In brief

  1. The House of Representatives has passed a Bill to prohibit anti-competitive ‘price signalling’, subject to new amendments. This marks a further step towards the enactment of this Bill.
  2. The Bill now contains an amended process for specifying the goods and services in relation to which ‘price signalling’ disclosures are prohibited. This process may be used to extend the future application of the Bill (if enacted) to goods and services beyond the banking sector.
  3. The Bill has also been amended to significantly limit the outright prohibition against private disclosures of price-related information to a competitor. Importantly:
    • The Bill now only prohibits these disclosures where they are not made in the ordinary course of business. 
    • Three further exceptions now protect these disclosures by banks and other credit providers, in the context of work-outs, syndicated loans and credit distribution arrangements.
  4. The amendments helpfully limit the Bill’s very broad reach and go some way to addressing some major concerns about the Bill. However, numerous criticisms of the Bill remain unaddressed.
  5. The Bill will next be considered by the Senate, once the Senate sits again from mid-August.


On 7 July 2011, the House of Representatives passed the government’s Competition and Consumer Amendment Bill (No.1) 2011 (Bill) to prohibit anti-competitive ‘price signalling’. The Bill was previously introduced into Federal Parliament on 24 March 2011, to amend the Competition and Consumer Act 2010 (Cth) (CCA).

A detailed outline of the Bill was provided in our previous alert titled ‘Government releases Price Signalling Bill’.1 That alert discussed the Bill’s broad prohibitions against:

  • private disclosure of price-related information to a competitor (private disclosure prohibition), and 
  • disclosure, whether public or private, of any relevant aspect of a corporation’s commercial strategy, where the disclosure aims to substantially lessen competition (general disclosure prohibition),

together with the Bill’s ten former exceptions to the above prohibitions.

The Bill has now been passed subject to certain amendments, as set out below, and now contains thirteen exceptions to the two core prohibitions. The growing number of exceptions again highlights the potentially broad reach of the principal prohibitions.

The Hon David Bradbury MP, Parliamentary Secretary to the Treasurer, stated in moving the amendments that they contain further explicit exemptions that will ‘give the banking industry absolute certainty that it can continue to engage in legitimate business conduct without breaching’ the new price signalling prohibitions. Whether or not the ‘absolute certainty’ said to have been given is in fact the practical outcome of the exceptions, remains to be seen.

The amended Bill had bipartisan support in the Lower House—from the government, the Opposition and the Greens.

Three new amendments

Relevant goods and services

As we noted in our earlier alert, a key element of the proposed reforms is that the scope of the new prohibitions is not defined in the Bill. Rather, it is left for regulations to define the particular goods and services to which the Bill would apply. Draft regulations have not been released, however the government has confirmed that the prohibitions will initially target the banking sector. It is not yet known which particular goods and services will be covered.

There are strong concerns about using regulations to define the scope of the Bill, as they would enable the legislation (if enacted) to be extended relatively simply and quickly. This gives rise to the risk that businesses in certain industries could become affected by the government’s proposed prohibitions, without the opportunity to comment and without parliament considering the implications in the same level of detail as for the Bill.

In response to these concerns, the amended Bill states that regulations will prescribe the process for making future regulations specifying the classes of further goods and services to be caught by the prohibitions. These procedural regulations will not apply to the drafting of initial regulations to identify relevant goods and services in the banking sector. In other words, the procedural regulations will set out the process for altering and/or extending the Bill’s application in the future.

When the Bill was debated in the Lower House, Liberal MP Bruce Billson commented that the ACCC Chairman had been overzealous in ‘saying he can imagine any number of markets to which these provisions should apply.’2 In effect, the above procedural amendment affirms that the banking sector is the Bill’s only intended inital focus. This is further reinforced by the banking sector-specific nature of the three new exceptions discussed below.

‘Ordinary course of business’ exclusion

The amended Bill excludes disclosures made in the ordinary course of business from the application of the per se private disclosure prohibition. The onus would be on the ACCC to show that any disclosure that it alleges is in breach of this prohibition, was not made in the ordinary course of business.

This is a significant amendment that is likely to seriously limit the scope of the private disclosure prohibition.

The precise impact of the exclusion is unclear, however, as the Bill does not define the phrase ‘ordinary course of business’. Subject to its interpretation by the ACCC and ultimately by the courts, the phrase may in effect amount to a legitimate business justification defence for private price-related disclosures that are not contrary to normal competitive processes. In other words, the phrase may import a pseudo-competition test into the private disclosure prohibition (that otherwise would apply per se).

Exceptions for work-outs, syndicated lending and credit distribution arrangements

Three new exceptions to the private disclosure prohibition have been introduced into the Bill, to protect disclosures by banks and other credit providers in the context of work-outs, syndicated lending and credit distribution arrangements.

It is not clear if the government has considered whether these exceptions could potentially apply outside the banking sector, if future regulations are passed to expand the goods and services in relation to which ‘price signalling’ disclosures are prohibited.


As confirmed at the time the new amendments were introduced, it is intended that the private disclosure prohibition would not apply in the context of work-out arrangements. The reason given is to enable banks to help financially distressed businesses avoid insolvency, through commercially sensitive and time-critical discussions with other banks.

The work-out exception would apply where two or more corporate lenders have been notified of a ‘borrower insolvency situation’. A ‘borrower insolvency situation’ would exist where there are reasonable grounds for suspecting that the borrower or its guarantor/indemnifier may be or may become insolvent. Notification must be given to the lenders by the borrower or by its guarantor/indemnifier.

Unfortunately, by limiting the work-out exception to notified ‘borrower insolvency situations’, the exception will not apply to restructures or work-outs prior to insolvency or near-insolvency, which are commonplace in practice. These latter circumstances could be covered by the Bill’s provision for notification under section 93 of the CCA, however this notification process is cumbersome.

It is not clear what would constitute reasonable grounds for suspecting insolvency (ie how proximate any insolvency situation would need to be). In addition, it is worth considering whether notification of a ‘borrower insolvency situation’ could give rise to any risk of premature administration or allegations of insolvent trading in respect of the borrower or its guarantor/indemnifier.

Syndicated lending

The aim of the second new exception to the private disclosure prohibition is to provide lenders with the necessary comfort to continue to engage in syndicated loan discussions. The exception would protect disclosures between two or more corporate lenders that supply (or are likely to supply) loans or credit to the same borrower. This new exception would operate in addition to the pre-existing exception to protect disclosures among participants or proposed participants in a joint venture. It aims to address concerns that the joint venture exception was inadequate to deal with the range of possible syndicated lending structures. This new exception is a welcome addition.

Credit distribution arrangements

The third new exception to the private disclosure prohibition is designed to protect discussions between banks, mortgage brokers and financial planners when making credit distribution arrangements. According to the amended Bill, a private price-related disclosure to another person would be legal where one of the persons is a credit provider and another person provides a credit service (within the meaning of the National Consumer Credit Protection Act 2009 (Cth)), and the disclosure is made in the course of that relationship.


The amendments set out above are welcome because they limit the very broad scope of the Bill—in particular the per se private disclosure prohibition. As such, the amendments help to address some criticisms of the Bill and its application to routine wholesale banking operations.

That the government perceives a need for thirteen exceptions, however, serves to reinforce the prohibitions’ overreach. Therefore there remain some fundamental concerns with the structure and emphasis of the Bill, that mean it is still neither apt nor proportionate to the harm it seeks to address. These concerns include, for example, the Bill’s:

  • targeting of one particular sector and type of conduct
  • lack of emphasis on whether targeted conduct is anti-competitive, for instance through a focus on unilateral disclosure rather than mutual information-sharing
  • over-reliance on long and prescriptive provisions in an area more suited to case-by-case basis consideration by the judiciary, and
  • reliance on public authorisation and section 93 notification processes to deal with legitimate conduct otherwise caught by the broad prohibitions.

As a result, there remains substantial scope for the Bill to prohibit legitimate business conduct, including through the general disclosure prohibition.

The above concerns were discussed at length in submissions made to:

  • the House of Representatives Standing Committee on Economics Inquiry into the Bill and the Competition and Consumer (Price Signalling) Amendment Bill 20103, and 
  • the Senate Economic References Committee Inquiry into Competition within the Australian banking sector.

Both of these inquiries have now produced detailed reports. Importantly, the majority report on Competition within the Australian banking sector states that:

new legislation should not prevent legitimate communication of pricing information that is not anti-competitive in its intent or effect. The Committee believes that it is better for a bank engaging in anti-competitive price signalling to go undetected than it is for a bank conducting legitimate communications to be inappropriately penalised. In this vein, the Committee is concerned that the Government's over-reliance on the proposed new ACCC notification regime in its bill may be cumbersome and restrictive for the banks, as well as a burden on the ACCC. The far better alternative is to replace the prohibitions with a competition test that applies to both public and private communications.

The amended Bill represents a compromise between the Coalition and government positions in respect of price signalling. It does not, however, fully address the above majority finding of the Senate Economic References Committee or many other concerns raised during the processes of considering the Bill. It should also be noted that the government senators’ minority report on Competition within the Australian banking sector explicitly rejected the above majority recommendation.

The government claims that the Bill (including the new amendments) will deliver increased certainty and reduced anti-competitive ‘price signalling’ conduct. It is not clear, however, that the Bill will necessarily achieve either of these objectives in practice. On the issue of certainty, for example, it is far from clear precisely how the prohibitions and the many exceptions will operate in practice.


The Bill will next be considered by the Senate, after the Spring sitting commences on 16 August 2011. It remains to be seen if the Senate will pass the Bill.

There is scope for further submissions to be made to the government regarding the Bill and the regulations to accompany any eventual ‘price signalling’ act (if the bill is passed).

Clients wishing to make a submission or to discuss the implications of the Bill should not hesitate to contact us.