Australia's banking sector has just over six months to get ready for the new price signalling laws, following the passage last night of the Competition and Consumer Amendment Bill (No. 1) 2011.
After protracted debate and various amendments made on the floor of Parliament in order to secure support , the Bill introduces a new prohibition on public and private "disclosures" of pricing and other information to competitors in prescribed industries, with banking being the first (and so far only) sector affected. The changes will come into effect six months after the Bill receives Royal Assent, which should be quite soon.
The Federal Government proposed the Bill to address a claimed weakness in Australian competition laws where competitors may signal pricing or strategic information to each other in order to weaken competition but without actually colluding or reaching any understandings.
As we noted when the Bill was introduced into Parliament, the Bill will capture many forms of disclosure that are likely to be benign or actually pro-competitive, as well as those cases of disclosures that are actually likely to damage competition or consumer interests.
The new law will add significantly to the compliance task for affected banks but there are numerous exceptions and caveats in the Bill, the most notable of which are disclosures made to competitors in the "ordinary course of business".
Little guidance has been offered on the policymakers' view of what constitutes an acceptable disclosure to a competitor in the ordinary course of business, so banks and others will no doubt eagerly await the forthcoming guidelines on the new law which the ACCC has indicated it will publish before the law comes into force.
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