Overview
Australia's core competition law provisions are contained in Part IV of the Competition and Consumer Act 2010 (CCA) (previously named the Trade Practices Act 1974 (Cth)). In addition, separate prohibitions have been created in relation to anti-competitive conduct in the telecommunications industry and a regime for access to essential facilities has been developed. .
Cartels
The prohibitions on cartel conduct are (since 24 July 2009) contained in Division 1 of Part IV of the Competition and Consumer Act 2010 (CCA).
Cartel conduct is prohibited civilly and it also constitutes a criminal offence. Cartel conduct is now defined in s 45AD (previously s 44ZZRD) as including four forms of activity:
price fixing (defined in the same way as the former s 45A)
market division
restricting outputs and
bid rigging.
This conduct is prohibited where made or given effect to in a 'contract, arrangement or understanding' and two or more of the parties involved are competitors (or would be but for the conduct). In relation to price fixing the provision must have the 'purpose or effect' of price fixing; in relation to the other forms of conduct the provision must have the requisite 'purpose'.
Criminal penalties of up to $420,000 per offence or up to 10 years imprisonment are available for individuals found to have committed a cartel offence. The civil penalties for making or giving effect to a cartel provision are the same as those currently available for other contraventions of Part IV.
A defence is available for joint venture contracts.
View cartel page.
See also cooperation and immunity policy page
Anti-competitive agreements and concerted practices
Section 45 of the Competition and Consumer Act 2010 (CCA) prohibits making or giving effect to contracts, arrangements or understandings containing a provision which has the purpose, effect or likely effect of substantially lessening competition. These arrangements will generally be horizontal in nature, but this is not a requirement of s 45 (and as a number of anti-competitive vertical arrangements are caught by other more specific provisions in Part IV, anti-overlap provisions will give those specific provisions priority over s 45).
As a result of the Harper Reforms concerted practices are now also prohibited where they substantially lessen competition.
The conduct of dual listed companies is now assessed under s 49 which prohibits parties making (or giving effect to) a dual listed company arrangement if a provision of the proposed arrangement would have the purpose, effect or likely effect of substantially lessening competition.
Misuse of market power
Section 46(1) prohibits a corporation with substantial market power from engaging in conduct having the purpose or effect of substantially lessening competition. This new 'effects' test commenced on 6 November 2017, replacing a purpose based test.
Exclusive dealing
Section 47 of the Competition and Consumer Act 2010 (CCA) prohibits various forms of exclusive dealing. Broadly, it captures two types of anti-competitive vertical transactions:
(1) the conditional supply (or acquisition) of goods or services (conditions may relate to the ability to re-supply, exclusivity, limits on ability to acquire from competitors etc)
(2) refusing to supply for specified reasons (eg, because purchaser refuses to agree to a conditional supply).
All forms of exclusive dealing are captured only if it can be demonstrated that they substantially lessen competition (s 47(10)) (until 6 November 2017) third line forcing was subject to per se liability.
Recognising potential benefits associated with exclusive dealing, a system of notification and authorisation is available. Authorisation may be provided on public benefit grounds. More commonly, parties will notify the ACCC of conduct that might fall within the various definitions of exclusive dealing and, while the notification stands, they will not be held in breach of s 47. The ACCC can only remove the notification if they consider the conduct substantially lessens competition and that there are no benefits to the public that would outweigh the anti-competitive detriment.
View exclusive dealing page.
Resale price maintenance
Section 48 of the CCA prohibits a corporation from engaging in the practice of resale price maintenance. Resale price maintenance is defined in Part VIII. It captures various forms of minimum RPM, both in relation to goods and services (including withholding supply as a result of failure to agree to or adhere to a RPM requirement).
Maximum RPM is not prohibited (even if it substantially lessens competition!) A person does not engage in RPM merely by providing a statement of recommended prices (s 97).
Mergers
In Australia mergers are prohibited if it can be demonstrated that they will have the effect or likely effect of substantially lessening competition in a market (section 50 CCA).
There are no mandatory pre or post-merger notification obligations, but parties generally seek 'informal' clearance from the ACCC.
The ACCC may also grant authorisation if satisfied the merger would not substantially lessen competition or the merger would result in a net public benefit.
Section 50A deals with mergers occurring outside Australia.
View mergers page
Authorisation and notification
Authorisation is available for all forms of conduct prohibited by Part IV of the CCA, save for misuse of market power. Authorisation is granted either where public benefit can be demonstrated to outweigh any anti-competitive detriment or where the public benefit is such that the conduct should be permitted (although different tests apply to different conduct, in practice they seem to apply in the same way).
As part of the Harper Reforms the authorisation test will change; it will be the same for all forms of conduct (including mergers) and will be available for misuse of market power. The test for granting authorisation (s 90(7)) will be whether the proposed conduct:
would not substantially lessen competition; or
would result in a public benefit likely to outweigh the detriment that would be likely to result from the conduct
However, the first limb (the no SLC option) does not apply for per se conduct (cartels, secondary boycotts and resale price maintenance) which still require demonstration of net public benefit (s 90(8)).
Notification is available for small business collective bargaining, exclusive dealing and resale price maintenance. Notification will become available for RPM as part of the Harper Reforms.
In 2017 the ACCC was also granted a class exemption powers as part of the Harper Reforms.
Access
The Competition Policy Reform Act 1995, following recommendations of the Hilmer Committee in 1993, introduced a formal system of access to essential facilities. This is provided for in Part IIIA of the CCA. Subsequently a separate system of access to telecommunications facilities was established.
View access page.
Institutions
Australian Competition and Consumer Commission (ACCC)
Although individuals may commence actions for damages and other remedies, the ACCC is the primary enforcer of Part IV of the CCA. If it believes there has been a contravention of the CCA it may commence proceedings for pecuniary penalties, injunctions, divestiture in the case of mergers and it may accept understandings (s 87B) designed to alleviate competition concerns. It has powers to obtain evidence pursuant to s 155 and, subject to obtaining a search warrant, has search and seizure powers to assist in its investigations.
The ACCC also provides a semi-judicial role, having the power to grant 'authorisation' of conduct that would otherwise contravene Part IV on competition or public benefit grounds (for non-per se conduct) or public benefit grounds (for per se prohibited conduct). An appeal from authorisation decisions is available to the Australian Competition Tribunal (ACT)).
The ACCC also has the power to revoke notifications made in respect of exclusive dealing or collective bargaining, again on public benefit grounds (appeal is available to the ACT).
The ACCC also has a role in relation to the access regime; in particular, it is involved in the arbitration of access disputes, the registration of access contracts and may assess and accept undertakings from providers of declared services.
More generally the ACCC has the function of disseminating information about the CCA, including the provision of guidelines, and has a research and reporting role.
Australian Competition Tribunal
The Tribunal’s main function is to hear appeals from decisions of the ACCC relating to authorisation and notification. There is also a review function in relation to the access regime.
Between 2007 and 2017 the Tribunal was responsible for reviewing merger authorisations applications. Since 6 November 2017 the ACCC has retained primary decision making power in relation to merger authorisations, with the possibility of appeal to the Tribunal.
The President and Deputy Presidents must be judges of the Federal Court and other members must be experienced in industry, commerce, economics or public administration.
Commonwealth Department of Public Prosecutions (CDPP)
The CDPP determines which matters it will prosecute as a 'cartel offence'. The ACCC makes recommendations to the CDPP about which matters it considers appropriate to pursue criminally and the CDPP will make a determination based on the MOU between the ACCC and CDPP and on the Prosecution Policy of the Commonwealth. The CDPP may also grant immunity from prosecution for whistle-blowers meeting set criteria.
National Competition Council (NCC)
The Council was established as a result of the Hilmer Reforms in 1995. It is composed of a President and three other members, having the primary roles of advising about competition law matters and making recommendations in relation to access declarations.
Federal Court of Australia
The Federal Court of Australia has primary jurisdiction in relation to competition law matters (to the exclusion of other courts). The Federal Court is also given exclusive jurisdictions under the state and territory Competition Codes.
High Court of Australia
The High Court of Australia is Australia’s highest court. Appeals from the Full Court of the Federal Court of Australia proceed to the High Court.
Enforcement
Penalties and civil remedies
Both civil and criminal penalties are available for contraventions of Part IV of the CCA. Civil remedies include:
(1) pecuniary penalties (s 76)
(2) damages (s 82)
(3) injunctions (s 80)
(4) divestiture (in relation to mergers) (s 81)
(5) non-punitive orders (eg, community service) (s 86C)
(6) punitive orders - adverse publicity orders (86D)
(7) disqualification from directorship (86E)
(8) other orders (s 87)
Criminal fines and imprisonment for up to 10 years is available for contraventions of the cartel provisions in Division 1 of Part IV of the CCA.
View remedies page.
Immunity and cooperation
The ACCC has developed a policy to encourage cooperation and, in the case of cartels, an immunity policy to encourage whistle-blowers. A new immunity and cooperation policy was published by the ACCC on 10 September 2014. It is currently under review.
Restraint of trade
In Australia the common law doctrine of restraint of trade continues to operate where it does not conflict with the Competition and Consumer Act 2010. Briefly, the doctrine renders provisions which impose restrictions on a person's freedom to engage in trade or employment illegal and therefore unenforceable at common law unless they are demonstrated to be reasonable. The provision must be reasonable both in the interests of the parties and in the interests of the public.
View restraint of trade page.