Applying for exemption
The CCA recognises that there may be circumstances where greater public benefit would result from allowing certain business behaviour that may restrict competition.
As Australia's competition regulator, the ACCC can allow businesses to engage in conduct that may otherwise breach the competition provisions of the CCA, through its authorisation or notification process. These exemptions apply to the cartel provisions. The ACCC will assess whether the proposed behaviour is likely to result in a public benefit that outweighs any resulting public detriment (i.e. harm), including from a lessening of competition.
If the ACCC allows an exemption, the applicant is protected from legal action under the CCA.
For example, the CCA makes it illegal for businesses to get together and collectively negotiate prices with a supplier or a customer, as this could involve agreements between competitors and amount to price fixing. However when the outcome of collective negotiations is likely to result in a public benefit - such as lower costs for business and lower prices for consumers, or an increased variety of products - the ACCC may allow it.
There are two administrative pathways that a business seeking an exemption from the cartel provisions of the CCA can choose to follow: authorisation or notification.
Businesses can apply for exemption from the cartel provisions through the ACCC's authorisation process. However businesses seeking to have proposed cartel conduct authorised must apply to the ACCC before engaging in the conduct. Authorisation cannot be granted after the fact.
An authorisation will only be granted when the ACCC is satisfied that the public benefit from the arrangements or conduct outweighs any public detriment.
A lodgement fee of $7500 is payable by the businesses making the application to the ACCC, although this can be waived in certain circumstances.
In 2017, the South Australian Chamber of Mines and Energy, along with 27 other South Australian businesses, sought authorisation to establish a joint electricity purchasing group. By aggregating their electricity demand and conducting a single tender into the market for the supply of their combined loads the group is better able to secure reliable electricity supply arrangements at competitive prices. The ACCC formed the view that there would be minimal public detriment from the proposed conduct, given the proportion of total market demand represented by the group. Consequently, the ACCC granted authorisation for 11 years.
Notification is an alternative process to authorisation that is available where parties propose to engage in small business collective bargaining or collective boycotts.
The lodgement fee for a notification is $1000. Businesses do not need to wait for the ACCC to grant them an exemption. Rather, businesses may engage in the notified conduct 14 days after they have lodged their notification, unless the ACCC objects to the notification within the 14-day period.
The notification provides an exemption for three years or until such time as the ACCC revokes the notification by sending an objection notice on the basis that the conduct does not result in an overall public benefit.
As a quick summary:
- Collective bargaining is an arrangement where two or more competitors come together to negotiate with a supplier or a customer over terms, conditions or prices. A group of businesses may sometimes appoint a representative, such as an industry association, to act on its behalf in the negotiations.
- A collective boycott occurs when a group of competitors agree not to acquire goods or services from, or not to supply goods or services to, a business with whom the group is negotiating, unless the business accepts the terms and conditions offered by the group.