Competition And Consumer Act
The Competition and Consumer Act 2010 aims to promote fair trading and competition, and to protect consumers. It governs the conduct of suppliers, wholesalers, retailers and consumers. Formerly the Fair Trading Act 1974, it covers:
- product safety and labelling;
- unfair market practices;
- price monitoring;
- industry codes;
- collective bargaining;
- industry regulation – airports, electricity, gas, telecommunications
- mergers and acquisitions.
Exemptions can be made under the Act. Section 51(1) allows conduct that would normally contravene the Act if it is specifically permitted under certain Commonwealth, state and territory acts.
The Australian Competition and Consumer Commission administers the Act.
The Act prohibits behaviour such as anti-competitive conduct, which involves practices which lessen competition and result in higher prices and less choice for consumers.
When competitors agree on prices rather than compete, prices are forced up along the supply chain, innovation is suppressed and businesses are prevented from entering the market.
This involves competitors agreeing to do business in specific market segments. It can include allocating customers by geographic region or splitting contracts by value within a region.
This involves businesses pricing a product or service below cost with an aim to eliminate or damage competitors.
This is also called collusive tendering and involves competitors agreeing they will not genuinely compete with each other for tenders. It can include the deliberate suppression, rotation or withdrawal of bids.
Section 45 of the Act deals with cartels and prohibits “concerted practices” between corporations that “would have or be likely to have the effect of substantially lessening competition”. It also prohibits agreements, arrangements or understandings designed for the same purpose.
The Act prohibits the acquisition of shares or assets of a company by a corporation or a person if this would have, or be likely to have, the effect of substantially lessening competition in the market.
Australian Competition and Consumer Commission
The ACCC is the nation’s peak consumer protection and competition agency. It is responsible for administering and enforcing the Competition and Consumer Act. It promotes compliance and where necessary, takes legal action.
The commission’s main roles are education about the rights and responsibilities of businesses and consumers; and the investigation of alleged breaches of the Act and enforcement action. Priorities can vary year to year depending on the market, but enduring priorities are cartel conduct, anti-competitive conduct, product safety, vulnerable and disadvantaged consumers, and conduct impacting indigenous Australians.
In most cases, the ACCC advises a business it is being investigated. The ACCC’s compliance and enforcement policy states that when deciding whether to pursue a matter, the agency will consider:
- public interest;
- whether the conduct causes substantial harm to consumers or business;
- whether the conduct is by large businesses, given the potential for greater harm and influence;
- whether the conduct relates to a significant new or emerging issue;
- whether action is likely to deter or educate;
- whether action can clarify the law.
Where warnings and informal efforts to help a business or person comply with the Act have failed, the ACCC has several enforcement options. These include:
This is adopted where the potential risk from conduct is low. It generally involves a business agreeing to stop negative conduct, compensate those harmed by it, and take action to prevent a recurrence.
This is used in situations where a more severe punishment than an administrative solution is required but the matter could be resolved without legal proceedings.
Under this penalty, a business or individual agrees to accept responsibility for their actions, remedy the harm caused, and establish or improve processes to comply with the Act.
Legal action is taken where litigation is seen as the best option to achieve compliance. This is especially so when the conduct is by a large business, where the conduct has a substantial impact on competitors, and where litigation creates a strong deterrent effect. Possible outcomes include an injunction to restrain further offending, fines, orders for compensation or compliance, disqualifications of directors, convictions and prison.
In addition to the ACCC, the National Competition Council, Australian Competition Tribunal and Australian Energy Regulator were established under the Competition and Consumer Act.
National Competition Council
This council is a research and advisory body whose main function is to advise on the regulation of third-party access to services provided by monopoly infrastructure.
Australian Competition Tribunal
This body was established to review decisions made by the ACCC. The tribunal can adopt the powers and functions of the ACCC in determining whether to affirm, set aside or vary a decision. It reviews decisions about company mergers and acquisitions; authorisations that would otherwise be prohibited under the Act; third-party access to infrastructure; notices issued for exclusive dealing; and international liner cargo shipping.
Australian Energy Regulator
This body monitors, investigates and enforces compliance with national energy legislation. It assesses wholesale and retail energy markets, and energy markets, mainly in eastern and southern Australia. Its scope includes market pricing, performance reviews, demand forecasts and network revenue restrictions.
If you require advice or legal representation in any matter, please contact Armstrong Legal.