The Australian Trade Practices Act regulates competition and consumer protection law in Australia. The competition provisions of the Trade Practices Act are based on anti-trust legislation in the United States and are not dissimilar to the anti-trust provisions of the European Community's Treaty of Rome. The Trade Practices Act prohibits:
- anti-competitive behaviour;
- misuse of market power;
- anti-competitive mergers; and
- unfair business practices when dealing with small businesses.
It also:
- imposes obligations on businesses designed to protect consumers; and
- provides an access regime for essential facilities and a specific access and competition regime for the telecommunications industry.
The Australian Competition and Consumer Commission (ACCC) is responsible for administering and enforcing the Trade Practices Act. It has the power to authorise on public benefit grounds some conduct which may otherwise breach the Act.
COMPETITION PROVISIONS
Anti-competitive behaviour
The Trade Practices Act prohibits anti-competitive behaviour. Under the Act, the following conduct is always anti-competitive and is per se illegal:
- agreements between competitors to fix, maintain or control prices;
- agreements between competitors to split up a market or customers;
- agreements between competitors not to deal with particular suppliers customers or other competitors;
- the supply of goods or services on condition that the customer purchase goods or services from a third party; and
- requiring resellers to sell products at a specified retail price.
The Act also prohibits agreements, arrangements or understandings which have the purpose, effect or likely effect of substantially lessening competition in a market.
Misuse of market power
It is illegal for a corporation that has a substantial degree of market power to take advantage of that power for the purpose of:
- eliminating or substantially damaging a competitor;
- preventing someone from entering the market as a competitor; and
- deterring or preventing a person from competing.
Mergers and acquisitions
The Act prohibits the acquisition of shares or assets of a company if the acquisition is likely to have the effect of substantially lessening competition in a market in Australia.
The acquisition of a foreign company by a foreign company may be subject to the Trade Practices Act if as a consequence of obtaining a controlling interest in a foreign company, a controlling interest in a corporation in Australia is acquired.
UNFAIR BUSINESS CONDUCT AIMED AT SMALL BUSINESSES
The Trade Practices Act aims to protect businesses particularly small businesses, by prohibiting:
- Misleading conduct in business transactions - this is extremely broad and includes not only the making of untrue statements about present matters but also the making of unfounded or unreasonable predictions or statements as to future matters.
- Unconscionable conduct in business transactions - the Act makes it illegal for businesses to engage in unconscionable conduct in business transactions worth less than $1 million with businesses that are not listed companies. Unconscionable conduct includes the use of a strong bargaining position to extract unreasonably onerous terms from another business.
CONSUMER PROTECTION
The consumer protection provisions of the Trade Practices Act aim to protect consumers by:
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- Prohibiting misleading conduct - this is extremely broad, and includes not only the making of untrue claims or statements but also omitting to give all relevant details and failing to correct mistaken impressions.
- Prohibiting unconscionable conduct - it is illegal in business dealings to take advantage of a consumer's vulnerable circumstances. These include a consumer having poor reading or writing skills, poor English language skills or lacking business know-how or intelligence.
- Implying warranties into sales transactions with consumers - the Act implies warranties into sales transactions relating to the quality and standard of goods and services supplied. These warranties cannot be excluded from supply transactions with consumers.
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The information contained in this article has been prepared by the Minter Ellison Legal Group. Professional advice should be sought before applying the information to particular circumstances.
