Australia: Amendments To Australian Antitrust Regime Take Effect

Last Updated: 7 December 2017
Article by Nicolas Taylor and Prudence Smith

In Short

The Situation: Australia has adopted a package of changes to its antitrust laws that are designed to give more power to its antitrust enforcement agency, the Australian Competition and Consumer Commission, and to increase private antitrust litigation.

Looking Ahead: Companies that are involved in the exchange of competitive information or that could be accused of having a substantial degree of market power should quickly review their practices in light of the new laws.

On November 10, 2017, Australia adopted a package of changes to its antitrust laws that enhance the Australian Competition and Consumer Commission's ("ACCC") power and increase exposures to private litigation.

The key changes concern:

  • A stricter "misuse of market power" prohibition that removes the "taking advantage" element of the prohibition and enables competition effects cases to be made;
  • The introduction of prohibitions applying to "concerted practices" even where there is no "agreement, arrangement or understanding", which is especially relevant to the exchange of confidential information; and
  • Removing the ability for merging parties to "forum shop" between the ACCC and Australian Competition Tribunal ("ACT") for clearance.
  • Companies should urgently review their practices if:
  • They are involved in any exchanges of competitively sensitive information with competitors; or
  • They could be accused of having a substantial degree of market power and have "pushed the envelope" of what conduct can be legally undertaken in Australia.

Misuse of Market Power (aka Single Firm Monopolization)

Old Rule: Misuse of market power cases used to be very rarely taken, and liability was found even more rarely for two reasons. The ACCC (or private plaintiff) had to prove that the defendant:

  1. was in possession of a substantial degree of market power and "took advantage" of market power—i.e. that the firm had engaged in conduct it would not have undertaken if it lacked market power and was operating in response to competition. To escape liability, a defendant could scour the world to find an example of a firm that was clearly nondominant that engaged in the same conduct (as occurred in a case called Melway); or
  2. had one of three specific anticompetitive purposes. The effect of the conduct was not directly relevant to liability. In effect, this required a "smoking gun" intent email or a concession by the accused. Well-counselled Australian companies regularly avoided liability by never recording an anticompetitive purpose, and for a plaintiff seeking to prove a case solely on oral concessions, this was impractical.

New Rule: The new rule is that a person with a significant degree of market power must not engage in any conduct that has the purpose or effect of substantially lessening competition.

By adopting an "effects" standard and removing the "taking advantage" requirement, Australia moves closer to the general standards applying internationally. Note, however, that an important remnant of the old rule remains—liability can exist based on the "purpose" of conduct (i.e. a smoking gun) even if there is no evidence of the anticompetitive effects the conduct will have.

Key Point: Many firms have structured their distribution systems and other business affairs based on exculpatory evidence that the conduct in question would not fall foul of the "taking advantage" or "purpose" elements required by the old rule. These firms must urgently review and potentially reform their conduct.

Concerted Practices

Old Rule: There are a multitude of Australian prohibitions against different forms of coordinated anticompetitive conduct, and these used to require the ACCC (or a private plaintiff) to prove that there was an "contract, arrangement or understanding" between two entities. It was not sufficient to prove a mere "concerted practice".

The term "concerted practice" is used in Europe, most of Asia and many other parts of the world. It means to engage in:

Co-ordination between entities which, without having reached the stage of concluding a formal agreement, have knowingly substituted practical co-operation for the risks of competition.

As a result, the ACCC lost cartel prosecutions where it could only show repeated disclosures of confidential information by some competitors to others without being able to show that the recipients of the information had entered into any form of understanding to alter their behavior in response.
New Rule: The various prohibitions against coordinated conduct have been amended so that the ACCC or a plaintiff can base their suit on a "concerted practice" without having to prove "contract, arrangement or understanding".

The Australian legislature made the change in response to ACCC lobbying which suggested that this would bring Australia's law into line with that applying in Europe and Asia and thereby solve the ACCC's problems where information is exchanged without a "contract, arrangement or understanding".

The contention that the change brings Australian law into alignment with European and Asian competition laws is erroneous because of another important difference between European and Asian competition laws on the one hand and Australian competition law on the other. In Europe and Asia, the language of the prohibition is expressed as follows:

The following shall be prohibited...: all agreements ... and concerted practices ... which have as their object or effect the prevention, restriction or distortion of competition....

In Europe, the courts have decided that in general, disclosures of confidential information by one competitor to another where the recipient does not take active steps to reject the information is sufficient to constitute a "concerted practice" "by object".

In Australia, the ACCC (or private plaintiff) will still have to prove that any concerted practice had the "purpose or effect" of either "fixing, controlling or maintaining prices" or "substantially lessening competition". In competitively sensitive information-sharing cases, the ACCC has not generally sought to prosecute on the "effects" standard, so only the "purpose" standard was relevant. Proving purpose would usually require proof of intent, which is analogous to having to prove a "meeting of the minds", albeit that there would not need to be a shared intent.

Key Point: Any arrangements concerning information exchange of any nature between competitors should be reviewed.

Abolition of Forum Shopping for Merger Clearances

Old System: Australia has long provided an option for merging parties between two statutory standards for merger clearances. The standard rule provides that a merger is prohibited if it has the effect of substantially lessening competition. However, there has been an alternative by which a merger can be approved if it results in such benefit to the public as to outweigh any competitive detriment.

For most of the last 40 years, the ACCC has undertaken the initial assessment under both tests either through the formal or informal clearance process (for the SLC test) or the authorization process (for the net public benefit test). The courts and tribunals were only involved if the ACCC took enforcement action or if the merging parties appealed an ACCC decision.

However, for the last decade, any applications under the public benefit test were made directly to the ACT, which has generally required any complainant to meet a higher standard of proof than the ACCC does. For example, the ACCC opposed the merger of Australia's main retail sports betting businesses, Tabcorp and Tatts, in 2006 and again in 2017, but the ACT approved the merger.

New System: The new law restores the pre-2006 system whereby any application for a merger to be approved on public benefit grounds must first be made to the ACCC, not the ACT.

Other Amendments

The new law will essentially remove the specific Australian blanket prohibition against "third line forcing", permitting firms to engage in such conduct if they are confident that the conduct will not have the purpose or effect of significantly lessening competition. It will no longer be necessary to approach the ACCC for an exemption.

Although resale price maintenance will remain per se illegal, a more streamlined exemption process known as "notification" will be available rather than full-blown "authorization" for companies wishing to engage in the conduct. This effectively means that the ACCC will have to take active steps to disallow an exemption on the basis of public benefit concerns rather than the applicant having to prove that the resale price maintenance is of net public benefit.

The new law permits the ACCC to make class exemptions equivalent to the European and Asian "block exemption" concept, although whether this mechanism will ever be used is an open question.

The law also amends other aspects of the competition law, such closing a loop-hole that enabled certain "buy side" cartels to avoid prohibitions and seeking to better align the legal drafting for the joint venture exception from the cartel provisions with the original legislative intent.

Three Key Takeaways

  1. Misuse of market power cases may now be brought by the ACCC or plaintiffs alleging conduct that has either the purpose or effect of substantially lessening competition.
  2. Firms should review any practices that involve sharing information with competitors, although Australia's rules regarding "concerted practice" cases still differ from the rules in much of Europe and Asia.
  3. Any application for a merger to be approved on public benefit grounds must now first be made to the ACCC, not the ACT.

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 Mondaq.com.

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

Authors
Events from this Firm
13 Dec 2017, Seminar, Cleveland, United States

Jones Day partners Harold Gordon and Tony Dias, and Associate Courtney Snyder will explore the significant role New York's Attorney General and its Department of Financial Services (DFS) play in the financial services industry and why these two state-level agencies will continue to exert significant power over the financial services industry, especially with federal oversight potentially shrinking.

 
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
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
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

    Mondaq.com (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 www.mondaq.com

    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 Mondaq.com’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.

    Disclaimer

    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.

    Registration

    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 unsubscribe@mondaq.com 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.

    Cookies

    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.

    Links

    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.

    Mail-A-Friend

    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.

    Emails

    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 .

    Security

    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 webmaster@mondaq.com.

    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 EditorialAdvisor@mondaq.com.

    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 enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com 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