Both houses of the Australian Parliament have passed a repeal of subsection 51(3) of the Competition and Consumer Act 2010 (Cth) ("CCA"). Following the repeal, owners of intellectual property rights in Australia must comply with certain competition rules from which they previously enjoyed an exemption. The repeal is effective on September 13, 2019.
Subsection 51(3) of the CCA contained exceptions for intellectual property ("IP") owners to the majority of the restrictive trade prohibitions contained in Part IV of the CCA. In particular, under this provision, IP owners were exempt from the provisions relating to:
- cartel conduct;
- making or giving effect to a contract, arrangement, or understanding, or engaging in a concerted practice, for the purpose, or with the effect or likely effect, of substantially lessening competition (section 45); and
- engaging in exclusive dealing (section 47).
Following the repeal of subsection 51(3), conduct involving intellectual property rights will be subject to the anticompetitive conduct prohibitions in Part IV of the CCA in the same manner as all other non-IP related conduct. The ACCC has released guidelines that state its approach to enforcement of sections 45, 47, and the cartel prohibition following the repeal. The guidelines also provide examples of conduct that the ACCC considers likely to violate these provisions.
Critically, the repeal has retrospective effect and any existing arrangements may constitute a breach of the CCA. Businesses should urgently confirm that both their existing and any proposed IP arrangements are compliant with the restrictive trade prohibitions contained in Part IV of the CCA before September 13.
The guidelines are available on the ACCC's website.