Last May the Federal Government introduced the Competition and Consumer Legislation Amendment Bill (Bill) into Federal Parliament.  Following the announcement of the election later that year, the Bill lapsed. Today it was re-introduced in the Federal Parliament.  Both the re-introduced Bill and its corresponding Second Reading speech are, in essence, identical to those introduced in May 2010.

Key objectives of the bill

The Explanatory Memorandum (EM) notes that concerns about “creeping acquisitions” have been raised primarily in relation to the independent supermarket sector.  The Bill is intended to give greater certainty regarding the ACCC’s current practice when considering acquisitions in local markets.  This is in response to concerns about “creeping acquisitions” that have been raised primarily in relation to the supermarket sector.

The Bill also seeks to clarify perceived vagaries in the law surrounding statutory unconscionable conduct by providing a list of interpretative principles to assist the courts in applying the prohibition and by unifying the consumer and business-related provisions.

Overview of amendments

A brief outline of the proposed amendments to both the merger control and unconscionable conduct provisions is set out below.  Our previous alert on 27 May 2010 “Merger control and unconscionable conduct reform” provides a more detailed overview.

Merger control provisions

The Bill proposes to amend the merger control provisions by:

  • amending the definition of “market” in s 50(6) of the Competition and Consumer Act 2010 (CCA) to remove the requirement that the market affected by a merger must be “substantial”; and
  • amending s 50(1) and (2) of the CCA to replace the words “a market” with “any market”.

Unconscionable conduct provisions

The Bill will also amend the unconscionable conduct provisions by including a statement of interpretative principles to provide that:

  • the statutory prohibition against unconscionable conduct is not limited by the equitable or common law doctrines of unconscionable conduct;
  • in considering whether conduct to which a contract relates is unconscionable, a court should not limit its consideration to the formation of the contract alone, but may also consider the terms of the contract and the manner in which the contract is carried out; and
  • the statutory prohibition against unconscionable conduct can apply to a system or pattern of conduct over time, and need not be limited to an individual transaction or event.

Further, it will consolidate sections 21 and 22 of the CCA (previously sections 51AB and 51AC of the Trade Practices Act) in order to remove the distinction between business and consumer transactions with respect to unconscionable conduct. As a result, the factors to which a court may have regard when considering whether conduct is unconscionable in the circumstances will be the same for both business and consumer transactions (adopting the longer list of factors which presently apply to business transactions).

The Bill will also amend the unconscionable conduct provisions in the ASIC Act in the same way.

What will the changes mean in practice?

The Explanatory Memorandum to the Bill states that the merger control amendments will involve no additional cost to businesses and largely confirms the existing administration of those provisions.  We expect little (if any) change to the way in which the ACCC reviews proposed mergers if the Bill is passed.

The amendments to statutory unconscionable conduct are intended to provide a much clearer understanding of the conduct the provisions were always intended to address.

Commencement

The Bill provides that:

  • the proposed amendments to s 50 would apply to acquisitions occurring after the commencement of Schedule 1 of the Bill, which will be no later than two months after the Bill receives Royal Assent; and
  • the changes to the unconscionable conduct provisions would commence on the later of either the day the Bill receives Royal Assent or 1 January 2012.​​​​