Today the ACCC Chairman Rod Sims discussed the ACCC’s enforcement of competition law as it applies to alleged union behaviour in the general industrial relations arena, outlined current investigations and described difficulties with current laws.
The comments were made in a speech to the Law Council of Australia’s Business Law Competition and Consumer Committee Annual General Meeting.
“The Competition and Consumer Act (CCA) has always had clear exemptions for agreements relating to employment conditions and these, for example, mean that, even if employers met in a smoke-filled room to reach an agreement on the wages to be paid to their employees, this would not be within the ACCC’s jurisdiction”, Mr Sims said.
“The first exemption is the IR carve out, which means the ACCC does not have jurisdiction to deal with agreements that relate to employment conditions. The second exemption means that, broadly speaking, the CCA doesn’t apply to services of employees performed under a contract of service. The final exemption is for enterprise agreements that have been approved by the Fair Work Commission.”
“However, even with these exemptions, it does not mean the role of unions is to regulate markets by fixing prices, deciding who can and can’t operate in a market, or determining how bids for work will be allocated, just as it is not any company’s role to do this,” said Mr Sims.
Mr Sims said, “With this in mind, the ACCC has many related issues on its plate; indeed, the ACCC may currently have more union-related major investigations than ever before.
Last year, in a major matter, we instituted proceedings against the CFMEU and others alleging 12 cases of breaches of the secondary boycott provisions, one case of an attempted breach of section 45E of the CCA, and one instance of a breach of section 50 of the Australian Consumer Law (undue harassment or coercion).
We currently have two further in-depth secondary boycott investigations underway, one at an advanced stage.
In response to allegations raised in the Royal Commission hearings in Canberra, the ACCC is investigating two instances of potential cartel behaviour in the ACT construction sector. The allegations, however, appear to also involve a wide range of restrictive behavior beyond the specific allegations of price fixing.
“It is possible that in the past the ACCC has not looked sufficiently into such additional restrictive behaviour that could amount to a contract, agreement or understanding that has the purpose or effect of substantially lessening competition, thinking such matters were covered by the carve outs and exemptions discussed above.”
“The alleged behavior in Canberra may provide an avenue to do so in the context of investigating the alleged cartel behaviour.”
Mr Sims said, “This type of alleged conduct can disrupt competitive markets, increase costs and impede productivity. In these circumstances we need to ensure that our competition law applies to such restrictive behavior as it does to every other sector of the economy.”
That said, it is important to understand that, no matter how concerning particular behavior might be, for the ACCC to act the behavior should and will need to amount to a substantially lessening of competition.
Particular legal difficulties
“The ACCC will be making a submission to the Royal Commission outlining some difficulties with current laws.” said Mr Sims.
“The secondary boycott provisions are complex and open to differing interpretations. In addition, the boycott provisions are the only anti-competitive conduct provisions in the CCA which require both a purpose and effect test to be proven, and this sets a high threshold.
Section 45E only applies in circumstances where the contract, agreement or understanding targets a particular person, not a class of people. For example, if there was an arrangement or understanding that a business will not acquire services from businesses that don’t have an enterprise bargaining agreement, this conduct would be outside the scope of section 45E as it isn’t targeted at a particular person,” Mr Sims said.
“Some of the conduct of concern may involve serious cartels. It has been identified both in Australia and internationally, that to effectively combat covert conspiracies such as cartels there is a need for investigatory authorities to have access to telecommunication interception material. The ACCC needs the ability to use the product of telecommunication interceptions in its own investigations of cartels,” Mr Sims said.
“The ACCC is also concerned that there are not appropriate mechanisms which will protect whistle-blowers or other parties who provide information to assist with ACCC investigations.
“Finally section 155 of the CCA is a central investigative tool for the ACCC. Parties can be issued with a notice to provide information and documents as well as provide evidence.
The ACCC, through the Harper Competition Policy Review Inquiry, has raised concerns about the adequacy of penalties for non-compliance with section 155 notices. Non-compliance with section 155 notices is a criminal offence with a maximum fine of $3,600. The very small monetary sanctions may tempt some to conceal evidence rather than put themselves at risk of prosecution and much higher penalties,” Mr Sims said.
The speech will be available here: ACCC Speeches