Australia: Competition law – a hat trick of important developments

Last Updated: 8 April 2014
Article by Martyn Taylor and Claire Forster


Unusually, three significant developments occurred in Australian competition law last week:

  • On Monday, AGL applied to the Australian Competition Tribunal for the authorisation of its proposed acquisition of Macquarie Generation. This is only the second application for a merger authorisation since the authorisation regime was amended in 2006. An interesting twist is that AGL is seeking authorisation notwithstanding express ACCC opposition to the acquisition.
  • On Thursday, the Commonwealth Government announced the panel membership and terms of reference for its comprehensive 'root and branch' review of Australian competition law and policy. The terms of reference remain ambitious and the panel members are of a high quality, lead by Professor Ian Harper. The review is now being referred to as the 'Harper Review'. A discussion paper will be released shortly.
  • On Friday, Flight Centre was subjected to a fine of AUD 11 million in respect of five attempts to contravene the Competition and Consumer Act 2010 (Cth). The fine is unexpectedly high, particularly for attempted contraventions, increasing the risk profile for certain distribution arrangements. The fine indicates that Australian courts are now taking anti-competitive conduct very seriously indeed.

Each of these developments are discussed in further detail below.

AGL applies to the Australian Competition Tribunal for authorisation of its proposed acquisition of Macquarie Generation

On 24 March 2014, AGL Energy Limited (AGL) quelled speculation as to its likely response to the ACCC's opposition of its proposed acquisition of Macquarie Generation. AGL took the rare step of applying to the Australian Competition Tribunal for a public benefit authorisation. This is one of the first times that an authorisation has been used to attempt to circumvent express ACCC opposition to an acquisition.


AGL is one of three major energy retailers operative in Australia. It also owns significant generation capacity in Victoria and South Australia. AGL was the successful bidder for the currently State-owned Macquarie Generation portfolio (which accounts for 27 per cent of the New South Wales electricity generation capacity), conditional upon ACCC approval.

AGL had applied to the ACCC for an informal clearance for the acquisition. AGL had also proposed detailed behavioural undertakings to address potential ACCC concerns. These undertakings sought to provide ongoing accessibility of competitive hedge contracts to competitive retailers.

Notwithstanding the undertakings, the ACCC opposed the acquisition on 4 March 2014 on the basis that it would allow significant further vertical integration by AGL whereby "the three largest retailers in NSW would own a combined share of 70 to 80 per cent of electricity generation capacity or output". This would result, the ACCC commented, "in significant reduction both in hedge market liquidity and the supply of competitively priced and appropriately customised hedge contracts to second tier retailers", thereby raising barriers to entry and expansion. The ACCC identified that there would be likely to be a substantial lessening of competition if the acquisition occurred.

What strategy does one follow if the ACCC opposes a merger?

Following the ACCC's opposition, there were essentially four alternatives open to AGL if it wished to proceed with the acquisition:

  • Declaratory relief (colloquially known as the "Loy Yang" route), which refers to a previous acquisition by AGL in 2003 in which declaratory relief was sought from the Federal Court that no breach of section 50 of the Act would occur if the relevant acquisition proceeded.
  • Contest an injunction (colloquially known as the "Metcash" route), which refers to a previous acquisition by Metcash in 2011 in which Metcash indicated it would proceed with an acquisition despite the fact that the ACCC had denied informal clearance. The ACCC was, in effect, forced to injunct that acquisition and that injunction was then challenged by Metcash in the Federal Court.
  • Authorisation, involving a formal application for authorisation to the Australian Competition Tribunal. Such an approach was previously attempted in December 2013 by the Murray Goulbourn dairy co-operative but did not proceed.
  • Formal clearance, involving an application to the ACCC for formal clearance and then appealing the ACCC's adverse decision. The formal clearance procedure has not yet been used in Australia.

Of these four potential strategies, AGL opted for authorisation.

Application for Authorisation

An application to the Australian Competition Tribunal for authorisation permits an assessment of the transaction on a broader set of criteria than that which the ACCC is permitted to consider under its informal merger assessment process. The Tribunal must not grant an authorisation unless it is satisfied that the proposed acquisition would result, or be likely to result, in such a benefit to the public that the acquisition should be allowed to occur.

Merger authorisations are very rare. AGL has lodged only the second application to the Tribunal under the current merger authorisation regime that has been in place since 2007, the first being the application for authorisation by the Murray Goulbourn Co-operative in December 2013.

AGL's application effectively argues that compared to the alternative (where the Macquarie Generation assets remain State-owned), the competition impacts would not be so significant as to outweigh the efficiency benefits and other benefits that would flow from the proceeds of the sale being invested by the Government elsewhere.

AGL's application therefore seems heavily dependent on AGL being able to demonstrate that the State Government of New South Wales will not otherwise sell the Macquarie Generation asset if AGL is not allowed to acquire it. Ultimately, this may be an interesting question of fact for the Australian Competition Tribunal.

AGL continues to offer up conditions similar to those offered to the ACCC in the form of behavioural undertakings to forestall competition concerns.

The Tribunal will conduct hearings and must make a decision within the next six months.

Harper 'root and branch' review of Australian competition policy formally commenced

The Government's 'root and branch' review of competition policy now has a name, the "Harper Review". A high quality review panel has been announced. Ambitious terms of reference have been finalised (with only minor changes relative to the draft terms of reference).

As we identified in our client alert of February 2014, the review could potentially result in the greatest regulatory reforms in 20 years. A formal discussion paper will be released in the coming weeks, including a timeline for the review process and submissions.

The review panel comprises Professor Ian Harper, one of Australia's best known economists, Peter Anderson, previous CEO of the Australian Chamber of Commerce, Su McCluskey, an expert on regulation and small business, and Michael O'Bryan, one of Australia's most respected competition barristers. The calibre of the panel demonstrates the government is taking the review seriously.

Importantly, the review could provide a blueprint for the next wave of sectoral deregulation and reform. The scope of review extends well beyond a review of Australia's competition laws. The objective of the review is to improve economic welfare by removing impediments to competition, including excessive regulation. Some have commented that the scope of the review may be too ambitious, so it will be interesting to see how key issues will be prioritised.

A critical issue is how the review will balance the interests of small and big business. The genesis of the review is in the small business portfolio. The review panel was announced by the Minister for Small Business, suggesting an emphasis by the Government on small business concerns. The review may well consider the extension of Australia's unfair contract and unconscionable conduct prohibitions to protect small business. Yet any greater protection of small business will need to be carefully balanced against the objectives of competition policy and the need to avoid increasing the regulatory burden overall.

The review could recommend institutional reforms. While some have speculated on reform of the ACCC, the ACCC is widely recognised as one of the best competition agencies in the world. A more likely focus will be on fixing some ACCC processes, including the formal merger review process – still unused after eight years.

Beyond the ACCC, Australia's competition policy institutions arguably require reinvigoration. Some have proposed a high-powered policy review and development entity to independently advise government and review regulation. Such reforms could involve an enhanced role for the National Competition Council, the expansion of the Productivity Commission, or even the integration of these entities.

There is welcome scope to fine tune our competition laws. A substantive redraft is unlikely - our competition laws are world leading. The review is more likely to scrutinise those provisions that regularly attract criticism: the controversial 'Birdsville' prohibitions, which regulate powerful businesses from pricing below cost; our over-zealous third line forcing prohibitions, which regulate the bundling of goods and services by different businesses, and our inconsistent joint venture defences.

Some reform proposals in the public domain are already controversial. The ACCC has called for the extension of the price signalling provisions in the banking sector so that they apply universally. The provisions were ostensibly introduced to prevent banks colluding by way of press release. Senator Nick Xenophon has tabled private member's legislation giving the ACCC the ability to ask a court to break up powerful firms that abuse their market power. The review may also revisit recommendations from previous reviews, including the nature of exemptions for intellectual property and liner shipping.

There are opportunities to prevent future 'knee-jerk' regulation. Some industry sectors have been singled out for specific attention, including shipping, e-commerce, groceries, utilities, automotive fuel, technology, and infrastructure. Rather than focus on the detail, the review panel is more likely to identify key principles – potentially leading to a more harmonised, principled and predictable approach to sectoral regulation.

Interestingly, reforms may be considered for governmental businesses. An underlying concern is that excessive government involvement in business may 'crowd-out' private sector investment, impeding competition and productivity. The word "privatisation" in the terms of reference has already attracted disproportionate media comment.

One does not envy the task of the review panel. It will be required to maintain balance while walking a difficult political tight rope, under tight deadlines, in swirling political cross winds. As leader of the G20, Australia's domestic policy initiatives will be the subject of enhanced international attention. The final recommendations will no doubt be taken seriously by those in Canberra. Peter Harris, Chairman of the Productivity Commission, identified in November 2013 that the alternative is a "low growth scenario" for Australia.

It has been some 20 years since Australian competition policy was last comprehensively reviewed. The so-called 'Hilmer Review' had a profound impact on the Australian economy. In 2006, Australia was one of the most deregulated economies in the western world. Australia's policy reforms led the world and delivered Australia some of the strongest growth rates in the OECD.

As other nations have implemented reforms, Australia's competitive advantage has eroded. The review provides a real opportunity to chart the course of Australian competition policy in the 21st century, re-assert global economic leadership, and reap the corresponding economic rewards.

Flight Centre ordered to pay $11 million for attempted price fixing

On 28 March 2014, travel agency Flight Centre, was ordered by the Federal Court to pay AUD 11 million in penalties. This figure is unexpectedly high, particularly for conduct that amounted to an attempt to contravene the Competition and Consumer Act 2010 (Cth) (CCA). As such, the penalty sends a clear message that Australian courts will take any anti-competitive conduct very seriously indeed.

Specifically, the penalties were given in respect of six separate attempts (although one was time barred) by Flight Centre to procure the agreement of each of Singapore Airlines, Emirates and Malaysian Airlines (together, Airlines) that:

  • they each would make available to Flight Centre any offering that was on their respective websites; and
  • that the price they each would charge customers for an airfare would be no less than the total of the net fare plus the commission that Flight Centre would be entitled to be paid for supplying the fare to a Flight Centre customer.

It was alleged that if such an agreement had been entered into, it would have enabled Flight Centre to match the Airlines' prices while maintaining Flight Centre's commission.

The case has potentially broad implications for a business that makes use of multiple distribution channels. Justice Logan found that although Flight Centre did not compete with the Airlines in providing airline services, it did compete in providing associated intermediary services. Flight Centre was found to have attempted to engage in price fixing in breach of the cartel provisions of the then Trade Practices Act 1974 (Cth) (TPA) (now the CCA).

Importantly, this is one of the first cases that has been able to apply the stricter penalty regime that has existed since the beginning of 2007 under the CCA. Historically, the maximum penalty per offence had been AUD 10 million for a corporation. Under the new regime, the Court may impose the greater of the following penalties per contravention:

  • AUD 10 million; or
  • if the court can determine the total value of the benefit from the anti-competitive conduct, 3 times that total value; or
  • if the court cannot determine the total value of those benefits—10% of the corporation's annual turnover during the 12-month period ending at the end of the month in which the corporation committed, or began committing, the offence.

Interestingly, the ACCC did not plead facts that allowed the Court to have regard to the second and third limbs in this instance. However, the significant penalty was partly attributable to the fact that there were five separate attempts that occurred within the six-year limitation period (giving rise to a potential maximum fine of AUD 50 million at AUD 10 million per contravention). The Court also pointed to Flight Centre's significant revenue and market share and what Justice Logan considered "flagrant" and "serious" conduct. The value of general and specific deterrence were also identified as of particular importance.

Justice Logan acknowledged that "Though the [CCA] specifies the same maximum penalty for an attempt to induce and for an inducement which has succeeded, there is a qualitative difference between the two. Nonetheless, so far as general deterrence is concerned, one purpose of the imposition of a penalty must be to discourage attempts and, instead, to encourage a culture of compliance with the contemporary standards of commercial behaviour which Parliament has prescribed in the TPA."

Flight Centre is expected to appeal both on the finding of legal contraventions and the quantum of penalty. Irrespective of the appeal, the Flight Centre decision indicates that the penalties that will be imposed in future by Australian courts for anti-competitive conduct are likely to be high.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Martyn Taylor
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions