EXPLANATORY STATEMENT
Issued by the authority of
the Parliamentary Secretary to the Minister for Transport and Regional Services
Trade Practices Act 1974
DECLARATIONS PURSUANT TO SUBSECTION 10.03(2) OF PART X
Part X (International liner cargo shipping) of the Trade Practices Act 1974 regulates the market conduct of international cargo shipping companies that collaborate as ‘conferences’ in order to provide joint liner cargo shipping services, often at agreed freight rates. Liner shipping operators have traditionally been permitted by governments around the world to act in concert as ‘conferences’ in order to limit competition and stabilise freight rates. They allow members to: allocate routes; fix prices; manage capacity; offer loyalty agreements; and pool revenue/ losses. The traditional justification for allowing collusive behaviour of this kind is that it prevents destructive competition, which could lead to unsustainable prices below cost, and so market instability, which would impact on the capability of ocean carriers to provide the frequent, reliable services valued by shippers.
As well as permitting ocean carriers to work together in conferences, Part X provides exporters and importers with countervailing powers to strengthen their negotiating ability with conferences, through shipper bodies designated by the Minister for that purpose. Part X obligates shipping lines who are members of a conference to negotiate with designated shipper bodies in relation to liner cargo shipping services they intend to provide.
Designated peak shipper bodies deal with matters affecting liner trades as a whole whereas designated secondary shipper bodies may be nominated to negotiate with ocean carriers in relation to, for example, matters affecting shippers of a particular commodity, or shippers in a particular state/ territory.
Pursuant to subsection 10.03(2) of Part X, the Minister may declare an association to be a designated outwards secondary shipper body, provided the Minister is of the opinion that, in relation to outwards liner cargo shipping, the association represents the interests of Australian shippers in a particular trade, or of Australian shippers of particular kinds of goods, or of shippers in a particular part of Australia, or of producers of goods of a kind exported from Australia, and that such a declaration is desirable.
Part X falls within the portfolio responsibility of the Minister for Transport and Regional Services; this responsibility has been delegated to the Parliamentary Secretary to the Minister for Transport and Regional Services.
By force of the Legislative Instruments Act 2003, legislative instruments made before 1 January 2000 will be automatically repealed on 31 December 2007 unless they are registered with the Federal Register of Legislative Instruments on or before that date. In the light of this, the Department of Transport and Regional Services (DOTARS) conducted a review of all affected shipper bodies currently designated pursuant to section 10.03 of Part X. As a result of that review, it was discovered that the designations of six outwards secondary shipper bodies should be repealed because the associations are either defunct or no longer wish to retain their designation. These associations are outlined below.
Although there is no direct provision in Part X for the repeal of a shipper body’s designation, subsection 33(3) of the Acts Interpretation Act 1901 provides that:
“Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall , unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.”
Instruments of repeal have therefore been executed for the following designated outwards secondary shipper bodies:
- the Australian Dried Fruits Shippers’ Association, designated on 9 May 1990, which inquiries indicate to be defunct;
- the Australian Malt Exporters Committee, designated on 9 October 1990, which inquiries indicate to be defunct for Part X purposes;
- the Australian Prawn Promotion Association Ltd, designated on 11 April 1997, which inquiries indicate to be defunct;
- the Dairy Industry Shipping Association, designated on 2 May 1990, which inquiries indicate to be defunct;
- the Australian Onion Association, designated on 3 September 1990: a representative of the Association has advised that it no longer requires designation as an outwards secondary shipper body; and
- the Wool Industry Shipping Group, designated on 17 May 1990: a representative of the Wool Commodity Group Pty Limited advised that the Group no longer requires designation as an outwards secondary shipper body.
It is open to any of the above associations to reapply for designation as outwards secondary shipper bodies pursuant to Part X should they re-establish and/ or wish to be eligible to negotiate with liner conferences in relation to international liner cargo shipping services in the future.
Overview
The Trade Practices Act 1974, enacted by the Parliament of Australia, addresses the regulation of market conduct for international liner cargo shipping companies that operate as conferences. These conferences, historically permitted by governments to collaborate on route allocation, price fixing, capacity management, and revenue pooling, were seen as a means to stabilise freight rates and prevent destructive competition. Part X of the Act provides exporters and importers with countervailing powers through designated shipper bodies to negotiate with these conferences. The objective of the Act is to ensure fair market practices while maintaining the stability and reliability of international shipping services. The authority to designate peak and secondary shipper bodies lies with the Minister for Transport and Regional Services, who has delegated this responsibility to the Parliamentary Secretary. This legislative instrument, made under the authority of the Legislative Instruments Act 2003, includes the repeal of designations for six outward secondary shipper bodies, either due to their being defunct or having opted out of the designation process.
Scope and Application
The Trade Practices Act 1974, specifically Part X concerning international liner cargo shipping, governs the conduct of shipping companies that operate as conferences, allowing them to set freight rates and manage their services collectively. This Act applies to entities participating in international liner cargo shipping conferences, including both shipping companies and designated shipper bodies that represent the interests of Australian exporters and importers. These shipper bodies can be either peak or secondary, with the latter focusing on particular commodities or geographic regions within Australia. The Act applies nationally across Australia and is administered by the Minister for Transport and Regional Services, with the responsibility delegated to the Parliamentary Secretary to the Minister for Transport and Regional Services. The legislation allows for the declaration of associations as designated outwards secondary shipper bodies if they represent specific Australian shipper interests, although the Act does not provide a direct repeal mechanism for such designations. However, the Acts Interpretation Act 1901 allows for the repeal of such designations through instruments. Following a review by the Department of Transport and Regional Services (DOTARS), the designations of six outwards secondary shipper bodies have been repealed due to their inactivity or expressed disinterest in retaining their status.
Key Provisions
The Trade Practices Act 1974, specifically Part X, governs the conduct of international liner cargo shipping companies, known as conferences, which collaborate to provide joint shipping services and often agree on freight rates (sections 10.03, 10.03(2)). These conferences are allowed to allocate routes, fix prices, manage capacity, offer loyalty agreements, and pool revenue and losses to avoid destructive competition and ensure market stability. The Act also empowers exporters and importers by designating shipper bodies to negotiate with conferences. Designated peak shipper bodies handle broader issues affecting all liner trades, while designated secondary shipper bodies may negotiate on behalf of shippers of particular commodities or regions.
Under subsection 10.03(2) of Part X, the Minister has the authority to declare an association as a designated outwards secondary shipper body if it is deemed to represent Australian shippers' interests in a specific trade, type of goods, region, or producers of goods exported from Australia. The Minister must believe that such a declaration is desirable. The responsibility for Part X falls under the Minister for Transport and Regional Services, delegated to the Parliamentary Secretary to the Minister for Transport and Regional Services.
Following a review by the Department of Transport and Regional Services (DOTARS) under the Legislative Instruments Act 2003, it was determined that the designations of six outwards secondary shipper bodies should be repealed as these associations are either defunct or no longer wish to retain their designation. These associations include the Australian Dried Fruits Shippers’ Association, Australian Malt Exporters Committee, Australian Prawn Promotion Association Ltd, Dairy Industry Shipping Association, Australian Onion Association, and the Wool Industry Shipping Group. Although Part X does not explicitly provide for the repeal of a shipper body’s designation, the Acts Interpretation Act 1901 allows for the repeal of such designations under the authority conferred to make, grant, or issue instruments.
The repealed designations were formally executed through instruments of repeal, and these associations have the option to reapply for designation in the future if they wish to be eligible to negotiate with liner conferences. The repeal of these designations ensures that only active and relevant shipper bodies remain eligible to negotiate on behalf of Australian shippers in the international liner cargo shipping market.