In brief: Significant changes to Australia’s competition laws commenced on 6 November 2017. The changes Harper reforms become law: implement key recommendations of the Harper Panel’s review of Australian and policy. The Allens Competition, Consumer & Regulatory Team look at the key changes and the implications for what you need to know your business.

MISUSE OF MARKET & CONCERTED THIRD LINE FORCING POWER MERGERS JOINT VENTURES PRACTICES ACCESS & RESALE PRICE MAINTENANCE >> Prohibits any conduct engaged in by a >> Maintains the informal clearance process >> Narrows the reach of the provisions >> Prohibits ‘concerted practices’ that have the >> Amends the first criterion so that access on >> Makes the third line forcing prohibition firm with substantial that but combines the unused ACCC formal to conduct in trade or commerce (ie conduct purpose or effect of substantially lessening reasonable terms, as a result of declaration, subject to a competition test. A party may has the purpose, effect or likely effect merger clearance process with the in Australia or between Australia and places competition. The prohibition applies to all must promote a material increase in now engage in third line forcing unless it of substantially lessening competition Australian Competition Tribunal merger outside of Australia). industry sectors. competition compared to the current extent has the purpose, effect or likely effect of in a market in which the firm directly or authorisation process. of access provided (criterion A). substantially lessening competition. >> Simplifies the cartel provisions by removing >> Repeals the prohibition on ‘price signalling’ indirectly supplies or acquires goods or >> Under the new combined process, the the prohibition on exclusionary provisions (which only applied to the banking sector). >> Amends the second criterion to be a ‘natural >> Introduces notification for resale price services. ’ test which is satisfied where ACCC will approve a merger if it does not and amending the cartel prohibition on maintenance, which will be allowed in >> The Explanatory Memorandum defines total foreseeable market demand for the >> Removes the requirement for the ACCC substantially lessen competition or the public output restrictions so it covers acquisitions. circumstances where it is pro-competitive benefits outweigh the detriment to the public. a ‘concerted practice’ as: ‘any form of declaration period could be met ‘at least cost’ to demonstrate a causal link between the and beneficial for consumers. >> Expands the exemption for JVs to: cooperation between two or more firms by a single facility compared to any two or firm’s conduct and its market power (the >> The Tribunal may review a determination of (or people) or conduct that would be likely more facilities (criterion B). Also permits a >> Clarifies that resale price maintenance ‘taking advantage’ test). the ACCC and affirm, set aside or vary the • include cartel provisions contained in to establish such cooperation, where this facility, which is at capacity, to be declared if it determination. JV arrangements or understandings between related bodies corporate is not conduct substitutes, or would be likely is reasonably possible for it to be extended or >> Removes the specific prohibition on below (previously limited to JV contracts); and prohibited. cost pricing for an anti-competitive purpose >> In its review, the Tribunal can only have to substitute, cooperation in place of the expanded to meet total foreseeable demand. regard to information referred to in the by a firm with substantial market share. • include JVs for the acquisition of goods uncertainty of competition’. >> Amends the ‘public interest’ criterion ACCC’s reasons and information provided or services (previously limited to JVs for (previously criterion F, now criterion D) to >> Incorporates a process for seeking ACCC to the ACCC, unless the new information Implications: production and/or supply). ensure that services are only declared authorisation for conduct which may clarifies the information that was before the where it would promote the public interest • At last! The need to notify most third line amount to a ‘misuse of market power’. ACCC or was not in existence at the time. >> Narrows the exemption for JVs so that it Implications: applies only to: (making it harder for an access seeker to forcing conduct to the ACCC will now >> The ACCC and Tribunal processes will be • Businesses will need to be even satisfy this criterion). cease. Only conduct that raises genuine subject to strict timelines. • cartel provisions that are both for the more vigilant about interactions >> If the Minister has not made a decision competition issues is subject to the purposes of the JV and reasonably with competitors in light of the new within 60 days, he or she will be taken to prohibition and requires notification. Implications: necessary for undertaking the JV; and prohibition, which applies to lesser forms have accepted the NCC’s recommendation • The exemption for resale price • The new prohibition applies to a broader Implications: • JVs that are not carried on for the purpose of coordination (the cartel provisions (currently, the Minister is taken to have not maintenance for related bodies corporate range of conduct and firms which have • Authorisation by the Tribunal had become of substantially lessening competition. only capture contracts, arrangements or declared the service if he or she does not allows parents to control prices of their substantial market power will need to understandings). make a decision within this time frame). a popular option in recent years. These >> Increases the standard of proof that a subsidiaries without needing to seek take care when undertaking commercial mergers will now need to be assessed defendant must discharge in relying on the • The definition of a ‘concerted practice’ authorisation. strategies which have the potential to Implications: by the ACCC in the first instance, with JV exemption to the balance of probabilities. in the Explanatory Memorandum is • The option to notify will make it easier affect the ability of rivals to compete e.g. the option to seek review of the ACCC’s intentionally broad and will likely capture a • Greater clarity for infrastructure owners for businesses to obtain immunity buying up essential inputs or services, decision by the Tribunal. wide range of conduct across all sectors. and access seekers on the application of the in circumstances where retail price bundling, pricing below or close to cost, • Most merger parties are likely to continue • The examples contained in the declaration criteria. maintenance is pro-competitive and cross-subsidisation, price discrimination, to use the flexible informal clearance Explanatory Memorandum reflect a beneficial for consumers. Implications: • Criterion A previously set a low threshold loyalty rebates, or refusing to supply a route, which generally works well. strict approach as to what may amount that was easy for access seekers to meet. competitor. • Some merger parties may seek • The repeal of the specific prohibition to a ‘concerted practice’, capturing, for Now access providers may be able to more authorisation from the ACCC, particularly • The Harper reforms also introduce the on exclusionary provisions will reduce example, one-off interactions, one-way readily resist declaration. This is because in complex mergers where the option to seek authorisation to undertake unnecessary complexity in the law. exchanges of information and exchanges the comparison is between competition competition arguments may be finely conduct that may otherwise contravene between non-competitors in some with and without regulated access. This balanced. This option may be attractive • Although the JV exemption will apply to s46. The firm seeking authorisation will circumstances. new test takes into account the level of as merger parties can argue the merger a broader range of JVs, it may be harder to need to demonstrate that the conduct access currently being provided. Previously, does not substantially lessen competition rely on the exemption. JV parties will need • If staff receive unsolicited competitively results in public benefits that outweigh criterion A compared competition in or results in a net public benefit, whereas to consider whether the provision they sensitive information from a competitor, dependent markets with and without an any public detriments arising from the previously authorisation was only available wish to include is reasonably necessary it will be important to expressly reject the ability to access the service at all (even if conduct. on public benefits grounds. to undertake the JV or whether a less approach and not rely upon or share the some access was already being provided). • Merger parties seeking authorisation restrictive provision could achieve the information more broadly. • Criterion B will now, on balance, be easier should bear in mind that any review same end. • It is important to remember that, unlike in for access seekers to meet by changing by the Tribunal will be based primarily • JVs found to be for the purpose of the EU, the prohibition only applies where the threshold from a test based on private on information provided to the ACCC. substantially lessening competition will be the ‘concerted practice’ has the purpose, profitability to a ‘’ test. Accordingly, in contentious mergers, it subject to the cartel provisions. effect or likely effect of substantially • Criterion D will be harder for access seekers may be important to provide additional lessening competition. to meet because declaration must promote materials to the ACCC up front such as the public interest (previously it was economic reports and witness statements. sufficient if declaration was not contrary to the public interest). Allens is an independent partnership operating in alliance with Linklaters LLP. 17046D