Summary
On Friday 23 December 2011, Treasury released an exposure draft of the Competition & Consumer Amendment Regulations 2012. The draft regulations prescribe the goods and services to which the price signalling prohibitions under Part IV of the Competition and Consumer Act 2010 will apply from 6 June 2012.
The draft regulations confine the initial application of the price signalling prohibitions to the deposit taking and advance activities of authorised deposit taking institutions. They also set out the process by which the Minister may determine which additional goods or services (ie. beyond the banking sector) should be made subject to the prohibitions and the statutory Forms that must be used in any application for Authorisation or Notification of price signalling conduct (by which immunity from prosecution may be granted).
The price signalling reforms come amidst significant debate in Australia over whether the anti-competitive conduct prohibitions under the Competition and Consumer Act are adequate to regulate anti-competitive price signalling (or 'price facilitation', 'tacit collusion' or 'co-ordinated conduct'), particularly in the banking sector.
Copies of the Draft Regulations and the Explanatory Note are available here.
Background
The price signalling prohibitions are set out in the Competition and Consumer Amendment Act (No.1) 2011, which comes into force on 6 June 2012.
The price signalling prohibitions govern anti-competitive disclosures of pricing and other information in relation to goods or services within a prescribed class (as prescribed by the Regulations). Specifically, a corporation will contravene the price signalling prohibitions where:
- there is a private disclosure to competitors and the information relates to a price, discount, allowance, rebate or credit in relation to a prescribed class of goods or services which are supplied or acquired (or likely to be supplied or acquired) by the disclosing party (other than disclosures made in the ordinary course of business). A 'private disclosure to competitors' occurs if the disclosure is to one or more competitors or potential competitors of the corporation in the market, and is not to any other person, or
- there is any disclosure (private or public) of information relating to price, discounts, allowances, rebates or credits in relation to goods or services within a prescribed class, or the capacity to supply or acquire or commercial strategy in relation to those goods or services,where that disclosure has the purpose of substantially lessening competition. The relevant purpose may be ascertained by inference from conduct or other relevant circumstances.
A breach of the price signalling prohibitions will attract (civil) pecuniary penalties of up to the greater of $10 million, three times the value of the benefit gained, or ten per cent of annual group turnover.
Exceptions
The price signalling prohibitions will not apply to disclosures of information:
- authorised by or under a law (including, for example, ASX continuous disclosure obligations)
- solely between related bodies corporate
- due to an accident, the default of a person other than the corporation or some other cause beyond the control of the corporation
- formally authorised by the ACCC under section 88 of the Competition and Consumer Act, or notified under section 93.
There are additional exceptions to the prohibition on private disclosures to competitors. These include supply or acquisition between the parties, disclosures between joint venture participants, disclosures between parties to a prevailing collective bargaining notification, disclosures to 'unknown competitors' and disclosures in connection with the acquisition of shares or assets.
Specific exemptions also apply to the private disclosures within the banking and credit sector, including between commercial lenders for the purposes of providing (or considering whether to provide) lending or credit services to a third party, between a credit provider and a provider of a credit service and between credit providers in certain insolvency contexts.
Further information in relation to the price signalling provisions is available from our News Alert Anti-competitive price signalling – implications beyond the banking sector (15 December 2010).
The draft regulations
In short, the draft regulations:
- (as expected) purport to give effect to the Government's intention to initially confine the application of the price signalling provisions to the banking sector. Specifically, this includes only deposit taking activities (otherwise than as part-payment for identified goods or services) or the making of advances of money, by an authorised deposit taking institution within the meaning of the Banking Act 1959 (ie. credit unions, building societies, specialist credit card institutions, providers of purchased payment facilities and authorised non-operating holding companies),
- set out the process that the Minister is to follow when making future regulations to extend the categories of goods and services to which the price signalling provisions apply (ie. beyond the banking sector). The Minister must be satisfied that any appropriate and reasonably practicable consultation process has been undertaken. The Draft Regulations provide only an indicative, rather than mandatory, list of steps that may be involved in such a consultation process, and
- prescribes statutory forms by which applications for Authorisation or Notification of price signalling conduct may be made to the ACCC. These include Form BA (Application for Authorisation: Anti-competitive disclosure of pricing and other information) and Form GAA (Notification of private disclosure of pricing information). Associated lodgement fees are set at $7,500/$1,500 (concessional) for Authorisation, and $1,000/$100 for Notification.
Next steps
With the draft regulations confining the price signalling prohibitions to the deposit taking and advance activities of authorised deposit taking institutions, the banking sector should give particular consideration to the extent to which its activities are caught by (or fall beyond) the scope of the provisions. An assessment should also be made as to where authorisation and/or notification may be required to continue current (or implement new) commercial strategies.
Businesses in other industries should be alert to the implications of any consultation process which the Minister may initiate as a prelude to prescribing additional categories of goods or services. This is particularly relevant to corporations in concentrated markets, such as the retail petroleum industry (as flagged by the government in the Regulation Impact Statement).
Treasury is seeking any comments on the draft regulations by 22 March 2012.