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Competition and Consumer Amendment (Competition Policy Review) Bill 2016

Exposure Draft

 

The Exposure Draft Bill

Treasury is conducting a consultation on the Exposure Draft Bill relating to the recommendations made by the Harper Panel in 2015. The Exposure Draft bill was released on 5 September 2016 and consultation closes on 30 September 2016.

Note that consultation on all aspects of the Bill, other than misuse of market power, has been extended until 28 October.

The Treasury website notes that the draft includes:

... amendments to the misuse of power provision, as well as a significant number of other important amendments to the CCA which were supported by the Government, including:

  • broadening the definition of ‘competition’ to include potential imports of goods and services, to fully reflect the range of competitive pressures facing Australian firms;
  • confining the cartel conduct provisions to apply to conduct affecting Australian trade or commerce, and broadening the exceptions for joint ventures and vertical trading restrictions to apply to common, pro-competitive business arrangements;
  • amending the National Access Regime declaration criteria to ensure third-party access is only mandated where it is in the public interest;
  • consolidating the various authorisation processes into a single, streamlined process; and
  • simplifying the CCA by repealing separate, specific prohibitions on price signalling and exclusionary provisions, and introducing a prohibition against concerted practices.

See also my blog post discussing the proposed changes

I have also prepared a mark-up (both clean and with mark-up showing) of the proposed amendments:

 

Contents of the Exposure Draft Bill

The Exposure Draft Bill is broken down into the following schedules:

  • Definition of competition
  • Cartels
  • Price signalling and concerted practices
  • Exclusionary provisions
  • Covenants affecting competition
  • Secondary boycotts
  • Misuse of market power
  • Third line forcing
  • Resale price maintenance
  • Authorisations, notifications and class exemptions
  • Admissions of fact
  • Power to obtain information, documents and evidence
  • Access to services

Detail on each forthcoming - see comparison with recommendations, below, for further details.

Misuse of market power

The exposure draft proposes repealing the current provision and replacing it with the following:

46 Misuse of market power
(1) A corporation that has a substantial degree of power in a market must not engage in conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition in that or any other market.

(2) Without limiting the matters to which regard may be had in determining for the purposes of subsection (1) whether conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market, regard must be had to the extent to which:

(a) the conduct has the purpose of, or has or would be likely to have the effect of, increasing competition in that market, including by enhancing efficiency, innovation, product quality or price competiveness in that market; and

(b) the conduct has the purpose of, or has or would be likely to have the effect of, lessening competition in that market, including by preventing, restricting, or deterring the potential for competitive conduct or new entry into that market.

...

 

Comparison with recommendations

Definition of market and competition

Harper Recommendation 25

Exposure Draft Bill

The current definition of ‘market’ in section 4E of the CCA should be retained but 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.

Model legislative provision:

competition includes competition from goods imported or capable of being imported into Australia, or from services rendered or capable of being rendered in Australia, by persons not resident or not carrying on business in Australia.

Current definition of competition in s 4(1) repealed and substituted with:

'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'

This mirrors the model provision/definition proposed in the Harper Report.

 

Comparison of new law and current law (EM page 6)

Current law

New law

'Competition includes goods and services that are imported.'

'Competition expressly includes goods and services that are capable of being imported, in addition to goods and services that are imported'

Cartel conduct prohibition

Harper Recommendation 27

Exposure Draft Bill

The prohibitions against cartel conduct in Part IV, Division 1 of the CCA should be simplified and the following specific changes made:

  • The provisions should apply to cartel conduct involving persons who compete to supply goods or services to, or acquire goods or services from, persons resident in or carrying on business within Australia.
  • The provisions should be confined to conduct involving firms that are actual or likely competitors, where ‘likely’ means on the balance of probabilities.
  • A broad exemption should be included for joint ventures, whether for the production, supply, acquisition or marketing of goods or services, recognising that such conduct will be prohibited by section 45 of the CCA if it has the purpose, effect or likely effect of substantially lessening competition.
  • 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 recommendation is reflected in the model legislative provisions in Appendix A.

In subsection 6(2)(C) omitted 'likely and production have' and substitute 'production has'.

Repealed definition of likely in s 44ZZRB. It is now not a defined term.

Output restrictions

Add at the end of s 44ZZRD(3)(a) (dealing with output restrictions):

(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

This is designed to address any gap following the proposed repeal of the separate exclusionary provision prohibition.

Trade or commerce

In ss 44ZZRD insert references to 'in trade or commerce' (various) and insert after 44ZZRD(4)(h)

(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

This is designed to restrict cartel laws to conduct occurring int rade or commerce within Australia or between Australia and other places.

Joint ventures

The exposure draft legislation broadens the joint venture exemption to include arrangements or understandings as well as contracts and extends it to cover acquisitions of goods or services.

Vertical trading restrictions

The exception for vertical trading restrictions has been broadened to apply to a variety of vertical trading restrictions and not just exclusive dealing.

 

Comparison of new law and current law (EM page 11)

Current law

New law

'The cartel conduct provisions are not expressly confined to cartel conduct affecting competition in Australian markets.'

'The cartel conduct provisions apply to cartel conduct occurring in trade or commerce within Australia, or between Australia and places outside Australia.'

'‘Likely’ is a defined term.'

'‘Likely’ is not a defined term.'

'The joint venture exception applies only to contracts.'

'The joint venture exception applies to contracts, arrangements or understandings.'

'The joint venture exception applies to cartel provisions that are for the purposes of a joint venture.'

'The joint venture exception applies to cartel provisions that are for the purposes of a joint venture or reasonably necessary for undertaking a joint venture.'

'The joint venture exception applies to joint ventures for the production and/or supply of goods or services.'

'The joint venture exception applies to joint ventures for the production, supply or acquisition of goods or services.'

'The exception for vertical trading restrictions applies only to exclusive dealing.'

'The exception for vertical trading restrictions applies to a broad range of vertical trading restrictions.'

'The ‘output restriction’ purpose condition refers to production, capacity and supply.'

'The ‘output restriction’ purpose condition refers to production, capacity, supply and acquisition.'

Exclusionary provisions

Harper Recommendation 28

Exposure Draft Bill

The CCA should be amended to remove the prohibition of exclusionary provisions in subparagraphs 45(2)(a)(i) and 45(2)(b)(i), with an amendment to the definition of cartel conduct to address any resulting gap in the law.

This recommendation is reflected in the model legislative provisions in Appendix A.

Sections 4D and 76C repealed

Sub-sections 45(1)-(3) repealed and replaced.

New section 45 does not prohibited entering into contracts, arrangements or understandings containing exclusionary provisions.

Amendment to cartel conduct (above) designed to fill resulting gap). In particular, at the end of s 44ZZRD(3)(a) (dealing with output restrictions) the following is added:

(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

 

Comparison of new law and current law (EM pages 19 and 24)

Current law

New law

'There is no separate prohibition on exclusionary provisions within contracts, arrangements or understandings.'

'There is a separate prohibition on exclusionary provisions within contracts, arrangements or understandings.'

'‘Exclusionary provision’ is defined in the Act.'

'‘Exclusionary provision’ is not defined in the Act.'

'There is a defence to the prohibition against exclusionary provisions.'

'There is no provision containing a defence as there is no longer a separate prohibition on exclusionary provisions.'

Price signalling and concerted practices

Harper recommendation 29

Response

The ‘price signalling’ provisions of Part IV, Division 1A of the CCA are not fit for purpose in their current form and should be repealed.

Section 45 should be extended to prohibit a person engaging in a concerted practice with one or more other persons that has the purpose, effect or likely effect of substantially lessening competition.

This recommendation is reflected in the model legislative provisions in Appendix A.

Price signalling (Division 1A of Part IV) repealed

Section 45 extended to price signalling - s 45 now provides:

(1) A corporation must not

...

(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.

Notably concerted practice is not defined.

 

Comparison of new law and current law (EM page 19)

Current law

New 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 dealt with under the more general prohibitions in the competition law.'

'A corporation is prohibited from engaging in a concerted practice that has the purpose, effect or likely effect of substantially lessening competition.'

'No equivalent.'

Misuse of market power

Harper Recommendation 30

Exposure Draft Bill

The primary prohibition in section 46 of the CCA should be re-framed to prohibit a corporation that has a substantial degree of power in a market from engaging in conduct if the proposed conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market.

To mitigate concerns about inadvertently capturing pro-competitive conduct, the legislation should direct the court, when determining whether conduct has the purpose, effect or likely effect, of substantially lessening competition in a market, to have regard to:

  • the extent to which the conduct has the purpose, effect or likely effect of increasing competition in the market, including by enhancing efficiency, innovation, product quality or price competitiveness; and
  • the extent to which the conduct has the purpose, effect or likely effect of lessening competition in the market, including by preventing, restricting or deterring the potential for competitive conduct in the market or new entry into the market.

Such a re-framing would allow the provision to be simplified. Amendments introduced since 2007 would be unnecessary and could be repealed. These include specific provisions prohibiting predatory pricing, and amendments clarifying the meaning of ‘take advantage’ and how the causal link between the substantial degree of market power and anti-competitive purpose may be determined.

Authorisation should be available in relation to section 46, and the ACCC should issue guidelines regarding its approach to the provision.

This recommendation is reflected in the model legislative provisions in Appendix A.

Effects test introduced - section 46 repealed and replaced with:

46 Misuse of market power
(1) A corporation that has a substantial degree of power in a market must not engage in conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition in that or any other market.

(2) Without limiting the matters to which regard may be had in determining for the purposes of subsection (1) whether conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market, regard must be had to the extent to which:

(a) the conduct has the purpose of, or has or would be likely to have the effect of, increasing competition in that market, including by enhancing efficiency, innovation, product quality or price competiveness in that market; and

(b) the conduct has the purpose of, or has or would be likely to have the effect of, lessening competition in that market, including by preventing, restricting, or deterring the potential for competitive conduct or new entry into that market.

...

The Bill now also provides for authorisation of conduct which would otherwise contravene s 46.

Specific prohibition on predatory pricing (Birdsville amendment) repealed)

 

Comparison of new law and current law (EM page 36)

Current law

New law

'The conduct must ‘take advantage’ of market power.'

'The conduct must have the purpose, effect or likely effect of substantially lessening competition in that or any other market.'

'Conduct must be for a specific anti-competitive purpose, relating to damaging an actual or potential competitor.'

'The conduct must have the purpose, effect or likely effect of substantially lessening competition in that or any other market.'

'Predatory pricing and other forms of conduct are expressly prohibited.'

'There is a general provision only, and no specific prohibition on predatory pricing or other forms of conduct (however described).'

'Authorisation is not available for section 46.'

'A person may seek exemption from section 46 via the Commission authorisation process.'

'‘Substantial lessening of competition’ is not an element of section 46.'

'Certain pro-competitive and anti-competitive factors must be taken into account when considering a substantial lessening of competition.'

Third line forcing

Harper Recommendation 32

Exposure Draft Bill

Third-line forcing (subsections 47(6) and (7) of the CCA) should only be prohibited where it has the purpose, effect or likely effect of substantially lessening competition.

Per se prohibition removed - subjected to competition test

 

Comparison of new law and current law (EM page 42)

Current law

New law

'Third line forcing is prohibited on a per se basis.'

'Third line forcing is prohibited only where it has the purpose, effect or likely effect of substantially lessening competition.'

Exclusive dealing

Harper Recommendation 33

Exposure Draft Bill

Section 47 of the CCA should be repealed and vertical restrictions (including third-line forcing) and associated refusals to supply addressed by sections 45 and 46 (as amended in accordance with Recommendation 30).

No change other than to third line forcing

Resale price maintenance

Harper Recommendation 34

Exposure Draft Bill

The prohibition on resale price maintenance (RPM) in section 48 of the CCA should be retained in its current form as a per se prohibition, but notification should be available for RPM conduct.

This recommendation is reflected in the model legislative provisions in Appendix A.

The prohibition should also be amended to include an exemption for RPM conduct between related bodies corporate, as is the case under sections 45 and 47.

Notification available for RPM

Conduct between related bodies corporate no longer constitutes engaging in RPM.

 

Comparison of new law and current law (EM page 42)

Current law

New law

'Notification is not available for RPM.'

'A corporation or other person may notify the Commission of RPM.'

'Acts between related bodies corporate may constitute engaging in RPM.'

'Actions between related bodies corporate do not constitute engaging in RPM.'

Mergers

Harper Recommendation 35

Exposure Draft Bill

There should be further consultation between the ACCC and business representatives with the objective of delivering more timely decisions in the informal merger review process.

The formal merger exemption processes (i.e., the formal merger clearance process and the merger authorisation process) should be combined and reformed to remove unnecessary restrictions and requirements that may have deterred their use. The specific features of the review process should be settled in consultation with business, competition law practitioners and the ACCC.

However, the general framework should contain the following elements:

  • The ACCC should be the decision-maker at first instance.
  • The ACCC should be empowered to authorise a merger if it is satisfied that the merger does not substantially lessen competition or that the merger would result, or would be likely to result, in a benefit to the public that would outweigh any detriment.
  • The formal process should not be subject to any prescriptive information requirements, but the ACCC 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 ACCC should be subject to review by the Australian Competition Tribunal under a process that is also governed by strict timelines.
  • The review by the Australian Competition Tribunal should be based upon the material that was before the ACCC, 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 that there is sufficient reason.

Merger review processes and analysis would also be improved by implementing a program of post-merger evaluations, looking back on a number of past merger decisions to determine whether the ACCC’s processes were effective and its assessments borne out by events. This function could be performed by the Australian Council for Competition Policy (see Recommendation 44).

Merger changes are addressed in the section on authorisation.

As recommended in the Haper Report, the authorisation process and the formal notification process are combined into a single authorisation process which now sits with the ACCC at first instance.

Merger authorisation is combined with authorisation for other conduct - there is not a separate authorisatioon process.

There is no provision for ex-post review of merger and no proposed establishment of a separate policy body like the proposed Australian Council for Competition Policy.

Comparison of new law and current law (EM page 42)

Current law

New law

'There are separate authorisation provisions applying to mergers and other types of authorisations.'

'There is a single authorisation provision for all types of authorisations.'

'The decision-maker at first instance for merger authorisations is the Tribunal.'

'The decision-maker at first instance for merger authorisations is the Commission.'

'The Tribunal’s determination on a merger authorisation cannot be appealed.'

'The Commission’s determination on a merger authorisation can be reviewed by the Tribunal on appeal.'

Authorisation and notification

Recommendation 38

Response

The authorisation and notification provisions in Part VII of the CCA should be simplified to:

  • ensure that only a single authorisation application is required for a single business transaction or arrangement; and
  • empower the ACCC to grant an exemption from sections 45, 46 (as proposed to be amended), 47 (if retained) and 50 if it is satisfied that the conduct would not be likely to substantially lessen competition or that the conduct would result, or would be likely to result, in a benefit to the public that would outweigh any detriment.

This recommendation is reflected in the model legislative provisions in Appendix A.

Authorisation

Simplified - single authorisation provision allowing Commission to authorise otherwise prohibited conduct. Authorisation may be granted if conduct (other than conduct which is per se prohibited) would either not have the effect or likely effect of substantially lessening competition or if it would it would be likely to result in a benefit to the public that would outweigh detriment that would or would be likely to result from the conduct. For per se prohibited conduct the public benefit test must be satisfied before authorisation is granted.

Formal merger clearance and authorisation processes repealed- mergers subject to same general authorisation process.

Notification

ACCC can now impose conditions on notifications for collective bargaining and boycotts

Collective boycott

ACCC given 'stop notice' pwoer to require collective boycott conduct to cease

Block exemption

See also block exemption below

 

Comparison of new law and current law (EM page 42)

Current law

New law

'There are separate authorisation provisions applying to mergers and other types of authorisations.'

'There is a single authorisation provision for all types of authorisations.'

'The decision-maker at first instance for merger authorisations is the Tribunal.'

'The decision-maker at first instance for merger authorisations is the Commission.'

'The Tribunal’s determination on a merger authorisation cannot be appealed.'

'The Commission’s determination on a merger authorisation can be reviewed by the Tribunal on appeal.'

'The Commission can only approve or reject notifications.'

'The Commission may impose conditions on collective boycott and RPM notifications.'

'There is no provision for a ‘stop notice’.'

'A collective boycott must cease when the Commission gives a ‘stop notice’ ...'

Block exemptions

Recommendation 39

Response

A block exemption power, exercisable by the ACCC, should be introduced and operate alongside the authorisation and notification frameworks in Part VII of the CCA.

This power would enable the ACCC to create safe harbours, where conduct or categories of conduct are unlikely to raise competition concerns, on the same basis as the test proposed by the Panel for authorisations and notifications (see Recommendation 38).

The ACCC should also maintain a public register of all block exemptions, including those no longer in force. The decision to issue a block exemption would be reviewable by the Australian Competition Tribunal.

The Panel’s recommended form of block exemption power is reflected in the model legislative provisions in Appendix A.

New 'class exemption' power allows Commission to exempt categories of conduct. Pursuant to s 95AA the Commission must be satisfied the conduct would not have the effect or be likely to have the effect of substantially lessening competition or the conduct must result or be likely to result in a benefit to the public outweighing the detriment that would or would be likely to result from the conduct.

 

Comparison of new law and current law

Current law New law
There is no block/class exemption power There is a class exemption power.

Private actions

Harper Recommendation 41

Exposure Draft bill

Section 83 of the CCA should be amended so that it extends to admissions of fact made by the person against whom the proceedings are brought in addition to findings of fact made by the court.

This recommendation is reflected in the model legislative provisions in Appendix A.

Admissions of fact or findings of fact may be used in other proceedings

Current section 83 repealed and replaced to facilitate this - changes only relate to findings of fact and admissions of fact made after commencement of the new section.

 

Comparison of new law and current law

Current law

New law

'Findings of fact made by a court against a person may be used in other proceedings against that person under the Act.'

'Admissions of fact made by a person, or findings of fact made by a court, in certain proceedings may be used in certain other proceedings against that person under the Act.'

 

Access regime

Harper Recommendation 42

Exposure Draft Bill

The declaration criteria in Part IIIA of the CCA should be targeted to ensure that third-party access only be mandated where it is in the public interest. To that end:

  • Criterion (a) should require that access on reasonable terms and conditions through declaration promote a substantial increase in competition in a dependent market that is nationally significant.
  • Criterion (b) should require that it be uneconomical for anyone (other than the service provider) to develop another facility to provide the service.
  • Criterion (f) should require that access on reasonable terms and conditions through declaration promote the public interest.

The Competition Principles Agreement should be updated to reflect the revised declaration criteria.

The Australian Competition Tribunal should be empowered to undertake a merits review of access decisions, while maintaining suitable statutory time limits for the review process.

Part IIIA amended to

  • clarify the declaration criteria;
  • provide that the default position where a Minister does not respond within 60 days to a declaration recommendation is that they will be deemed to have made a decision in accorance with that recommendation; and
  • clarify the scope of a determination made by the Commission to extend a facility in an access dispute

A new meaning of declaration criteria is inserted into s 44CA of the Act and the current s 44H is repealed and substituted with:

'The designated Minister cannot declare a service unless he or she is satisfied of all of the declaration criteria for the service'

The changes to the criteria are:

(a) 'that access (or increased access) to the service, on reasonable terms and conditions, following a declaration of the service would promote a material increase in competition in at least one market (whether or not in Australia), other than the market for the service'

(b) reference to 'uneconomical for anyone to develop another facility' is replaced with 'the facility ... could meet the total foreseeable demand in the market at the least cost'

(c) is unchanged

(d) is added - requiring that access to the service on reasonable terms and conditions would promote the public interest (sub-section (f) currently refers to the access not being contrary to the public interest). In considering public interest the Council or Minister may have regard to the effect declaration would have on investment and administration and compliance costs.

sub-section (e) has been removed (dealing with the service already being the subject of an effective access regime).

 

Comparison of new law and current law (pp 77-78)

Current law

New law

'The declaration criteria that must be considered by the Council and Minister are replicated across multiple sections.'

'The declaration criteria that must be considered by the Council and Minister are contained in a single section.'

'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 access (or increased access) on reasonable terms and conditions following declaration would promote a material increase in competition.'

'The decision maker must consider whether it is uneconomical for anyone to develop another facility to provide the service.'

'The decision maker must consider whether total foreseeable market demand could be met by the facility at least cost.'

'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.'

'No change.'

'The decision maker must consider whether access (or increased access) would be contrary to the public interest.'

'The decision maker must consider whether access (or increased access) would promote the public interest.'

'The decision maker must consider whether the service is subject to an effective access regime as part of the declaration criteria.'

'The decision maker does not need to consider an application by an access seeker or access recommendation respectively if the regime is subject to an effective access regime.'

'No equivalent.'

'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.'

'The Commission’s power to make a determination requiring a facility operator to extend or expand the facility, and the safeguards on that power, relate to ‘expansions’, ‘extensions’ and ‘extending’ the facility.'

'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 amended to include capacity and geographical expansions.'

'If the Minister does not publish a decision on a declaration within the 60 day time limit, they are taken to have accepted the Council’s recommendation.'

'If the Minister does not publish a decision on a declaration within the 60 day time limit, they are taken to have not made a declaration.'

Power to obtain information, documents and evidence

Harper Recommendation 40

Exposure Draft Bill

The section 155 power should be extended to cover the investigation of alleged contraventions of court-enforceable undertakings.

The ACCC should review its guidelines on section 155 notices having regard to the increasing burden imposed by notices in the digital age. Section 155 should be amended so that it is a defence to a ‘refusal or failure to comply with a notice’ under paragraph 155(5)(a) of the CCA that a recipient of a notice under paragraph 155(1)(b) can demonstrate that a reasonable search was undertaken in order to comply with the notice.

The fine for non-compliance with section 155 of the CCA should be increased in line with similar notice-based evidence-gathering powers in the Australian Securities and Investments Commission Act 2001.

The section 155 power is extended to cover the investigation of alleged contraventions of court-enforceable undertakings.

A 'reasonable search' defence is introduced.

The fine for non-compliance is increased.

 

Comparison of new law and current law (p 72)

Current law

New law

'If a person has refused or failed to comply with a notice to produce documents it is not a defence if the person has undertaken a reasonable search for those documents.'

'If a person has refused or failed to comply with a notice to produce documents it is a defence if the person has undertaken a reasonable search for those documents.'

'A section 155 notice may not be issued in relation to alleged contraventions of court-enforceable undertakings.'

'A section 155 notice may be issued in relation to alleged contraventions of court-enforceable undertakings.'

The maximum penalty for non-compliance with a section 155 notice is 20 penalty units or 12 months imprisonment (for an individual).'

'The maximum penalty for non-compliance with a section 155 notice is 100 penalty units or 2 years imprisonment (for an individual).'

Secondary boycotts

Harper Recommendation 36

Exposure Draft Bill

The prohibitions on secondary boycotts in sections 45D-45DE of the CCA should be maintained and effectively enforced.

The ACCC should pursue secondary boycott cases with increased vigour, comparable to that which it applies in pursuing other contraventions of the competition law. It should also publish in its annual report the number of complaints made to it in respect of different parts of the CCA, including secondary boycott conduct and the number of such matters investigated and resolved each year.

The maximum penalty level for secondary boycotts should be the same as that applying to other breaches of the competition law.

Maximum penalty increased to align with other competition law breaches.

 

Comparison of new law and current law (p 32)

Current law

New law

'The maximum penalty for a breach of the secondary boycott provisions is $750,000.'

'The maximum penalty for a breach of the secondary boycott provisions is the greatest of:

  • $10,000,000;
  • three times the total value of the benefit obtained from the secondary boycott; or
  • 10% of the annual turnover of the corporation for the twelve months leading up to when the secondary boycott occurred.'

Competition law simplification

Harper Recommendation 23

Exposure Draft Bill

The competition law provisions of the CCA should be simplified, including by removing overly specified provisions and redundant provisions.

The process of simplifying the CCA should involve public consultation.

Provisions that should be removed include:

  • subsection 45(1) concerning contracts made before 1977; and
  • sections 45B and 45C concerning covenants.

Section 45(1) concerning contracts made before 1977 was repealed.

A definition of contract was added which includes a covenants with the result that duplicate and redundant provisions relating to covenants could be repealed.

 

Comparison of new law and current law (p 28)

Current law

New law

'Contract is not defined.'

'Contract is defined.'

'Contract is not defined and the Act separately refers to contracts and covenants throughout.'

'The definition of contract includes a covenant.'

'Party, to an arrangement that is a covenant, is not defined.'

'Party, to an arrangement that is a covenant, is defined, to include a person bound by or entitled to the benefit of a covenant.'

'Covenants affecting competition are provided for under separate provisions in the law.'

'Covenants are specifically included within the meaning of ‘contract’.'

Consultation

Consultation on the Bill will take place until 30 September 2016.

Specific questions

The consultation page includes a set of specific questions for consideration (PDF). They are:

Schedule 2, Cartels

The Exposure Draft includes amendments that would widen the current exceptions in the cartels provisions to better account for legitimate commercial activity, while retaining the prohibition on collusive behaviour between actual or likely competitors involving bid rigging, price fixing, market allocation and/or agreements to restrict supply or acquisition.

1. Joint ventures are exempt from per se liability for cartel conduct through sections 44ZZRO and 44ZZRP. In this context, is the definition of joint venture activity (in section 4J) appropriate or should such activity be more narrowly defined?

2. Does the proposed drafting of section 44ZZRS appropriately limit the exception to the cartels provisions to supply arrangements which are genuinely vertical, and exclude arrangements which are between actual or likely competitors?

a. If not, how could the exception be changed to ensure only vertical arrangements are captured?

3. With the proposed repeal of the definition of ‘likely’ from section 44ZZRB, is the court’s interpretation of ‘likely’ in relation to other parts of the Act sufficiently clear to inform expectations in relation to the cartels provisions?

Schedule 5, Covenants affecting competition

4. With the proposed repeal of sections 45B and 45C, and the repeal and replacement of subsection 45(1), are there contracts still in effect which rely on the operation of paragraph 87(3)(a) for variation, or could the subsection be repealed in its entirety?

Schedule 10, Authorisations, notifications and class exemptions

5. Is there a need for the ACCC’s decision to issue a stop notice to be reviewable by the Tribunal (separate from any review relating to a draft objection or conditions notice), or is it sufficient that the stop notice is in place for a limited period of time?

6. With the proposed repeal of Division 3 of Part VII of the Act (merger clearances and authorisations) and the consolidation of the various clearance and authorisations processes, have all the appropriate considerations for authorisations been included or is there a need for some of the repealed provisions to be reintroduced elsewhere?

Schedule 13, Access to services

7. Are further consequential amendments required to give effect to the proposed changes?

8. Are additional transitional arrangements necessary for existing certifications?

9. Are additional amendments necessary to address matters that have come to light since the release of the Productivity Commission’s 2013 Inquiry into the National Access Regime?

ACCC parallel consultation

The ACCC has set up two consultation hubs in relation to its proposed framework for dealing with two key recommendations contained in the Exposure Draft Bill.

The ACCC's consultation runs from 5 September until 3 October.

 

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