In November 2015, the Federal Government published its response to the recommendations on competition law and policy made by the Harper Review.

We summarise the key competition law changes below:

1. Simplification of all competition laws

 The Government will conduct a public consultation process with relevant stakeholders in order to simplify the provisions of the Competition and Consumer Act (in particular the prohibition on cartel conduct). 

What does this mean for clients?

  • An opportunity to provide comment on the shape and form of the new proposals.

2. Misuse of market power – no “effects” test … yet

The Government has not accepted the Harper recommendation to move to an “effects” test but will consult further with relevant stakeholders on proposed reforms. 

What does this mean for clients?

  • A further opportunity to provide comment on the shape and form of the “misuse of market power” test.

3. Cartels and “concerted practices”

Major broadening of the types of conduct between competitors that will be caught by competition law.

The Government will prohibit “concerted practices” that have the purpose, effect or likely effect of substantially lessening competition. A “concerted practice” is not defined but it implies conduct between competitors that is coordinated or otherwise undertaken jointly in some manner. The new law is not intended to catch unilateral conduct or mere parallel conduct but it is targeted at catching conduct that is less than an “understanding”.

No other major changes to the per se cartel conduct provisions other than to clarify that cartel conduct must involve actual or likely competitors (not “potential” competitors) and joint ventures (for production, supply, acquisition or marketing) and vertical supply agreements will only be problematic if they substantially lessen competition. There is also likely to be further simplification of the cartel provisions.

What does this mean for clients?

  • Companies in concentrated industries where price matching and parallel conduct is common will be at greater risk.
  • Information sharing with competitors (either directly or via third party association or customer/supplier) will be at greater risk.
  • Genuine joint ventures and vertical supply agreements will continue to be subject to a competition test.

4. Mergers

There will be two ways to “get your deal through” – 1) the existing informal clearance process under the substantial lessening of competition test; and 2) a new formal authorisation process before the ACCC (with a right of review to the Australian Competition Tribunal) under a substantially lessening competition test or a net public benefit test. The ACCC will also consult with stakeholders to consider how the informal clearance process can deliver more timely decisions.

What does this mean for clients?

  • A need to assess the competitive effects and public benefits of your merger to determine whether prospects of ACCC approval are greater under informal clearance or authorisation.
  • More merger authorisations given the ability to satisfy one of two tests, strict timelines for decisions and the benefit of the review by the Tribunal.
  • We anticipate the ACCC will commit to more timely decisions where merger parties provide more detailed information to the ACCC at the outset of the informal clearance process.

5. Third line forcing – no more notifications

Third line forcing will be subject to a competition test rather than being outright illegal.

What does this mean for clients?

  • No more third line forcing notifications.
  • A need to assess whether such conduct has the purpose or effect of substantially lessening competition in a market.

6. Resale Price Maintenance – new notification regime

RPM will continue to be automatically illegal but you can “notify” the ACCC about RPM and obtain immunity if the public benefits outweigh the anti-competitive detriments. There will also be an exemption for related parties. 

What does this mean for clients?

  • An ability to consider engaging in notified RPM conduct if the public benefits outweigh the anti-competitive detriments.

7. Secondary boycotts – higher penalties

The Government will increase the maximum penalty for secondary boycotts from $750,000 to $10 million.

What does this mean for clients?

  • Increased enforcement action in relation to secondary boycott behaviour.

8. Block exemptions available

The ACCC will be able to exempt certain types of conduct (e.g. efficiency enhancing arrangements such as shipping conference agreements and IP licences) from competition law on the basis they are unlikely to result in competition concerns or will generate a net public benefit.

What does this mean for clients?

  • Businesses can obtain considerable certainty via block exemption.

9. Access to nationally significant infrastructure

 Amongst other minor changes, the Government will change the “private profitability” test back to a “natural monopoly” test under criterion (b) and introduce a positive public benefit test under criterion (f).

What does this mean for clients?

  • More access applications in light of the change to criterion (b) and rejection of a “substantial increase in competition” test under criterion (a).
  • Increased documentation accompanying applications given that the Tribunal only can review decisions on the papers.