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 issue of collusive behaviour among international liner cargo shipping companies that operate as conferences to provide joint services. These companies traditionally allocate routes, fix prices, manage capacity, and pool revenue or losses to stabilise the market and prevent unsustainable price competition. Part X of the Act provides a regulatory framework to manage these conferences, ensuring they do not engage in practices that could be detrimental to the shipping industry's stability. Furthermore, the Act empowers exporters and importers by designating shipper bodies to negotiate with conferences, thereby strengthening their bargaining position. The policy objective is to balance the need for market stability with the protection of Australian shippers' interests, ensuring fair and efficient international liner cargo shipping services.
Scope and Application
The Trade Practices Act 1974, specifically Part X, focuses on the regulation of international liner cargo shipping, addressing the conduct of shipping companies that collaborate in conferences to provide joint services at agreed freight rates. This Act applies to international shipping companies participating in conferences, allowing them to allocate routes, fix prices, manage capacity, offer loyalty agreements, and pool revenue or losses, with the traditional aim of preventing destructive competition and ensuring market stability. Additionally, the Act empowers exporters and importers by designating specific shipper bodies that can negotiate with these shipping conferences to strengthen their bargaining position. The Minister for Transport and Regional Services has the authority to declare an association as a designated outwards secondary shipper body if it is deemed to represent the interests of Australian shippers in a particular trade, specific kinds of goods, a particular region, or producers of export goods from Australia. The application of Part X is within the jurisdiction of the Commonwealth of Australia, and while the Act itself does not explicitly provide for the repeal of a shipper body’s designation, the Acts Interpretation Act 1901 allows for the repeal, rescission, revocation, amendment, or variation of instruments, enabling the repeal of designations where necessary. The recent review by the Department of Transport and Regional Services led to the repeal of designations for six outwards secondary shipper bodies due to their inactivity or expressed desire to cease their designation.
Key Provisions
The Trade Practices Act 1974 (TPA), specifically Part X, regulates the conduct of international liner cargo shipping companies that operate as conferences, allowing them to set freight rates and allocate routes, among other things (section 10.03). The TPA permits the Minister to designate peak and secondary shipper bodies, which can negotiate with conferences on behalf of Australian exporters and importers (section 10.03). The Explanatory Statement refers to the decision to repeal the designation of six outwards secondary shipper bodies, including the Australian Dried Fruits Shippers’ Association, the Australian Malt Exporters Committee, the Australian Prawn Promotion Association Ltd, the Dairy Industry Shipping Association, the Australian Onion Association, and the Wool Industry Shipping Group (section 10.03(2)). These associations are either defunct or no longer wish to retain their designation, leading to their repeal. The repeal was executed under subsection 33(3) of the Acts Interpretation Act 1901, which allows for the repeal of instruments made under an Act, in this case, the TPA (subsection 33(3) Acts Interpretation Act 1901).
The TPA imposes obligations on shipping lines that are members of a conference to negotiate with designated shipper bodies in relation to the liner cargo shipping services they intend to provide (section 10.03). Shipper bodies designated by the Minister have the authority to negotiate with conferences on behalf of Australian exporters and importers (section 10.03). The repealed shipper bodies were required to represent the interests of Australian shippers in a particular trade or commodity, or shippers in a particular part of Australia, or producers of goods exported from Australia (subsection 10.03(2) TPA). The repeal of their designation means that they are no longer recognised as having the authority to negotiate with conferences on behalf of Australian exporters and importers. However, these associations can 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 (subsection 10.03(2) TPA).
There are no specific offences, penalties, or consequences mentioned in the Explanatory Statement for the repeal of the designation of the outwards secondary shipper bodies. However, any failure to comply with the obligations imposed by the TPA, such as failure to negotiate with designated shipper bodies, may result in legal action being taken against the shipping lines. The TPA provides for both civil and criminal penalties for breaches of its provisions, including fines and imprisonment (section 123). The maximum penalties for contravening the TPA depend on the nature and seriousness of the offence, and can range from fines of up to $1.1 million for corporations and $220,000 for individuals, to imprisonment for up to 10 years (section 123). The Explanatory Statement does not provide information on any potential legal action that may be taken against the shipping lines for their failure to negotiate with the repealed shipper bodies.