More Trade Practices Act changes coming
Following the 2003 Dawson Review of the Trade Practices Act's (the Act) competition provisions, the Federal Government has announced a new package of reforms to the Act. The changes focus on increased penalties for anti-competitive conduct such as price fixing, and reducing some of the obstacles the Act puts in front of smaller businesses.
Higher penalties
The current maximum penalty for anti-competitive conduct is $10m per offence.
The maximum penalty will now be increased to the greater of $10m or three times the gain from the contravention or, where the gain cannot be readily ascertained, 10% of the turnover of the body corporate and any related bodies corporate.
This brings Australia more into line with the scale of financial penalties available in the US and Europe and should make corporations sit up and take notice (if $10m wasn't already enough to achieve that).
Collective bargaining
The Act has a blanket prohibition on price fixing, regardless of its real competitive effect. Among other things, this prevents competitors from banding together (for example, under the umbrella of an industry association) to collectively bargain with suppliers or customers. This can be a big problem where the competitive landscape is uneven – such as where a large number of small retailers are forced to buy from a single monopoly wholesaler, so that they individually have no bargaining power but collectively could.
The amendments create a system whereby multiple competitors can notify the ACCC that they intend to engage in collective bargaining, receive temporary immunity and subsequent authority to proceed if certain conditions are met. One of the conditions is that the value of the purchase price of the relevant goods or services under the contract or contracts (in respect of which the competitors will bargain) is below $3m.
The transaction threshold may be increased above that limit for specific industries by regulations (for example, where participants in an industry have a high turnover but small profit margins, such as petrol retailers). The idea is to effectively exempt small business from the collective bargaining prohibition.
The powers of the ACCC
The changes will expand the ACCC's investigative powers, enabling it to search premises and seize evidence with a warrant.
And still more reforms are coming soon
The Government has indicated that the next stage of the Trade Practices reform package is to strengthen the provisions relating to the misuse of market power and unconscionable conduct.
Stay tuned for further updates on the progress of the reforms.
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