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2003
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
TRADE PRACTICES LEGISLATION AMENDMENT BILL 2003
EXPLANATORY MEMORANDUM
(Circulated by authority of the Treasurer,
the Hon Peter
Costello, MP)
Table of Contents
Outline 1
Financial Impact Statement 2
Notes on individual clauses 3
Schedule 1 – Access regimes 4
Schedule 2 - Prices surveillance 5
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Outline
1. The overall object of the Trade Practices Act 1974 (‘the TPA’) is to enhance the welfare of all Australians through the promotion of competition and fair trading and provision for consumer protection (section 2 of the Act). The object of the new Part VIIA of the TPA is to have prices surveillance applied only in those markets where, in the view of the Minister, competitive pressures are not sufficient to achieve efficient prices and protect consumers.
2. The Prices Surveillance Act 1983 (PSA) was reviewed in the Productivity Commission’s Review of the Prices Surveillance Act 1983 (2001). The Productivity Commission recommended, among other things, that the PSA be repealed and that limited new inquiry and monitoring functions be written into a new part of the TPA. The Government has accepted the recommendation that the PSA be repealed and a new part inserted into the TPA.
3. The PSA was introduced in 1983 to promote price restraint as part of a prices and incomes policy. An object was to reduce inflation and inflationary expectations. Since then, the economic environment has changed considerably. Transferring prices surveillance to the TPA recognises that it has have become part of Australia’s competition policy, rather than a tool to reduce general price inflation. Despite this transfer, the new prices surveillance part of the TPA will not lessen the ability to respond to pricing concerns.
4. Given that the PSA was enacted in different circumstances and for different purposes, updated prices surveillance legislation is desirable. The style of legislation has been modernised in drafting Part VIIA of the TPA, but the preservation of many concepts and provisions from the PSA minimises the impact of the change.
5. Like the PSA, Part VIIA of the TPA provides for selective surveillance of the prices of certain goods and services, at the discretion of the Minister. Declared companies and authorities are required to give notice to the Australian Competition and Consumer Commission (ACCC) before increasing the prices of notified goods or services and to wait a statutory period before implementing an increase. The inquiry body, at the direction of the Minister, may inquire into prices charged and conduct certain other price inquiries.
6. Penalties will apply under Part VIIA of the TPA for failure to observe the notification procedures, or for increasing prices during the course of an inquiry without approval from the inquiry body, but not for failure to comply with a finding of the inquiry body. The PSA provided similarly.
7. Part IIIA of the TPA concerns the regulation of access to services. It also regulates Commonwealth, State and Territory access regimes.
8. The amendments to Part IIIA of the TPA contained in this Bill clarify the ability of State and Territory access regimes to confer duties upon the ACCC and Australian Competition Tribunal (ACT). It is intended that these amendments will also clarify the requirements for imposing functions, powers and duties on both the ACCC and ACT.
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9. There is no financial impact to the Commonwealth as a result of these measures.
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Clause 1 – Short Title
10. This clause provides the short title by which the Act may be cited.
Clause 2 - Commencement
11. This clause specifies the day on which Schedules 1 and 2 will commence. It is intended to overcome any unreasonable delay in Proclamation of the Act.
Clause 3 - Schedules
12. This clause makes it clear that the Acts specified in the Schedules are amended or repealed as set out in the Schedules, and that the Schedules may also contain other provisions.
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13. Item 1 inserts a definition of “State or Territory access regime law” into section 44B of the TPA.
14. Item 2 inserts three new sections (44ZZM, 44ZZMA and 44ZZMB) into the TPA. These sections will replace the previous sections 44ZZM and 44ZZOA.
15. The new sections differ from the previous sections in the following areas:
(a) New subsection 44ZZM(1) explicitly refers to the conferral of duties on the ACCC and ACT.
(b) New subsection 44ZZM(2) sets out the limits to which the conferral of a duty can be authorised by a State or Territory access regime law.
(c) New subsection 44ZZM(3) replaces previous subsection 44ZZM(2). The subsection provides and specifies that neither the ACCC nor the ACT can perform any functions or duties, nor exercise any powers unless there is an explicit agreement between the Commonwealth and the State or Territory concerned.
(d) New subsection 44ZZMA(1) sets out the circumstances in which 44ZZMA applies.
(e) New subsection 44ZZMA(2) provides that a duty is taken not to be imposed by any law of the Commonwealth to the extent to which the duty is not supported by State or Territory legislative power.
(f) New subsections 44ZZMA(3) through (6) provide that if State or Territory legislative power is not sufficient to support any duty, that duty will be imposed by the TPA.
16. New section 44ZZMB sets out the circumstances in which a State or Territory access regime law imposes a duty on the ACCC or ACT.
Item 3 – Section 44ZZOA
17. Item 3 repeals section 44ZZOA.
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Part 1 – Amendments
Airports Act 1996
Items 1-12
18. Items 1-12 make consequential amendments to replace references to the Prices Surveillance Act 1983 (PSA), which is to be repealed, with corresponding references to the new part to be inserted into the Trade Practices Act 1974 (TPA).
Air Services Act 1995
Items 13-18
19. Items 13-18 make consequential amendments to replace references to the PSA with corresponding references to the new part to be inserted into the TPA.
Australian Crime Commission Act 2002
Item 19
20. Item 19 deletes a redundant reference to the PSA.
Australian Maritime Safety Authority Act 1990
Items 20-27
21. Items 20-27 make consequential amendments to replace references to the PSA with corresponding references to the new part to be inserted into the TPA.
Australian Postal Corporation Act 1989
Items 28 and 29
22. Items 28 and 29 make consequential amendments to replace references to the PSA with corresponding references to the new part to be inserted into the TPA.
Item 30
23. Item 30 deletes a redundant reference to the PSA.
Prices Surveillance Act 1983
Item 31
24. Item 31 repeals the PSA.
Trade Practices Act 1974
Item 32
25. Item 32 makes a consequential amendment to replace a reference to the PSA with a corresponding reference to the new part to be inserted into the TPA.
Items 33-35
26. Items 33-35 restrict prices surveillance to the types of transactions or conduct specified in the new Part VIIA (95C, Application of Part), rather than to the types specified in s6(2)-(4) of the TPA. Accordingly, the application of prices surveillance under Part VIIA will be the same as it has been under the PSA.
Item 36
27. Item 36 prevents the Commission from delegating, under s25, certain powers conferred under PartVIIA.
Item 37
28. Item 37 inserts a note on the power of the Commission to delegate, under Part VIIA rather than s25, certain powers conferred under Part VIIA.
Item 38
29. Item 38 prevents the Minister giving directions relating to Part VIIA under paragraph 29(1A)(a). Instead, Ministerial directions relating to Part VIIA would be given under Part VIIA (95ZH). (The TPA provides a specific power, s29(3), for a House of the Parliament or a Committee of either House to require the Commission to furnish information. That specific power would apply in relation to prices surveillance under the TPA.)
Item 39
30. Item 39 makes a consequential amendment to replace a reference to the PSA with a corresponding reference to the new part to be inserted into the TPA.
Item 40
31. Item 40 inserts the new Part VIIA – Prices surveillance - into the TPA.
Division 1 – Preliminary
95A Defines a number of terms used in the Bill. As in the PSA, the interpretation given to the terms “Commonwealth authority”, “goods”, “services”, “price” and “supply” is intended to leave the ambit of the Part wide. The relevant “price” is the price after any charges have been added and after any discounts or other pecuniary benefits have been deducted. Exports fall outside that ambit, as do supplies for which a price is not charged.
95B States that any supply can be removed by regulation from the ambit of the Part.
95C Defines the application of the Part which, broadly, extends to the supply of any goods or services by the corporate sector or by Commonwealth authorities but not by State, Northern Territory or Norfolk Island authorities.
95D Defines the extent to which the Part binds the Crown.
95E Defines a clear and non-conflicting object. The regulator would never be obliged to judge the relative importance of different goals in deciding whether prices surveillance should be applied. The Minister would be the person obliged to judge the relative importance of each goal. The regulator is guided to seek the Minister’s view in determining whether prices surveillance would be appropriate in a given circumstance.
95F Provides a simplified overview of the Part.
Division 2 – Commission’s functions
95G States the Commission’s functions under the Part, which are to hold price inquiries, to consider price notices and to monitor prices, costs and profits when directed or approved by the Minister. In exercising its powers and performing its functions under Part VIIA, the Commission must, subject to any directions given under s95ZH (which would become the paramount factors to be considered by the Commission), have particular regard to the three other factors described in s95G(7)(a),(b) and (c). (95J also provides that an inquiry body - potentially but not exclusively the Commission - must comply with directions from the Minister as to the matters to be taken into consideration in the inquiry.)
Division 3 – Price inquiries
Subdivision A – Holding of inquiries
95H States the powers of the Minister in relation to inquiries. The Minister may require the Commission, or another body, to hold an inquiry and may approve the holding of an inquiry, which can be into any matter specified in a notice.
95J Provides that the inquiry notice is to specify the goods or services to be covered and whether the inquiry is to be held in relation to particular persons, in which case the notice may specify the persons. If it does not specify the persons, the inquiry body is to determine the persons and the inquiry Chair must give the Minister notice in writing of the determination. The inquiry body must comply with directions from the Minister as to the holding of the inquiry and the matters to be taken into consideration in the inquiry.
95K Requires the Minister to specify the period in which the inquiry is to be completed and the report submitted, and requires the inquiry body to meet that timetable. 95K(3) provides for extensions of time to be given to the inquiry body.
95L Requires the inquiry body to give notice in the Gazette, and in the press, of its forthcoming inquiries and, where the inquiry is to be held in relation to particular persons, notice is to be given to the persons.
95M Provides that where an extension of time is given to the inquiry body for completion of an inquiry in relation to particular persons, notice of that extension is to be given to the persons involved.
95N Prohibits persons taken to inquiry from increasing the prices of goods or services covered by the inquiry before the “applicable day”, or from supplying a new locality at a price higher than they have previously charged elsewhere in Australia, or from supplying the goods or services on terms and conditions substantially different from those previously applying. A penalty of 100 penalty units applies to a breach of these provisions. The “applicable day” is defined in 95N(8).
Subdivision B – Reports on inquiries
95P Requires the inquiry body to send its report on the supply of goods or services by particular persons to those persons on the day on which it gives the Minister the report. When it sends the report to those persons, the inquiry body must send an accompanying notice setting out obligations (for notifying prices) that would arise upon receipt of the inquiry report. The Minister may exercise his or her discretion not to release an inquiry report to the public, but person(s) subject to the inquiry could make the report publicly available without penalty. The discretion not to release an inquiry report to the public is desirable in order to prevent unfair damage to the reputation of person(s) subject to an inquiry and to prevent unwarranted public concern or harmful speculation.
95Q Requires persons taken to inquiry to notify the Commission, within 14 days of receiving the inquiry report, the price at which they are supplying or proposing to supply the goods or services covered by the inquiry. A penalty of 10 penalty units applies to persons who breach this provision. The Commission has 14 days in which to make the particulars available to the public.
Subdivision C – Procedure at inquiries
95R Provides that an inquiry body must hold an inquiry in public, unless the Minister directs otherwise. 95R(2) provides, however, for confidential evidence to be taken in private if the inquiry body agrees. 95R(3) permits evidence to be given by witnesses in the form of a written statement, and 95R(4) requires the inquiry body to make certain witness statements publicly available, unless the witness objects. 95R(7) and (8) provide that, subject to the Part, and subject to any direction given by the Minister or the Chairperson (if not the inquiry Chair), the procedure at inquiries is within the discretion of the inquiry Chair. The inquiry body is not bound by the rules of evidence.
95S Empowers the inquiry body to take evidence on oath or affirmation, and empowers the inquiry Chair to summon a person to appear and give evidence.
95T Provides a penalty of 10 penalty units for failure of a witness to attend, unless the witness has a reasonable excuse.
95U Provides a penalty of 10 penalty units for refusal or failure to be sworn or to answer a question, or to produce a document as required.
95V Protects witnesses appearing at inquiries against civil or criminal proceedings.
95W Provides for payment of allowances to witnesses.
Division 4 – Price notifications
95X Provides for the relevant declarations to be made which activate the notification procedures. It enables price surveillance to be exercised selectively at the discretion of the Minister or by the Commission with the approval of the Minister.
95Y Prevents the Minister from making or approving a declaration of a State or Territory authority, except in the circumstances specified.
95Z Sets out the notification requirements which apply to declared persons. A penalty of 100 penalty units may be incurred for failure to comply with those requirements. The circumstances in which prices must be notified to the Commission by a declared person supplying notified goods or services are where that person proposes to:
(a) increase prices in a locality beyond the highest price previously charged in that locality;
(b) supply a new locality at a price higher than previously charged elsewhere in Australia; or
(c) supply particular goods or services for the first time in Australia on the proposed terms and conditions.
The requirements to be met before the goods or services can be supplied on the proposed basis are that:
(a) the person has given a notice to the Commission stating the proposed prices, terms and conditions of supply;
(b) either –
(i) the applicable period has expired;
(ii) the Commission has notified the person that it has no objection to the proposed basis of supply; or
(iii) the Commission has served a notice on the person nominating a lower price, and the person has within 7 days given a notice to the Commission agreeing not to exceed that lower price
(c) the terms and conditions of supply are the same as or substantially similar to the proposed terms; and
(d) the price charged does not exceed the proposed price, or the lower price nominated by the Commission where the person has agreed as in (iii) to accept that price.
Exempt supplies are released from the notification requirements.
95ZA Entitles a person to substitute a lower price for one originally proposed in a notice to the Commission.
95ZB Defines the applicable period in relation to a locality notice, but provides for the applicable period to be extended beyond 21 days with the consent of the notifying person. Also, where the Commission has served on the person a notice nominating a price lower than proposed by the person, the applicable period is increased by 14 days beyond the normal 21 days or such longer period as may have been agreed by the person.
95ZC Requires the Commission to keep a register of, and to publish, the outcomes of its consideration of notices given under 95Z(5). This provision makes appropriate details of the Commission’s operations available to the public in cases where locality notices are dealt with outside of public inquiry. The relevant details are to be entered in the register, which is to be available for inspection by the public at the end of the applicable period for dealing with the notice. The relevant Gazette notice is to be published within 3 months after the prescribed time has elapsed.
95ZD Enables the Commission to delegate to a single member the task of dealing with notices given by persons under 95Z(5), but does not prevent the use by the Commission of the powers delegated. This provision enables notices to be processed within the applicable period, particularly where the Commission may have difficulty in meeting as a body.
Division 5 – Price monitoring
95ZE Provides for the relevant directions to be made which activate the monitoring procedures in relation to an industry. The Commission’s monitoring report is to be prepared with regard to commercial confidentiality.
95ZF Provides for the relevant directions to be made which activate the monitoring procedures in relation to a business. The Commission’s monitoring report is to be prepared with regard to commercial confidentiality.
95ZG Prevents the Minister from directing the Commission to monitor exempt supplies or supplies by State and Territory authorities.
Division 5 – Other provisions
95ZH Empowers the Minister to direct the Commission to give special consideration to particular matters in exercising its powers and performing its functions under Part VIIA, and requires the Commission to comply with such a direction. The purpose of this provision is to ensure that the operations of the Commission remain within the framework of Government policy. (95ZH special considerations are to be paramount; for example, they are to be more important considerations than the particular factors specified in 95G.)
95ZI Provides for the regulations to specify the manner in which an unincorporated body, or a group of 2 or more individuals, is to perform its functions as an inquiry body under Part VIIA.
95ZJ Provides for withdrawal of notices served on a person by the Commission under Part VIIA, or by an inquiry body other than the Commission.
95ZK Empowers the Commission or an inquiry body other than the Commission to require persons to furnish information or produce documents relevant to:
- consideration of notices given by the person under 95Z(5);
- an inquiry that is being held in relation to the person; or
- the supply of goods or services by the person.
A penalty of 20 penalty units applies for refusing or failing to comply with a notice given to a person under 95ZK, unless the person has a reasonable excuse. A penalty of 20 penalty units applies for making a statement that the person knows is false or misleading.
The inquiry body must make the information or documents concerned available to the public in such a manner as it thinks fit. (As mentioned below, 95ZN provides for the Commission to take confidentiality steps where disclosure of certain information would damage the competitive position of the person furnishing the information.
95ZL Permits the Commission and its staff to inspect relevant documents and make copies or take extracts from them. In the case of an inquiry by a body other than the Commission, persons providing assistance in the inquiry may inspect relevant documents and make copies or take extracts from them.
95ZM Permits the Commission to retain documents given or produced to it for a reasonable period, but the person otherwise entitled to possession of the document is to receive a certified copy of the document from the Commission.
95ZN Provides for the protection of confidential information given at inquiries or furnished in accordance with 95ZK. Where a person claims that disclosure of particular information so given or furnished would damage the competitive position of the person, and the Commission accepts the claim and is not of the opinion that disclosure is necessary in the public interest, it is required to take all reasonable steps to ensure that the relevant information is not, without the consent of the person, disclosed other than to a member or associate member or to staff who receive the course of information in the course of their duties.
95ZO Protects members (or associate members of the Commission, or the person presiding at an external inquiry) in the performance of their duties against civil or criminal proceedings.
95ZP Imposes secrecy on members and staff of the Commission, consultants engaged by it, and officers of the Department with respect to information or documents obtained in the course of their duties under on in connection with the Part, other than information or documents made available to the public by the Commission pursuant to the Part. A penalty of imprisonment for 2 years applies to breach of this provision. 95ZP(2) protects such information and documents from having to be produced to a court. The intention of this provision is to protect the security of information and documents furnished to the Commission by persons subject to the Part.
95ZQ Imposes secrecy on persons involved in inquiries by bodies other than the Commission, and has effects similar to 95ZP.
Items 41-43
32. Items 41-43 make consequential amendments to replace references to the PSA with corresponding references to the new part to be inserted into the TPA.
Part 2 – Transitional provisions
Item 44
33. Item 44 defines a number of terms used in Part 2.
Item 45
34. Item 45 continues the effect of certain directions and declarations made under the PSA as if they were made under the new part to be inserted into the TPA. Like the other transitional provisions, the purpose of the provision is to ensure a smooth transfer of prices surveillance powers from the PSA to the new part to be inserted into the TPA.
Items 46-55
35. Items 46-55 continue the effects of price inquiries, price notifications, price monitoring, information gathering, inspection of documents, witness allowances, secrecy, and related matters made under the PSA as if they were made under the new part to be inserted into the TPA.
Item 56
36. Item 56 provides that paragraphs 155(2A)(a),(b) & (c) of the TPA have effects after the commencement time as if the (new) references to sections of the new Part also referred to relevant (but repealed) sections of the PSA.
Item 57
37. Item 57 preserves the “global” transitional provisions of the Acts Interpretation Act 1901, notwithstanding the specific transitional provisions of this part.
Item 58
38. Provides for the Governor-General to make regulations in relation to transitional matters arising from the amendments or repeals made by Schedule 2 of the Bill.