The Government has responded to concerns and narrowed the scope
of the Competition and Consumer Amendment Bill (No. 1) 2011 which
will introduce a new prohibition on public and private
"disclosures" of pricing and other information to
competitors in prescribed industries.
The Bill has been proposed to introduce prohibitions, in defined
on making a private disclosure of pricing
information to competitors; or
a public disclosure of pricing, supply
capacity or strategic information of any kind, where the disclosure
is made for the purpose of substantially lessening competition in a
The Government has reaffirmed that it intends this reform will
apply initially only to the banking sector, although no details
have yet been provided as to how the "banking sector"
will be defined for this purpose.
The concerns and the Government's response
These are new prohibitions which significantly extend the reach
of the Competition and Consumer Act addressing anti-competitive
arrangements between competitors.
For this reason much attention has been focused on the permitted
exceptions to the new Bill and concerns over unintended
consequences. A number of concerns were raised in the House of
Representatives Economics Committee Report into the Bill of May
this year, which split along party lines.
In response to these and other concerns, the Government has
amended the Bill in the House of Representatives, offering the
following additional exceptions to the prohibition of private
the prohibition will only apply to a private disclosure to
competitors that is "not in the ordinary course of
the private disclosure will not apply in
relation to syndicated loans and similar arrangements where two or
more competitors exchange information about loans or credit
supplied or likely to be supplied to a single borrower;
private disclosure of pricing information by a credit provider
to another person who provides a credit service such as a finance
broker or similar will be permitted; and
work outs – a private pricing disclosure will be
permitted to a competitor where the competitors have lent money to
a borrower and have been notified of a "borrowing insolvency
situation" and the disclosure is for the purpose of
addressing, avoiding or reducing the risk of insolvency.
These new exceptions are welcome, although the work out
exception is very narrow – it will only be available
where a borrower is prepared to notify its lenders that there are
reasonable grounds for suspecting that the borrower is or may
become insolvent. We expect many borrowers considering work out
discussions with their lenders may be reluctant to accept or state
that they are or may become insolvent in the near future.
However the "ordinary course of business" exception
does offer a general safe harbour for workouts and other
arrangements which can clearly be seen to be standard commercial
transactions or arrangements
Adding in other industry sectors?
The Bill now provides that regulations will proscribe the
process by which additional industry sectors – for
example, unleaded petrol – may later be brought under the
There were criticisms that the Bill should say more about that
process, such as by specifying the relevant criteria to which the
Minister should have regard before bringing a sector under the
Bill, or requiring public consultation. However it remains to be
seen from regulations how far the Government is prepared to go to
introduce these procedural steps.
Other exceptions to the Bill remain, such as:
within joint ventures;
disclosures to customers;
ACCC specific authorisations;
by formal notifications to the ACCC under section 93; and
compliance with the continuance disclosure requirements for
The Bill will be introduced into the Senate during the next
sitting which starts on Tuesday 16 August 2011.
There may be scope for further suggestions or changes to the
Bill, especially as the Government does not have a majority in the
Senate and both the Greens and Opposition have amendments which
they failed to make in the House of Representatives.
The Bill is expected to come into force six months after it
receives Royal Assent.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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