Application of the Trade Practices Act to the professions
Competition provisions
In summary, since 1974 the Act has covered incorporated professionals' businesses, as well as unincorporated professionals’ businesses in the Territories. Since 1996 professionals operating via a partnership of natural persons or as sole practitioners, and their associations, have been subject to the competition provisions of the Act and the Competition Codes.
Since 1974 the restrictive trade practices provisions (sometimes also known as 'the competitive conduct rules') in Part IV of the Act have applied to those professionals practising their professions by means of a corporate business structure in Australia. In particular, 'services' has always been defined in the Act to expressly include 'work of a professional nature'.
Commonwealth Constitutional limitations excluded from the reach of Part IV of the Act professionals practising in partnerships of natural persons or other unincorporated structures. This meant that professionals who did not incorporate their practices were not subject to the provisions in Part IV of the Act. Exceptions to that exclusion were professionals whose conduct was in, or in relation to, trade or commerce between Australia and other countries; or across Australian state or territory boundaries or within Australian territories; or who supplied services to the Commonwealth or its authorities and instrumentalities.
A variety of Australian state and territory legislation or regulation also exempted certain conduct by some professions from reach of the Act by specifically approving or authorising such conduct. Examples were advertising restrictions and fee setting regulations.
The Hilmer Review
In 1991 the Council of Australian Governments (COAG) established an Independent Committee of Inquiry to consider and advise COAG on the need for a national competition policy. The Committee was chaired by Professor Fred Hilmer.
The report of the committee known as the 'Hilmer' report observed that:
'Whatever significance is attributed to the professions generally, it is important to emphasise that their partial exclusion from the Act is primarily due to a constitutional limitation which is unrelated to the status of professions. The scope of the exception depends largely on the legal form of the business, which varies widely across professions … The overall result is patchy and difficult to justify on public policy grounds.'
COAG agreed in April 1995 to implement a national competition policy and, as part of this agreement, to extend the application of Part IV of the Act to all unincorporated businesses.
In 1995, each of the Australian State and Territory Parliaments passed legislation known as Competition Policy Reform Acts, which achieved the goal of extending Part IV of the Act to unincorporated businesses. This was done by including, as a schedule to that state’s or territory’s Competition Policy Reform Act a 'Competition Code' which mirrored the provisions in Part IV of the Act but changed the reference in those provisions from 'a corporation' to 'a person.' The legislation took effect on 21 July 1996.
The Wilkinson Review
Released in November 2002, the Wilkinson Review examined the impact of the competition provisions (Part IV) of the Trade Practices Act on the recruitment and retention of medical practitioners in rural and regional Australia.
The Review found that compliance with the TPA was not a hindrance to the recruitment and retention of doctors. It did find however, that there was a degree of uncertainty and misconception amongst the medical profession regarding the application of the TPA to doctors, particularly in the areas of medical rosters, collective negotiations and fee setting.
Two of the key recommendations of the Review were:
establishment of the Health Services Advisory Committee (in September 2003), to facilitate communication between the medical profession and the ACCC
With regard to consumer protection, unincorporated medical practitioners' businesses are covered by the state and territory fair trading acts, which apply to corporations and natural persons, and which substantially mirror the consumer protection provisions of the Trade Practices Act (Part V).
Legislative review
As part of national competition policy reforms, state and territory governments have all reviewed their legislation with a view to removing regulations that impede competition in professional service markets. To the extent that regulation cannot be justified (on the grounds that it provides a net benefit to the community and is necessary to achieve the government's legislative objectives. National competition policy requires that the regulation be repealed.
State legislation continues to impose competition restraints in a number of areas; one common example is a professional registration board that is established by legislation and given the power to determine educational or other prerequisites to enter the profession.
