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 Australian Parliament, addresses the regulation of international liner cargo shipping by controlling the conduct of shipping companies that operate as conferences. This legislation was introduced to manage the historically collusive practices of shipping conferences, which traditionally allocated routes, fixed prices, and managed capacity to prevent destructive competition and ensure market stability. Part X of the Act provides countervailing powers to exporters and importers through designated shipper bodies to negotiate with these conferences, enhancing their bargaining position. The Act falls under the purview of the Minister for Transport and Regional Services, with the responsibility delegated to the Parliamentary Secretary. The Explanatory Statement outlines the repeal of the designations of six outwards secondary shipper bodies, either due to their defunct status or their decision to withdraw from the designation process. This repeal was executed under the authority granted by the Acts Interpretation Act 1901, which allows for the repeal of instruments where the power to make or issue such instruments exists. The associations in question remain eligible to reapply for designation if they choose to resume their activities in the future.
Scope and Application
The Trade Practices Act 1974, specifically Part X, governs the conduct of international cargo shipping companies that operate as conferences, which are groups that jointly provide liner cargo shipping services and often agree on freight rates. These conferences have historically been allowed by governments to limit competition and stabilise freight rates, allowing them to allocate routes, fix prices, manage capacity, offer loyalty agreements, and pool revenue and losses. Part X also empowers exporters and importers by allowing them to negotiate with designated shipper bodies, which are either peak bodies representing the interests of all shippers or secondary bodies representing specific commodities, regions, or types of goods. The Minister for Transport and Regional Services has the authority to designate outwards secondary shipper bodies that represent the interests of Australian shippers in particular trades, commodities, regions, or as producers of exported goods. The legislation applies to shipping lines that are members of conferences and obligates them to negotiate with these designated shipper bodies regarding the services they intend to provide. The geographic reach of this legislation is national, as it applies to all international liner cargo shipping services involving Australian shippers. The Explanatory Statement addresses the repeal of the designations of six outwards secondary shipper bodies due to their defunct status or voluntary relinquishment of their designation, with the power to repeal derived from subsection 33(3) of the Acts Interpretation Act 1901. These associations may reapply for designation in the future should they wish to represent Australian shippers in negotiations with liner conferences.
Key Provisions
The Trade Practices Act 1974 (TPA) (Part X) regulates the conduct of international liner cargo shipping companies that operate as conferences, which offer joint shipping services often at agreed freight rates. Section 10.03(2) of Part X allows the Minister to designate associations as outwards secondary shipper bodies, provided they represent Australian shippers in a particular trade or goods, or shippers in a particular region. The current Minister has exercised this power to declare six associations as designated outwards secondary shipper bodies, which should be repealed because the associations are either defunct or no longer wish to retain their designation. The repeal is executed under subsection 33(3) of the Acts Interpretation Act 1901, which provides the power to repeal, rescind, revoke, amend, or vary any instrument. The six associations that are affected by the repeal are 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. Any of these associations may reapply for designation as outwards secondary shipper bodies under Part X in the future.
The obligations imposed by the Trade Practices Act 1974 (TPA) (Part X) on the parties it governs include the requirement for 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. The Act 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. These negotiations may include the allocation of routes, fixing of prices, management of capacity, offer of loyalty agreements, and pooling of revenue/losses.
The Trade Practices Act 1974 (TPA) (Part X) imposes civil and criminal consequences for breach of its provisions. The maximum penalty for contravening any provision of the Act is imprisonment for five years or a fine of up to $22,000 for an individual, or up to $110,000 for a body corporate. In addition, the Act provides for the imposition of pecuniary penalties for contravention of certain provisions, with the maximum penalty being three times the benefit obtained by the person as a result of the contravention. The Act also provides for the recovery of costs associated with legal proceedings. Breach of any provision of the Act may also result in the imposition of an injunction or other equitable remedy.