On 17 August 2011, the House of Representatives passed the Government's Competition and Consumer Legislation Amendment Bill 2011 (Bill) to amend the Competition and Consumer Law Act 2010 (CCA). The Bill proposes to address the issue of creeping acquisitions and simplify the unconscionable conduct provisions in the Australian Consumer Law (ACL).
The Bill was re-introduced this year after it was originally tabled in May 2010 but lapsed before passing the Senate as a result of the Federal election. The Bill replicates the original Bill with the addition of some minor technical amendments.
Creeping acquisitions are generally defined to be a series of small-scale acquisitions that individually do not substantially lessen competition in a market in breach of section 50 of the CCA, but collectively may have that effect over time.
The provisions amend section 50 of the CCA:
- The words 'a market' in section 50(1) and (2) have been replaced with 'any market'.
- The market defined in section 50(6) is no longer required to be a 'substantial' market.
Click here to view ammendment to the act.
What does it mean?
The proposed creeping acquisition amendments in the Bill are intended to clarify the ability of the ACCC or courts to consider multiple markets when assessing mergers and acquisitions. The changes will prevent businesses challenging a decision on grounds that the lessening of competition identified was in one or more markets other than the primary market in which the merger or acquisition would occur. Removing the 'substantiality' requirement allows the ACCC to continue its current practice of considering acquisitions in local markets including those where creeping acquisition concerns have been raised.
History of creeping acquisitions
Various models of reform have been proposed by the Government since the release in 2008 of its first discussion paper seeking views on how best to address the issue of creeping acquisitions, as a part of its preliminary response to the release of the ACCC's Grocery Inquiry.
The proposed models were considered to be overly interventionist with high costs and there was a lack of a clear consensus of support for a particular model. Consequently, the Government chose to specifically address two areas of the law where it considered clarification would be helpful in dealing with its concerns.
Unconscionable conduct is unfair or unreasonable conduct in business transactions that goes against good conscience. These amendments to the unconscionable conduct provisions of the ACL come only a year after the ACL was introduced.
The Bill proposes to insert a list of interpretive principles into the unconscionable conduct provisions of the ACL:
- Statutory unconscionable conduct may, where appropriate, continue to develop independently from the equitable and common law doctrines.
- The prohibition against unconscionable conduct may apply to systems of conduct or patterns of behaviour, whether or not one particular individual is identified as having been disadvantaged by the conduct or behaviour.
- The court may consider the terms and progress of a contract in determining whether the conduct to which the contract relates is unconscionable.
The Bill proposes to insert new provisions replacing sections 21 and 22 of the ACL:
- The consumer and business-related provisions prohibiting unconscionable conduct are combined to create a new section 21.
- A non-exhaustive list of factors that the court may have regard to in determining whether there has been unconscionable conduct is set out in the new section 22 of the ACL. These are drawn from the current business-related provisions of the ACL.
Sections 12CB and 12CC of the ASIC Act 2001 will be amended to mirror the new drafting in sections 21 and 22 of the ACL.
Effect of the Amendments
The unification of business and consumer provisions avoids the risk that courts might accord different meanings to two sets of provisions. The statement of principles will assist the courts in applying the prohibition of statutory unconscionable conduct as well as improve stakeholder understanding of the meaning and scope of the provisions.
The Bill has now been introduced into the Senate. Before the Bill can receive Royal Assent and become law it must be passed by the Senate.
The amendments to section 50 will be in effect within two months after the Bill receives Royal Assent. The changes to the unconscionable conduct provisions will commence on the later of the day the Bill receives Royal Assent or 1 January 2012.