John Howard's Trade Practices Amendment Bill 1977: Second Reading Speech: 8 December
1976
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...The Trades Practices Act will continue to deal with anti-competitive agreements, monopolisation, exclusive dealing, resale price maintenance and anti-competitive mergers ... this Bill makes some adjustments to the laws on these matters and, importantly, to the pro- cedures for their administrative adjudication. However the Government has accepted ... that the prohibition of price discrimination be repealed. That prohibition has worked to inhibit price flexibility, and has not encour- aged competition. In fact the review committee stated that this law has actually been used as a pretext to abolish discounts and effectively raise prices.
... The test of restraint of trade - with its undesirable common law connotations - has been omitted. The previous differing tests of competitive effect has been eliminated in favour of a single test. The Bill prohibits collusive price agreements and collective boycotts. However, except for price agree- ments for goods, which are prohibited outright, these matters may be granted authorisation if a net public benefit is shown to exist. The Government has not adopted the recommendation of the review committee that price agreements for services be prohibited outright. In some service industries, price agreements may be considered analogous to the determination of wage and salary levels.
The Bill recognises the special contribution of joint ventures to the economy of Australia. In particular, it recognises that joint decisions as to the marketing of the joint venture product - including pricing decisions - are often inseparable from the decision to establish the joint venture in the first place. Appropriate distinctions are made in the prohibition and authoris- ation sections of the Bill. In substance, the relevant question is now whether the joint venture as a whole substantially lessens competition in a market. Even in that event a joint venture will still be able to seek authorisation on public benefit grounds. This Bill also places joint acquisition schemes in a more favourable position. Such schemes have played an important role in containing price increases to the consumer, particu- larly in retail industries.
The law of monopolisation is clarified by this Bill. It makes it clear that only purposive conduct by a market dominating concern comes within the prohibition. It also states expressly that capital investment can never, of itself, constitute monopolisation. Section 47 of the Act, that is the general prohibition of exclusive dealing, has been restructured as recommended by the review committee. A distinction has now been drawn between normal commercial requirements contracts and re- quirements contracts which have been entered into for an anti-competitive purpose. The Bill provides immun- ity for exclusive dealing conduct notified to the Trade Practices Commission, until the Commission makes a positive determination that the conduct is both anti- competitive and without net public benefit. This procedure is available either as an alternative to, or in addition to, authorisation.
...Experience has shown that the clearance pro- cedure provided by the present law has involved the Trade Practices Commission very closely in the daily operations of Australian business. Whatever justifi- cation this may have had in the early days of the legislation has now disappeared. To continue the clearance procedure would perpetuate unnecessary interference by Government in the exercise of individ- ual initiative. This Bill abolishes the clearance pro- cedure, except in relation to mergers, to which special considerations apply. The authorisation test in the present law has been widely criticised as unnecessarily harsh. The review committee recommended that the test be altered to reflect a simple balance between benefits and detriments to the public flowing from the conduct. The Government supports this simple, but highly desirable change which will bring a better perspective to the application of trade practices law.
This Bill also provides a right for discussions with the Trade Practices Commission before the determi- nation of authorisation applications of exclusive dealing notifications. The lack of direct contact between the Commission, applicants and other interested persons has been a major deficiency in the operation of the law to date. The availability of such discussions, which the review committee recommended should be a matter of right, is essential. Public hearings before the Trade Practices Commission in authorisation matters are abolished. The heavy cost of these hearings - both to parties and to the Commission itself - is not war ranted. The possibility remains for a full public hearing before the Trade Practices Tribunal on appeal.
The present wide exemption for restrictive practices by employees is substantially modified by this Bill. The exemption is now to be limited to matters of remuner- ation, conditions of employment, and hours and work- ing conditions. In addition, the Bill prohibits secondary boycotts by employees which substantially damage the business of a corporation. These boycotts have been used by some trade unions in this country to dictate the business arrangements of independent businessmen. In some instances these boycotts have resulted in higher prices to the consumer. The most common instance of a secondary boycott occurs where a group of employees collectively acts for the purpose of interfering with supply of goods and/or services by their employer to a company.
Honourable members will be aware of instances of this occurring in respect of petrol and bread deliveries. In addition, it has occurred in the stevedoring industry where employees of a port authority have interfered with container deliveries to particular companies and most recently in Sydney where employees of a newsprint supplier interfered with deliveries to John Fairfax and Sons Ltd. Under the Bill, businesses affected will have a similar redress against employee secondary boycotts as they already have against boycotts organised by other companies. The Govern- ment recognises that some sections of the community might argue that provisions of this nature should be included in other Commonwealth legislation such as the Conciliation and Arbitration Act. The Government retains an open mind as to which legislation is the relevant one and will be particularly interested in submissions or comments it might receive on this issue.
...The definition of consumer has been changed in a way which will give small businesses a measure of protection which they previously did not have. The conditions and warranties implied by Division 2 and Part V of the Act will now be implied into a wider range of transactions. The present Act is pointedly deficient in protecting consumers in land transactions. Major abuses have occurred in the past in relation to the promotion and sale of land - particularly major subdivisions promoted on an interstate basis. The Bill extends protection to the consumer in these matters. At present there is no quick method for the Government to ban the sale of unsafe consumer products produced in Australia. The marketing of unsafe products is a major concern of the community. Provision is now made in the Bill for the making of orders banning the sale of unsafe goods.
...An area of major concern to Australian business has been the multiplicity of State and Commonwealth laws implying non-excludable terms into consumer transactions. The review committee considered this multiplicity to be a source of cost and confusion to Australian business. It recommended that the Commonwealth legislate in the area so as to cover the field to a significant degree. The Government has accepted this recommendation in principle and will naturally explore proposals for its implementation with State governments. Indeed, the recommendation has already been discussed by a meeting of Commonwealth and State Ministers. The review committee also recommended that the Trade Practices Act be extended to provide for manufacturers to be liable directly to consumers for breach of implied terms in consumer contracts. Some State laws already provide for such liability. The Government has accepted this recommendation in principle and is examining details of its implementation.
Governments are increasingly involved in commercial activites, often in direct competition with private enterprise. It is anomalous that the Trade Practices Act should apply to private enterprise and not to government enterprise of a commercial nature. The Government has decided in principle that its commercial operations should be subject to the same restraints of the Trade Practices Act as apply to like operations of private enterprise. It is recognised, however, that some exceptions on national interest grounds might have to be made to this general rule. At present an interdepartmental committee is examining the detailed implementation of the proposal. Appropriate provisions will be inserted into this Bill to give effect to this policy before the Bill is finally enacted.
Trade Practices Amendment Bill 1977: Second Reading Speech - Commonwealth Parliamentary) Debate, House of Representatives - 8 December 1976
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