Major shake-ups to Australian competition laws are closer with the release of three separate consultation packages today implementing the Harper reforms and the flow-on changes needed to the ACCC's practices and telecommunications laws.

The Exposure Draft of the Competition and Consumer Amendment (Competition Policy Review) Bill 2016 embodies key Harper reforms to:

  • section 46 provisions on misuse of market power;
  • cartels
  • price signalling
  • exclusionary provisions
  • concerted practices; and
  • third party access.

Comments are due by:

  • 5pm Friday 30 September 2016 for the Exposure Draft of the Competition and Consumer Amendment (Competition Policy Review) Bill 2016, and the Department of Communications' consultations on competitive provisions in the telecommunications sector;
  • 5pm 3 October 2016 for the ACCC's draft approach to enforcement.

Section 46 reforms - the effects tests

Competition would expressly include goods and services that are capable of being imported, in addition to goods and services that are imported.

Other elements of the proposed reforms are:

  • "take advantage" is broadened to the effects test ie. the conduct must have the purpose, effect or likely effect of substantially lessening competition in that or any other market;
  • the specific prohibitions on predatory pricing and other practices are removed
  • market participants can seek authorisation for an exemption;
  • pro- and anti-competitive factors must be taken into account

Cartels scope to be limited to conduct affecting competition in Australia

The cartel conduct provisions would only apply to:

  • cartel conduct occurring in trade or commerce within Australia, or between Australia and places outside Australia;
  • between actual or likely competitors.

The exceptions for joint ventures and vertical trading restrictions would also be broadened.

Goodbye separate prohibitions on price signalling and exclusionary provisions, hello concerted practices

The price signalling provisions will be repealed. The separate prohibition on exclusionary provisions within contracts, arrangements or understandings will also go.

On the other hand, section 45 will be extended to prohibit a person from engaging in a concerted practice with one or more other persons that has the purpose, effect or likely effect of substantially lessening competition.

Third party access

The declaration criteria that must be used by the Council and designated Minister would be tweaked - for example:

  • the decision-maker would no longer be required to consider whether it is uneconomical for anyone to develop another facility to provide the service - instead, he or she must consider whether total foreseeable market demand could be met by the facility at least cost;
  • instead of asking whether access would be contrary to the public interest, the decision-maker must consider whether access (or increased access) would promote the public interest.

The ACCC's draft frameworks for misuse of market power and concerted practices guidelines

In parallel to the Federal Treasury's consultation process on the exposure draft Bill, the ACCC is asking for feedback on a framework for guidance on its proposed approach to section 46 and concerted practices.

It does not consider that the proposed section 46 would change its approach to market definition, analysing substantial market power, or substantially lessening competition. It has however given examples of conduct that it considers could breach the new section 46:

  • refusal to supply an essential input;
  • land banking;
  • predatory pricing;
  • bundling a competitive product with a monopoly product.

Examples of conduct that would not breach section 46 include:

  • research and development;
  • standardised or national pricing by large retail chains;
  • price war; and
  • investing in new production technology to increase efficiency.

The ACCC is also seeking comments on the sorts of practices it considers might fall foul of the new section 45, and the competitive effect of a broader range of co-ordinated conduct to be assessed than before.

Department of Communications and the Arts consultation on telecommunications-specific anti-competitive conduct laws

In light of the proposed changes to the Competition and Consumer Act, the Department of Communications and the Arts is also seeking comment on what, if anything, needs to change in the telecommunications-specific anti-competitive conduct laws in Part XIB, specifically:

  • should they be retained; and
  • what should be the role of competition notices?

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. Persons listed may not be admitted in all states and territories.