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COMPETITION AND CONSUMER AMENDMENT REGULATION 2012 (NO. 1) (SLI NO 90 OF 2012)

EXPLANATORY STATEMENT

Select Legislative Instrument 2012 No. 90

Issued by the authority of the Assistant Treasurer

Competition and Consumer Act 2010

Competition and Consumer Amendment Regulation 2012 (No. 1)

The objective of the Competition and Consumer Act 2010 (the CCA) is to enhance the welfare of Australians through the promotion of competition and fair trading and to make provisions for consumer protection.

Section 172 of the CCA provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed, or are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Competition and Consumer Amendment Regulation 2012 (No. 1) (the Regulation) is to amend the Competition and Consumer Regulations 2010 (the principal Regulations) to:

•                 prescribe which goods and services are subject to the prohibitions in the new Division 1A of the CCA;

•                 outline the process to be followed by the Minister before prescribing any future classes of goods or services (after the Regulation is made) to be subject to Division 1A of the CCA; and

•                 provide forms and prescribe fees so parties can apply to the Australian Competition and Consumer Commission (ACCC) for immunity for proposed disclosures which may otherwise contravene the prohibitions in Division 1A of the CCA.

In December 2010, the Government announced that it would introduce laws to prohibit anti-competitive price signalling and other information disclosures, as part of its Competitive and Sustainable Banking System package. 

The Competition and Consumer Amendment Act (No. 1) 2011 amended the CCA to introduce Division 1A into Part IV from 6 June 2012.  Division 1A contains two core prohibitions:

•                 the outright prohibition of the private disclosure of pricing information between competitors which are not made in the ordinary course of business (section 44ZZW); and

•                 the prohibition of the disclosure of pricing or other information if the disclosure is made for the purpose of substantially lessening competition (section 44ZZX).

The prohibitions apply only to those classes of goods or services prescribed by regulation. 

The Regulation complements the amendments made to the CCA.

Details of the Regulation are set out in Attachment A.

The CCA does not specify any conditions that need to be satisfied before the power to make the Regulation may be exercised.

The Government carried out a three-month consultation on the Regulation with the general public and with affected stakeholders.

The Government, in accordance with the 1995 intergovernmental Conduct Code Agreement also carried out:

•                 a three-month consultation period with the States and Territories on the Regulation; and

•                 a 35-day voting period with the States and Territories on the Regulation.  The Conduct Code Agreement 1995 requires that the Government not make regulation unless a majority of votes of the Commonwealth and the States and Territories support the Regulation.  The Government received the requisite majority support.

Following this consultation, no change was made to the Regulation.

A Statement of Compatibility with Human Rights is in Attachment B.

The Regulation commences on 6 June 2012.

Attachment A

Details of the proposed Competition and Consumer Amendment Regulation 2012 (No. 1)

Section 1 - Name of Regulation

This section specifies the name of the Regulation as the Competition and Consumer Amendment Regulation 2012 (No. 1) (the Regulation)

Section 2 - Commencement

This section provides that the Regulation will commence on 6 June 2012, which coincides with the commencement of Schedule 1 to the Competition and Consumer Amendment Act (No. 1) 2011 (the Amendment Act).

Section 3 - Amendment of Competition and Consumer Regulations 2010

This section provides that Schedule 1 of the Regulations amends the Competition and Consumer Regulations 2010 (the principal Regulations)

Schedule 1 - Amendments

Item [1] - Regulation 9

Notification is a process under the Competition and Consumer Act 2010 (CCA) that allows parties which propose to engage in certain conduct that may be prohibited under the CCA, to obtain immunity from legal action if that conduct provides a net public benefit.

A party may notify the Australian Competition and Consumer Commission (ACCC) of conduct that may be prohibited under section 44ZZW of the CCA.

Item [1] substitutes a new regulation 9 in place of the existing one, to include provisions dealing with section 44ZZW notification, while still covering exclusive dealing conduct. 

Item [1] amends regulation 9 so that a party wishing to notify the ACCC of conduct that may contravene section 44ZZW of the CCA, must do so in accordance with Form GAA (subregulation 9(2)).

Item [1] amends regulation 9 so that if a party lodges a valid notice with the ACCC of conduct that may contravene section 44ZZW of the CCA, the party will obtain immunity to engage in the conduct described in that notice after a 14 day period has elapsed (subregulation 9(3)).

Item [2] - Paragraph 26(2)(b)

In addition to the notification process, the ACCC is also able to authorise a corporation to engage in conduct that would otherwise be considered to breach the prohibitions in Part IV of the CCA, other than those relating to the misuse of market power.  The effect of an authorisation is to provide a corporation with immunity from action under the relevant provision(s).

Item [2] inserts a reference in paragraph 26(2)(b) to the new Form BA (for the authorisation process) so that parties must state an address (in appropriate terms) in Australia at which documents under the CCA or the principal Regulations may be served.  Failure to do so may prevent the ACCC from proceeding with the matter to which the form relates.

Item [3] - Paragraph 26(2)(b)

Similar to item [2], item [3] inserts a reference in paragraph 26(2)(b) to the new Form GAA (for the notification process) so that parties must state an address (in appropriate terms) in Australia at which documents under the CCA or the principal Regulations may be served.  Failure to do so may prevent the ACCC from proceeding with the matter to which the form relates.

Item [4] - Subregulation 28(7), definition of additional notice, paragraphs (a) and (b)

Under subregulation 28(6A), a concessional fee is payable to the ACCC for an additional notice lodged by a party to the ACCC if certain criteria are met.

Item 4 inserts a reference to section 44ZZW into paragraphs (a) and (b) of subregulation 28(7), so that an additional notice in relation to section 44ZZW can be lodged with the ACCC in conjunction with a concessional fee.

Item [5] After Part 3

Regulation 48

Division 1A of the CCA only applies to the classes of goods and services that are prescribed by regulation for the purpose of the prohibitions (subsections 44ZZT(1) and (2) of the CCA).

The Government intends for Division 1A of the CCA to be applied to the banking sector through this regulation.

An institution seeking to be prudentially regulated as an Authorised Deposit-taking Institution (ADI) is required to be authorised under the Banking Act 1959 by the Australian Prudential Regulation Authority (APRA). To receive authorisation, the institution must be carrying on 'banking business'.

Section 5 of the Banking Act 1959 defines 'banking business' as both taking money on deposit (otherwise than as part-payment for identified goods or services) and making advances of money, as well as other financial activities prescribed by regulation under the Banking Act 1959.

Item [5] inserts regulation 48 which prescribes (for the purposes of section 44ZZT of the CCA) that goods and services provided by ADIs consisting, to any extent, of either the taking of money on deposit (otherwise than as part-payment for identified goods or services) or making advances of money are subject to sections 44ZZW and 44ZZX of the CCA.

Regulation 48 is intended to recognise that ADIs may carry on a wider range of activities than just 'banking business' activities.  Therefore, Division 1A will only apply to goods and services provided by ADIs that relate to the taking of money on deposit (otherwise than as part-payment for identified goods or services) or making advances of money. 

A disclosure related to an activity outside of banking; for example, a disclosure related to the provision of travel insurance products, is not intended to be captured by regulation 48 (nor, accordingly, sections 44ZZW and 44ZZX of the CCA).

'Banking business' in the Banking Act 1959 is defined as both the taking of money on deposit and making advances of money.  Given that a single banking good or service provided by an ADI is likely to consist of either taking money on deposit or making an advance of money (not both concurrently), regulation 48 specifies that a good or a service consisting of either taking money on deposit or making an advance of money by an ADI is prescribed for the purposes of sections 44ZZW and 44ZZX of the CCA.

The additional activities prescribed by the Banking Regulations 1966 to be 'banking business' are not covered by regulation 48 (and therefore the prohibitions in sections 44ZZW and 44ZZX of the CCA).

A good or service consisting of taking money on deposit or making an advance of money is likely considered to be a 'service' rather than a 'good'.  However, to remain consistent with the CCA, which generally refers to both goods and services, regulation 48 covers both a 'good or service'. 

A disclosure in connection with a transfer under the Financial Sector (Business Transfer and Group Restructure) Act 1999 is intended to come within the exception provided in subsection 44ZZZ(4) of the CCA.

Regulation 49

Subsections 44ZZT(3) and (4) of the CCA outline that the Governor-General will prescribe by regulation the process which the Minister will follow when making a regulation in the future which extends the application of Division 1A beyond the first made regulation. This procedural requirement does not apply to the first regulation which will apply the prohibitions to the banking sector (subsection 44ZZT(4)). 

Item [5] inserts regulation 49 which outlines that, before the Governor-General makes any regulation for the purpose of subsection 44ZZT(1) of the CCA (other than the first regulation made, that is, regulation 48), the Minister must be satisfied that any consultation that is considered appropriate and that is reasonably practicable to undertake, has been undertaken.  To be satisfied, the Minister may have regard to whether the consultation:

•            drew on the knowledge of persons having expertise in fields relevant to the proposed regulation;

•            ensured that the persons likely to be affected by the proposed regulation had an opportunity to comment on its proposed content; and

•            if appropriate, involved an invitation of submissions to be made by a specified date, or consultation involving an invitation of participation in public hearings held concerning the proposed regulation.

Item [6] Regulation 70, table, after Item 2

Item [6] inserts a reference to Form BA 'Anti-competitive disclosure of pricing and other information: application for authorisation' so that Form BA can be inserted within Part 2 of Schedule 1 of the principal Regulations.

Item [7] Regulation 71, heading

Item [7] amends the heading of regulation 71 to 'Forms for exclusive dealing, private disclosure of pricing information and collective bargaining notifications'.

Item [8] Regulation 71, after Item 1

Item [8] inserts a reference to Form GAA 'Notification of private disclosure of pricing information' so that Form GAA can be inserted within Part 3 of Schedule 1 of the principal Regulations.

Item [9] Schedule 1, after Form B

A party wishing to obtain immunity from section 44ZZW and/or section 44ZZX via the authorisation process is required to lodge a form with the ACCC.  Item [9] inserts Form BA 'Anti-competitive disclosure of pricing and other information: application for authorisation' into Schedule 1 of the principal Regulations.

Item [10] Schedule 1, after Form G

A party wishing to obtain immunity from section 44ZZW via the notification process is required to lodge a form with the ACCC.  Item [10] inserts Form GAA 'Notification of private disclosure of pricing information' into Schedule 1 of the principal Regulations.

Item [11] Schedule 1B, after Item 2

Schedule 1B outlines the fees parties must pay when lodging either an application or a notice.

Consistent with the fees for authorisation for conduct that may breach other prohibitions within Part IV of the CCA, Item [11] outlines that the fee parties are required to pay the ACCC for lodging Form BA is $7500.  The concessional fee is $1500

Item [12] Schedule 1B, after item 9

Schedule 1B outlines the fees parties must pay when lodging either an application or a notice.

Consistent with the fees for lodgement of an exclusive dealing notice, Item [12] outlines that the fee parties are required to pay the ACCC for lodging Form GAA is $100.  The concessional fee is also $100.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Competition and Consumer Amendment Regulation 2012 (No. 1)

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Regulation amends the Competition and Consumer Regulations 2010 to:

•                 prescribe which goods and services are subject to the prohibitions within Division 1A - Anti-competitive disclosure of pricing and other information - of the Competition and Consumer Act 2010 (the CCA);

•                 outline the process to be followed by the Minister before prescribing any future classes of goods or services (after the first regulation made) to Division 1A of the CCA; and

•                 provide forms and prescribe fees so parties can apply to the ACCC for immunity for proposed disclosures which may otherwise contravene the prohibitions within Division 1A of the CCA.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

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