Part IIIA of the Act establishes a national legislative regime to facilitate third party access to the services of certain facilities of national significance such as electricity grids or natural gas pipelines. It aims to encourage competition in upstream or downstream markets.
Under this regime a party may apply to the National Competition Council asking it to recommend that a service be declared (that is, if there is a dispute over access to the service the ACCC can make a determination setting the access terms and conditions).
The council cannot recommend declaration of a service unless it is satisfied that:
access to the service would promote competition in another market
it would be uneconomical for anyone to develop another facility to provide the service
the facility is of national significance
access would not cause undue risk to health or safety
access is not already the subject of an effective regime
access would not be against the public interest.
Having made an assessment according to the criteria, the council’s recommendation to either declare or not declare the service is considered by the designated minister. (If a facility is owned or operated by a state or territory government that is a party to the Competition Principles Agreement, the designated minister is the responsible state/territory minister. Otherwise the designated minister will be the responsible Commonwealth minister.)
The minister’s decision is subject to appeal to the Australian Competition Tribunal.
Once a service is declared, parties are free to negotiate terms and conditions of access. If the parties disagree on the terms and conditions for access they may decide to refer the dispute to private arbitration. If the parties reach agreement through arbitration or negotiation they may apply to the ACCC to have the contract registered. In deciding whether to register a contract the ACCC must consider the public interest and the interests of all persons who have rights to use the service(s) to which the contract relates. Once registered the contract may be enforced as if it were an ACCC arbitration determination under Part IIIA.
If the provider of the service and the party seeking access cannot agree on any aspect of access to a declared service, either the provider or the party seeking access can notify the ACCC of a dispute and it can make a determination setting the terms and conditions of access. Such determinations may be reviewed by the Australian Competition Tribunal upon application by a party to the determination. A party to the determination may seek to enforce the determination through the Federal Court.
Part IIIA not only provides a national regime to facilitate third party access, but allows state and territory governments to seek exemption from declaration for services covered by conforming regimes. Under Part IIIA, state or territory governments may apply to have their access regimes recommended as ‘effective’ by the National Competition Council. Recommendations on the effectiveness of state or territory access regimes are made to the relevant Commonwealth minister on the basis of an assessment of the regime according to the relevant principles set out in the Competition Principles Agreement. Having received a recommendation the Commonwealth minister must also assess the effectiveness of the access regime by applying the relevant principles set out in the Competition Principles Agreement. Once a decision is made by the Commonwealth minister it must be published. An access regime that has been recognised by the minister as effective, and continues to be recognised as such, cannot be declared under Part IIIA.
As an alternative to the declaration process, Part IIIA allows a service provider to give an access undertaking to the ACCC specifying the terms and conditions on which access will be made available to third parties. The ACCC has discretion to accept or reject an undertaking proposal. However, the ACCC cannot accept an access undertaking if the service concerned is a declared service. If the ACCC accepts such an undertaking the services provided by the facility cannot be recommended for declaration by the National Competition Council or declared by the designated minister.
If the ACCC thinks that a provider of an access undertaking has breached that undertaking, the ACCC may apply to the Federal Court to enforce the undertaking as accepted by the ACCC.
The ACCC can bring a civil action in the Federal Court seeking the imposition of pecuniary penalties for anti-competitive conduct. For a corporation the penalties are whichever is the highest of:
$10 million
three times the value of the benefit
10 per cent of annual turnover.
For an individual the maximum penalty is $500 000.
The ACCC can also seek injunctions or ancillary orders, or, in relation to a merger, divestiture.
The ACCC may take representative action and seek other orders including compensation for third parties when there has been a contravention of Part IV (other than the secondary boycott provisions ss. 45D to 45DE).
Individuals and corporations can, through private action, seek various remedies from the Federal Court for breaches of the restrictive trade practices provisions of Part IV of the Act. The remedies include injunction (except for mergers), damages, ancillary orders, or, in relation to a merger, divestiture.
The restrictive trade practices provisions contained in Part IV of the Act—ss. 45 to 50A—prohibit the following types of anti-competitive conduct. However, some can be authorised or cleared by the ACCC.
Agreements affecting competition—these are prohibited if they have the purpose or effect of substantially lessening competition. Prohibited outright are:
most price agreements
agreements containing exclusionary provisions, commonly known as primary boycotts, that is, collective refusals to deal with another party.
Price fixing agreements between competitors may be authorised if significant benefit to the public can be established.
These are prohibited if their purpose is to cause substantial loss or damage to a business, or a substantial lessening of competition in a market. They generally involve action by two persons, in concert, engaging in conduct that hinders or prevents a third person from supplying to, or acquiring goods or services from, a fourth person.
A corporation with a substantial degree of market power is prohibited from taking advantage of this power to eliminate or damage an actual or potential competitor, prevent the entry of a person into any market, or deter or prevent a person from engaging in competitive conduct in any market.
Provisions against misuse of market power also extend to companies involved in trans-Tasman trade, whether based in Australia or New Zealand. Australian legal proceedings can be heard in New Zealand and vice versa.
It is unlawful for a supplier to attempt directly or indirectly to interfere with the freedom of buyers to buy from other suppliers or to sell to whom they choose, for example by imposing territorial or customer restrictions on the buyer.
Similarly, buyers cannot impose restrictions on the freedom of suppliers to sell as they wish. Exclusive dealing is prohibited if it occurs in the context of trade or commerce.
Supplying goods or services on condition that the buyer will acquire other goods or services from another supplier, even a related company, is prohibited outright regardless of its effect on competition (third line forcing). However, this conduct can be notified to the ACCC, and may be authorised on public benefit grounds.
A supplier must not directly or indirectly fix a price below which resellers may not sell or advertise their products or services, for example, by threatening to cut off supplies or actually cutting them off. Two exemptions from this prohibition are genuinely recommended prices and loss leader selling. However, resale price maintenance on both goods and services may be authorised provided it delivers a benefit to the public such that it should be allowed to occur.
These are prohibited if they have the effect, or likely effect, of substantially lessening competition. However, such an arrangement is not prohibited if the ACCC authorises it and the corporation applied for the authorisation within 14 days of the arrangement being made.
Mergers are prohibited if they would have the effect, or likely effect, of substantially lessening competition in a market. However, such mergers can be cleared by the ACCC or authorised by the Australian Competition Tribunal in certain circumstances. (See ‘Authorisation’ below.)
The concept of unconscionable conduct generally involves a stronger party exploiting an evident special disability or disadvantage suffered by another party.
Part IVA prohibits unconscionable conduct in:
the common law sense of unconscionable conduct (s. 51AA)
consumer transactions (s. 51AB)
small business dealings (s. 51AC), after 1 July 1998.
Part IVB prohibits contraventions by corporations of applicable industry codes of practice. An applicable code is one that has been prescribed as mandatory for the industry or as a voluntary industry code that binds the corporation.
