It has been possible, for many years, for people and companies to apply for immunity from section 45 of the Trade Practices Act 1974 (Cth) (the TPA) – and immunity from the strict price-fixing prohibitions in particular - to engage in 'collective bargaining'. Such conduct can have detrimental effects on competition but where it can be demonstrated that the public benefit from the arrangements will outweigh the anticompetitive detriment, the conduct can be approved.
The collective bargaining authorisation regime that existed until 21 months ago prescribed a lengthy, costly and often complex process for obtaining immunity from contraventions of the TPA. As such, collective bargaining was largely unavailable to small commercial operators seeking to agree to negotiate terms and conditions on a collective basis with a supplier or customer so that they could supply or acquire goods or services on more favourable terms. Paradoxically, these were often the types of people who would have the most legitimate reason for engaging in collective bargaining.
On 1 January 2007, the existing 'authorisation' process was refined and, in parallel, a simpler 'notification' regime introduced. It was anticipated that individuals and small businesses seeking to engage in collective bargaining would take advantage of the easier and faster notification process and, due to the substantially reduced lodging fee ($1,000 as opposed to $7,500 for authorisations), be encouraged to come forward.
The notification process permits a party to lodge a collective bargaining notice with the Australian Competition and Consumer Commission (ACCC) of its intention to collectively bargain with a named target. Unless the ACCC raises any objections to the notification or revokes it, the notice comes into force and protects the applicants from liability under the TPA after 28 days of its lodgement.
The number of collective bargaining notifications lodged since 1 January 2007 is equivalent to one notification per quarter. In comparison, there have been over 190 exclusive dealing notifications (mostly third-line forcing notifications) lodged since the beginning of 2008.
Some might conclude from these figures that the introduction of the collective bargaining notification regime has not achieved its intended goal of assisting small commercial operators to engage in collective bargaining. However, it may be too early to make such an assessment for the following reasons:
- First, it is likely that it will take some time for small businesses to understand the new notification process and compare the respective advantages with the improved authorisation process for collective bargaining. Unlike for exclusive dealing arrangements, a culture of notification has yet to develop for collective bargaining arrangements.
- Second, some businesses have chosen to take advantage of the streamlined authorisation processes (and applied for a reduction in authorisation fees) rather than use the notification process.
- Third, between 1999 and 2006, there were only approximately ten substantive collective bargaining authorisations lodged with the ACCC (all of which were granted but one). Statistically, therefore, since its introduction, the number of immunity applications for collective bargaining has increased.
- Fourth, the lack of applications under both regimes may well be attributable, not only to the process itself, but to a lack of awareness by businesses that their conduct actually amounts to collective bargaining and should be notified. Alternatively, those businesses that are aware of the general prohibition against collective bargaining (and so avoid such arrangements) might not be aware that notification is an option to permit them to engage in that conduct.
Compared with its predecessor, the new regime clearly makes the collective bargaining approval process more accessible. However, it is clear that there has not been an overwhelming response by small businesses to its introduction as might have been expected. In another 21 months, it may be possible to assess more definitively the trends associated with the notification regime so as to better assess its effectiveness.
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