NO.021

RELEASE OF THE REPORT ON THE COMPETITION PROVISIONS OF THE TRADE PRACTICES

ACT 1974, AND THEIR ADMINISTRATION AND THE COMMONWEALTH GOVERNMENT RESPONSE

The Treasurer today announced the release of the Report on the competition

provisions of the Trade Practices Act 1974 (the Act) and their administration,

and the Commonwealth Government’s response.

The Prime Minister announced this review in October 2001 as part of the Government’s

election commitment: “Securing Australia’s Prosperity”. The

review was conducted by an independent committee of inquiry – the Chairman was

Sir Daryl Dawson, AC KBE CB, and the members were Ms Jillian Segal and Mr Curt

Rendall.

The Committee’s Report follows an exhaustive consultation process. Over a period

of eight months the Committee received and examined 213 submissions (14 confidential),

and 320 representations from consumers. The Committee conducted consultations

with a range of interested parties, involving around 50 meetings with 47 parties

between July and October 2002 in Sydney, Melbourne, Canberra, Brisbane

and Perth. Two members of the Committee undertook 27 additional meetings with

relevant parties in Ottawa, Washington, Paris, Brussels and London between 23 September

and 4 October 2002. The Government will now undertake three months consultation

with the States and Territories in accordance with clause 6 of the 1995 Intergovernmental

Conduct Code Agreement.

The Committee concluded that the competition provisions of the Act have served

Australians well. The Act has sustained a competitive environment which has

benefited consumers in terms of service and price. The Committee found that

the Act has achieved an appropriate balance between the prohibition of anti-competitive

conduct and the encouragement of competition. In forming this assessment, the

Committee drew on a broad range of views expressed in submissions made to it,

discussions overseas and consultations with a wide range of interested parties.

The overall theme of the report is that the competition provisions should protect

the competitive process, rather than particular competitors. Further, competition

laws should be distinguished from industry policy.

The Committee made a total of 43 recommendations aimed at improving the

competition and authorisation provisions, and the administration of the Act.

The Government response endorses the Report, and acknowledges the expertise

brought to bear on the issues by the Committee.

Rural and regional stakeholders and small business will welcome the introduction

of a notification process to facilitate collective bargaining by small businesses

dealing with large businesses. This would apply to businesses that supply or

acquire goods in transactions valued at less than $3 million per year,

or a larger sum if varied by regulation.

The Act will be amended to include a time limit of six months for the

consideration of non-merger applications for authorisation by the ACCC. The

ACCC will be provided with a discretion to waive, in whole or in part, the fee

for filing a non-merger application for authorisation. These measures would

reduce the time and cost involved in obtaining authorisation, and increase certainty

for applicants.

The combined effect of the introduction of a notification process for collective

bargaining by small business and of amending the authorisation process will

be to improve the accessibility and effectiveness of the Act, particularly for

small business.

The Government has, in principle, accepted the proposal to introduce criminal

sanctions for serious cartel behaviour, subject to further examination of the

issue by a working party. The Treasurer will announce the Terms of Reference

for, and details of, this working party after consulting on the issue.

For assessing mergers, the Committee did not consider that any amendment to

the section 50 test or section 90 public benefit test was necessary. Businesses

will instead benefit from changes to the merger assessment process. The existing

informal merger clearance process is relatively speedy and inexpensive and will

be retained, but will be made more transparent by requiring the ACCC to provide

adequate reasons for its decisions when requested to do so by the parties and

in cases where it has rejected a merger or accepted an undertaking.

An additional formal clearance process will be introduced for consideration

of mergers under section 50. The formal process will retain the advantages of

the current system but will provide additional speed and certainty by imposing

defined time limits and only granting the applicants the right of review.

The merger authorisation process will be amended to provide direct application

to the Australian Competition Tribunal (the Tribunal). The amended process will

provide the Tribunal with a three month time limit for consideration of

the application. These amendments will increase the speed and certainty of the

authorisation process. No review on the merits will be allowed from Tribunal

decisions.

The Committee recommended there be no amendment to section 46.

The per se prohibitions of the Act will be amended to provide that it is a

defence in proceedings based on the prohibition of an exclusionary provision

to prove that the exclusionary provision did not have the purpose, effect or

likely effect of substantially lessening competition. A similar competition

defence will apply to the treatment of joint ventures. The per se prohibition

of third line forcing will be subject to a substantial lessening of competition

test. These amendments will target the Act at conduct that is more likely to

be anti-competitive.

More details on the Government’s response to the recommendations of the Committee

are provided in the attached document.

The Treasurer thanked the Review Committee – Sir Daryl Dawson AC KBE CB, Ms

Jillian Segal and Mr Curt Rendall – for their thorough analysis and discussion

of the issues.

The Government’s response to the Report is available at:

http://www.treasurer.gov.au/tsr/content/publications/TPAResponse.asp

The Report is available at:

http://tpareview.treasury.gov.au/content/report.asp

CANBERRA

16 April 2003

Contact:

Niki Savva

David Alexander

Ph: (02) 6277 7340