Australian Law A very noticeable feature of the Trade Practices Act is the inclusion of some provisions dealing not only with anti-competition generally, but specifically those covering anti-competitive practices in the telecommunications industry. This represents a major advancement in the protection of yet another potentially abusive area of consumer services, which can come up with the reduction of trade barriers, growth of financial markets and improvements in information technology have contributed to a major expansion of international commerce. This expansion has been accompanied by increased requirements for logistics services, and a restructuring of services to support increasingly global businesses. Globalization and microeconomic reform (e.g. deregulation and privatization) have contributed to major changes in Australian industry. In particular, reduced levels of protection have exposed many local firms to increased international competition.
Their responses have included a greater emphasis on logistics activities in order to improve product quality, increase responsiveness to market requirements, and reduce costs. After implementation of the Trade Practices Act in 1974 there have also been significant changes in industry structure, with contraction of some local activities (e.g. clothing, textiles, footwear) and expansion in other areas (e.g. tourism).
Preliminary information on market structure suggests that there is significant variation in the level of competition within the logistics system. For example, one major operator reportedly holds 80 per cent of the primary market for pallet and crate pools in Australia. In contrast, there are many operators in the road transport industry. In announcing its decision not to intervene in the proposed acquisition of Finemore Holdings by Toll Holdings, the Australian Competition and Consumer Commission (ACCC) stated that competition among transport and logistics providers is fierce (ACCC 2000a, p.
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The reasons include relatively low barriers to small-scale entry and the countervailing power of customers. The Commission noted that large customers control substantial volumes of business, and have the option of using either in-house services or contractors. Small carriers have access to a large number of small logistics service providers. There have been several convictions of operators in the express freight industry for breaches of the Trade Practices Act 1974 (ACCC 1996, p. 1; ACCC 2000b, p.
1; TPC 1994, p. 50).
The activities have included a long-running price fixing cartel (1994); misleading or deceptive conduct, involving a practice of representing those goods would be transported by air when they were actually sent by road (1996); and attempts to implement collusive tendering arrangements (1998).
Broadly speaking, Part IV of the Trade Practices Act prohibits anti-competitive agreements and exclusionary provisions, including primary or secondary boycotts (s.45); misuse of market power (s. 46); exclusive dealing (s. 47); resale price maintenance (ss.
48, 96-100); and mergers, which would have the effect or are likely to effect of substantially lessening competition in a substantial market (ss. 50, 50A).
In some situations, the prohibition is subject to a competition test. Most conduct can be exempted from legal proceedings by the processes of authorization or notification. Sections45 to 45D deal with a variety of proscribed agreements between businesses. Agreements which involve, for example, market sharing or which restrict the supply of goods are prohibited if they have the purpose or effect of substantially lessening competition in a market in which the businesses operate.
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Agreements that contain an exclusionary provision. Sometimes referred to as a primary boycott’, these are agreements between persons in competition with each other which exclude or limit dealings with a particular supplier or customer or a particular class of suppliers or customers (s. 45(2)).
Exclusionary provision is defined in s. 4D. Agreements that fix prices (s. 45A).
This includes agreements, which purport to recommend prices but which in reality fix prices by agreement.
Some joint ventures and collective buying groups are excluded from this prohibition. The ACCC is able to authorize agreements between competitors to fix the price of goods, where significant benefit to the public from the agreement can be established. Secondary boycotts are prohibited by s.45D. They involve action by two or more people. For example, members of a union or trade association, which hinders or prevents a third person from: supplying goods or services to a business; acquiring goods or services from a business; or engaging in interstate or overseas trade or commerce; where the target business is not the employer of those imposing the boycott. A boycott of this kind will be prohibited if it substantially lessens competition. The ACCCs statutory function in considering an application for authorization is to apply one of two tests, depending on the conduct in question.
For agreements that may substantially lessen competition, the applicant must satisfy the ACCC that the agreement results in a benefit to the public that outweighs any anti-competitive effect. For primary and secondary boycotts, third line forcing, resale price maintenance and mergers, the applicant must satisfy the ACCC that the conduct results in a benefit to the public such that it should be allowed to occur. Except for mergers, the ACCC must publish a draft determination and provide the opportunity for a conference of interested parties, before making a final decision whether to grant authorization. The immunity conferred by authorization operates only from the time the ACCC grants final authorization. The Tribunal is required to determine appeals from the ACCC in merger authorization cases within 60days (s. 102(1A)).
However, this time limit does not apply if the matter is especially complex or other special circumstances arise (s.
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Moreover, authorization applications for mergers are covered by additional specific legislative requirements. The ACCC must make a decision on such applications within 30days of receiving them (plus any time taken by the applicant to provide additional information sought by the ACCC).
In deciding whether to grant the authorization, the ACCC will consider all potential public benefits from the proposed merger. It is specifically required by the Trade Practices Act to regard as a public benefit because of a significant increase in the real value of exports, or significant import substitution. The Trade Practices Act of 1974 takes into account all relevant matters that relate to the international competitiveness of Australian industry. Sources: www.pc.gov.au www.treasury.wa.gov.au/TreasuryPublications/access 2.pdf www.accc.gov.au/telco/foxtel_optus/telstra/Multime dia_draft.pdf.