NO.112

Joint Press Release by the Treasurer

and the

Minister for Small Business and Tourism

TRADE PRACTICES ACT REFORM

Today we announce that the Government will refine the Trade Practices Legislation Amendment Bill (No 1) 2005 (the Dawson Bill) to strengthen the role of the Australian Competition and Consumer Commission (ACCC) in the mergers authorisation process.  

The purpose of this refinement is to clarify the role of the ACCC in merger authorisation applications to the Australian Competition Tribunal (the Tribunal) under the Trade Practices Act 1974 (TPA).

The amendments will make it clear in law that the ACCC shall be entitled to appear before the Tribunal, provide evidence, examine and cross-examine witnesses and make submissions as determined by the ACCC.

The Government has taken this step to clarify the arrangements as part of its ongoing discussions with small business.  In particular, the Government has been working closely with the following small business groups:

• The National Association of Retail Grocers of Australia (NARGA)
• The Council of Small Business Organisations of Australia (COSBOA)
• The Fair Trading Coalition (FTC); and
• The National Farmers Federation (NFF).

  NARGA, COSBOA, the FTC and the NFF have all indicated their support for the amended Bill.

We would like to particularly acknowledge the work undertaken by Senator Boswell, Leader of the Nationals in the Senate in this regard.

In response to small business concerns the Government moved amendments to the Bill last year which included clarifying the role of the ACCC and the Tribunal and retaining the per-se prohibition in relation to third line forcing.  The announced amendments today go a step further.

The Bill will bring significant benefits to small business, including an easier notification system for collective bargaining for small business, making this process simpler and less costly. The Government acknowledges that while the majority of small businesses will fit within the $3 million transaction threshold, there will be some small businesses that will require a higher transaction limit as they have high turnover and small profit margins.  The issue of thresholds will be addressed via regulations, which will include, but are not limited to, car retailers, petrol station retailers and farm equipment retailers. The Office of Small Business and Treasury will issue a draft thresholds paper for consultation once the Bill has passed the Senate.  The regulations will be put in place no later than 6 months after the Bill has passed the Senate.

The Bill also increases the powers of the ACCC.  The current provisions in the TPA provide the ACCC with the power to enter premises and inspect documents without a warrant.  The Bill will provide the ACCC with the ability to search premises and seize evidence, when backed by a warrant.

Finally, the Bill provides for higher penalties for contraventions of the TPA as a means of better deterring corporations or individuals from engaging in anti-competitive behaviour.  The current provisions in the TPA provide for a maximum penalty of $10 million.  The Bill provides that the maximum pecuniary penalty for corporations be raised to be the greater of $10 million or three times the gain from the contravention or, where the gain cannot be readily ascertained, 10 percent of the turnover of the body corporate and any related bodies corporate.

Increased penalties can be expected to provide a greater incentive for all businesses to comply with the Act, which will provide added protection to small business where they are victims of anti-competitive conduct.

Once the Dawson Bill has been passed, the Government can move forward with the next stage of its TPA reform to strengthen the misuse of market power provisions and unconscionable conduct provisions of the TPA after consultation with interested stakeholders, in particular small business who have already put a number of proposals to the Government.

After passage of this Bill, the Government will move quickly to consult on its next Bill – the Trade Practices Legislation Amendment Bill (No. 2) 2006 – by releasing an exposure draft, making any amendments that flow from the consultation process so that the Bill can be introduced as quickly as possible after the Commonwealth carries out its obligations to the states and territories under the 1995 Conduct Code Agreement and 2002 Corporations Agreement.

CANBERRA

17 October 2006

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