Trade Practices Regulations (Amendment) 1995 No. 248
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 248
Issued by the authority of the Assistant Treasurer
Trade Practices Act 1974
Trade Practices Regulations (Amendment)
Subsection 172(1) of the Trade Practices Act 1974 (the Principal Act) provides that the Governor-General may make regulations for the purposes of the Principal Act.
On 11 April 1995, the Commonwealth, States and Territories agreed to implement the national competition policy reform package. Subsequently, the Competition Policy Reform Act 1995 (the CPR Act), which is the central element of the policy package, was passed by Parliament (30 June 1995) and received the Royal Assent (20 July 1995).
The CPR Act, among other things, makes major amendments to the Principal Act. These amendments will commence in three stages. The first stage of the amendments commence on 17 August 1995.
(a) At this time, the competitive conduct rules in Part IV, and the authorisation and notification provisions in Part VII, will be amended as follows. (The competitive conduct rules are those rules which prohibit anti -competitive behaviour such as collusion, misuse of market power, exclusive dealing and resale price maintenance, and anti-competitive acquisitions.)
(i) The specific prohibition on price discrimination (section 49 of the Principal Act) will be repealed. Currently, section 49 of the Principal Act prohibits price discrimination between purchasers of goods of like grade and quality where such discrimination will substantially lessen competition in an Australian market.
(ii) The competitive conduct rules will be amended to ensure that they apply in respect of both goods and services in a similar manner. (Many of the prohibitions in the competitive conduct rules currently only apply to goods.)
(iii) The prohibition on resale price maintenance (ie where a supplier specifies the minimum price at which goods or services can be re-sold) will become subject to authorisation. Authorisation is a process whereby the Trade Practices Commission (the Commission) on public interest grounds, grant immunity in respect of certain forms of anti-competitive conduct that would otherwise be unlawful.
(iv) Third line forcing conduct can be notified. Briefly, third line forcing is a form of exclusive, dealing whereby a person will only supply goods or services (eg a car) to a purchaser on the condition that the purchaser also purchases other goods or services (eg finance) from a third party. Notification is a process whereby the person wishing to engage in the prohibited conduct gives notice of that conduct to the Commission. If the Commission lets the notification stand on the basis that there is some net public benefit, the person can engage in the third line forcing conduct with immunity.
(b) Also commencing at this time will be new provisions of the Principal Act which facilitate the extension of the competitive conduct rules (by way of State and Territory application legislation) to the entire Australian economy.
The Trade Practices Regulations (Amendment) (the Amending Regulations) amend the Trade Practices Regulations (the Principal Regulations) in order to support this first stage of amendments to the Principal Act. The Amending Regulations are described in the attachment.
The regulations commence on the commencement of Part 2 of the CPR Act (which is scheduled to commence on 17 August 1995).
ATTACHMENT
Regulation 3 and subregulations 8.7 to 8.15 (inclusive) of the Amending Regulations - the Competition Code
Under the competition policy reforms, a body of text known as the Competition Code, has been created. The Competition Code text consists of the (amended) competition provisions of the Principal Act and Principal Regulations.
The States and Territories have agreed to apply the Competition Code text to all persons within their legislative competence, thus ensuring the entire Australian economy is covered by the competitive conduct rules in the Principal Act and/or the Competition Code. These rules will be administered by a single institution - the Australian Competition and Consumer Commission.
Subregulation 3.1 of the Amending Regulations will insert a definition of Competition Code in regulation 2 of the Principal Regulations. Subregulation 3.2 provides that references in the Principal Regulations to the Principal Act are, where appropriate, read as including references to the Competition Code.
Subregulations 8.7 to 8.15 (inclusive) of the Amending Regulations will amend Form F (mergers: application for authorisation) of Schedule 1 of the Principal Regulations to reflect the fact that, as a result of the operation of the Competition Code, the applicant may be a person other than a body corporate and that the person whose assets are to be acquired may also be a person other than a body corporate. These regulations also make changes which are consequential upon amendments made to the Principal Act by the Trade Practices Legislation Amendment Act 1992.
Regulations 4, 7 and 10, and subregulations 8.2, 8.5, 8.6 and 9.1 of the Amending Regulations -authorisation of resale price maintenance
These regulations deal with authorisation applications for resale price maintenance which will now be possible as a result of amendments to the Principal Act.
(a) Regulation 4 and subregulation 8.6 of the Amending Regulations amend regulation 7 and Schedule 1 of the Principal Regulations to insert the application form - new Form EA.
(b) Subregulation 9.1, and regulations 7 and 10, of the Amending Regulations amend regulation 25 and Schedules 1A and 1B of the Principal Regulations to insert the application fee ($7500), with a concessional fee ($1500) for subsequent applications in respect of the same (or closely related) markets.
(c) Subregulations 8.2 and 8.5 of the Amending Regulations amend Forms A and D of Schedule 1 of the Principal Regulations (respectively) to make amendments consequential upon section 17 of the CPR Act which amends subsection 90(8) of the Principal Act.
Regulations 5, 6 and 10, and subregulations 8.16, 8.17, 8.18 and 9.2 of the Amending Regulations - third line forcing notification
These regulations deal with the practice of exclusive dealing defined in subsections 47(6) and (7), and paragraphs 47(8)(c) and (9)(d) of the Principal Act - commonly referred to as third line forcing. Third line forcing is prohibited, regardless of its effect on competition. Authorisation is currently available. The amendments to the Principal Act will provide for the notification of third line forcing conduct.
Under the notification provisions of the Principal Act, a person can engage in exclusive dealing (with immunity) by giving notification to the Commission. The Commission can revoke this notice by itself giving notice. However, unlike other forms of exclusive dealing, protection for third line forcing will not commence immediately upon notification. Rather, a 'prescribed period' must first expire. If, within the prescribed period, the Commission gives a notice under subsection 93A(2) of the Principal Act, then the protection will not commence unless and until the Commission decides not to give its notice under new subsection 93(3A) of the Principal Act.
These regulations set out the prescribed period and the fee for third line forcing notifications, amend the current notification form, and make consequential amendments to other regulations and forms.
(a) Until 30 June 1996, the prescribed period will be 21 days; thereafter, it will be 14 days - regulation 5 of the Amending Regulations which amends regulation 9 of the Principal Regulations.
(b) The notification fee is $1000, with a concessional fee of $200 for subsequent notifications in respect of the same (or closely related) markets - subregulations 9.2 and 10.1 of the Amending Regulations which amend Schedules 1A and 1B of the Principal Regulations.
(c) Subregulations 8.16 and 8.17 of the Amending Regulations amend the current notification form (Form G in Schedule 1 of the Principal Regulations).
(d) Regulation 6 and subregulation 8.18 of the Amending Regulations make consequential amendments to regulations 20 and Form J of Schedule 1 (respectively) of the Principal Regulations.
Subregulations 8.3 and 8.4 of the Amending Regulations - similar treatment of goods and services
These regulations amend Form C of the Principal Regulations, consequential upon the amendments to the Principal Act made by paragraphs 16(b) and (c) of the CPR Act. (Paragraphs 16(b) and (c) of the CPR Act amend section 88 of the Principal Act to permit authorisation of price fixing covenants involving goods, thus ensuring goods are treated in a similar manner to services.)