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 was enacted to regulate the market conduct of international liner cargo shipping companies operating as conferences. These companies traditionally collaborate to limit competition and stabilise freight rates by allocating routes, fixing prices, managing capacity, offering loyalty agreements, and pooling revenue or losses. The policy objective is to prevent destructive competition and market instability that could impact the reliability and frequency of services valued by shippers. Part X of the Act provides countervailing powers to exporters and importers through designated shipper bodies to negotiate with conferences. The Act allows the Minister for Transport and Regional Services to declare associations as designated outwards secondary shipper bodies if they represent the interests of Australian shippers in a particular trade, of particular kinds of goods, in a particular part of Australia, or of producers of goods exported from Australia. The legislation aims to address the issue of defunct or inactive associations by repealing their designations to ensure that only active and relevant associations are recognised for negotiation purposes.
Scope and Application
The Trade Practices Act 1974, specifically Part X, governs the conduct of international liner cargo shipping companies that operate as conferences to provide joint services, including the setting of freight rates. The Act applies to shipping lines that form conferences, as well as designated shipper bodies, which are authorised to negotiate on behalf of Australian exporters and importers. These shipper bodies include peak associations that represent the interests of shippers across all trades, and secondary bodies that may focus on particular commodities or regions. The Act falls within the jurisdiction of the Commonwealth of Australia and applies nationally. The Explanatory Statement details the process of repealing the designations of six outward secondary shipper bodies due to their inactivity or expressed disinterest in maintaining their designation. This repeal is executed under the authority of the Acts Interpretation Act 1901, which allows for the revocation of designations when associations are defunct or no longer wish to retain their status. The repealed 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 Wool Industry Shipping Group. These associations have the option to reapply for designation should they become active again and wish to negotiate with liner conferences.
Key Provisions
The Trade Practices Act 1974 (TPA), under Part X, specifically subsection 10.03(2), allows the Minister for Transport and Regional Services to designate certain associations as outwards secondary shipper bodies. These associations are meant to represent the interests of Australian shippers in particular trades or regions, and their designation is considered desirable by the Minister (subsection 10.03(2)). These designated shipper bodies have the authority to negotiate with international liner conferences on behalf of shippers, aiming to balance the power dynamics and provide a countervailing force to the conferences. This legislative framework ensures that Australian exporters and importers have a voice in the negotiation of international liner cargo shipping services.
The designated shipper bodies have specific obligations under the Act. These include representing the interests of Australian shippers in their respective trades or regions, engaging in negotiations with international liner conferences to secure fair and reasonable shipping services, and ensuring that the interests of the shippers they represent are adequately considered and protected in these negotiations. The Act mandates that these shipper bodies must act in good faith and with due diligence, striving to achieve outcomes that are beneficial to the shippers they represent.
Failure to comply with the obligations outlined in the Act can result in various consequences. While the Act does not explicitly state penalties for non-compliance, breaches of the Act can lead to legal actions being taken against the shipper bodies, potentially resulting in fines or other legal repercussions. The Act also provides for the possibility of the Minister revoking the designation of a shipper body if it is found to be in breach of its obligations. Such revocation would mean that the shipper body would lose its authority to negotiate on behalf of Australian shippers, which could significantly impact the negotiating power of the shippers it represents.
Additionally, the Act includes provisions for the repeal of the designation of outwards secondary shipper bodies. Under subsection 33(3) of the Acts Interpretation Act 1901, the power to make an instrument includes the power to repeal, rescind, revoke, amend, or vary it. This provision allows the Minister to repeal the designation of a shipper body if it is determined that the association is defunct or no longer wishes to retain its designation. The Act provides a clear pathway for the repeal of designations, ensuring that only active and relevant associations continue to have the authority to negotiate on behalf of Australian shippers.