-elasticity of demand;
4.36 the Act should apply to agreements by holding companies to restrict the dealings of their subsidiaries;
4.40 the Act should extent to anti-competitive covenants running with land;
4.45 the Act should apply to restrictions in commercial leases, including licences;
4.48 repeal sub-section 45(3);
4.59 all price-fixing agreements between competitors, subject to exceptions relating to joint venture and joint acquisition pricing, should be absolutely prohibited and incapable of authorisation;
4.61 and 4.70 'true' recommended price agreements, including agreements to maintain prices, should be capable of authorisation;
4.65 multi-level collective pricing agreements should be capable of authorisation;
4.81 joint venture agreements should be capable of authorisation, except some price-fixing agreements;
4.81 there should be a 4-month time limit for the Commission to decide authorisations in relation to joint ventures; 4.82 buying group agreements should be capable of authorisation;
4.97 repeal sub-section 47(3);
4.106 section 47 should apply to vertical restrictions upon suppliers as well as buyers;
4.116 collective boycotts should be capable of authorisation;
4.121. instead of a scheme of prohibition and authorisation of matters, the conduct within sub-section 47(2) as enlarged should be lawful, if registered with the Commission, until a positive adverse decision;
Chapter 5 - Termination of Franchise Agreements
5.7 a franchisee should have a right, upon termination of his franchise, to secure fair compensation for his investment, including goodwill;
5.12 the right should not apply where the termination is for default by the franchisee;
5.15 the right should not be capable of exclusion.
Chapter 6 - Section 46, Monopolisation
6.9 it should be made clear that the Act requires intent to monopolise;
6.11 it should be made clear that monopolisation does not occur by^reason only of investment in new capital plant and equipment.
Chapter 7 - Section 49, Price Discrimination
7.21 repeal section 49.
Chapter 8 - Section 50, Mergers, including Assets Acquisition
8.7 a law on anti-competitive mergers is necessary;
8.18 and 8.19 merger law should take in acquisition of interests in assets and mergers of companies effected by operation of law;
8.22 a statutory defence should be provided in the case of a failing target company, defined by reference to the imminent likelihood of it going out of business, and lack of alternative buyers on similar terms;
8.25, 8.29 and 8.31 merger provisions should not apply to small acquisitions (businesses with an average annual turnover for the two previous complete financial years' of $3 million);
8.34 the threshold test should not be applied where the acquiring corporation engages in a pattern of buying small businesses in the same industry;
8.35 clearance procedures should be retained for mergers;
8.52 the power of ministerial intervention in merger matters should be removed;
Chapter 9 - Consumer Protection
9.11 and 9.25 there should, as far as possible, be uniform laws in relation to prohibitions of unfair practices and the Commonwealth and State Governments should create an appropriate Standing Committee of Ministers;
9.13 the Commonwealth Government should legislate to cover the field in relation to conditions and warranties to be implied into consumer transactions (except where State law, in relation to particular goods or services, also provides appropriate rights to a consumer);
9.30 and 9.35 State consumer protection agencies and State courts should have a greater involvement in the administration of these provisions of the Act;
9.43 'consumer' transactions should be defined primarily by reference to the price paid for the goods or services ($15 000 or such higher amount as may be prescribed by regulation) but should also include transactions above $15 000 in respect of goods or services ordinarily obtained for personal, domestic or household uses;
9.47 and 9.78 separate provision should be made to prohibit in the promotion of land transactions, false or misleading representations concerning characteristics, location and future use of the land or the services associated with the land;
9.59 the Act should prohibit, as a civil matter only, unconscionable conduct or practices in trade and commerce;
9.103 and 9.105 all goods intended for export should be excluded from the operation of the standards provisions of the Act, upon condition that the goods are appropriately marked;
9.109 the Act should empower the responsible Minister to take action to prohibit the sale of hazardous products, such an order to be effective for twelve months only;
9.111 there should be a prohibition, subject to civil sanctions' only, of unsolicited services;
9.127 a manufacturer should be liable to a consumer for breach of any express warranty given by him or of implied warranties of the same kind as those presently implied in consumer transactions;
9.135 the penalty of imprisonment should be eliminated;
9.138 special provisions should limit potential penal liability for essentially similar advertisements;
9.144 the defence to part V prosecutions should be restructured;
9.156 the court should be empowered to grant mandatory injunctions.
9.162 an Australian Consumer Affairs Council should be established.
Chapter 10 - The Scope of the Act and Exemptions
10.11 the Act should apply to restrictive conduct of organisations of employees, carried out in combination with another person engaged in trade or commerce;
10.19 a business directly affected by a secondary boycott by employees should have recourse through access to an independent deliberative body, under either the Trade Practices Act or the Conciliation and Arbitration Act;
10.24 and the Commonwealth Government and its instrumentalities should be
10.25 bound, in its commercial activities, to the same extent as a corporation; desirably the position with State Governments will be similar;
10.31 the Act should apply to the business activities of professional persons who practise privately for fees.
Chapter 11 - Procedures, including Clearance and Authorisation
11.10 the clearance provisions of the Act should be repealed except in relation to mergers;
11.15 the authorisation test should be changed to enable authorisation if it can be shown that, on balance, there are public benefits that outweigh the effects on the public of the restrictions of competition;
11.20 public hearings by the Trade Practices Commission should be discontinued;
11.31 a time limit should be provided for the processing of authorisation applications;
11.35 an applicant for authorisation should have a right to discussions with one or more Commissioners before a final decision by the Commission;
11.39 confidentiality of information supplied to the Commission should be available as of right in certain categories of sensitive business information;
11.56 the Minister should give a direction to the Commission and his Department that officers act in accordance with the relevant Judges Rules in investigating matters in relation to Part V of the Act."
In April 1976 then Minister for Business and Consumer Affairs, the Hon John Howard MP, announced the establishment and terms of reference of this Committee. The terms of reference were:
"1. The Committee shall consider the operation and effect of the Act, not including Par X, and report ... on:
(a) whether the Act is achieving its intended purpose of the development and maintenance of a free and fair market, and whether Australian consumers are benefiting from the Act.
(b) whether the Act is causing unintended difficulties or unnecessary costs to the Australian public, including Australian business;
(c) whether in the current economic circumstances of Australia the operation of any part of the Act inhibits, or is likely to inhibit, economy recovery, contrary to the economic objectives of the Government; and
(d) the measures open to the Government, by way of amendment of the Act or otherwise, to improve the operation of the Act in the light of (a), (b) and (c) above.
2. The Committee should pay particular attention to the need to ensure that the Trade Practices Act is sufficiently certain in its language to enable persons affected by it to understand its operation and effect so as to be reasonably able to comply with its obligations in the ordinary course of business.
3. The Committee is asked to report on the effect of the Act on small business and to assess whether small businesses could and should be accorded special treatment by the Act.
4.In considering the operation of the substantive prohibitions of the Act relating to restrictive trade practices, the Committee is asked to give close attention to the sections dealing with exclusive dealing, price discrimination and mergers, and particularly -
(a) whether it is desirable for the Act to contain a prohibition relating to anti-competitive mergers and, if it is, what form that prohibition should take; further, if there is to be such a prohibition, whether it would be appropriate to make special provision for mergers involving failing companies and whether it would be appropriate and practicable to exclude mergers involving small companies, possibly by a threshold test; and
(b) whether, in relation to price discrimination, it is appropriate for the Act to have regard to anti-competitive effects in the market of the buyers subject to a discrimination in price, or in any other markets other than the market of the seller.
5. The Committee is requested to give particular attention to the application of the Act to anti-competitive conduct by employees, and employee or employer organisations.
6. In its consideration of the provisions of the Act dealing with consumer protection, the Committee is asked to give attention to any particular problems arising from the inter-relationship with State laws.
7. The Committee is requested to report by 30 June 1976.
Mr T B Swanson (Chairman)
Mr J A Davidson
Mr A G Hartnell
Professor A Kerr
Mr H S Schreiber
A total of 212 submissions were received by the Committee
Key changes introduced by Trade Practices Amendment Act 1977
The bill introduced to repeal section 49 (Trade Practices Amendment Bill 1977) lapsed in February 1977 and when another amendment bill was introduced and passed (Trade Practices Amendment Act 1977) it did not contain the provision to repeal s 49 - that was omitted for the express reason of small business protection (see, eg, second reading speech of Mr Tony Whitlam (here and here) and Mr Mick Young)
See also price discrimination page
More details forthcoming