STREAMLINING THE COMPETITION AND CONSUMER ACT: WHY AND HOW

GTLAW.COM.AU Streamlining the Competition and Consumer Act: Why and How

Summary 1 Background

The real issue with Australia’s “highly codified” competition The Harper Review’s Terms of Reference charge the Review law lies in its overly proscriptive approach, which prohibits Panel with the task of: too much conduct per se and relies too heavily on piecemeal exceptions and administrative processes to make up for this [C]onsidering whether Australia's highly codified initial overreach. is responsive, effective and certain in its support of its economic policy objectives.1 This combination represents an undue impediment to competition, and imposes substantial and unnecessary costs This question mines a rich seam of criticism of what has on business and ultimately on consumers through increased become the Competition and Consumer Act 2010 (CCA), prices and stifled innovation. and what the CCA has become: its three hefty volumes, its 1500 pages and 400,000 words, and its section Relatively straightforward changes to the CCA would 44ZZOAAA(6)(a)(iv).2 Our legislation contrasts starkly reduce this burden and promote dynamic and responsive with the elegance of the two operative sections of the competition for the benefit of all Australians. These changes Sherman Antitrust Act of 1890 – hardly disfigured by the would: modest ornaments of the Clayton Antitrust Act of 1914 – and the two articles and single merger regulation that have + + focus the per se prohibitions on the most anti- served Europe so well. competitive forms of conduct as described in the provisions, removing the reference to exclusionary Some of these criticisms should be seen in context. Part IV provisions from section 45, assessing third line forcing of the CCA only makes up 5% of the Act’s total bulk; much and resale price maintenance under a competition of the remainder is taken up with details of implementation test, and replacing the price signalling provisions with a that are common to all jurisdictions in one form or another. prohibition against concerted conduct; Sections that are rarely or never used take up space but little time. The section numbers may be impossible to remember, ++ improve section 46 by retaining the “purpose” test but but they are easy enough to look up. more closely considering the “take advantage” limb; ++ remove remaining sector-specific frameworks; and The more fundamental problem with the highly codified CCA is in the real costs imposed by its overly proscriptive + + provide a coherent set of defences to replace the approach and design. Its insistence on per se prohibitions, fragmented defences and exceptions throughout and its rigid regulation of specific conduct and specific the CCA, including a “single economic enterprise”, industries, involve high compliance and risk costs for a “collaborative activity” and an “efficiency or public business, and these costs result in some combination of benefit” defence. higher prices, stifled innovation and reduced incentives to invest, to the ultimate detriment of the Australian public.

To mitigate these strict prohibitions, the CCA relies on an even more complex system of exceptions and exemptions together with the overlapping administrative processes of authorisations, notifications and formal and informal clearances. These are by their nature ad hoc solutions to a general problem, a combination that imposes burdens on businesses, regulators and ultimately consumers that could more easily be avoided by reconsidering the primary prohibitions of the CCA.

1. Terms of Reference, 3.1. 2. See for example Justice Steven Rares, “Introductory Remarks for the 2012 Competition Law Conference”, 5 May 2012; Allan Fels, “The Competition Review: The Competition Provisions of the Competition and Consumer Act”, May 2014; also cited in Andrew Burrell, “Fred Hilmer backs competition audit”, The Australian, 6 December 2013. 2 Streamlining the Competition and Consumer Act: Why and How

Over many years advising clients on navigating the CCA, The Dawson Report reiterated this principle: we have directly experienced the substantial cost and delay that this approach imposes, whether because of the time The rationale behind a per se prohibition is that the and cost needed to prepare authorisations and notifications; conduct prohibited is so likely to be detrimental to the uncertainty surrounding ambiguous terms; or the economic welfare, and so unlikely to be beneficial, that arbitrary limits of per se prohibitions, which may be avoided it should be proscribed without further inquiry about its 6 by restructuring the arrangements around the prohibition at impact on competition. 3 considerable cost and to nobody’s benefit. This principle might have been implicit in the early antitrust In this paper we suggest some relatively straightforward laws and their common law antecedents, but its expression changes to the competition sections of the CCA that has taken some time. The prohibitions in the Sherman Act would simplify compliance, improve efficiency and promote are expressed without qualification, and if taken literally vigorous competition for the benefit of the Australian public. would prohibit a large proportion of economic behaviour: Every contract, combination in the form of trust 2 Focusing the per se prohibitions or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign It is now accepted in Australian and worldwide nations, is declared to be illegal.7 and jurisprudence that conduct should be prohibited per se only when it is anti-competitive with no redeeming public Every person who shall monopolize, or attempt to benefit in the overwhelming majority of cases. This principle monopolize, or combine or conspire with any other was explained in the Blunt Report: person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign The conduct that is proscribed absolutely is so proscribed nations, shall be deemed guilty of a felony.8 because it is believed that in the majority of cases such conduct will clearly substantially lessen competition. Such Indeed, early cases such as Trans-Missouri Freight appeared conduct is prohibited absolutely because the certainty to take the Sherman Act at its word: and administrative efficiency that is achieved outweighs When, therefore, the body of an act pronounces as illegal the difficulties and costs that would be entailed in having every contract or combination in restraint of trade or to prove anti-competitive effects in each case.4 commerce among the several states, etc., the plain and The principle was also put succinctly by the Hilmer Report: ordinary meaning of such language is not limited to that kind of contract alone which is in unreasonable restraint of Per se prohibitions are appropriate where conduct has trade, but all contracts are included in such language, and such strongly anti-competitive effects that it is almost no exception or limitation can be added without placing in always likely to lessen competition. 5 the act that which has been omitted by Congress.9

3. For example, vertical arrangements subject to a per se prohibition may in some cases be avoided through agency arrangements, which fundamentally alter the relationships but have no impact on the consumer. 4. Trade Practices Consultative Committee, “Small Business and the Trade Practices Act”, 1979. 5. At page 52. 6. At page 123. 7. §1. 8. §2. 9. US v Trans-Missouri Freight Association 166 U.S. 290 (1897) at 328.

3 Streamlining the Competition and Consumer Act: Why and How

However, after twenty years the Supreme Court felt The category of or bundling moved towards the confident enough to decide in Standard Oil that the rule of reason with Jefferson Parish in 198413 and resale Sherman Act should be interpreted according to the “rule of price maintenance followed it with Leegin in 2007.14 As reason”: described by the Antitrust Modernization Commission in that year: [T]he construction which we have deduced from the history of the act and the analysis of its text is simply that [A]s new economic learning suggested possible pro- in every case where it is claimed that an act or acts are in competitive explanations for conduct previously assumed violation of the statute, the rule of reason, in the light of to be anticompetitive, the courts moved away from per the principles of law and the public policy which the act se rules of automatic illegality toward a more flexible embodies, must be applied.10 rule of reason analysis that would allow consideration of pro-competitive explanations of challenged business Two decades after apparently considering that every conduct.15 restraint of trade was illegal per se, the Supreme Court apparently felt that every restraint should be subject to the Although some commentators have wondered whether this rule of reason. The pendulum had only swung back slightly trend will leave any per se prohibitions standing,16 it appears by the time Chicago Board of Trade was decided: for now that the US and European jurisprudence have settled on a handful of hard-core violations that continue Every agreement concerning trade, every regulation to attract per se liability: namely, the horizontal agreement of trade, restrains. To bind, to restrain, is of their very between competitors to fix prices, share markets, restrict essence. The true test of legality is whether the restraint output or rig bids, together widely known as hard-core imposed is such as merely regulates and perhaps thereby cartel arrangements. promotes competition or whether it is such as may suppress or even destroy competition. To determine In 1998 the OECD Council made recommendations that that question the court must ordinarily consider the considered that “hard core are the most egregious facts peculiar to the business to which the restraint is violations of competition law” and explained that: applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual A “hard core cartel” is an anticompetitive agreement, or probable.11 anticompetitive concerted practice, or anticompetitive arrangement by competitors to fix prices, make rigged Subsequent cases determined that several categories of bids (collusive tenders), establish output restrictions or conduct were so often and so severely anti-competitive that quotas, or share or divide markets by allocating customers, they required no further investigation as to their purpose suppliers, territories, or lines of commerce.17 or effect but were illegal per se under the Sherman Act, while others depended more on the circumstances and were properly judged according to the rule of reason. Generally speaking, the per se column filled up until the early 1970s and has been emptying ever since, beginning with the 1977 Sylvania decision that shifted non-price vertical restraints to the “rule of reason” side.12

10. Standard Oil Co of New Jersey v United States, 221 U.S. 1 (1910) at 66. 11. Chicago Board of Trade v. United States, 246 U.S. 231 (1918). 12. Continental TV Inc v GTE Sylvania Inc, 433 US 36 (1977) 13. Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2 (1984). 14. Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007). 15. At page 33. 16. Thomas E. Kauper, “The Report of the Attorney General’s National Committee to Study the Antitrust Laws: A Retrospective”, 100 Mich L Rev 1867 (2002) 17. OECD Council, “Recommendation of the Council concerning Effective Action Against Hard Core Cartels”, 25 March 1998, C(98)35.

4 Streamlining the Competition and Consumer Act: Why and How

As the International Competition Network found in its 2.1 Clarify the position of vertical 2005 survey of worldwide competition laws: arrangements The basic concepts of a cartel found in statutes and policy It has been suggested that the cartel provisions could be statements are nearly universal; a cartel is defined as an drafted more simply or clearly.19 Indeed, section 44ZZRD agreement between competitors to restrict competition. takes more than 1,500 words to define the four categories Further, the categories of conduct most often defined of hard core cartel conduct considered above. The as “hard core” are also consistent: they are , provisions seem to be the manifestation of the warning output restrictions, market allocation, and .18 contained in Kep Enderby’s second reading speech for the It is of course no coincidence that these are the Trade Practices Act 1974: arrangements now subject to Division 1A of the CCA, the It is of course desirable that uncertainty be kept to the new cartel provisions – at least according to the simplified minimum in this as in any other law. But it is questionable outline in section 44ZZRA, which provides that: whether detailed drafting leads to more certainty. Often A cartel provision is a provision relating to: it does no more than obscure the broad purpose of a provision.20 a. price-fixing; or That concern was repeated by Justice Rares in 2012: b. restricting outputs in the production and supply chain; or The more words, the harder it is to identify the right, liability, or standard of behaviour that the law has established. It is c. allocating customers, suppliers or territories; or not just a fussy judge who has this morass to wade through. d. bid-rigging; Accountants, lawyers, businesses, right down to the corner by parties that are, or would otherwise be, in competition shop, all have to deal with mega-regulation such as is in the 21 with each other. Australian Consumer Law…

These four categories of horizontal arrangement have not Clear and concise drafting is certainly an advantage, but been seriously challenged as the most consistently anti- of greater concern is the potential of these provisions to competitive classes of conduct and the most deserving of prohibit behaviour that should not as a matter of principle be per se prohibition. In our view they should be the only per se prohibited. In particular, given the recent confusion around offences in the CCA. the treatment of horizontal and vertical arrangements introduced by the ANZ22 and Flight Centre23 cases, This proposition suggests the following amendments. it is critical that the CCA make absolutely clear that arrangements properly characterised as vertical ones should not be assessed per se under the cartel provisions but should be subject to a substantial lessening of competition test.

ANZ and Flight Centre both involved similar “dual- distribution” models under which principals distributed their products both directly to the public and through agents or intermediaries.

18. International Competition Network, “Defining Hard Code Cartel Conduct; Effective Institutions; Effective Penalties”, June 2005. 19. See for example C Beaton-Wells & B Fisse, Competition Policy Review Submission, 10 June 2014. 20. Hansard, House of Representatives, 16 July 1974. 21. Justice Steven Rares, “Introductory Remarks for the 2012 Competition Law Conference”, 5 May 2012. 22. ACCC v Australian and New Zealand Banking Group Limited [2013] FCA 1206. 23. ACCC v Flight Centre Limited (No 2) [2013] FCA 1313

5 Streamlining the Competition and Consumer Act: Why and How

ANZ sold its mortgages directly, including through its Not only does adopting these terms distract attention branch network, and also through mortgage brokers. The from the language of the Act, it does so by introducing ACCC alleged that ANZ had limited the discounts that terms which are, so it seems, intended to convey value one of its brokers could offer on ANZ loan products, and or other judgments about the social or economic that this amounted to price fixing in relation to the supply consequences that are assumed or expected to follow of “loan arrangement services”. Dowsett J found that ANZ from the making of or giving effect to the arrangement to and its brokers did not operate in the same market: the which one of these descriptions is applied… brokers supplied loan arrangement services but could not themselves supply loans; and ANZ simply sold loans and did [N]o less importantly, employing the descriptions of not provide loan arrangement services. ANZ and its brokers “horizontal” and “vertical” appears intended to adopt, were not competitors, and the price fixing provisions (then or at least runs a serious risk of inviting the adoption of, set out in sections 45 and 45A) did not apply. the usage of such terms in the wholly different statutory context of United States antitrust law. In particular, the Similarly, a number of airlines sold their airfares directly to use of these terms invites attention to the distinction customers, including on their websites, and also through drawn in the antitrust law of that country between travel agents such as Flight Centre. The ACCC alleged that arrangements which are to be condemned as “per se” Flight Centre had tried to limit the discounts that its supplier violations of antitrust law and arrangements which are to airlines offered to direct customers, and that this was price be tested against the so-called “Rule of Reason”.24 fixing in relation to the “retail distribution margin” for which Flight Centre and the airlines competed. Logan J found The CCA does not refer explicitly to horizontal or vertical that Flight Centre and the airlines (or their internal sales arrangements, but the distinction imposes a clear influence departments) competed in the provision of both “booking nevertheless. The CCA prohibits certain forms of anti- and distribution services” to airlines and “travel arrangement competitive conduct outright, and assesses other forms services” to customers. Accordingly the price-fixing according to their actual or intended effect on competition, provisions in sections 45 and 45A applied to impose per se which is broadly equivalent to the per se and “rule of reason” liability. liability imposed under the United States jurisprudence. The most strictly prohibited forms of conduct are The arrangements in each of the cases were functionally horizontal in nature – particularly since the advent of the so similar that they are difficult or impossible to reconcile. cartel provisions – while vertical arrangements are either In each case it was accepted that the ultimate product assessed by a competition test or eligible for administrative (mortgages or airfares) were supplied only by the principal authorisation or notification. and not the intermediary; in each case a fairly technical market was proposed in which the principal and intermediary Further, the anti-overlap provisions in sections 45(6) might be argued to compete. and 44ZZRS go some way towards ensuring that vertical arrangements are treated as such and may avoid per se Neither judgment gave any weight to the fact that the prohibition even where they have horizontal aspects. The arrangements were primarily vertical in nature, though the limits of those provisions flow directly from the CCA’s ACCC’s expert economist had in each case pointed out tendency to codify. The full impact of this tendency is the vertical and horizontal aspects of the relationships in not immediately obvious in relation to section 47 itself question. Logan J in the Flight Centre case considered – since much of the uncaught conduct will be picked up that the conduct in question should be determined only by other sections – but reveals itself where section 47 by reference to the language of sections 45 and 45A and is used as a clumsy tool to rescue vertical arrangements not whether the arrangements were horizontal or vertical from per se prohibition. That limitation led directly to the in nature. His Honour endorsed the majority High Court unsatisfactorily technical result in Visy Paper, in which judgment in Visy Paper, which cautioned against the use of vertical aspects related to supply had the benefit of a those terms: competition test but aspects related to acquisition were prohibited per se.

24. Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2003] HCA 59

6 Streamlining the Competition and Consumer Act: Why and How

An appropriately broad exception for reasonably In addition, the anti-overlap provisions applying in each proportionate restraints in vertical arrangements might case are also slightly different: section 44ZZRS(1) provides have avoided the confusion of the ANZ and Flight Centre that the cartel prohibitions do not apply “in so far as” giving cases, and is particularly important in relation to the cartel effect to a cartel provision would fall under section 47; while provisions and the criminal liability they can impose. As section 45(6) provides that the relevant prohibitions do the proliferation of digital online services creates new not apply “by reason that” giving effect to an exclusionary opportunities both for suppliers to interact directly with end provision would do so. Any difference between “in so far customers, and for new intermediaries to provide services as” and “by reason that” may be a subtle one, but it was to both suppliers and customers, horizontal and vertical controversial in the Visy Paper decision, and the adoption arrangements are likely to intersect even more often into of a different formulation in the cartel provisions does not the future. make the position any clearer. This may further complicate the legal advice necessary and increase business uncertainty 2.2 Remove section 4D exclusionary wherever vertical arrangements between potential provisions from section 45 competitors are contemplated. In order to reduce cost and uncertainty and reflect an Various subsections of section 45 prohibit “exclusionary appropriate faith in the new cartel provisions, the residual provisions” on a per se basis. These are defined in section section 4D and all references to exclusionary provisions in 4D as agreements between competitors to restrict the section 45 should be removed. supply or acquisition of goods or services, either at all or in particular circumstances or on particular conditions. This Section 45 would then ensure that all contracts, was not an unreasonable first attempt to capture the most arrangements or understandings that fall outside the four reliably anti-competitive categories of behaviour, but the per se categories of the cartel provisions will be prohibited more targeted approach of the new cartel provisions is a if, and only if, they have the purpose, effect or likely effect better one. of substantially lessening competition. This configuration would be consistent with international jurisprudence Having identified the specific categories of horizontal and would appropriately discriminate between the most arrangement deserving of per se prohibition, it is not egregious hard-core horizontal arrangements and those that appropriate to retain the concept of an exclusionary may be neutral or pro-competitive and should accordingly provision in case that concept encompasses conduct not be judged on their merits. already covered by the cartel provisions. Any arrangement – even a horizontal arrangement – that does not constitute hard-core cartel behaviour cannot reliably be predicted to substantially lessen competition and should be assessed case by case in order to avoid prohibiting legitimate competitive behaviour.

The need to assess the same behaviour according to two substantially overlapping regimes imposes real costs on business. For example, each regime has its own set of exceptions relating to joint ventures. The exceptions for cartel provisions in sections 44ZZRO and 44ZZRP are more limited in some ways, since they apply only to provisions contained in contracts, and to joint ventures for production and supply. The exception for exclusionary provisions in 76C is not limited in those ways, but it is subject to a substantial lessening of competition test, which the cartel joint venture exceptions are not. Any joint venture is likely to require legal advice as to both sets of exceptions, incurring substantial additional costs.

7 Streamlining the Competition and Consumer Act: Why and How

2.3 Only prohibit third line forcing or external legal fees and management time required to when it has an anti-competitive prepare notifications and respond to the ACCC’s further purpose or effect inquiries: there is a drag on competitive response, and even if that delay is measured in weeks rather than months it is The per se prohibition of third line forcing is a quirk of an unnecessary compromise to the dynamics of a business history and an anomaly in international jurisprudence and in and ultimately a market. It is like dealing with a puncture by section 47 itself. The Swanson Report considered that the carrying a bicycle pump everywhere you go. practice, then denoted somewhat less opaquely than it is And sometimes the delay is measured in months. For today, deserved its per se prohibition in 1977: example, the third line forcing notification for one transport In the opinion of the Committee the practice of forcing company, which used a third-party booking system to more another person's product may be justifiable in certain efficiently manage empty shipping containers, took ten cases. However, the Committee is of the opinion that the months to resolve, although a similar arrangement involving practice will, in virtually all cases, have an anti-competitive the same booking system had been notified the previous effect and that it should accordingly, continue to be year. The ACCC did not need to define a market and found capable of justification upon the ground only of public there would be no public detriment whatsoever from the benefit.25 conduct, suggesting that if third line forcing had not been prohibited per se the arrangement would have raised no That is, the Swanson Report considered that the benefits of issues. third line forcing should be assessed in the context of the authorisation process. The Hilmer Report recommended The ACCC’s recent submission to the Harper Review both that the per se prohibition of third line forcing be provides strong arguments that the per se prohibition on removed and that the faster and cheaper notification third line forcing and reliance on the notification system is process should be available. 26 The government of the day inefficient: ignored the former but implemented the latter, again relying The ACCC considers that the per se prohibition against on administrative processes to patch up the increasingly third line forcing is inefficient and that such conduct embarrassing conduct provision. should only be prohibited under competition law if it The Dawson Report constructed what should have been the has the purpose, effect or likely effect of substantially conclusive argument against the per se prohibition of third lessening competition in a market... line forcing, identifying its historical roots in the lending The streamlined notification process provides a relatively practices of the 1970s, searching in vain for any analogous simple mechanism for businesses to obtain immunity treatment in international jurisprudence, and counting the from legal action. However, given the large number of unchallenged notifications piling up at the ACCC.27 The notifications that do not raise competition concerns (or government of the day was unmoved. which are even procompetitive), the process imposes The third line forcing impasse is perhaps the epitome of an unnecessary regulatory burden on business and the the problem with the CCA, pitting a manifestly unjustified ACCC. 28 per se prohibition against a notification process that almost The ACCC does not often call for relaxations in seems painless enough to just put up with. But there are the competition law or reductions in its powers or real costs associated with the notification process that responsibilities, so this is a particularly significant go far beyond the $100 filing fee and even the in-house endorsement.

25. At page 30. 26. At page 53. 27. At page 129. 28. Australian Competition and Consumer Commission, “Reinvigorating Australia’s Competition Policy: Submission to the Competition Policy Review”, 25 June 2014.

8 Streamlining the Competition and Consumer Act: Why and How

Third line forcing could be considered under a substantial Second, since the anti-overlap provisions in section lessening of competition test by amending section 47(10) 44ZZRS 29 would have nothing to apply to, the cartel to provide that conduct under subsections (6), (7), (8)(c) provisions would need to be examined to make sure that and (9)(d) is to be treated like every other kind of exclusive they exempted the kind of conduct currently assessed dealing described in that section, and prohibit the conduct under section 47 – that is, vertical supply arrangements. As only where it has the purpose, effect or likely effect of discussed above, a clarification of this nature would be highly substantially lessening competition. desirable in any event.

Alternatively, section 47 could be removed altogether and the relevant conduct assessed under section 45. That would 2.4 Only prohibit resale price suggest two consequential amendments. maintenance when it has an anti-competitive purpose or effect First, the treatment of offers and refusals should be considered. Any offer or refusal currently addressed by The rehabilitation of resale price maintenance is lagging that section 47 might well be considered under section 76(1) of third line forcing, at least in Australia. The Hilmer Report to be an attempt, inducement or attempted inducement decided to maintain the per se prohibition in section 48, (“whether by threats or promises or otherwise”) of a although it recognised that it would not always be anti- contravention of section 45. Any refusal to supply or competitive: acquire that has the purpose or effect of substantially The economic theory associated with RPM does, lessening competition might also constitute a misuse of however, present a convincing argument that RPM can, in breach of section 46. in certain circumstances, enhance economic efficiency. However, to avoid any doubt the elements of offer and These arguments are highly technical, and could refusal could be added to section 45 to cover conduct appropriately be examined in an authorisation context. 30 that does not manifest in a contract, arrangement or Here the Hilmer Report found itself in the same understanding, by providing that: position as the Swanson Report had in relation to third a corporation shall not offer to make a contract or line forcing almost twenty years before, deferring to arrangement, or arrive at an understanding, where a the authorisation process conduct that it recognised provision of the proposed contract, arrangement or could be pro-competitive but did not feel comfortable understanding has the purpose, or would have or be likely endorsing more fully. Again, this was an unfortunate to have the effect, of substantially lessening competition; evasion. Conduct should be prohibited per se where in the and overwhelming majority of cases it will be anti-competitive with no offsetting public benefit; in other cases it should be a corporation shall not refuse to deal with a person for the subjected to the substantial lessening of competition test reason that the person has not made or given effect to a even if “highly technical” arguments may be involved. contract, arrangement or understanding where a provision of the proposed contract, arrangement or understanding Of course, arguments that seem highly technical at first has the purpose, or has or is likely to have the effect, of become simple over time. The Dawson Report did not substantially lessening competition. evaluate whether the per se prohibition of resale price maintenance was still appropriate, but in the 2007 Jurlique case Spender J traversed the economic literature and found no difficulty with the many arguments for the efficiency benefits of resale price maintenance, including assisting new products entering the market, preventing free riding by discounters particularly in the case of prestige goods, encouraging competition on non-price aspects such as service, and assuring product quality. His Honour noted: 29. And section 45(6), if the prohibition on exclusionary provisions were retained. 30. At page 58.

9 Streamlining the Competition and Consumer Act: Why and How

There is a respectable view among economists, particularly The ACCC also “recognises that RPM can, in certain those belonging to the so-called ‘Chicago School of circumstances, promote efficiency and be pro-competitive” Economics’, that vertical price restraints such as retail price but considers that it should remain prohibited per se but be maintenance are not anti-competitive. Such economists capable of authorisation and perhaps treated sympathetically would argue that there is absolutely no basis on which such in the ACCC’s enforcement priorities.34 Again, this is not practices should be illegal per se, even if there is room for the most appropriate solution in terms of efficiency or the view that they should be subject to a ‘rule of reason’. 31 certainty.

Spender J lamented that this discussion was literally Vertical restraints can reduce competition between retailers academic due to the per se nature of the prohibition under of a single brand, but they can also increase competition the proscriptive Australian legislation: between brands. Since few if any markets comprise a single brand, in almost every market inter-brand competition In the present proceedings, the difficulty is that, will be more significant than intra-brand competition, and notwithstanding the views outlined above, I am bound by resale price maintenance will rarely result in a substantial the law, and, in particular, by the Trade Practices Act 1974 lessening of competition in the properly (Cth). Resale Price Maintenance is a per se contravention defined. These principles are no more technical than the of s 48 of the Act. It is therefore somewhat of an other economic principles that underpin competition law; indulgence to consider whether the law ought to be the courts have shown themselves capable of understanding different from what it is presently is. The parties and this and applying them where the legislation permits it; and in 32 Court are bound by the provisions of the Act. this case the certainty of a per se prohibition comes at a Four months later, the US Supreme Court, bound only significant cost to efficient and pro-competitive behaviour by 96 years of precedent, decided that resale price that should be addressed by a change in the law rather than maintenance should indeed be subject to a rule of reason a continued reliance on administrative authorisation. rather than a per se prohibition in Leegin, using many of Section 48 could be made subject to the provision that the same economic arguments that Spender J had been resale price maintenance would only be prohibited where prevented from applying: it had the purpose, effect or likely effect of substantially [E]conomics literature is replete with pro-competitive lessening competition; or the section could be removed justifications for a manufacturer’s use of resale price altogether. Since resale price maintenance is a vertical maintenance… A single manufacturer’s use of vertical restraint it should be dealt with along with other vertical price restraints tends to eliminate intra-brand price restraints, either by including it in section 47 or, if that competition; this in turn encourages retailers to invest section were to be removed, by leaving it to a section 45 in tangible or intangible services or promotional efforts extended to embrace offers and refusals if necessary. that aid the manufacturer’s position as against rival manufacturers. Resale price maintenance also has the potential to give consumers more options so that they can choose among low-price, low-service brands; high-price, high-service brands; and brands that fall in between… Resale price maintenance, in addition, can increase interbrand competition by facilitating market entry for new firms and brands.33

31. Australian Competition and Consumer Commission v Jurlique International Pty Ltd [2007] FCA 79. 32. At para 75. 33. Leegin Creative Leather Products Inc v PSKS Inc dba Kay’s Kloset…Kay’s Shoes 551 U.S. 877 (2007). 34. Australian Competition and Consumer Commission, “Reinvigorating Australia’s Competition Policy: Submission to the Competition Policy Review”, 25 June 2014 at page 117.

10 Streamlining the Competition and Consumer Act: Why and How

2.5 Replace the price signalling Like many unfortunate amendments, the current price provisions with a more effective signalling provisions have their genesis in high-profile treatment of concerted conduct court cases that did not go the way many people thought they should have. The petrol cases arguably did involve The price signalling provisions in Division 1A of Part IV coordinated behaviour that would be considered concerted represent a clumsy and compromised solution to a problem conduct or facilitating practices under the US or European that appears to be poorly characterised. The current law: petrol retailers shared information about future prices provisions should be removed completely and certainly not in the hope, if not the expectation, that their competitors extended beyond the banking sector. would raise their prices to match. Because no commitment was found, the cases failed. There is a credible view that a gap exists in the Australian competition law, as interpreted by the Courts, insofar as The ACCC over time proposed a range of amendments to the concept of a “contract, arrangement or understanding” ensure that the conduct of competitors sharing information requires an element of commitment or obligation to act in for anti-competitive purposes was caught by the CCA even accordance with the arrangement or understanding. This in the absence of a commitment. principle was most clearly expressed in ACCC v CC (NSW), In its 2007 Petrol Pricing Report the ACCC recommended in which Lindgren J decided: a legislative expansion of the apparent judicial meaning of The cases require that at least one party “assume an “understanding” to include understandings ascertainable obligation” or give an “assurance” or “undertaking” that only by inference from a broad range of factual matters, and it will act in a certain way. A mere expectation that as to make it clear that no commitment to give effect to the a matter of fact a party will act in a certain way is not understanding should be required.39 enough, even if it has been engendered by that party. In January 2009 the Treasury released a discussion paper In the present case, for example, each individual who calling for submissions on the meaning of “understanding”. attended the meeting may have expected that as a matter 40 Even members of what has become known as the “trade of fact the others would return to their respective offices practices mafia” suggested that a European style treatment by car, or, to express the matter differently, each may of “concerted practices” might be more appropriate. have been expected by the others to act in that way. Each The ACCC supported this suggestion and dropped the may even have “aroused” that expectation by things he expansion of “understanding” in favour of a “concerted said at the meeting. But these factual expectations do practices” approach. not found an “understanding” in the sense in which the word is used in ss 45 and 45A. The conjunction of the In 2010 the ACCC again called for legislative change word “understanding” with the words “agreement” and to address price signalling, prompted this time by public “arrangement” and the nature of the provisions show that commentary by financial institutions over the impact that 35 something more is required. changes in the official interest rate might have on loan interest rates. This last line in particular appears to rely on an approach to statutory construction that is at least open to debate, but the passage was endorsed by the Full Federal Court in Rural Press36 and, subsequently and fatefully, in the petrol price- fixing cases Apco37 and Leahy.38

35. Australian Competition and Consumer Commission v CC (NSW) Pty Ltd [1999] FCA 954. 36. Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 37. Apco Service Stations Pty Ltd v ACCC [2005] FCAFC 161. 38. Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794 39. ACCC, “Petrol Prices and Australian Consumers: Report of the ACCC inquiry into the price of unleaded petrol”, December 2007. 40. Treasury, Discussion Paper: The meaning of 'understanding' in the Trade Practices Act 1974, 2009.

11 Streamlining the Competition and Consumer Act: Why and How

Opposition Treasurer Joe Hockey called for a change in the Price information is essential for markets to function; it is law to allow the ACCC to address bank price signalling, and almost always pro-competitive and often legally mandated. Opposition spokesman for Small Business and Competition Equally, the range of potentially anti-competitive Policy Bruce Billson introduced a private member’s bill communications between competitors is by no means creating a new prohibition on price signalling, that is, limited to price information; sharing information about communicating price-related information to a competitor capacity, output, investment and entry decisions may be just with the purpose of influencing a competitor to change as damaging. their prices and the likely effect of substantially lessening competition.41 Having started from the wrong place, the current provisions are forced to tie themselves in knots of inclusions The Government introduced its own bill including the and exclusions – and, once again, authorisations and twin prohibitions of private disclosures per se and public notifications – in an attempt to get back to a sensible disclosures for anti-competitive purposes that we have position. This approach cannot be as effective as properly come to know. 42 Both bills relied on new prohibitions, targetting the primary conduct provisions. terms and concepts instead of addressing the limits to the concept of an “understanding” or adopting a more familiar Since the gap in the primary conduct provisions is the limit “concerted practices” approach, preferring prescription to in the concept of a contract, arrangement or understanding, principles. the solution should address this limit more directly, as was suggested in the first place, by adding a new prohibition on The House of Representatives held an inquiry into both bills, concerted practices. 43 and at the same time the Senate held its own inquiry into Competition in the Australian Banking Sector which also Given the range of neutral and even pro-competitive covered the issue of price signalling.44 The multiplicity of information disclosures that may occur between bills and inquiries may have led to further confusion in the competitors, and the necessarily less predictable discussion. circumstances in which competitors may be considered to be acting in concert, this conduct is not appropriate for There are arguments that the ACCC’s failure in the per se prohibition: both the purpose of the conduct and its petrol cases did not necessarily reflect a deficiency in the likely effect on competitions should be examined. Once legislation. In particular, the law of attempts is suggested again, the availability of administrative authorisation is not an as a solution to the problem in many cases, since disclosure answer. As argued by the Senate Banking Inquiry: of price information may be seen under section 76(1)(d) or 79(1)(b) as an attempt to induce a contract, arrangement or understanding with the requisite commitment or obligation.

However, it would seem preferable to more precisely tailor the primary conduct provision to the behaviour of concern.

In these circumstances the ambition of the legislation may well be appropriate but its implementation is certainly not. In focusing on the disclosure of pricing information it addresses the problem at the wrong level of abstraction.

41. Competition and Consumer (Price Signalling) Amendment Bill 2010. 42. Competition and Consumer Amendment Bill (No. 1) 2011. 43. House of Representatives Standing Committee on Economics, Advisory Report on the Competition and Consumer (Price Signalling) Amendment Bill 2010 and the Competition and Consumer Amendment Bill (No. 1) 2011, June 2011. 44. Senate Economics References Committee, Competition within the Australian banking sector, May 2011, Chapter 8.

12 Streamlining the Competition and Consumer Act: Why and How

the per se prohibitions in the Government's Exposure 3 Retain the “purpose” test but Draft Bill run the risk that legitimate communication consider the “take advantage” of pricing information that is not anti-competitive in problem in section 46 its intent or its effect will be captured. The Committee argues that it is better for a bank engaging in anti- For many years it has been argued that section 46 is too competitive price signalling to go undetected than it is difficult to prove because it relies on establishing one of the for a bank conducting legitimate communications to be proscribed purposes, and accordingly that the section should inappropriately penalised. In this vein, the Committee be broadened with some kind of effects test. In fact few also contends that the government's over-reliance on the section 46 cases have failed because they have not proved proposed new ACCC notification regime as a solution purpose; and the addition of an effects test would not to the problems in the bill is likely to be cumbersome address the real difficulty with section 46 and would result and restrictive for the banks, as well as a burden on the in significant business uncertainty as decision-makers tried ACCC.45 to predict the likely effects of their every action on their competitors. Accordingly, section 45 could be supplemented with a new prohibition to the effect that: Despite repeated calls for an “effects” test, it is clear that the real difficulty with section 46 is establishing the “taking a corporation shall not, in concert with a second person, advantage” element.46 This formulation makes perfect engage in conduct for the purpose, and with the effect sense in principle: a corporation with market power should or likely effect, of substantially lessening competition in not be prevented from conduct that has no connection the acquisition or supply of goods or services in respect of with that market power. In practice, this requirement has which it is in competition with the second person. proved difficult to pin down. Judicial and legislative attempts This is a simple change that introduces no new or untested to clarify the test have not yet led to any consistency in its concepts but draws on concepts already familiar from other application, with a wide variety of views within and between contexts of the CCA, particularly the secondary boycott courts in most major cases. provisions. It would more effectively address the relevant The first problem is in deciding what degree of possibility conduct and would be suitable for application across the or likelihood is appropriate in asking whether a corporation economy. could or would have acted in the way it did in the absence In addition to focusing the per se prohibitions, the following of market power. The second is in deciding what such changes would improve the certainty of the CCA and a hypothetical corporation would or could in fact (or reduce the burden in complying with it. counterfact) have done, a task in which judges appear more richly imaginative than might have been predicted.

The clarifications introduced in 2008 by section 46(6A) provide a range of questions for the court to ask in deciding whether advantage has been taken, generally along the lines of the alternatives raised in previous cases, in an attempt to shift the ultimate test away from the “could” test of Rural Press. The recent Cement Australia concerned facts that occurred before the amendments took effect, and so Greenwood J did not take the section 46(6A) factors into account in deciding that:

45. At page 167. 46. See for example Rod Sims, “The need to elevate competition in our public policy”, CEDA State of the Nation Conference, 23 June 2014. Available at http://www.accc.gov.au/speech/the-need-to-elevate-competition-in-our-public-policy.

13 Streamlining the Competition and Consumer Act: Why and How

The question, put simply, is whether a firm profitably could We believe it to be extremely important that the Trade have engaged in the conduct in question in the absence Practices Act should start from a position of universal of a substantial degree of power in the relevant market. application to all business activity, whether public sector Because that question involves a hypothetical construct or private sector, corporate or otherwise. Only in this way it must be answered by applying an objective test but one will the law be fair, and be seen to be fair, and avoid giving which takes into account the legitimate business reasons a privileged position to those not bound to adhere to its identified by the firm for engaging in the conduct...47 standards...49

This is probably as good a question as any, and is, indeed, The Committee was presented with numerous proposals to put about as simply as possible. It is not at all clear that exclude from the operation of all or some of the provisions the outcome of the case would have been affected if the of the Act, both particular organisations, and matters legislative amendments had been taken into account. As the relating to particular industries or affecting different case is yet another in a long line of cases in which the courts functional levels within those industries… We refrain from have not found a taking of advantage, it may be that this listing the industries and organisations claiming exclusion. element is simply too difficult to prove positively. However, as already indicated, we consider that in general the Act should apply across-the-board and be admissible In this regard, Dr Philip Williams has suggested that the of exceptions only where a case for public benefit can be “taking advantage” test be replaced as a positive limb of made out, or where Parliament has specifically legislated to section 46 with a defence: that is, if a corporation with a regulate the area.50 substantial degree of market power engages in any conduct for a proscribed purpose, it has the onus of showing that it The Hilmer Report agreed with the principle of universal did not take advantage of its market power in doing so.48 application:

[T]he general conduct rules of a national competition 4 Remove any remaining sector- policy should, in principle, apply to all business activity specific frameworks in Australia, with exemptions for any particular conduct only permitted when a clear public benefit has been The price signalling regime discussed above is undesirable demonstrated through an appropriate and transparent not only because it is poorly adapted to the problem it is process.51 trying to solve, but also because it is designed to apply only to certain sectors, and presently applies only to the banking As well as the price signalling provisions, the international sector, with a range of exceptions that seem tailored to that liner shipping regime in Part X and the telecommunications sector. Sector-specific regulation is frequently duplicative industry provisions of Part XIB should be removed and the and imposes often unnecessary burdens on businesses and relevant sectors dealt with under the general provisions of regulators alike; it generates uncertainty by introducing new Part IV. tests and concepts that may take many years to elucidate.

In 1976 the Swanson Report expressed the desirability of universal application, prefiguring many of the principles suggested by the Hilmer Report and again being raised in the Harper Review:

47. ACCC v Cement Australia [2013] FCA 909 (10 September 2013) 48. Dr Philip Williams, “Should an effects test be added to s 46?” Competition Law Conference, Sydney, 24 May 2014. 49. Trade Practices Review Committee, Report to the Minister for Business and Consumer Affairs, August 1976 at page 84. 50. Trade Practices Review Committee, Report to the Minister for Business and Consumer Affairs, August 1976 at page 91. 51. At page xxiv.

14 Streamlining the Competition and Consumer Act: Why and How

5 Provide a more coherent set of Meanwhile, section 76C provides a much broader joint defences venture defence for exclusionary provisions, requiring only that the provision is for the purposes of a joint venture Exceptions, exemptions and defences are spread throughout (of any kind) and does not have the purpose, effect or the CCA, and are characterised by both overlaps and gaps. likely effect of substantially lessening competition. This is These could usefully be rationalised into a set of general getting towards the position that should apply in relation to defences that would apply throughout the CCA, including a all collaborative ventures, which would ideally be a general single economic enterprise defence, a collaborative activity “collaborative activity” defence similar to that proposed in defence and an efficiency or public interest defence. the New Zealand cartels legislation.54 That legislation will provide an exception where a cartel provision is “reasonably 5.1 Single economic enterprise necessary for the purpose of the collaborative activity”, defined to include any enterprise, venture or other activity Related bodies corporate, dual listed companies and in trade that “is not carried on for the dominant purpose of 55 partnerships are separately dealt with throughout the lessening competition” between the parties. CCA; related bodies corporate have only recently been exempted from third line forcing and are still in theory 5.3 Efficiency or public interest subject to the resale price maintenance prohibition. All of these exceptions could be more effectively dealt with by a Finally, a general “efficiency” or “public interest” defence unified “single economic enterprise” defence similar to the applying to all proscribed conduct apart from the cartel US52 and EU53 doctrine that the members of a corporate offences would provide a superior alternative in many group are not considered separate economic entities and so cases to the administrative notification and authorisation cannot conspire with each other in violation of the antitrust processes, and reduce the cost and burden of administrative laws. The fact that the related parties exception to third line processes in many circumstances, by allowing businesses to forcing is even being debated suggests that such a doctrine assess for themselves the overall efficiency or public benefit could usefully be implemented in Australia. impact of their conduct. A business that felt sufficiently confident that the efficiency or other public benefits of its 5.2 Collaborative activity conduct would outweigh any anti-competitive detriment would be able to pursue opportunities with a minimum of Exceptions relating to joint ventures, collective bargaining cost and delay – balanced against the risk that the ACCC and collective acquisitions are similarly fragmented and might see things differently and that this divergence might are subject to arbitrary limitations – for example, the joint end up being resolved in court. venture exceptions to the cartel provisions in sections 44ZZRO and 44ZZRP, and to the price signalling provisions in 44ZZZ(3), apply only to joint ventures for production and supply, and not to joint ventures for acquisition, marketing or research. The cartel exceptions apply only to provisions contained in a contract, while the price signalling exceptions apply more broadly.

52. Copperweld Corp v Independence Tube Corp 467 U.S. 752 (1984). 53. Akzo Nobel NV v Commission of the European Communities ECJ Case C-97/08 (10 September 2009) 54. Commerce (Cartels and Other Matters) Amendment Bill 2011, inserted proposed s 31 to the Commerce Act 1986. 55. See Brent Fisse, “Proposed NZ collaborative activity exemption”, e-Concurrences 11 July 2013.

15 Streamlining the Competition and Consumer Act: Why and How

The courts are already accustomed to applying the This provision is similar to the existing section 50A of the substantial lessening of competition test and this defence CCA applied by the Tribunal to mergers outside Australia, would present no greater difficulty, particularly taking into and there is no reason why the Tribunal or a court could account the body of precedent from the Tribunal on the not apply effectively the same test to mergers and other assessment of public benefit. conduct within Australia.

This approach would enhance the dynamic efficiency and In Europe, Article 101(3) provides that a restrictive responsiveness of businesses and markets by focusing agreement or concerted practice that would otherwise administrative intervention on cases that are potentially breach Article 101(1) will be permitted where it: problematic. contributes to improving the production or distribution of This would in many cases be a more efficient and responsive goods or to promoting technical or economic progress, approach than the current requirement to lodge at least while allowing consumers a fair share of the resulting notifications for a wide range of conduct that does not benefit raise significant concerns. Of course, businesses seeking certainty before engaging in any potentially anti-competitive Article 101(3) further provides that the agreement conduct could continue to obtain it through the traditional or practice must not impose restrictions that are not avenues of notification and authorisation. indispensable to the attainment of these objectives or afford the possibility of eliminating competition in respect of a Such a defence would be consistent with the “rule of reason” substantial part of the products in question. Since 2004 approach that applies in relation to all but the hardest-core this defence has been available directly to parties with no cartel conduct in the US. Similar defences are increasingly prior finding by a regulator required.57 applied in other jurisdictions to more and more forms of conduct. European courts and regulators have also recognised an efficiency defence in Article 102 dominance cases. In Post For example, the Canadian Competition Act 1985 provides Danmark the Grand Chamber of the European Court of a statutory efficiency defence in merger cases before the Justice restated that: Competition Tribunal, which provides that: [I]t is open to a dominant undertaking to provide The Tribunal shall not make an order [against a merger] justification for behaviour that is liable to be caught by the if it finds that the merger or proposed merger in respect prohibition under Article 82 EC [now Article 102 TFEU]… of which the application is made has brought about or is In particular, such an undertaking may demonstrate, likely to bring about gains in efficiency that will be greater for that purpose, either that its conduct was objectively than, and will offset, the effects of any prevention or necessary… or that the exclusionary effect produced may lessening of competition that will result or is likely to result be counterbalanced, outweighed even, by advantages in from the merger or proposed merger and that the gains terms of efficiency that also benefit consumers.58 in efficiency would not likely be attained if the order were made.56 The European Commission has adopted this position in its enforcement priorities: The section further requires the Tribunal to consider whether these efficiency gains will result in a significant increase [A] dominant undertaking may also justify conduct in the real value of exports or a significant substitution of leading to foreclosure of competitors on the ground of domestic products for imported products; and that a mere efficiencies that are sufficient to guarantee that no net redistribution of income will not be considered an efficiency harm to consumers is likely to arise… The efficiencies… gain.

56. §96, Canadian Competition Act 1985. 57. European Commission, “Guidelines on the application of Article 101(3) TFEU (formerly Article 81(3) TEC)”, 24 April 2004. 58. Case C-209/10, Post Danmark A/S v Konkurrencerådet, 27 March 2012, citing Case 311/84, CBEM [1985] ECR 3261, Case C-95/04 P, British Airways plc v. Commission [2007] ECR I-2331.

16 Streamlining the Competition and Consumer Act: Why and How

may, for example, include technical improvements in the However, a review of Tribunal decisions and ACCC quality of goods, or a reduction in the cost of production guidelines and determinations suggests that most of or distribution.59 the public benefits likely to be provided by the relevant conduct can be characterised as improvements in economic More broadly, the South African Competition Act 1998 efficiency, whether by addressing market failures or market provides a defence to anti-competitive mergers and imperfections. In its recent Authorisation Guidelines the prohibitions against restrictive horizontal practices (apart ACCC notes that these benefits may include reducing from price-fixing, market-sharing or bid-rigging), restrictive transaction costs; addressing an externality (which may vertical practices, exclusionary acts in abuse of dominance, provide environmental benefits); reducing information and engaging in complex conduct, where asymmetry; achieving economies of scale, scope and/or (typically): density; and facilitating the provision of public goods.62

[T]he firm concerned can show technological, efficiency A defence expressed in terms of “public benefit” would or other pro-competitive, gains which outweigh the anti- therefore align closely with the efficiency or pro- 60 competitive effect of its act. competitive defences of other institutions, while benefiting In Australia, the existing body of administrative and from the existing body of precedent and allowing for the jurisprudential precedent that has arisen around the concept possibility of further public benefits that are not directly of “public benefit” in the context of authorisations and related to economic efficiency. certain notifications suggests that the most appropriate A “public benefit” formulation that tied in with the defence might also be framed in terms of public benefit. Australian precedent would also appropriately deal with Although public benefit certainly encompasses benefits the question of whether efficiencies that benefit only the arising from increased economic efficiencies, it may also go participating businesses should count against any lessening 63 further, as the Tribunal held in QCMA: of competition. The Australian jurisprudence, echoed by the ACCC’s guidelines,64 appears to strike an appropriate [W]e would not wish to rule out of consideration any balance between the consumer and total welfare standards argument coming within the widest possible conception by recognising the public benefit in efficiencies that accrue of public benefit. This we see as anything of value to to the participating businesses but giving more weight to the community generally, any contribution to the aims benefits that flow through to consumers. pursued by the society including as one of its principal elements (in the context of trade practices legislation) Applying the accumulated jurisprudence around the “public the achievement of the economic goals of efficiency and benefit” test would ensure that a complementary “public progress.61 benefit” defence would promote the objective of the CCA to “enhance the welfare of Australians.”

59. European Commission, “Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings”, 2009/C 45/02. 60. At sections 4(1), 5(1), 8(c) and (d), 12A(1)(a)(i) and the upcoming section 10A(1). 61. Re Queensland Co-operative Milling Association, Defiance Holdings (1976) ATPR ¶40-012. 62. ACCC, Authorisation Guidelines, June 2013. 63. Re Howard Smith Industries Pty Ltd and Adelaide Steamship Industries Pty Ltd (1977) ATPR ¶40-023; Qantas Airways Ltd (2005) ¶ATPR 42- 065. 64. ACCC, Authorisation Guidelines, June 2013.

17 Streamlining the Competition and Consumer Act: Why and How

6 Conclusions

There are many reasons for clarifying, simplifying and This approach is designed to promote clarity, certainty and streamlining the Competition and Consumer Act. Some predictability. It has clearly failed. A law that is difficult – of these are aesthetic or even philosophical in nature; some that is, expensive – to explain to a client, that is difficult may be considered, in the best sense of the word, academic. for the people affected by the law to understand, that requires legal advice before any action can be taken and One submission to the Harper Review states briefly that: even then requires authorisation or notification to avoid an unnecessary per se prohibition – that law is a drag on the My submission goes to form, not content. competitive conduct that the CCA is meant to promote. The section numbering system adopted in the main body This paper suggests some relatively straightforward of the Competition and Consumer Act 2010 (the Act), changes that we believe would improve understanding particularly the alphanumeric numbering of the cartel of the legislation, reduce the costs and other burdens conduct provisions, is difficult to follow and even more of compliance, and promote vigorous competition for difficult to explain to a client.65 the ultimate benefit of consumers (and, to be sure, the With respect, that submission goes to form and content. proximate benefit of legal advisers). These suggestions The section numbering runs to eight numerals and letters are consistent with international jurisprudence and because the legislation is so determined to proscribe so with proposals put forward by some of Australia’s most much behaviour on a per se basis, and rely on exceptions, experienced competition law practitioners. At a time when exemptions, authorisations and notifications to rein in those Australia’s competition policy framework is undergoing a prohibitions, rather than examining the competitive effects root and branch review, we hope that this time we can do of conduct on a case by case basis. more than simply add more branches.

65. Alex Rhydderch, 13 June 2014.

18 Streamlining the Competition and Consumer Act: Why and How

Authors

LUKE WOODWARD MATT RUBINSTEIN Partner | Competition and Regulation Consultant | Competition and Regulation T +61 2 9263 4014 T +61 2 9263 4592 E [email protected] E [email protected]

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