Bills Digest no. 90 2008–09
Trade Practices Amendment (Cartel Conduct and Other
Measures) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date
introduced: 3 December
2008
House: House of Representatives
Portfolio: Treasury
Commencement:
Sections 1 3 on the day of
Royal Assent; Items 50 and 51 of Schedule 2 on the day after Royal
Assent; all other provisions on the 28th day after Royal
Assent.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of the Bill is to
amend the Trade Practices Act 1974 (TPA) to provide for
criminal penalties for cartel behaviour.
Generally speaking, a cartel is an anticompetitive arrangement
between two or more businesses.[1]
The Organisation for Economic Co-operation and Development
(OECD) defines hard-core cartel conduct more narrowly as:
an anticompetitive agreement, anticompetitive
concerted practice, or anticompetitive arrangement by competitors
to fix prices, make rigged bids (collusive tenders), establish
output restrictions or quotas, or share or divide markets by
allocating customers, suppliers, territories, or lines of commerce.
[2]
Currently, Part IV of the TPA relates to restrictive trade
practices. Although it does not specifically use the word cartel it
already contains provisions spread across a number of sections
which regulate anti-competitive conduct between two or more
businesses. It does this by dividing the conduct into one of two
categories, being:
- conduct which is, of itself (referred to as
per se) regarded as anti-competitive. This conduct is
prohibited, regardless of whether it has the purpose, effect or
likely effect of substantially lessening competition. The rationale
behind a per se prohibition is that the conduct
prohibited is so likely to be detrimental to economic welfare, and
so unlikely to be beneficial, that it should be proscribed without
further inquiry[3]
and
- other conduct which is subject to a competition test.
The TPA does not, in its current form, contain criminal
penalties for cartel conduct.
The Review of Competition Provisions of the Trade Practices
Act by the Trade Practices Act Review Committee, chaired by
Sir Daryl Dawson (known as the Dawson report) was released in April
2003. The Trade Practices Act Review Committee stated that
despite the problems associated with the
introduction of criminal sanctions there should be criminal
sanctions for serious cartel behaviour a satisfactory definition of
serious cartel behaviour needs to be developed and there needs to
be a workable method of combining a clear and certain leniency
policy with a criminal regime.[4]
In response, on 2 February 2005 the former Treasurer, the Hon.
Peter Costello announced his intention that the Government would
amend the TPA to introduce criminal penalties for serious cartel
conduct.[5]
Subsequently, a joint media statement advised that the proposed
Trade Practices Amendment (Cartel Conduct) Bill 2005 was being
prepared.[6] However,
the Bill was never introduced.
In a door stop interview on 9 October 2007, the then Prime
Minister, the Hon. John Howard stated that the coalition would
continue to examine the strength of the trade practices law and
make further changes if they were needed. However he stated that he
would not make any commitment beyond that.[7]
The absence of a criminal sanction for cartel behaviour was most
notable in the
Visy case[8]
which related to price fixing. The cartel came to light following a
request from Amcor to the Australian Competition and Consumer
Commission (ACCC) for immunity from prosecution. Following
disclosure of the existence of the cartel, the ACCC brought an
action in the Federal Court alleging that between January 2000 and
October 2004, companies in the Visy Group, and certain officers of
those companies, engaged in price fixing and market sharing with
companies in the Amcor Group, contrary to section 45 of the
TPA.
On 2 November 2007, the Federal Court found that Visy, a listed
Australian manufacturer of packaging, had committed 69
contraventions of the TPA. In his judgment, Justice Heerey was
critical of the cartel, stating:
Had it not been accidentally exposed, it would
probably still be flourishing. It was run from the highest level in
Visy It was carefully and deliberately concealed. It was operated
by men who were fully aware of its seriously unlawful
nature.[9]
The Court fined the Visy group of companies $36 million
including separate pecuniary penalties for the former chief
executive and the former general manager.
On 11 January 2008, Treasury issued a
discussion paper to serve as a basis for consulting
stakeholders. As part of the consultation process, input was also
sought about:
- how to distinguish the criminal prohibitions from the civil
prohibitions, and
- whether telephone interception warrants should be available in
relation to the new criminal cartel offences.
In addition, Treasury issued an
exposure draft of the Bill for public comment.
Following the consultation process, and the receipt of numerous
submissions in response to the exposure draft, the Assistant
Treasurer and Minister for Competition Policy and Consumer Affairs,
the Hon. Chris Bowen announced a package of measures providing criminal sanctions for serious
cartel conduct. In announcing the measures he stated that:
Cartel conduct harms consumers, businesses and
the economy; that is, by companies fixing prices or reducing choice
or distorting the ordinary processes of competition.
The final bill includes a maximum 10‑year
jail term for individuals who partake in cartel conduct.
The possibility of criminal sanctions for
company executives will increase the deterrent effect for
businesses that may otherwise rationalise corporate fines for
cartel conduct as the cost of doing such business.[10]
A number of significant issues which were raised in the
submissions to Treasury in response to the exposure draft of the
legislation were addressed in the drafting of this Bill. Most
notable is the removal of the requirement that the criminal cartel
offence is dependent upon an intention of dishonestly obtaining a
benefit.
According to the submission by the Law Council of Australia:
The dishonesty test proposed in the exposure
draft emerged from the common law in the United Kingdom. In
Feely[11]
the Court of Appeal considered that, as dishonesty is an ordinary
word in the English language, the jury, not the judge, should
determine whether the defendant's conduct was dishonest according
'to the current standards of ordinary, decent people'.
The Court of Appeal in Ghosh[12] modified this
formulation so that the test contains both objective and subjective
aspects.[13]
The main criticism of the dishonesty test is that it requires a
jury to make a moral assessment by putting themselves in the
position of a hypothetical ordinary person and assessing whether,
according to the standards of ordinary people, the relevant conduct
was dishonest. In addition, the test requires the jury to assess
whether the defendant knew that his or her acts were dishonest
according to the standards of ordinary people. This moral
assessment has the potential to result in inconsistent
outcomes.[14]
The provisions of the Bill have been referred to the Senate
Economics Committee for inquiry and report by 20 February 2009.
Details of the inquiry are at its webpage.[15]
At the time of preparing this digest, many of the submissions to
the Senate Economics Committee related to the joint venture
provisions of the Bill. A discussion of joint ventures is located
in the Key Issues part of this Digest.
According to the Explanatory Memorandum, the Bill has no
significant impact on Commonwealth expenditure or revenue.[16]
Described as a revolution in anti-cartel
enforcement, the policy of offering immunity from proceedings to
the first eligible cartel member to fulfil the policy s conditions
is seen by regulators world-wide as the most effective means of
detecting, investigating and prosecuting cartel activity. The ACCC
Chairman Graeme Samuel has described the ACCC Immunity Policy as
absolutely vital in the commission s efforts to crack cartels and
has credited it with exposing potential cases at the rate of about
one a month.[17]
The existing ACCC
immunity policy applies only to civil cartel contraventions.
When the Competition and Consumer Policy Division of the Department
of Treasury published its discussion paper and draft legislation in
January 2008, a
draft copy of a Memorandum of Understanding (MOU) between the
Australian Competition and Consumer Commission (ACCC) and the
Commonwealth Director of Public Prosecutions (DPP) was also
published.
The purpose of the MOU is to facilitate arrangements between the
ACCC and DPP in relation to the proposed criminal offences.
Essentially, the MOU sets out the responsibilities of the ACCC and
the DPP in criminal cartel matters in order to reconcile the
differences between the ACCC immunity policy and the existing
DPP
prosecution policy. For example, the immunity policy and the
prosecution policy contain different eligibility criteria for
immunity and reflect fundamentally different approaches to when
immunity should be granted .[18]
A
final version of the MOU has now been published. It provides
that the ACCC will manage the immunity process for criminal cartel
conduct in consultation with the DPP. As the MOU is not a
legislative instrument, its content is beyond the scope of this
Bills Digest.
The Extradition Act 1988 (the Extradition Act) provides
for the extradition of persons from 'extradition countries'. An
'extradition country' includes a country
which is prescribed as such by regulations (following the making of
an extradition treaty).[19] A valid extradition application would need to satisfy a
court that, amongst other things, the conduct is an offence in the
overseas jurisdiction and in Australia.[20] The offence created by
the Bill will be an extradition offence and will therefore allow
persons to be extradited from Australia to a foreign country for
criminal cartel conduct.
According to the Law Council of Australia:
It is important to appreciate that conduct
which will under the Bill amount to criminal cartel conduct may
already be a criminal offence which is punishable by at least 12
months imprisonment under Australia s general criminal laws and
therefore an extradition offence . To the extent to which this is
the case, the Bill does not change the extradition status of that
conduct.[21]
Clearly, there is already a capacity to extradite Australian
citizens for criminal matters such as fraud. However, the position
of the United States should be noted:
The United States has tried hard to raise the
stakes for foreign executives residing outside of the United
States. Thus, as part of the plea bargains in the Vitamins cartel
cases, three Swiss executives of one company and three German
executives of another leading company agreed to serve short
sentences in U.S. penitentiaries. More recently, a Japanese
executive agreed to face a possible jail sentence in the United
States. There are apparently a number of other foreign executives
who have been sentenced to jail for Sherman Act violations and are
now fugitives hiding abroad.[22]
Once the criminal cartel provisions are enacted in Australia, it
may be that the United States more actively pursues the extradition
of Australia citizens for alleged criminal activities in that
country. Furthermore, the application of the Extradition Act may be
enhanced by the operation of section 155AAA of the TPA.
Essentially, section 155 of the TPA provides that where the ACCC
has reason to believe that a person is capable of furnishing
information relating to a potential breach of the TPA, it may
compel the production of information or documents, or attendance to
give evidence .[23]
This Bill additionally provides for protected cartel
information , defined in proposed subsection
157B(7) as information that was given to the ACCC in
confidence and relates to a breach, or a possible breach of the
cartel provisions.
Section 155AAA was introduced by the Corporations (New
Zealand Closer Economic Relations) and Other Legislation Amendment
Act 2007. In particular, subsection 155AAA(12) provides that
the ACCC may provide information that it has been given in
confidence or obtained by use of compulsory powers to a foreign
government agency in connection with the performance of that agency
s functions.
That being the case, it is possible that the ACCC may be
requested to provide a foreign government that is investigating
cartel conduct in its own jurisdiction, with information given to
it, for example, by a third party in relation to alleged cartel
conduct in Australia. The existence of that information may not be
known to the person about whom it relates.
The Surveillance Devices Act
2004 (Surveillance Devices Act) provides the statutory regime
governing the use of surveillance devices by law enforcement
officers investigating certain Commonwealth offences. Under section
6, a surveillance device includes
listening, optical and tracking devices. Subsection 14(1) empowers
a law enforcement
officer to apply for the issue of a
surveillance device warrant if it is suspected, on reasonable
grounds, that:
- one or more relevant offences have
been, are being, are about to be, or are likely to be, committed,
and
- an investigation into those offences is being, will be, or is
likely to be, conducted, and
- the use of a surveillance device is necessary in the course of
that investigation for the purpose of enabling evidence to be
obtained of the commission of the relevant offences or the identity
or location of the offenders.
The amendments to the TPA proposed by this Bill would make a
cartel offence a relevant offence under
the Surveillance Devices Act.
Although the ACCC is not a law enforcement
officer under the Surveillance Devices Act, the
amendments in this Bill would allow the Australian Federal Police
to obtain a surveillance device warrant to aid in the investigation
of alleged cartel conduct by, for example, monitoring conversations
between cartelists, and to communicate the information obtained
under the warrant to the ACCC.
Further information about the operation of the Surveillance
Devices Act is available in the relevant Bills
Digest.
The proposed amendments to the Telecommunications
(Interception and Access) Act 1979 (TIAA) will enable the ACCC
to request the Australian Federal Police to obtain a
telecommunications intercept warrant to investigate criminal cartel
offences. The rationale for the amendments was elucidated in the
submission to Treasury of the Law Council of Australia as
follows:
Cartels are by their nature secretive. There
are particular evidentiary difficulties with cartel offences as
cartel participants generally seek to avoid documenting their
arrangements, and endeavour to conceal cartel communications.
Telecommunication systems (including the Internet) are an
increasingly common and prevalent method of communication.
Interception warrants, particularly used in
conjunction with an informant, could be a useful resource in
ongoing cartel offence investigations, in those cases where cartel
communications are predominately made over telecommunications
systems including in relation to the implementation phase.[24]
The amendment broadens the considerable investigatory powers
already available to the ACCC under Part XID of the TPA.
Telecommunication intercepts record all communications through a
relevant line. They record private personal communications, many of
which involve individuals who are not involved in any criminal
activity. This means that the benefits of gathering information in
this way must be weighed against the potential breach of privacy of
those individuals.[25]
The provisions of the TPA which effect joint ventures are as
follows:
- a joint venture can take one of two forms:
- unincorporated ventures between two or more persons, whether
corporations or not, carrying on activities in trade or commerce :
paragraph 4J(a)(i) or
- incorporated ventures carried on by two or more parties for a
joint purpose with joint control or ownership: paragraph
4J(a)(ii).
- section 45A broadly provides that price fixing arrangements are
illegal per se. It states that a provision of a contract,
arrangement or understanding[26] (CAU) will be regarded as a price fixing
provision if it has the purpose or likely effect of either:
- fixing, controlling or maintaining the price of goods or
services or providing for that to occur or
-
- fixing, controlling or maintaining any discount, allowance,
rebate or credit in relation to goods or services or providing for
that to occur.
- section 76D provides a defence to the prohibition against price
fixing in section 45A if it can be established that the provision
of the contract, arrangement or understanding:
- is for the purposes of a joint venture and
- does not have the purpose, and does not have and is not likely
to have the effect, of substantially lessening competition.
The Bill contains amendments which will significantly alter the
current position regarding joint ventures. Item 21
of the Bill repeals section 45A. Item 29 of the
Bill repeals section 76D.
The Bill inserts proposed sections 44ZZRO and
44ZZRP which provide that the criminal offences and the
civil penalty provisions respectively do not apply where a
contract (but not an understanding or arrangement)
containing a cartel provision is for the purposes of a joint
venture and:
- the joint venture is for the production and/or supply of goods
or services and
- for a joint venture under paragraph 4J(a)(i), the joint venture
is carried on jointly by the parties to the contract or
- for a joint venture under paragraph 4J(a)(ii), the joint
venture is carried on by a body corporate formed by the parties to
the contract for the purpose of enabling those persons to carry on
the activity jointly.
Law Council of Australia[27] has outlined some of its concerns about the
amendments as follows:
- the Bill limits joint venture exceptions to contracts rather
than CAUs so that operational decisions by joint venturers, which
are not enshrined in a contract, fall within the definition of a
cartel provision [28]
- proposed sections 44ZZRO and 44ZZRP only apply to joint
ventures for the production and/or supply of goods or services.
This definition is contrary to the wider definition of joint
venture in section 4J which does not limit the activity of the
joint venture beyond being for trade or commerce [29]
- the inclusion of section 44ZZRP is unnecessary; and preferably
the civil liability for cartel activity should be subject to the
existing civil provisions under section 4J and 76C[30]
- the joint venture exceptions in proposed paragraphs
44ZZRO(1)(c) and 44ZZRP(1)(c) may not benefit third parties which
enter into a contract with unincorporated joint venture parties to
acquire output produced by the joint venture.[31]
There has been some suggestion that the proposed amendments will
undermine the pro-competitive effects and benefits of joint venture
arrangements .[32]
However the following comments are worthy of note:
The law regards each marketplace competitor as
being responsible for its own pricing decisions. The result of each
competitor making its own decision will deliver, so economic
competition theory runs, the best market outcome. This is because
each competitor will seek to maximise its profit and make such
decisions as are necessary to achieve this end. Conduct which
complies with this concept is not illegal. It is when competitors
seek to subvert this concept by making arrangements between
themselves on agreed outcomes that the law steps in.[33]
Whilst the defence against price-fixing by joint venturers will
be repealed by the Bill,[34] section 88 of the TPA empowers the ACCC to authorise
corporations to enter into, or give effect to CAUs even if they are
anticompetitive, or engage in exclusive dealing conduct.
Item 64 of the Bill inserts proposed subsection
88(1A) which empowers the ACCC to authorise corporations to make a
CAU which contains a cartel provision or give effect to a provision
of a CAU which contains a cartel provision. Whilst that
authorisation is in force, none of the parties to the CAU will be
in breach of the cartel provisions.
Under the Bill it will fall to a joint venture to obtain an
authorisation from the ACCC before entering into the relevant
contract, rather than, after the event, proving that there is a
defence to the conduct in court proceedings. Given the secretive
nature of price fixing this would appear to be an intended outcome
of the Bill.
A quick guide to the
criminal cartel provisions
Below is a simplified guide to the criminal cartel provisions
which should be read in conjunction with the Main Provisions
below.
|
1. The
criminal cartel provisions only relate to conduct which is
described as price fixing; restricting outputs in the production or
supply chain; allocating customers, suppliers or territories or
bid-rigging.[35]
2. Any
other anti-competitive conduct which is already regulated by the
TPA is not intended to be caught by the new provisions.
3. Even if
a provision of a CAU relates to the above conduct it will not be a
cartel provision unless it also satisfies the purpose/effect
condition or the purpose condition
and the competition condition .[36]
4. There
are two criminal offences the making of a CAU which contains a
cartel provision[37] and the giving effect to a cartel provision contained
in a CAU[38] these
are the physical elements of the criminal
offence.
5. A person
will not be guilty of a criminal offence unless they
also satisfy the fault element
that is, knowledge or belief that the relevant provision of a CAU
was a cartel provision .[39]
6. Criminal
liability applies to both corporations and natural persons.[40]
7. If a
corporation is found guilty the Court may impose a financial
penalty.[41]
Obviously a corporation cannot be sent to jail.
8. If a
natural person (and this includes a director or officer of a
corporation) is found guilty they may be sentenced to a jail term
of up to 10 years and/or be required to pay a financial
penalty.[42] It is
for the Court to decide the extent of the sentence depending on a
number of factors such as the period of time over which the cartel
conduct occurred, the amount of money involved and any mitigating
factors.
9. The
Courts are not obliged to impose a custodial sentence, and a
sentence of less than 12 months may be converted to a fine.[43]
10.
The criminal offences created by the Bill are indictable
offences.[44] They
will be determined in a jury trial.[45] The standard of proof is beyond a
reasonable doubt .
|
Below is a simplified guide to the civil penalty provisions
which should be read in conjunction with the Main Provisions
below.
|
1. The civil
penalty provisions only relate to conduct which is described as
price fixing; restricting outputs in the production or supply
chain; allocating customers, suppliers or territories or
bid-rigging.[46]
2. Any
other anti-competitive conduct which is already regulated by the
TPA is not intended to be caught by the new provisions.
3. Even if
a provision of a CAU relates to the above conduct it will not be a
cartel provision unless it also satisfies the purpose/effect
condition or the purpose condition
and the competition condition .[47]
4. There
are two civil offences the making of a CAU which contains a cartel
provision[48] and
the giving effect to a cartel provision contained in a CAU.[49]
5. A
corporation or a natural person (including an officer of a
corporation) may be guilty of a civil offence and be required to
pay a financial penalty.
6. The
financial penalties are set out in the Bill.[50]
7. The
standard of proof for civil offences is on the balance of
probabilities .
|
Section 18 of the Proceeds of Crime Act 2002 (PCA)
provides that where persons are suspected
of serious offences , any of their assets/property which are
possibly connected with the offences can be frozen (restrained) by
court order. This allows law enforcement agencies to investigate
the alleged offences whilst minimising the possibility of evidence
and assets being disposed of due to the suspects being alerted to
the investigation.[51]
Where persons are subsequently
convicted of serious offences , Part 2-3
of the PCA provides for the forfeiture of assets/property to the
Commonwealth.
Section 338 of the PCA contains the dictionary of terms which
are used in that Act. In particular, the dictionary contains the
definition of the term serious offence . Item 1 of
Schedule 1 of the Bill inserts proposed paragraph
(ed) which will expand the existing definition so that
making a contract containing a cartel provision or giving effect to
a cartel provision will be classified as a serious offence .
The effect of this amendment will be that
suspected cartel behaviour will be caught
by the terms of section 18 of the PCA. This means that, subject to
certain procedural requirements, an order can be issued to restrain
the disposing of, or dealing with, assets/ property.
The TIAA prohibits the interception of a communication passing
over a telecommunications system except in specified circumstances.
One of those exceptions is that the interception is pursuant to a
warrant: subsection 7(2)(b).
Warrants may be obtained in relation to:
- a particular identified telecommunications service this is
known as a telecommunications service warrant ,[52] or
- any telecommunication service that is used or likely to be used
by a named individual this is known as a named person warrant
.[53]
An application for an interception warrant can include a request
that the warrant authorise entry on to specified premises.[54]
Interception warrants can be issued to aid the investigation of
serious offences . Item 2 of Schedule 1 of the
Bill proposes to amend the TIAA to include cartel offences in the
existing definition of serious offences .
Item 3 of Schedule 1 of the
Bill proposes to insert a new definition of cartel
provision as set out in proposed section
44ZZRD into existing subsection 4(1) of the TPA.
Existing subsection 5(1) of the TPA confers limited
extraterritorial operation by applying Parts IV (Restrictive Trade
Practices), IVA (Unconscionable Conduct), V (Consumer Protection),
VB (Price Exploitation in Relation to the New Tax System) and VC
(Offences) of the TPA to conduct outside Australia. It applies
where the party engaging in the conduct is an Australian citizen, a
person ordinarily resident in Australia, an Australian incorporated
entity or a body corporate carrying on a business in Australia. The
reference to a body corporate carrying on a business in Australia
gives the provision a broad scope so that an overseas corporation
which carries on business in Australia through a branch is
included. Item 4 repeals the existing subsection
5(1) and substitutes proposed subsection 5(1)
which expands the extraterritorial operation of the TPA to include
any other provisions in the TPA to the extent to which they relate
to those parts. This means that the criminal cartel provisions will
operate extraterritorially in the circumstances outlined above.
Existing subsection 5(4) provides that, where an application to
the Court is proposed under subsections 87(1) or 87(1A) relating to
conduct outside Australia, the consent of the Minister[55] or the
Commission[56] is
required before proceedings are instituted. Item 5
amends subsection 5(4) so that the required consent may also be
given by the Director of Public Prosecutions. This is consistent
with the MOU between the ACCC and the DPP.
The TPA is based primarily on the corporations power in section
51(xx) of the Commonwealth of Australia Constitution Act
(the Constitution). Existing subsection 6(2) provides an
alternative based on the trade and commerce power (section 51(i) of
the Constitution) and the territories power (section 122 of the
Constitution) in case the corporations power is held to be
insufficient for the purpose.[57] Items 6 13 are consequential
amendments to subsection 6(2) of the TPA.
Item 14 inserts proposed subsections
6(2C) (2E) which are machinery provisions intended to
ensure the constitutional validity of the cartel provisions using
the corporations power, the territories power and the postal,
telegraphic, telephonic power (section 51(v) of the
Constitution).
Item 17 inserts proposed subsections
6(5A) and 6(5B). Importantly proposed subsection
6(5B) provides that if a person, other than a body
corporate is convicted of a criminal cartel offence, the offence is
punishable by a term of imprisonment not exceeding 10 years or a
fine not exceeding 2 000 penalty units or
both.[58]
Item 19 inserts a new Division 1 in Part IV of
the TPA and contains proposed sections 44ZZRA
44ZZRV.
It should be stated at the outset that item 41
of the Bill proposes to repeal existing subsection 84(1) of the TPA
and insert proposed subsection 84(1). The effect
of the amendment is that where it is necessary to establish the
state of mind of a body corporate in a prosecution or proceedings
relating to a cartel provision then it is sufficient to show
that:
- a director, employee or agent of the body corporate engaged in
that conduct and
- the director, employee or agent was, in engaging in that
conduct, acting within the scope of their actual or apparent
authority and
- the director, employee or agent had that state of mind.
That being the case, a reference to a corporation in the Bill
will also apply to the directors, employees or agents of the
corporation.
Proposed section 44ZZRB contains those
definitions that are relevant to Division 1 of Part IV of the TPA.
It should be noted that proposed section 44ZZRE
provides that those definitions are to be disregarded in
determining the meaning of an expression used in a provision of the
TPA other than:
- Division 1 of Part IV (the cartel provisions inserted by
item 19 of this Bill)
- subsection 6(2C) (inserted by item 14 of this
Bill)
- paragraph 76(1A)(aa) (inserted by item 23 of
this Bill) or
- subsection 93AB(1A) (inserted by item 71 of
this Bill).
Proposed section 44ZZRD creates the
cartel provisions . Under
proposed subsection 44ZZRD(1) a provision of a CAU
is a cartel provision if two criteria are satisfied, being:
- it must meet the purpose/effect condition in proposed
subsection 44ZZRD(2) or the purpose condition in
proposed subsection 44ZZRD(3) and
- it must meet the competition condition set out in
proposed subsection 44ZZRD(4).
Proposed subsection 44ZZRD(2) is aimed at
price fixing conduct. It provides that
the purpose/effect condition is satisfied if the provision (of the
CAU) has the purpose, or has or is
likely[59] to have
the effect, of directly or indirectly
fixing, controlling or maintaining or providing for the fixing,
controlling or maintaining of the price for, or a discount,
allowance, rebate or credit in relation to goods or services which
are:
- supplied or acquired by any or all of the parties to the CAU:
proposed paragraphs 44ZZRD(2)(c) and (d)
- resupplied, or likely to be resupplied, where the goods and
services were originally supplied by any or all of the parties to
the CAU: proposed paragraph 44ZZRD(2)(e)
- likely to be resupplied where the goods and services were
originally likely to be supplied by any or all of the parties to
the CAU: proposed paragraph 44ZZRD(2)(f).
A CAU will not be taken to satisfy the purpose test merely
because it recommends or provides for the recommending of a price,
discount, allowance, rebate or credit: proposed subsection
44ZZRD(6).
Proposed subsection 44ZZRD(3) is aimed at
output restrictions, market sharing or bid
rigging activity. It provides that the purpose
condition is satisfied if the provision (in the contract,
arrangement or understanding) has the purpose of directly or
indirectly:
- preventing, restricting or limiting the production of goods,
the capacity to supply services or the supply of goods and
services: proposed paragraph 44ZZRD(3)(a)
- allocating between the parties to the CAU:
- the persons who have acquired (or are likely to acquire) or
supplied (or are likely to supply) goods or services from the
parties to the CAU: proposed subparagraphs 44ZZRD(3)(b)(i)
and (ii)
- geographical areas in which goods or services are supplied (or
likely to be supplied) or acquired (or likely to be acquired) to
the parties of the CAU: proposed subparagraphs
44ZZRD(3)(b)(iii) and (iv)
- ensuring that in the event of a request for bids in relation to
the supply or acquisition or goods or services:
- one or more parties to the CAU does bid, whilst one or more of
the other parties to the CAU does not: proposed
subparagraph 44ZZRD(3)(c)(i)
- separate bids by two or more parties to the CAU are made on the
basis that one is more likely to be more successful than the other:
proposed subparagraph 44ZZRD(3)(c)(ii)
- separate bids by two or more parties to the CAU are made on the
basis but not all the bids are proceeded with: proposed
subparagraph 44ZZRD(3)(c)(iii)
- separate bids by two or more parties to the CAU are made but a
material component of the bid is worked out in accordance with the
CAU: proposed subparagraph 44ZZRD(3)(c)(v).
Under proposed subsection
44ZZRD(7), in determining whether a CAU meets the
purpose/effect test or the purpose test , it is immaterial whether
the supply, acquisition or production contemplated by the CAU
happens or the capacity contemplated by the CAU actually
exists.
An aggregation principle[60] applies to demonstrate that a provision of a CAU
meets the purpose/effect test: proposed subsection
44ZZRD(8). This means that a provision may be aggregated
with other provisions of a CAU, or with provisions of another CAU
if there is at least one common party to both of the CAUs in
question. A provision in similar terms relates to the purpose test:
proposed subsection 44ZZRD(9).
Proposed subsection 44ZZRD(4) provides that the
competition condition[61] is satisfied if at least two of the
parties to the CAU are, or are likely to
be, in competition with each other in relation to the circumstances
listed in proposed paragraphs 44ZZRD(4)(c)
(j).
Proposed section 44ZZRC contains an extended
meaning of the term party . Under the
proposed provision if a body corporate is a party to a CAU then
each body corporate related to that body
corporate is taken to be a party to the CAU. According to the
submission by Blake Dawson the proposed definition has the
potential to significantly expand the scope of persons that could
be liable for contraventions of the cartel prohibitions .[62]
Proposed section 44ZZRF provides for the
first of the two criminal offences that a corporation
commits a criminal offence if it makes a CAU that contains a cartel
provision.
The Note to proposed subsection 44ZZRF(1)
states that Chapter 2 of the Criminal Code sets out the general
principles of criminal responsibility. The Explanatory Memorandum
explains those general principles as follows:
Subsection 3.1 of the Criminal Code provides
that a criminal offence consists of physical
elements and fault
elements.
In relation to the physical elements,
subsection 4.1(1) of the Criminal Code provides that a physical
element of an offence may be conduct, or a result of conduct, or a
circumstance in which conduct, or a result of conduct, occurs
In relation to the fault elements, subsection
5.1(1) of the Criminal Code provides that a fault element for a
physical element may be intention, knowledge, recklessness or
negligence... [63]
In the case of proposed subsection 44ZZRF(1)
the physical element that is, the requisite conduct is the making
of the CAU which contains the cartel provision. The fault element
is knowledge or belief: proposed subsection
44ZZRF(2). According to section 5.3 of the Criminal Code a
person has knowledge of a circumstance or
a result if he or she is aware that it exists or will exist in the
ordinary course of events.
Proposed subsection 44ZZRF(3) provides the
penalties on conviction for the offence as a fine not exceeding the
greater of the following:
- $10 000 000
- three times the total value of benefits that have been obtained
by one or more persons that are reasonably attributable to the
commission of the offence, where the court can determine them
- if the court cannot determine the total value of the benefits
above, then 10 percent 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.
Proposed subsection 44ZZRF(4) provides that it
is an indictable offence.[64] Under section 80 of the Constitution, the trial is by
jury.
Proposed section 44ZZRG provides for the
second of the two criminal offences that a corporation
commits a criminal offence if a CAU contains a cartel provision and
the corporation gives effect to the cartel provision. The fault
element and penalty are the same as for the first criminal office:
proposed subsections 44ZZRG(2) and (3). As with
the first criminal offence, the second is also an indictable
offence: proposed subsection 44ZZRG(5).
Proposed subsection 44ZZRG(4) provides that the
criminal offence provision applies to contracts and arrangements
made, and understandings arrived at, before, at or after the
commencement of the section. Whilst this would seem at first glance
to have retrospective application, that is not the case. The
physical element of this offence is giving effect to the cartel
provision in a CAU, rather than the making of a CAU which contains
a cartel provision.
Under proposed paragraph 44ZZRH(1)(a) a
corporation may be found guilty of an offence
against proposed sections 44ZZRF or 44ZZRG even if each other party
to the CAU is a person who is not criminally responsible.[65] A corporation cannot
be found guilty of an offence against proposed sections 44ZZRF or
44ZZRG where all the other parties to the CAU have been acquitted
of the offence, and a finding of guilt would be inconsistent with
their acquittal: proposed subsection
44ZZRH(2).
It should be noted here that existing paragraph 78(a) of the TPA
provides that criminal proceedings do not lie against a person by
reason only that the person has contravened any of the provisions
of Part IV. Item 30 amends that provision to
specifically remove the criminal cartel provisions from that
protection. For further information about enforcement see items
22-62.
The physical elements which constitute a
criminal offence are the same as those which constitute a civil
contravention, that is, the making of the CAU which contains the
cartel provision or the giving effect to a provision of a CAU which
contains the cartel provision. The significant difference between
the criminal and the civil offences is that there is no requirement
for a fault element in the civil offence. This
means that issues of knowledge and belief are irrelevant in the
civil penalty provisions.
Proposed section 44ZZRJ provides for the
first of two civil penalty provisions that a corporation
contravenes the section if it makes a CAU which contains a cartel
provision.
Proposed section 44ZZRK provides for the
second of the two civil penalty provisions that a
corporation contravenes the section if it gives effect to a cartel
provision which is contained in a CAU. The second civil penalty
provision applies to contracts or arrangements made, or
understandings arrived at, before at or after the commencement of
the section: proposed subsection 44ZZRK(2).
Proposed sections 44ZZRL 44ZZRP set out the
circumstances in which the criminal offences and/or the civil
penalty provisions do not apply.
Proposed section 44ZZRL provides that neither
the criminal offences nor the civil penalty provisions apply where
a corporation has given the Australian Competition and Consumer
Commission (ACCC) a collective bargaining notice under subsection
93AB(1A).
Proposed section 44ZZRM provides that neither
the criminal offences nor the civil penalty provisions apply where
the corporation has applied for authorisation from the ACCC within
14 days of making a CAU which contains a cartel provision, and that
provision will not come into force unless and until authorisation
is given.
Under proposed section 44ZZRN neither the
criminal offences nor the civil penalty provisions apply if the CAU
which contains the cartel provision is made between two related
bodies corporate.
Proposed subsection 44ZZRO(1) provides that the
criminal offences do not apply where a contract containing a cartel
provision is for the purposes of a joint venture and:
- the joint venture is for the production and/or supply of goods
or services: proposed paragraph 44ZZRO(1)(b)
and
- the joint venture is carried on jointly by two or more persons,
whether or not in partnership: proposed paragraph
44ZZRO(1)(c) or
- the joint venture is carried on by a body corporate formed by
the parties to the contract for the purpose of enabling those
persons to carry on that activity jointly by means of their joint
control, or by means of their ownership of shares in the capital,
of that body corporate: proposed paragraph
44ZZRO(1)(d).
Proposed subsection 44ZZRP(1) provides that the
civil penalty provisions do not apply where a contract containing a
cartel provision is for the purposes of a joint venture under the
same terms as those set out in proposed subsection
44ZZRO(1).
For the exceptions in proposed sections 44ZZRL
44ZZRO, the defendant bears the evidential burden of
proof. This is in accordance with subsection 13.3(3) of the
Criminal Code.
Currently Part IV of the TPA allows that some conduct is not to
be subject to the per se prohibitions.[66] The High Court in Visy Paper
Pty Ltd v Australian Competition and Consumer Commission had
this to say about the overlapping of provisions in Part IV of the
TPA:
The detailed scheme of regulation of restraints
on trade appearing in the TPA has the consequence that a variety of
arrangements, occurring in different commercial contexts, must be
tested against the criteria in the several sections of that Act. It
follows that an arrangement may fall within the scope of more than
one section of the TPA. The question of which section applies to an
arrangement may be determinative of whether or not the arrangement
constitutes a violation of the TPA, as different sections impose
different legal consequences. That there would exist such overlap
was recognised by the Parliament in enacting the TPA: for example,
subsection 45(6) has the purpose of ensuring the proper allocation
of regulatory responsibilities for a given arrangement that may
fall within the scope of sections 45 and 47 of the TPA
it should be recognised that the different
sections in Part IV of the TPA are not intended to work in a
mechanical or artificial way. The scheme adopted in Part IV
therefore should be interpreted and applied in a manner that allows
the provisions to work together so as to give effect to the
identified legislative policies.[67]
Currently anti-overlap provisions operate in relation to the
following:
- covenants under section 45B
- resale price maintenance under section 48
- exclusive dealing under section 47
- dual listed companies under section 49 and
- acquisition of shares in the capital of a body corporate or the
assets of a person under section 50.
The role of anti-overlap provisions is to make it clear which
section is relevant to a particular arrangement.
Proposed sections 44ZZRQ 44ZZRV preserve these
anti-overlap provisions.
Proposed section 44ZZRQ is about
covenants affecting competition.
Covenant is defined in section 4 of the
TPA as being annexed to or running with an estate or interest in
land .
Existing subsection 45B(1) applies to covenants in real estate
transactions. In essence, it provides that a covenant is
unenforceable if the covenant has the effect of substantially
lessening competition in any market in which a corporation would,
but for the covenant, supply or acquire goods or services. Existing
subsection 45B(9) provides for three exceptions to this rule.
Proposed section 44ZZRQ preserves these
exceptions by quarantining those covenants to which subsection
45B(9) applies from the application of the cartel criminal offences
or civil penalty provisions.
Proposed section 44ZZRR is about resale price
maintenance which is described in existing sections 96 and 96A of
the TPA as including the following conduct by a supplier:
- attempting to induce a person not to sell the supplier s
products or services at less than a price specified by the
supplier
- making it known to a person that the supplier will not supply
him or her unless that person agrees not to sell below the supplier
s specified price or
- entering into an agreement for the supply of goods or services
containing a provision that the purchaser will not sell below the
supplier s specified price.
Section 48 provides that a corporation or person is not to
engage in resale price maintenance. However under
subsection 88(8A) of the TPA, the ACCC may authorise resale
price maintenance, upon application by the corporation or person.
While the authorisation remains in force, section 48 does not
prevent the person from engaging in that conduct in accordance with
the authorisation. Proposed section 44ZZRR
preserves this exception.
Proposed section 44ZZRS is about exclusive
dealing. Subsection 47(1) of the TPA prohibits a corporation
from engaging in the practice of exclusive dealing. Some examples
of exclusive dealing are:
- supplying goods or services on condition that the purchaser
does not acquire goods or services from a competitor of the
supplier: existing subsection 47(2)
- supplying goods or services on condition that the purchaser
acquires other goods or services from a third party: existing
subsection 47(6)
- acquiring goods or services on condition that the supplier
accepts some restriction as to the freedom to supply third parties:
existing subsection 47(4)
- refusing to supply goods or services because the purchaser has
dealt or refused to cease dealing in a competitor s products:
existing subsection 47(3)
- refusing to acquire goods or services because the supplier
refuses to accept some restriction on the right to supply third
parties: existing subsection 47(5).
Proposed subsection 44ZZRS(1) provides that the
criminal cartel offence in proposed section 44ZZRF and the civil
penalty provision in proposed section 44ZZRJ do not apply to the
making of a CAU which contains a cartel provision where that cartel
provision would otherwise be a breach of the exclusive dealing
prohibition in section 47. This is because the following exceptions
continue to operate:
- subsection 47(10) provides an exception from the
prohibition where engaging in the conduct did not have the purpose,
effect or likely effect of substantially lessening competition
- subsection 88(8) provides that the ACCC may authorise exclusive
dealing, upon application by the corporation or person, and
- subsection 93(1) of the TPA provides that a corporation may
notify the ACCC of conduct amounting to exclusive dealing.
Similarly, proposed subsection 44ZZRS(2)
provides that the criminal cartel offence in proposed section
44ZZRG and the civil penalty provision in proposed section 44ZZRK
do not apply in relation to giving effect to a CAU which contains a
cartel provision where that cartel provision would otherwise be a
breach of the exclusive dealing prohibition in section 47.
Proposed section 44ZZRT is about dual listed
companies. The term dual listed company
arrangement has, according to section 4 of the TPA,
the same meaning in that Act as in section 125-60 of the Income
Tax Assessment Act 1997. It is an arrangement under
which two publicly listed companies, while maintaining their
separate legal entity status, shareholdings and listings, align
their strategic directions and the economic interests of their
respective shareholders.
Subsection 49(1) of the TPA provides that a corporation must not
make a dual listed company arrangement if the arrangement has the
purpose, or would have or be likely to have the effect, of
substantially lessening competition. However under
subsection 88(8B) of the TPA, the ACCC may authorise a dual
listed company arrangement upon application by the corporation or
person. While the authorisation remains in force, section 49 does
not prevent the person from engaging in that conduct in accordance
with the authorisation. Proposed section 44ZZRT
preserves this exception.
Proposed section 44ZZRU is about the
acquisition of shares or assets. Existing section 50 prohibits the
acquisition by a corporation of either shares in a body corporate
or assets of a natural person if the acquisition has the likely
effect of substantially lessening competition in a market. However,
under section 95AT of the TPA, the Australian Competition
Tribunal may authorise a merger, upon application. While the
authorisation remains in force, section 50 does not prevent the
acquisition of shares or assets. Proposed section
44ZZRU preserves this exception.
Subsection 45A(1) deems price fixing CAUs to have the
purpose, effect or likely effect of substantially lessening
competition. Existing subsection 45A(4) of the TPA provides that
existing subsection 45A(1) does not apply to a provision of a CAU
in relation to the price for goods or services to be collectively
acquired, or for the joint advertising of the price for the
re-supply of goods or services collectively acquired.
Proposed section 44ZZRV provides for exceptions to
the cartel criminal offences and civil penalty prohibitions to
reflect the existing exemption in current subsection 45A(4) of the
TPA. This is because existing section 45A is deleted by
item 21 of this Bill.
Where a defendant wishes to rely on the anti-overlap provisions
in proposed sections 44ZZRQ 44ZZRV, they bear the
evidential burden of proof in accordance with subsection 13.3(3) of
the Criminal Code.
Items 22 62 of the Bill make amendments to
various sections of Part VI of the TPA.
Existing section 76 of the TPA sets out the manner for
determining the maximum pecuniary penalty for a body corporate
found to have breached certain provisions of the TPA. Item
23 inserts proposed paragraph 76(1A)(aa)
which provides for the penalty payable by a body corporate for a
breach of the civil cartel prohibitions. The penalty is the greater
of the following:
- $10 000 000
- three times the total value of benefits that have been obtained
by one or more persons and are reasonably attributable to the
commission of the offence, where the court can determine them
- if the court cannot determine the total value of the benefits
above, then 10 percent of the body corporate s annual turnover
during the 12 month period (known as the turnover
period) ending at the end of the month in which the
body corporate committed, or began committing, the offence.
This is similar to, but not exactly the same as, the penalty
payable for all other breaches of Part IV of the TPA.
Existing subsection 76(3) of the TPA requires that where
proceedings are instituted against a person for breaches of more
than one provision of Part IV, a court cannot impose more than one
penalty in respect of the same conduct. Item 24
amends the subsection to remove the criminal cartel provisions from
this requirement. Item 25 amends existing
subsection 76(4) of the TPA so that where two or more of the limits
set out in paragraphs 76(1A)(aa), (a) and (b) apply, then the
penalty payable is an amount up to the highest of those limits.
Item 29 repeals existing section 76D which
provides defences to price fixing provisions. This is a
consequential amendment because the defences refer to section 45A
which is also repealed.
Items 31 36 amend existing section 79 to
include offences against the criminal cartel provisions. In
particular, item 31 inserts proposed
paragraph 79(1)(aa) which provides that a person who
attempts to contravene one of the criminal cartel provisions is
taken to have contravened that provision.[68]
Item 33 inserts proposed paragraphs
79(1)(e) and (f) which provide that where there has been a
contravention of the cartel offence provision by a person who is
not a body corporate, it is punishable by a term of imprisonment
not exceeding 10 years or a fine not exceeding 2 000 penalty units
or both.[69]
Item 39 inserts proposed subsection 80(9) to
allow the Director Public Prosecutions to make application to the
Court for the grant of an injunction in relation to a contravention
of the criminal cartel provisions. This is consistent with the
terms of the MOU between the ACCC and the DPP.
Items 41 48 make amendments to existing section
84 which is about conduct by directors, servants and agents. In
particular, item 41 amends subsection 84(1) by
inserting references to the cartel offences and civil penalty
provisions, so that the state of mind of directors, employees or
agents of a corporation can be imputed to the corporation in
proceedings related to a cartel offence or a cartel civil penalty
provision. Similarly, item 43 inserts into
subsection 84(3) references to the cartel offences and civil
penalty provisions, so that the state of mind of an employee or
agent of a person other than a body corporate can be imputed to
that person in proceedings related to a cartel offence or a cartel
civil penalty provision.
Items 49 51 amend section 86 of the TPA which
is about the jurisdiction of courts. Item 50
inserts proposed subsections 86(3A) and (3B) to
confer on the Supreme Court of a State and the Supreme Court of a
Territory (subject to the Constitution) jurisdiction in relation to
any matter in a civil proceeding under proposed section 44ZZRI.
Item 51 inserts proposed paragraphs
86(4)(ba) and (bb) which operate so that the jurisdiction
conferred by item 50 is an exception to the general principle that
the Federal Court has exclusive jurisdiction in relation to all
other trade practices matters.
Items 52 57 make amendments to sections 86C 86E
of the TPA to allow the Director of Public Prosecutions to make
applications for a range of orders in relation to a person who has
contravened the criminal cartel provisions. Under the existing
provisions of the TPA, only the ACCC can make such applications.
This is consistent with the MOU between the ACCC and the
DPP.[70]
Items 64 85 make amendments to Part VII of the
TPA which relates to authorisations, notifications and clearances
in respect of restrictive trade practices.
Section 88 of the TPA empowers the ACCC to grant immunities,
called authorisations in relation to certain of the competition
provisions of the TPA. The ACCC may authorise corporations to enter
into, or give effect to CAUs even if they are anticompetitive, or
engage in exclusive dealing conduct. Item 64
inserts proposed subsection 88(1A) which empowers
the ACCC to authorise corporations to make a CAU which contains a
cartel provision or give effect to a provision of a CAU which
contains a cartel provision. Whilst that authorisation is in force,
none of the parties to the CAU will be in breach of the cartel
provisions. Item 65 amends subsection 88(10) to
extend the immunity to include a person who becomes a party to the
CAU after it is made.
Item 66 inserts proposed subsections
90(5A) and 90(5B). These subsections provide that the ACCC
must not grant authorisation under proposed
subsection 88(1A) in respect of a CAU unless all of the following
are satisfied:
- that the provision of the CAU would result, has resulted, or is
likely to result in a benefit to the public and
- that the benefit would outweigh or does outweigh the detriment
to the public constituted by any lessening of competition that
would result from the CAU.
Items 86 and 87 amend subsections 101(1A) and
101(2) respectively. The effect of these amendments is to make a
decision by the ACCC not to grant an authorisation, a decision
which is reviewable by the Australian Competition Tribunal.
Items 70 84 make amendments to Subdivision B of
Division 2 of Part VII which is about collective bargaining.
According to the ACCC:
Collective bargaining is an arrangement under
which two or more competitors in an industry come together to
negotiate terms and conditions (which can include price) with a
supplier or a customer.[71]
Under section 93AB of the TPA, a corporation may lodge a
collective bargaining notice with the ACCC, where the corporation
has made, or proposes to make, a contract that contains an
exclusionary provision, a price fixing provision, or a provision
that may substantially lessen competition.
In particular, item 71 inserts proposed
subsection 93AB(1A) which sets up a separate collective
bargaining framework for cartel activity. It allows a corporation
to give the ACCC a collective bargaining notice in the following
circumstances:
- the corporation has made, or proposes to make, a contract that
contains a cartel provision which has the purpose or effect of
price fixing, or intends to give effect to a provision of a
contract that contains a cartel provision which has that purpose or
effect
- the corporation has made, or proposes to make, a contract which
contains a cartel provision whose purpose includes output
restrictions or market sharing, or intends to give effect to a
provision of a contract which contains a cartel provision with that
purpose.
Existing section 93AF prevents a corporation from lodging
multiple collective bargaining notices in circumstances where the
ACCC has lodged an objection notice in relation to a specified
contract or proposed contract or where the collective bargaining
notice has been withdrawn. Items 82 and 83 insert
proposed section 93AEA and amend existing
paragraph 93AF(a) respectively. The effect of these two amendments
is to create two separate sections in similar terms, preventing the
lodgement of multiple collective bargaining notices, one in respect
of contracts containing a cartel provision, and the other in
respect of other contracts.
Items 86 102 amend various sections within Part
X of the TPA which relates to international shipping. According to
the Productivity Commission:
Part X provides exemptions for ocean carriers
providing liner cargo shipping services from key provisions of
Australia s regulation of restrictive trade practices. In
particular, it allows them to group together to coordinate the
provision of their shipping services to and from Australia through
a wide variety of formal agreements (conference
agreements). It also provides exemptions to
Australian exporters and importers (shippers) to negotiate
collectively with ocean carriers.
To receive the exemptions, carriers must
register their agreements. They must negotiate with designated peak
shipper bodies representing Australian exporters and importers over
minimum service levels to be provided on specific routes by the
agreement parties
While an agreement is in operation and when
requested by designated shipper bodies, carriers are required to
negotiate (but are not required to come to an agreement) on service
conditions, including freight rates.[72]
Items 86 102 contain consequential amendments
so that where a conference agreement is registered, the parties
will be given partial and conditional exemptions from the cartel
provisions.
Items 103 to 111 amend various sections within
Part XIB of the TPA which relates to the telecommunications
industry.
According to the Productivity Commission:
Part XIB of the TPA establishes an
anti-competitive conduct regime for telecommunications markets
additional to that applying generally to all markets under Part IV.
There are two central differences: Part XIB makes use of an
effect or likely effect test, whereas Part IV
uses a purpose test; Part XIB, but not Part IV, allows the
ACCC to issue competition notices to firms it alleges are engaged
in anti-competitive conduct. Such notices provide strong incentives
for firms to modify their conduct, even if those firms consider the
conduct is not anticompetitive [73]
And further:
There are also provisions for exemption orders
where the ACCC is satisfied that the resultant public benefit
outweighs any public detriment of lessened competition, or the
conduct will not breach the competition rule.[74]
Items 103 111 contain consequential amendments
to include references to the cartel provisions.
Existing subsection 157(1) of the TPA provides that, in matters
relating to authorisations or merger clearances the ACCC
must furnish to a corporation a copy of every
document that has been given to it, or obtained by it in connection
with the matter, and a copy of any other document in its possession
which has come to its attention in connection with the matter.
Where the ACCC does not comply with a request from a corporation
for production of these documents, the Court is empowered to make
an order directing the ACCC to comply with the request: existing
subsection 157(2).
Item 113 inserts proposed subsections
157(1A) and (1B) which allow the ACCC to refuse to comply
with a request from a corporation under subsection 157(1) for
protected cartel information [75] and the matters which the
ACCC must take into account in making that decision.
Item 116 inserts proposed sections 157B
D. In particular, proposed subsection
157B(1) provides that that the ACCC is not
required to produce to a court or tribunal a document
containing protected cartel information or to disclose protected
cartel information to a court or tribunal except with the leave of
the court or tribunal. Proposed subsection 157B(2)
provides that in exercising its powers to grant leave, the court or
tribunal must have regard to specified matters,
and no others.
However proposed subsection 157B(4) provides
that the ACCC may produce documents or disclose
protected cartel information to a court or tribunal.
Proposed subsection 157B(5) sets out the matters
which must be taken into account in exercising the
power to produce or disclose protected cartel information. In any
event, neither the document produced nor the information disclosed
may be adduced in any other proceedings unless it is, once again,
subject to a determination under either proposed
subsections 157B(1) or 157B(4).
The ACCC is not required to provide disclosure
of, or produce documents containing, protected cartel information
in the following circumstances:
- to a person who is a party to proceedings before a court where
the ACCC is not also a party to the proceedings: proposed
subsection 157C(1) and
- to a person who is considering instituting proceedings but has
not yet done so: proposed subsection 157C(2).
However the ACCC may provide disclosure of, or
produce documents containing, protected cartel information in the
circumstances above: proposed subsections 157C(3) and
(4). In exercising that power, the ACCC must have regard
to the matters in proposed subsection 157C(5).
A refusal of a court to grant leave under proposed
subsection 157B(1) does not prevent the court from later
ordering that:
- a criminal proceeding be stayed on the ground that the refusal
would have a substantial adverse effect on the person s right to
receive a fair trial: proposed subsection 157D(2)
or
- a civil proceeding be stayed on the ground that the refusal
would have a substantial adverse affect on the hearing:
proposed subsection 157D(3).
Proposed subsection 157D(4) sets out those
matters which the court must consider in deciding whether to stay
proceedings.
Items 117 121 apply to section 163 of the TPA
to confer jurisdiction on the Federal Court for cartel
offences.[76]
Current section 163A of the TPA confers jurisdiction on the
Federal Court to make declarations and certain orders. The
amendments to section 163A in items 122 and 123
ensure that if a prosecution relating to the criminal cartel
offences is commenced in the Supreme Court of a State or Territory,
then the Federal Court does not have jurisdiction to make those
declarations and orders in respect of the offence being
prosecuted.
On 11 April 1995 the governments of Australia entered an
agreement the
Competition Code Agreement under which the States and
Territories of Australia agreed to submit, to their respective
legislatures, legislation to implement the version of Part IV of
the TPA contained in the Schedule. The intention was to extend the
operation of the restrictive trade practices provisions of the TPA
to all sectors of the community through the enactment of
complementary State and Territory legislation.[77]
To this end, section 150C of the TPA provides that the
Competition Code consists of, amongst other things, a schedule
version of Part IV of the TPA.
The amendments in items 126 128 of the Bill are
in the same terms as the amendments in items 19 21
of the Bill except that they apply to natural persons rather than
to corporations. This is so that the schedule version of Part IV in
the Competition Code is in the same terms as Part IV of the
TPA.
Items 1 and 2 of Schedule 2 of the Bill amend
existing section 79A of the TPA to delete incorrect references to
section 18A of the Crimes Act 1914 which was renumbered as section
15A by the Crimes Legislation Amendment Act (No. 2)
1989.
Existing section 86E of the TPA provides that the ACCC may make
an application to the court for an order disqualifying a person
from managing corporations in circumstances where the Court is
satisfied that the person has contravened, or attempted to
contravene Part IV of the TPA and the Court is satisfied that the
disqualification is justified. Item 5 inserts
proposed section 86F which provides that a person
is not entitled to refuse or fail to comply with a requirement to
answer a question, give information, produce a document or any
other thing, in civil or criminal proceedings for a cartel offence,
on the ground that to do so would expose them to disqualification
under section 86E.
Items 7 42 contain amendments to Part XID of
the TPA which is divided into five areas being:
- the enforcement regime for finding out whether there has been a
contravention of this Act, Part 20 of the Telecommunications
Act 1997 or Part 9 of the Telecommunications (Consumer
Protection and Service Standards) Act 1999
- the appointment of inspectors and the issue of identity
cards
- entry to premises with the consent of the occupier of the
premises
- entry to premises under a search warrant issued by a magistrate
and
- some general provisions relating to the operation of electronic
equipment at premises.
Items 7 11 insert new definitions into Part
XID, namely:
- contravention
- data
- data held in a computer
- data storage device and
- executing officer which is an
expanded definition which will allow the substitution of the
inspector named in a search warrant for another inspector.
Item 13 repeals existing subsection 154F(1) and
inserts proposed subsection 154F(1). The
subsection provides that an inspector who has entered premises and
believes on reasonable grounds that data accessed by operating
electronic equipment at the premises might be evidential material
must do only one of two things which are set out
in subsections 154F(2) and 154F(3). Currently the relevant
provisions state that the inspector may do one of
two things.
Item 17 inserts proposed subsections
154G(1A) and (1B). Proposed subsection
154G(1A) will allow the officer executing the search
warrant to photograph or make a video recording of the premises, or
anything in the premises, which is the subject of a search warrant
as long as it is for a purpose incidental to the execution of the
warrant. Proposed subsection 154G(1B) will empower
an officer executing a search warrant to complete the execution of
the warrant after a temporary absence of not more than one hour, or
for a longer period if the occupier consents in writing.
Existing subsection 154G(2) allows that an executing officer,
who in the course of searching for the kind of evidential material
specified in the warrant, finds another thing that he or she
believes on reasonable grounds to be evidence of an indictable
offence against certain other listed statutes, may seize that other
thing. Item 18 amends existing paragraph
154G(2)(a) to amend the list of statutes to include certain
indictable offences under the Criminal Code.
Item 19 inserts proposed section
154GA into the TPA which provides that a thing found at
the premises that are the subject of a search warrant, may be moved
to another place for examination or processing, in order to
determine whether it may be seized under a search warrant.
Proposed paragraph 154G(1)(a) provides that this
will occur where it is significantly more practicable to do so
having regard to the timeliness and cost of examining or processing
the thing at another place and the availability of expert
assistance and that there are reasonable
grounds to believe that the thing contains evidential material.
Items 20 26 amend section 154H to clarify what
action an officer executing a search warrant can take if the
officer believes on reasonable grounds that any data accessed by
operating electronic equipment at the premises might constitute
evidential material of the kind specified in the warrant.
Item 32 inserts proposed section
154RA which provides that an officer executing a search
warrant may apply to a magistrate for an order requiring a
specified person to provide information or assistance to allow the
officer to access data held in a computer, transfer the data to a
disk, tape or other storage device or convert the data into
documentary form.
Item 35 amends existing subsections 154U(1) and
(2) so that the period of time in which the ACCC is able to hold
things seized under a search warrant has increased from 60 days to
120 days.
Items 43 47 amend subsection 155(7) of the TPA
to cancel out not only the privilege against self incrimination but
also the privilege against exposure to a penalty for individuals
who are required to provide information, produce information or
give evidence under existing subsection 155(1) of the TPA.
It is important to note that cartel conduct has both an economic
and moral dimension. From an economic perspective:
Cartel conduct and in particular price-fixing
and market sharing arrangements have traditionally been seen as not
only distorting competitive processes, but, more fundamentally,
have been viewed as being against the public interest by attempting
to deny consumers, or other acquirers of goods or services, choice
in terms of price and/or suppliers. In short, by ensuring that
suppliers charge the same price or not pursue one another s
customers, price-fixing and market sharing agreements tend to limit
or prevent customers from shopping around for the best price or
supplier. In the circumstances, customers are effectively dictated
the price at which they will purchase or the supplier with which
they are to deal.[78]
From a moral perspective:
Price fixing, market sharing and bid rigging
are not 'victimless crimes'. They are comparable to white collar
offences such as insider trading or fraud. There is no question
that the punishment must fit the crime, but in the worst cases of
collusion, imprisonment does precisely this It is a harmful,
malevolent act. Society no longer treats white collar crime as a
lesser evil. People are more inclined today to ask why white collar
offenders are not pursued and punished with as much vigour as less
sophisticated criminals?[79]
The amendments to the TPA in the Bill reflect both the economic
and moral dimensions of cartel conduct. It is clear that,
particularly in respect of price-fixing, the amendments will create
a significantly different regulatory regime than the one which
currently exists. That is their intention to dramatically alter the
mindset of those involved in trade and commerce so that there is an
expectation that cartel conduct will attract serious legal
consequences.
Copyright Commonwealth of Australia
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expressed do not reflect an official position of the Parliamentary
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Feedback is welcome
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[25]. Before
issuing the warrant, subsections 46(2) and 46A(2) of the
Telecommunications (Interception and Access) Act 1979
require that consideration of how much the privacy of any person
would be likely to be interfered with by the intercepting of
communications, the gravity of the conduct constituting the offence
being investigated, and how much the information gathered would be
likely to assist in connection with the investigation of the
offence.
[68]. This
amendment is consistent with section 11.1 of the Criminal Code
which provides that a person who attempts to commit an offence is
guilty of the offence of attempting to commit that offence and is
punishable as if the offence attempted had been committed.
Subsection 11.1(2) requires that, for the person to be guilty,
their conduct must be more than merely preparatory to the
commission of the offence.
Paula Pyburne
4 February 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted
by the Copyright Act 1968, no person may reproduce or transmit any
part of this work by any process without the prior written consent
of the Parliamentary Librarian. This requirement does not apply to
members of the Parliament of Australia acting in the course of
their official duties.
This work has been prepared to support the work of the Australian
Parliament using information available at the time of production.
The views expressed do not reflect an official position of the
Parliamentary Library, nor do they constitute professional legal
opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au. Any
concerns or complaints should be directed to the Parliamentary
Librarian. Parliamentary Library staff are available to discuss the
contents of publications with Senators and Members and their staff.
To access this service, clients may contact the author or the
Library’s Central Entry Point for referral.
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