Doing Business in Australia: Chapter 12 - Competition Principles

Under Part IV of the CCA, certain conduct is prohibited outright (that is, irrespective of the effect on competition), while other conduct is prohibited only where it has the purpose, effect or likely effect of substantially lessening competition (SLC) in any market or it involves the misuse of substantial market power.

The CCA permits conduct that may otherwise contravene the CCA to be exempted by the ACCC. A company may apply to the ACCC for authorisation of anti-competitive conduct (including cartel conduct and misuse of market power) on public benefit grounds or it may lodge a notification with the ACCC for exclusive dealing, resale price maintenance or collective bargaining arrangements.

In respect of a merger or acquisition which raises competition law issues, companies may also seek to have the merger cleared or authorised by the ACCC. Clearance will require the parties to persuade the ACCC that the proposed merger or acquisition is not likely to SLC. Authorisation can be granted where the merger or acquisition will result in public benefits which outweigh any detriments (including competitive harm). There is presently no mandatory requirement to notify the ACCC prior to completing a transaction with the ACCC Merger Guidelines simply encouraging the parties to notify the ACCC where the products of the merger parties are either substitutes or complements and the merged firm will have a post-merger market share of greater than 20% in the relevant market/s. However, this may change in future, with the ACCC announcing significant proposed reforms to Australia’s merger laws in August 2021. Among other things, the proposed reforms include changing Australia’s voluntary merger review regime to a mandatory and suspensory regime, with parties being required to notify the ACCC of mergers above certain thresholds, and changes to the substantive merger ‘test’. Discussion on these reforms is still in its preliminary stages.

Pecuniary penalties apply to contraventions of all Part IV provisions. The maximum penalty per contravention is displayed below:

It is noted that on 28 September 2022 the Federal Government introduced a bill which would increase maximum penalties to the greatest of A$50 million, or three times value of the benefit, or where benefit cannot be determined 30% of corporate group turnover in the breach turnover period. If passed this will result in a significant increase in maximum penalties. Maximum penalties for individuals are to increase to $A2.5 million.

A company must not indemnify its officers against a liability to pay a pecuniary penalty or for the legal costs of defending proceedings in which the officer is found to have such a liability.

In addition, on the application of the ACCC (or in respect of criminal cartels, the Commonwealth Director of Public Prosecution), a court may disqualify a person who has been found to have engaged in anti-competitive conduct from managing companies for a period the court considers appropriate. Other non-pecuniary penalties include community services orders and adverse publicity orders.

Other provisions of the CCA

The CCA also has specific parts dealing with:

• access to telecommunications services (access to telecommunications facilities is dealt with in Schedule 1 of the Telecommunications Act 1997 (Cth));
• access to essential infrastructure services which cannot be economically reproduced by a third party. For example, gas and electricity transmission and distribution services, railway lines, airports, ports and other services with natural monopoly characteristics;
• anti-competitive conduct in telecommunications markets;
• the regulation of international liner cargo shipping;
• prices surveillance; and
• unfair dealings in business, consumer protection and product safety (now contained in the Australian Consumer Law, in Schedule 2 of the CCA). For more information on the Australian Consumer Law see Chapter 15 of this publication, 'Consumer protection and product liability'.

The ACCC is the body charged with administering the CCA. It also has a number of other competition-related functions under a wide range of other industry legislation. The ACCC is a powerful regulator, with broad discretions and a high profile.

Broadly, the ACCC’s role includes:

• the enforcement of the anti-competitive conduct, consumer protection and unfair dealing provisions of the CCA. The ACCC has extensive investigation powers, including powers to compel companies to provide information and documents and to examine individuals under oath. However, the ACCC cannot make findings of illegality and impose penalties for a breach of the CCA itself – it must apply to the Australian Federal Court. The exception to this is in relation to certain consumer protection provisions where the ACCC has the power to issue infringement and substantiation notices, banning orders and public warnings. The ACCC’s role in enforcement of the CCA is supplemented by the ability of private parties to take private actions under the CCA (other than seeking an injunction in relation to an anti- competitive merger);
• the assessment of mergers and acquisitions which might have the likely effect of substantially lessening competition. Although there is currently no compulsory pre-merger notification requirement, the ACCC will often investigate mergers and acquisitions that come to its attention, even where the merger parties may not have sought ACCC clearance. Parties can apply for the ACCC to assess mergers and acquisitions through its informal clearance process or by seeking merger authorisation on public benefit grounds and which can be appealed to the Australian Competition Tribunal;
• a range of regulatory functions under the general and telecommunications-specific access regimes, which relate to the terms and conditions upon which businesses competing in upstream and downstream markets will be granted access to services provided by essential infrastructure facilities (for example, telecommunications, electricity and gas transmission and distribution services, and railway lines); and
• prices surveillance including price notification, price monitoring and pricing inquiries.

A range of state regulatory bodies are responsible for administering state-based access regimes and other industry-specific regulation.