Competition law in Australia: overview

A Q&A guide to competition law in Australia.

The Q&A gives a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures. In particular, it covers relevant triggering events and thresholds, notification requirements, procedures and timetables, third party claims, exclusions and exemptions, penalties for breach, and proposals for reform.

To compare answers across multiple jurisdictions visit the Competition law Country Q&A tool.

This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Competition Q&As visit www.practicallaw.com/competition-mjg.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-mjg.

Sharon Henrick and Wayne Leach, King & Wood Mallesons
Contents

Merger control

1. What (if any) merger control rules apply to mergers and acquisitions in your jurisdiction?

Regulatory framework

Mergers and acquisitions in Australia are subject to merger control under the Competition and Consumer Act 2010 (CCA).

Section 50 of the CCA (section 50) prohibits direct or indirect acquisitions of shares or assets that would have the effect, or likely effect, of substantially lessening competition in a market in Australia where the acquirer is incorporated in Australia, carrying on business in Australia or registered as a foreign corporation in Australia.

Section 50A of the CCA (section 50A) applies to offshore acquisitions that would result in the acquirer obtaining a controlling interest in an Australian corporation. Unlike section 50, section 50A does not require the acquirer to be incorporated in Australia, carrying on business in Australia or registered as a foreign corporation in Australia. If the Australian Competition Tribunal (Tribunal) considers the acquisition would have the effect or likely effect of substantially lessening competition in a market in Australia without a countervailing public benefit, the Tribunal can make a declaration which prevents the Australian corporation from carrying on business in the affected Australian markets.

Regulatory authority

The Australian Competition and Consumer Commission (ACCC) enforces Australia's merger control regime. The ACCC may apply to the Federal Court for an injunction to prevent a merger from proceeding or may apply for divestiture orders or civil pecuniary penalties if the merger has already taken place.

The Tribunal considers applications for authorisations of mergers on public benefit grounds, can review formal merger clearance determinations made by the ACCC and can grant declarations under section 50A.

See box, The regulatory authorities.

 

Triggering events/thresholds

2. What are the relevant jurisdictional triggering events/thresholds?

Triggering events

A transaction is subject to merger control under section 50 of the CCA if it involves a direct or indirect acquisition of shares or assets (including any legal or equitable interest in shares or assets), which may result in a substantial lessening of competition regardless of whether it results in control of the target.

Section 50 applies to foreign transactions if the acquirer either:

  • Is incorporated in Australia.

  • Is registered as a foreign company in Australia.

  • Carries on business in Australia.

  • Is a person ordinarily resident in Australia.

  • Is an Australian citizen.

If section 50 does not apply, section 50A may apply (see Question 1, Regulatory framework).

Thresholds

While the notification regime is voluntary and does not contain minimum turnover or value thresholds, the ACCC's Merger Guidelines recommend notification of all mergers where both:

  • The acquirer will have a share of 20% or more of a market in Australia.

  • The acquirer and the target supply substitutable or complementary goods or services. (For example, the acquirer and the target would supply complementary services if the acquirer engages in grain marketing and trading and the target engages in bulk grain handling, or if the acquirer supplies iron ore and the target is a port used to export iron ore.)

Statutory limitation period

The limitation period for the ACCC to bring a claim for breach of section 50 varies depending on the type of orders sought by the ACCC. For example:

  • An action for civil pecuniary penalties must be brought within six years of the contravention.

  • An application for a divestiture order must be brought within three years of the contravention.

 

Notification

3. What are the notification requirements for mergers?

Mandatory or voluntary

Notification is voluntary. However, the ACCC encourages advance notification of a merger in certain circumstances (see Question 2, Thresholds).

The ACCC can also investigate any mergers that do not satisfy these thresholds.

In practice, most mergers that may have an appreciable effect on competition in Australia are voluntarily notified to the ACCC before completion. This is because the ACCC can seek a Federal Court order to injunct or void a merger if the parties have not sought clearance from the ACCC before completion and the ACCC considers that the merger is likely to substantially lessen competition in an Australian market.

There is no limitation period for the ACCC to bring proceedings in the Federal Court seeking an injunction. However, in practice, this is done before the merger is completed. An application for an order to void a merger must be brought within three years of the contravention.

Timing

While no statutory timeline is prescribed for informal clearance, the ACCC Merger Guidelines recommend that parties notify a proposed transaction at least six to 12 weeks before completion to allow for the ACCC's review (see Question 4, Informal clearance and courtesy approach).

Parties seeking to notify the ACCC confidentially should approach the ACCC at least two weeks before the proposed announcement date of the merger or acquisition.

A notification for formal clearance or an application to the Tribunal for authorisation on public interest grounds must be made before the transaction is completed (see below, Obligation to suspend).

Formal/informal guidance

Informal guidance can be obtained from the ACCC before notification.

Responsibility for notification

Primary liability for breaches of section 50 attaches to the acquirer under section 50. Therefore, the acquirer usually notifies the ACCC.

Relevant authority

Notification in relation to informal and formal clearance is made to the ACCC. An acquirer may also apply to the Tribunal for authorisation on public benefit grounds.

Form of notification

There are a number of ways for parties to seek clearance for a merger. They may:

  • Notify the ACCC as a matter of courtesy.

  • Seek informal or formal clearance from the ACCC.

  • Apply to the Tribunal for authorisation of the merger.

There is a prescribed form (much like the Form CO in Europe) for applications for formal clearance (Form O). There is also a prescribed form for applications to the Tribunal for authorisation of mergers (Form S) (see below).

Informal clearance and courtesy approach. Informal clearance and the courtesy approach are informal non-statutory processes. They are the most commonly used notification methods in Australia.

If parties believe that a merger will not give rise to any competition concerns, they may nevertheless approach the ACCC on a courtesy basis because, for example, they are purchasing a government business and the government requires them to notify the ACCC. The parties submit a short, confidential letter to the ACCC in which they:

  • Describe the parties.

  • Outline the transaction and its commercial rationale.

  • Explain why the proposed merger would not be likely to substantially lessen competition in any market.

An application for informal clearance is usually made where parties anticipate the ACCC identifying potential concerns with the proposed merger, perhaps because third parties are likely to complain about the merger. The notification involves a detailed submission describing:

  • The parties.

  • The transaction and its commercial rationale.

  • The affected markets.

  • The reasons why the proposed merger or acquisition would not be likely to substantially lessen competition in each affected market.

The ACCC issues a comfort letter to the parties indicating that it does not intend to oppose the proposed merger. While informal clearance does not provide statutory immunity, it is rare for the ACCC to subsequently decide to oppose a merger.

The acquirer may also notify the ACCC confidentially before a proposed merger is announced. This allows the ACCC to identify and narrow any issues before the ACCC begins its public market inquiries. The ACCC usually provides a qualified confidential view within two to four weeks of the confidential notification.

Formal clearance. Applications for formal clearance must be in a prescribed form. While formal clearance results in statutory immunity from prosecution for the proposed merger, the process has yet to be used in Australia.

Authorisation. Parties can apply to the Tribunal for authorisation of a proposed merger using a prescribed form. The Tribunal will only grant authorisation if the proposed merger is likely to result in a net public benefit. While authorisation results in statutory immunity from prosecution for the merger, authorisation applications are not common.

Filing fee

There is no filing fee for informal clearance or the courtesy approach. However, a filing fee of A$25,000 applies for applications for formal clearance or authorisation.

Obligation to suspend

Acquirers who apply for formal clearance or authorisation must provide a court-enforceable undertaking to the ACCC that the acquisition will not be completed while the application is being considered.

If the acquirer seeks informal clearance or has made a courtesy approach, there is no obligation to suspend the transaction pending the outcome of the ACCC's review. However, parties generally will not complete until they have a comfort letter from the ACCC. If the ACCC has concerns about the merger, it may seek undertakings that the parties will not complete the merger until it has time to complete its review, or unless the parties give the ACCC five business days' notice in writing. If the parties seek to complete before they have obtained informal clearance, they risk the ACCC seeking an injunction to prevent completion from the Federal Court.

 

Procedure and timetable

4. What are the applicable procedures and timetable?

Informal clearance and courtesy approach

Pre-assessments. The ACCC conducts pre-assessments of mergers that it considers are unlikely to raise competition concerns. Such transactions are considered "on the papers" (that is, on the basis of the parties' submissions, publicly available information and material the ACCC already has before it). Matters which are pre-assessed are generally not subject to market inquiries. However, if the pre-assessment indicates there may be competition concerns, the matter may be escalated to public review. In 2011/2012, 250 of the 340 mergers considered by the ACCC were cleared on a pre-assessment basis.

Confidential assessments. If a confidential notification is made to the ACCC before announcement, the ACCC generally provides a qualified confidential opinion within two to four weeks of the confidential notification.

Public review. Following the merger's announcement, the ACCC allows about two weeks for market inquiries, during which interested third parties can make submissions to the ACCC.

Within six to eight weeks of announcement, the ACCC may either:

  • Decide not to oppose the proposed merger.

  • If it has concerns, publish a statement of issues outlining its concerns, together with a secondary review timeline.

A further round of market inquiries will then be conducted on the basis of the concerns identified. In these cases, the clearance process may take 12 weeks or longer.

The ACCC may extend its indicative review timelines at any time if it identifies issues, experiences delays in obtaining information or the acquirer proposes remedies.

If the ACCC concludes that the acquisition would be likely to substantially lessen competition, or the acquirer believes that it is what the ACCC is likely to conclude, the acquirer may at any time offer a concession to the ACCC (such as to divest an asset to a purchaser approved by the ACCC). The concession must be offered in the form of an undertaking under section 87B of the CCA before it can be accepted by the ACCC (see Question 8).

If the ACCC accepts the undertaking, the ACCC will grant informal clearance subject to the undertaking and place a copy of the undertaking on a public register subject to limited rights to claim confidentiality.

If a concession is not offered, or the concession that is offered is not accepted by the ACCC, the ACCC will seek an undertaking from the acquirer that it will not take any further steps towards completion without giving the ACCC at least five business days' notice in writing. If the acquirer does not give the undertaking or gives it and then notifies the ACCC that it intends to complete the acquisition, the ACCC is expected to apply to the Federal Court for an urgent injunction to prevent completion.

Formal clearance

The ACCC notifies the applicant within five business days if it considers the application to be invalid. The ACCC must issue a decision within 40 business days, which may be extended by an additional 20 business days if necessary.

The ACCC may grant formal clearance subject to conditions.

Authorisation

The Tribunal notifies the applicant within five business days if it considers the application to be invalid. Alternatively, the Tribunal must make its decision within three months, or if the acquisition raises complex issues, within six months, from the date of application, subject to any extensions agreed by the applicant.

Authorisation may be granted on specified conditions.

For an overview of the notification process, see flowchart, Australia: merger notifications (www.practicallaw.com/7-504-5801).

 

Publicity and confidentiality

5. How much information is made publicly available concerning merger inquiries? Is any information made automatically confidential and is confidentiality available on request?

Publicity

For informal clearance and courtesy approaches, the ACCC does not publish confidential information or submissions provided by any person.

If a confidential notification is made, the ACCC does not publish notice of its confidential opinion. If the merger is subsequently announced or notification is made on a non-confidential basis, the ACCC publishes a notice of its review on its website, together with a summary of its decision or, if applicable, a Statement of Issues or Public Competition Assessment (where the merger is opposed, or is subject to enforceable undertakings or raises important issues).

For formal clearance and authorisation, the application and accompanying documentation, submissions, the determination of the ACCC or Tribunal and their reasons for decision are made public, subject to limited rights to claim confidentiality (see below, Confidentiality on request).

Procedural stage

For informal clearance, the ACCC publishes notice of its review after the proposed merger has been announced.

For formal clearance and authorisation, any information received (including the application) is released as soon as practicable after receipt, subject to limited rights to claim confidentiality (see below, Confidentiality on request).

Automatic confidentiality

For informal clearance and courtesy approaches, the ACCC does not publish any submissions or information provided to it by the parties or third parties unless the information is not confidential.

For formal clearance and authorisation, no information is automatically kept confidential.

Confidentiality on request

The parties can request that certain information be kept confidential under all notification methods.

For formal clearance and authorisation, where a request for confidentiality has been made, the ACCC/Tribunal may exclude the information from the public register because of its confidential nature, if it contains a secret formula or process, or if it discloses the cash consideration for the acquisition, or current manufacturing, production or marketing costs.

 

Rights of third parties

6. What rights (if any) do third parties have to make representations, access documents or be heard during the course of an investigation?

Representations

For all notification methods, third parties may make representations to the ACCC and be heard during the course of the ACCC's review.

For informal clearance, once the proposed merger or acquisition is announced, the ACCC publishes a notice of its review and consults third parties during its market inquiries.

For formal clearance and authorisation, the ACCC publishes a copy of the application and accompanying information and documents (subject to confidentiality claims) on its website and invites submissions from third parties.

Document access

For informal clearance, third parties have no rights to access documents or submissions provided to the ACCC by the parties or other persons.

For formal clearance and authorisation, the application and accompanying documentation and submissions received are publicly available (subject to claims for confidentiality).

Be heard

See above, Representations.

 

Substantive test

7. What is the substantive test?

Informal and formal clearance

The substantive test is whether the merger will have the effect or likely effect of substantially lessening competition in a market in Australia.

The ACCC considers the following factors, outlined in section 50(3):

  • Actual/potential level of import competition.

  • Barriers to entry.

  • Market concentration.

  • Countervailing power.

  • Acquirer's ability to significantly and sustainably increase prices or profit margins post-merger.

  • Availability of substitutes.

  • Dynamic characteristics of the market.

  • Removal of any vigorous and "maverick" competitor.

  • Degree of vertical integration.

The ACCC also considers the potential for co-ordinated effects.

Authorisation

The test for authorisation is whether the proposed merger gives rise to a net public benefit.

 

Remedies, penalties and appeal

8. What remedies can be imposed as conditions of clearance to address competition concerns? At what stage of the procedure can they be offered and accepted?

Merger parties can provide court-enforceable undertakings to the ACCC or the Tribunal under section 87B of the CCA.

The ACCC prefers structural undertakings to behavioural undertakings. For divestment undertakings, the ACCC's preference is for divestment to occur on or before completion of the headline transaction.

Undertakings can be offered at any time, including after the ACCC's decision to oppose the merger. The ACCC usually seeks public comment on the proposed undertakings from market participants and, if satisfied that the competition issues will be addressed, the undertaking will be accepted and the merger can proceed.

The ACCC generally requires all undertakings to provide for the appointment of an ACCC approved independent auditor to monitor the undertaking signatories' compliance with the undertaking and to provide audit reports to the ACCC at regular specified periods.

 
9. What are the penalties for failing to comply with the merger control rules?

Failure to notify correctly

The CCA prohibits the provision of false or misleading information to the ACCC or the Tribunal in relation to formal clearances or authorisations. Both individuals and companies can be liable and civil penalties for a breach of this prohibition can be up to A$33,000 for a company and up to A$6,600 for an individual.

Clearances and authorisations granted on the basis of false or misleading information can be revoked and the Federal Court can injunct the acquisition or order divestiture of the shares/assets if the decision, granted on the basis of false or misleading information, is subsequently found to breach section 50.

If a party is unable to implement a section 87B undertaking provided to the ACCC (see Question 8), it will be in breach of that undertaking and the ACCC may bring proceedings in the Federal Court for that breach (see below, Failure to observe).

Implementation before approval or after prohibition

The ACCC can seek orders for injunction, orders for divestment of the shares/assets and orders to void the acquisition (see above, Failure to notify correctly). It can also seek civil pecuniary penalties for companies of up to the greater of:

  • A$10 million.

  • Three times the value of the benefit.

  • 10% of the Australian annual turnover of the corporation and its related entities.

In the case of individuals who have intentionally participated in a breach of merger rules, the ACCC may seek civil pecuniary penalties of up to A$500,000 and banning orders. It is a criminal offence for a company to indemnify its officers and employees for the costs of the penalties and any associated legal costs.

Failure to observe

Decisions by the ACCC under the informal clearance or a courtesy approach are not binding on the merger parties. That is, they are free to complete the transaction even if the ACCC decides to oppose the merger. However, if they do so, they risk the ACCC seeking an injunction to prevent completion from the Federal Court or seeking divestiture orders and/or civil pecuniary penalties if the merger has already completed (see above, Implementation before approval or after prohibition).

If the merger parties fail to observe a decision by the ACCC under the formal clearance approach or the Tribunal under the merger authorisation process, they will not have statutory immunity for the transaction and will be liable for action for breach of section 50 if they proceed.

If a person fails to observe a section 87B undertaking provided to the ACCC (see Question 8), the ACCC can seek Federal Court orders directing the person to comply with the undertaking, pay a pecuniary penalty and/or any other appropriate order.

If a person fails to comply with such an order, they may be liable for fines, a criminal record, and/or imprisonment.

 
10. Is there a right of appeal against any decision? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties or only the parties to the decision?

Rights of appeal and procedure

Informal clearance. While a decision by the ACCC not to grant informal clearance cannot be appealed, parties can seek a Federal Court declaration that the proposed merger would not result in a breach of section 50 or section 50A.

Proceedings for injunctions or declarations in relation to mergers are rare.

The most recent declaration proceedings occurred in 2003 where the Federal Court granted a declaration that AGL's acquisition of a 35% stake in an electricity power station was not likely to substantially lessen competition. Proceedings were expedited and took about three months.

In December 2010, the ACCC applied to the Federal Court, on an expedited basis, to injunct Metcash from acquiring Franklins. The Federal Court decided, after more than eight months, not to injunct the merger and found that the merger was likely to be beneficial for competition. Appeals by the ACCC in the matter were unsuccessful.

Formal clearance and authorisations. A limited merits review can be brought in relation to a formal clearance decision (based only on information before the ACCC). An application to the Tribunal must be made within 14 days and must be accompanied by a section 87B undertaking not to complete the acquisition. The Tribunal must make its decision within 30 business days or, if it considers the matter complex, within an additional 60 business days.

There is no appeal right against the Tribunal's review decision. However, a person can apply to the Federal Court for review on administrative law grounds.

Third party rights of appeal

If a third party is dissatisfied with an informal clearance decision, it can apply to the Federal Court for a declaration that the merger would result, or has resulted, in a breach of section 50. They can also seek orders for divestiture and civil damages.

 

Automatic clearance of restrictive provisions

11. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automatically cleared, how are they regulated?

If a merger is cleared, any restrictive provisions in the agreements are not automatically cleared. These restrictive provisions remain subject to applicable prohibitions in the CCA but can be authorised by the ACCC (see Questions 13 to 26).

 

Regulation of specific industries

12. What industries (if any) are specifically regulated?

The merger control regime does not regulate specific industries. However, other Australian legislation regulates mergers in particular industries, including the financial sector, media and aviation.

 

Restrictive agreements and practices

Scope of rules

13. Are restrictive agreements and practices regulated? If so, what are the substantive provisions and regulatory authority?

Restrictive agreements and practices are regulated under the CCA and enforced by the ACCC. If the ACCC finds that a restrictive agreement or practice breaches the CCA it may apply to Federal Court for civil pecuniary penalties and other orders, or in criminal cases, refer the case to the Department of Public Prosecution (DPP).

The following conduct is per se, or outright, prohibited.

Cartel provisions. The CCA contains parallel civil and criminal prohibitions against making or giving effect to a contract, arrangement or understanding that contains a cartel provision. A cartel provision is defined as a provision of a contract, arrangement or understanding between actual or potential competitors that has either:

  • The purpose or likely effect of fixing, controlling or maintaining a price or component of a price.

  • The purpose of:

    • preventing, restricting or limiting production, capacity or supply;

    • allocating customers, suppliers or territories; or

    • bid-rigging.

The civil and criminal prohibitions have identical elements except for the standard for proof and the requirement for the criminal offence to demonstrate both:

  • An intention to make or give effect to the contract, arrangement or understanding.

  • Knowledge or belief that the contract, arrangement or understanding contains a cartel provision.

Price signalling. The CCA prohibits a corporation from making private disclosures to competitors of pricing information if the disclosure is not in the ordinary course of business. Currently, this prohibition only applies to the banking sector. However, the government has indicated the prohibition may be extended to other sectors in the future after further review and consideration.

Exclusionary provisions. The CCA prohibits making or giving effect to a contract, arrangement or understanding that contains an exclusionary provision. An exclusionary provision is a provision of a contract, arrangement or understanding between competitors that has the purpose of preventing, restricting or limiting the supply or acquisition of goods or services to or from particular persons or classes of persons by any or all of the parties.

Third line forcing. The CCA prohibits third line forcing. This is where Party A supplies goods or services to Party B on the condition that Party B acquire goods or services of a particular kind or description from a third person not related to Party A.

Resale price maintenance. A corporation cannot supply a customer on the basis that the customer will not re-sell the goods at a price below that specified by the supplier. There is an exemption for loss leading (see Question 15).

The CCA also contains civil prohibitions against the following conduct which is subject to a competition (or rule of reason) test:

  • Exclusive dealing. A corporation is prohibited from engaging in certain types of vertical arrangements that have the purpose, effect or likely effect of substantially lessening competition.

  • Anti-competitive agreements. There is a general civil prohibition against making or giving effect to contracts, arrangements or understandings that have the purpose, effect or likely effect of substantially lessening competition in a market.

  • Price signalling. A corporation is prohibited from making disclosures about prices, capacity or strategy for the purpose of substantially lessening competition in a market (see above).

 
14. Do the regulations only apply to formal agreements or can they apply to informal practices?

The prohibitions apply to formal agreements, informal practices and conduct. An informal practice may comprise arrangements or understandings where there has been a meeting of minds and a commitment to act in a certain way, rather than a mere hope that a party will act in a particular way. (For the types of agreements that may breach the law, see Question 13.)

 

Exemptions

15. Are there any exemptions? If so, what are the criteria for individual exemption and any applicable block exemptions?

There are anti-overlap exemptions to many of the prohibitions. For example, the prohibitions on cartel conduct, exclusionary provisions and provisions that substantially lessen competition do not apply where the provision constitutes exclusive dealing or provides for the acquisition of shares or assets.

In addition, conduct between related bodies corporate will not breach the prohibitions against cartel provisions, provisions that substantially lessen competition, exclusionary provisions, exclusive dealing, third line forcing and price signalling.

Other specific exemptions include:

  • Cartels. The complete defence for joint ventures from the prohibition against cartel conduct (see Question 37) and the exemption for collective acquisition of goods or services by the parties where the cartel provision relates to the price.

  • Exclusionary provisions. The complete defence for joint ventures from the prohibition on exclusionary provisions (see Question 37).

  • Resale price maintenance. A limited defence to the prohibition on resale price maintenance for the withholding of supply to a person who has sold goods below cost for the purpose of attracting persons likely to purchase other goods or for the purpose of promoting its business (loss leading).

  • Price signalling. There are numerous exceptions to the prohibitions on price signalling including disclosures made in the context of a joint venture, disclosures made for the purpose of complying with continuous disclosure obligations under the Corporations Act, and disclosures which are accidental or caused by something beyond the control of the corporation.

 

Exclusions and statutes of limitation

16. Are there any exclusions? Are there statutes of limitation associated with restrictive agreements and practices?

Exclusions

There are no exclusions and no de minimis provisions excluding small agreements.

Statutes of limitation

Any proceeding to recover a pecuniary penalty or to recover damages against restrictive conduct must be commenced within six years after the contravention.

 

Notification

17. What are the notification requirements for restrictive agreements and practices?

Notification and authorisation

Parties can apply to the ACCC for authorisation, on public benefit grounds, for conduct that would otherwise contravene the prohibitions on cartel conduct, price signalling, exclusionary provisions, provisions that substantially lessen competition, certain forms of exclusive dealing or resale price maintenance.

If the ACCC is satisfied, as a result of a statutory process that usually takes between four and six months and that involves third party consultation, that the conduct is likely to result in a net public benefit, the ACCC may make the conduct immune with or without conditions. Generally, the ACCC grants authorisation for five years.

Immunity for third line forcing, other exclusive dealing conduct, and the per se price signalling prohibition can be obtained by notification to the ACCC. Under this procedure, immunity for a third line forcing notification or a price signalling notification takes effect at the end of the 14th day of a valid notification being lodged with the ACCC. Immunity in respect of an exclusive dealing notification other than third line forcing takes effect on the day the notification is validly lodged with the ACCC. The immunity granted by a notification extends indefinitely, unless revoked by the ACCC. The ACCC will revoke the statutory immunity afforded by a notification if it is satisfied that the public benefit associated with the conduct no longer outweighs the public detriment.

Lodgement of a collective bargaining notification with the ACCC results in an exemption from the prohibitions against cartel conduct, exclusionary provisions and provisions that substantially lessen competition. The notification takes effect within 14 days and the ACCC will allow a notification to stand if it is satisfied that a net public benefit will arise.

Notifications, applications for authorisation and related information provided to the ACCC are publicly available on the ACCC's website (subject to confidentiality claims).

Informal guidance/opinion

Informal guidance may be sought before formal notification.

Responsibility for notification

Parties proposing to engage in the relevant conduct are responsible for lodging an application for authorisation or notification.

Relevant authority

Notification and applications for authorisation must be made to the ACCC.

Form of notification

Prescribed forms for notifications and applications for authorisations are available from the ACCC's website at www.accc.gov.au and set out in the regulations to the CCA.

Filing fee

The filing fees are:

  • A$1,000 for collective bargaining notifications.

  • A$100 for third line forcing notifications and price signalling notifications.

  • A$2,500 for exclusive dealing notifications not involving third line forcing.

  • A$7,500 for applications for authorisation.

 

Investigations

18. Who can start an investigation into a restrictive agreement or practice?

Regulators

The ACCC can initiate an investigation into a restrictive agreement or practice.

Third parties

Any person can bring a complaint to the ACCC regarding a potential breach of the CCA prohibitions. The ACCC may then initiate an investigation if appropriate.

 
19. What rights (if any) does a complainant or other third party have to make representations, access documents or be heard during the course of an investigation?

Representations

A complainant or other third party can make representations to and be heard by the ACCC during an investigation.

Document access

Generally, a complainant or third party cannot access documents obtained by the ACCC during the course of an investigation. Information obtained by the ACCC under its mandatory information gathering powers cannot be disclosed unless a court orders it to do so or certain statutory criteria are satisfied. However, it may be possible to obtain information held by the ACCC under the freedom of information regime. The regime contains a number of exceptions including that disclosure of the information would be contrary to public interest.

Be heard

See above, Representations.

 
20. What are the stages of the investigation and timetable?

Following a complaint or commencement of an investigation, the ACCC undertakes a preliminary assessment and has extensive evidence-gathering powers (see Question 22).

If the ACCC considers that the CCA has been breached, it can start proceedings in the Federal Court seeking penalties and other orders (see Question 24). If the ACCC identifies criminal breaches it will refer the matter to the DPP (unless the case involves contempt of court or breaches of criminal consumer protection provisions, in which case it starts court proceedings). The rules of natural justice require the ACCC to give an individual or company an opportunity to be heard before it makes a decision to commence proceedings, except for in limited circumstances including when the ACCC is seeking urgent, ex parte interlocutory relief.

If the corporation admits a breach, the ACCC and the corporation may agree appropriate orders and penalties and submit them to the Federal Court for consideration, or the corporation may provide court-enforceable undertakings to the ACCC.

The Federal Court decides on appropriate orders and penalties.

The timetable for the ACCC's investigation and the Federal Court proceedings varies depending on the nature of the conduct and whether the corporation has made an admission.

 

Publicity and confidentiality

21. How much information is made publicly available concerning investigations into potentially restrictive agreements or practices? Is any information made automatically confidential and is confidentiality available on request?

Publicity

Once the ACCC has instituted proceedings in the Federal Court, the ACCC issues a media release outlining the conduct and the orders being sought.

The orders and decisions made by the Federal Court and a list of documents filed are publicly available, subject to claims for confidentiality approved by the Court.

Automatic confidentiality

Subject to limited exceptions under section 155AAA of the CCA, the ACCC must not disclose information obtained under section 155 of the CCA without consent of the person who provided the information.

Confidentiality on request

Parties can request confidentiality over certain information.

Section 155AAA provides that, subject to limited exceptions, the ACCC must not generally disclose information given in confidence to the ACCC that relates to a matter arising under a core statutory provision without the consent of the person who provided the information.

If confidential information relating to a breach or possible breach of the cartel prohibitions was given to the ACCC, the ACCC is not required to:

  • Produce or disclose the information to a court or tribunal except with leave of the court or tribunal, but may do so having regard to specified matters.

  • Make discovery or produce the information to a person in a follow-on action where the ACCC is not a party, but may do so having regard to specified matters.

 
22. What are the powers (if any) that the relevant regulator has to investigate potentially restrictive agreements or practices?

The ACCC has broad investigative powers. Under section 155 of the CCA, the ACCC can require a person to provide information, produce documents or appear before it where there is reason to believe that the person can provide information or documents relating to a possible breach of the CCA. The person can be required to give evidence orally under oath or affirmation when they appear before the ACCC and there is no privilege against self-incrimination. However, a person does not have to produce legally privileged documents.

The ACCC can obtain search and seizure warrants allowing it to seize, or make copies of, material. The ACCC may also arrange telephone interception and surveillance but only for the purposes of investigating a possible criminal breach of the CCA.

 

Settlements

23. Can the regulator reach settlements with the parties without reaching an infringement decision? If so, what are the circumstances in which settlements can be reached and the applicable procedure?

The ACCC rarely reaches settlements with parties for breaches of the CCA without taking enforcement action in the Federal Court.

In certain circumstances, if the ACCC is concerned that the CCA may have been breached but has insufficient evidence to bring an enforcement action, the ACCC may accept court-enforceable undertakings from the parties to address its concerns. For example, the ACCC accepted court-enforceable undertakings from major Australian supermarkets to address concerns that restrictive provisions in their lease agreements may have the purpose and/or effect of substantially lessening competition in contravention of the CCA.

 

Penalties and enforcement

24. What are the regulator's enforcement powers in relation to a prohibited restrictive agreement or practice?

If the ACCC considers that the CCA has been breached, it can institute Federal Court proceedings.

Orders

The Federal Court can:

  • Make declarations that the CCA has been breached.

  • Issue an injunction restraining the conduct from continuing.

  • Impose civil pecuniary penalties (for civil breaches).

  • Impose fines or imprisonment (for criminal breaches) (see below, Fines and Personal liability).

  • Make other appropriate orders.

Fines

The Federal Court can impose civil pecuniary penalties on a corporation for each breach of the civil prohibitions in the CCA of up to the greater of:

  • A$10 million.

  • Three times the value of the benefit from the conduct.

  • 10% of the corporate group's annual turnover attributable to Australia, if the gain cannot be ascertained.

For criminal breaches of the cartel prohibitions, the Federal Court can impose a fine on a corporation of up to the greater of the amounts outlined above.

Personal liability

Individuals may face personal liability for breaches of or knowing involvement in breaches of the CCA. Penalties include:

  • Civil pecuniary penalties of up to A$500,000 for each civil breach of the CCA.

  • Imprisonment for up to ten years, a criminal record and/or fines of up to A$340,000 for each breach of the criminal cartel prohibitions.

  • Being excluded from company management.

Companies cannot indemnify any persons liable for breaches of the CCA.

If the penalties imposed by the Federal Court are not paid, the person is in contempt of court and liable for fines, a criminal record or imprisonment for individuals. The CCA also provides for the enforcement and recovery of fines imposed for breaches of the criminal prohibitions.

Immunity/leniency

The ACCC has immunity/leniency policies for cartel conduct. The ACCC's immunity policy provides immunity from civil action to the first member of a cartel that discloses its involvement and agrees to co-operate with the ACCC. The ACCC may refer a matter to the DPP, by way of recommendation in relation to immunity from or leniency in criminal proceedings. The DPP will consider this recommendation but will independently decide whether to grant immunity or leniency in accordance with its prosecution policy.

While the Federal Court must determine penalties for breaches of the CCA, the ACCC can agree appropriate orders and penalties with co-operative parties in joint submissions to the Federal Court.

Impact on agreements

If the contravening provision is severable, the remainder of the agreement is valid (section 4L, CCA). If the provision is not severable, the entire agreement may be void.

 

Third party damages claims and appeals

25. Can third parties claim damages for losses suffered as a result of a prohibited restrictive agreement or practice? If so, what special procedures or rules (if any) apply? Are class actions possible?

Third party damages

A person who suffers loss or damage by another's conduct that was in breach of the CCA can recover the amount of the loss or damage by action against a person involved in the breach. A third party can also seek declarations, injunctions and ancillary orders in the Federal Court. The ACCC can commence representative proceedings on behalf of a group that has suffered loss or damage as a result of conduct that breaches the CCA.

Special procedures/rules

Actions for damages under the CCA must be initiated within six years after the day on which the cause of action accrues.

Class actions

Class actions for breaches of the CCA are possible and this form of litigation is increasing in Australia. Class actions have tended to follow the ACCC's investigations and findings of fact in enforcement proceedings can, in some circumstances, be admissible as prima facie evidence of those facts in private proceedings. A class action can only recover the amount of loss or damage suffered by the claimants due to the conduct.

There is an ongoing class action relating to the alleged air cargo cartel. Previous class actions have seen settlements of A$1.5 million against chemical manufacturers Bayer and Chemtura, A$95 million against cardboard box manufacturers Amcor and Visy, and A$30.5 million against vitamin manufacturers, among others.

 
26. Is there a right of appeal against any decision of the regulator? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties, or only to the parties to the agreement or practice?

Rights of appeal and procedure

A Federal Court decision relating to breaches of the CCA can be appealed to the Full Federal Court within 21 days, and finally to the High Court of Australia. An application for special leave to appeal to the High Court of Australia must be made within 28 days of the judgment being handed down.

A person dissatisfied with an ACCC decision relating to authorisations or notifications can apply to the Tribunal for a merits review of the decision within 21 days. A person can apply to the Federal Court for review of the Tribunal's decision on administrative law grounds within 28 days.

Third party rights of appeal

Third parties can appeal court decisions but this is subject to the party having sufficient standing to bring an action. Third parties can appeal ACCC decisions relating to authorisations or notifications if the Tribunal is satisfied they have a sufficient interest.

 

Monopolies and abuses of market power

Scope of rules

27. Are monopolies and abuses of market power regulated under administrative and/or criminal law? If so, what are the substantive provisions and regulatory authority?

Abuses of market power

Sections 46 and 46A of the CCA prohibit abuses of market power. Specifically, a corporation:

  • That has a substantial degree of power in a market is prohibited from taking advantage of that power in that or any other market for the purposes of:

    • eliminating or substantially damaging a competitor in that or any other market;

    • preventing the entry of a person into that or any other market; or

    • deterring or preventing a person from engaging in competitive conduct in that or any other market.

  • With a substantial degree of power in a Trans-Tasman market (Australia and/or New Zealand) is prohibited from taking advantage of that power for any of the above purposes.

  • With a substantial market share is prohibited from supplying goods or services for a sustained period at a price below cost for any of the above purposes.

The ACCC enforces these provisions and can bring enforcement action in the Federal Court.

Access to monopoly infrastructure

The CCA contains a statutory access regime allowing third parties to acquire services provided by monopoly infrastructure.

Any person can apply to the National Competition Council (NCC) for a recommendation that certain services produced by facilities be "declared". The NCC will make a recommendation to the Federal Treasurer who will make a final decision. Services cannot be declared unless certain specified criteria are satisfied. Once a service is declared, a person seeking access to the service can negotiate terms of access with the service provider and, in the event of a dispute, seek binding arbitration by the ACCC.

The CCA also allows owners of infrastructure to submit voluntary access undertakings, proposing terms and conditions on which they will provide access, for ACCC approval.

 
28. How is dominance/market power determined?

In determining whether a company has market power, the court must consider the extent to which the company's conduct is constrained by the conduct of actual or potential competitors, customers or suppliers. A company can have a substantial degree of market power even though it does not substantially control the market or have absolute freedom from constraint by the conduct of competitors or potential competitors, suppliers or customers.

 
29. Are there any broad categories of behaviour that may constitute abusive conduct?

The types of behaviour that have previously been found to have contravened the prohibition on misuse of market power include refusal to supply, predatory pricing, and submissions of tenders where bundled products had a much lower price than the separate supply of products.

 

Exemptions and exclusions

30. Are there any exemptions or exclusions?

A corporation is not taken to have breached the prohibition on misuse of market power by reason only that it acquires plant or equipment.

The prohibition on misuse of market power also does not apply to conduct that is covered by an authorisation or notification for exclusionary provisions, provisions that substantially lessen competition, exclusive dealing, third line forcing or mergers.

 

Notification

31. Is it necessary (or, if not necessary, possible/advisable) to notify the conduct to obtain clearance or (formal or informal) guidance from the regulator? If so, what is the applicable procedure?

It is not necessary or advisable to notify the conduct to obtain clearance or guidance from the ACCC. It is not possible to obtain authorisation or clearance for the prohibitions on abuse of market power.

 

Investigations

32. What (if any) procedural differences are there between investigations into monopolies and abuses of market power and investigations into restrictive agreements and practices?

There are no procedural differences between investigations into abuses of market power and investigations into restrictive agreements and practices (see Questions 18 to 21 and Question 23).

 
33. What are the regulator's powers of investigation?

There are no differences from restrictive agreements and practices (see Question 22).

 

Penalties and enforcement

34. What are the penalties for abuse of market power and what orders can the regulator make?

There are no differences from restrictive agreements and practices (see Question 24).

 

Third party damages claims

35. Can third parties claim damages for losses suffered as a result of abuse of market power? If so, what special procedures or rules (if any) apply? Are class actions possible?

There are no differences from restrictive agreements and practices (see Question 25).

 

EU law

36. Are there any differences between the powers of the national regulatory authority(ies) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law?

Not applicable.

 

Joint ventures

37. How are joint ventures analysed under competition law?

If a joint venture involves an acquisition of shares or assets (including the acquisition of shares in a newly incorporated joint venture company), the joint venture is subject to section 50 (see Questions 1 to 11).

The CCA defines a joint venture as an activity in trade or commerce carried on either:

  • Jointly by two or more persons, whether or not in partnership.

  • By a body corporate formed by two or more persons for the purpose of enabling those persons to carry on that activity jointly by means of their joint control, or by means of their ownership of shares in the capital, of that body corporate.

There are separate complete defences for joint ventures from the cartel prohibitions and the prohibitions on exclusionary provisions.

The defence against the cartel prohibitions applies if both:

  • The cartel provision is:

    • in a contract or an arrangement or understanding that each party intended and reasonably believed to be a contract; and

    • for the purposes of a joint venture.

  • The joint venture is for the production and/or supply of goods or services and is either carried on:

    • jointly by the parties to the contract; or

    • by a body corporate formed by the parties to the contract for the purposes of enabling those parties to carry on activity by means of their joint control or ownership of shares in the capital of that body corporate.

The defence against the prohibitions on exclusionary provisions applies if the exclusionary provision both:

  • Is for the purposes of a joint venture.

  • Does not have the purpose, effect or likely effect of substantially lessening competition.

 

Inter-agency co-operation

38. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to infringements of competition law? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information)?

The ACCC co-operates with regulatory authorities in a number of other jurisdictions.

A treaty between the US and Australia enables the two countries to reciprocally exchange evidence for use in competition law enforcement.

The ACCC also has co-operation agreements with many foreign regulators, including with the:

  • United States Federal Trade Commission.

  • New Zealand Commerce Commission.

  • Commissioner of Competition, Competition Bureau (Canada).

  • UK Office of Fair Trading.

  • European Commission.

  • Korea Fair Trade Commission.

  • Taiwan Fair Trade Commission.

  • Commerce Commission of the Fiji Islands.

  • Consumer Affairs Council of Papua New Guinea.

The co-operation agreements provide for reciprocal notification of enforcement activities, co-operation and co-ordination of enforcement activities, avoidance of conflicts, exchange of certain information and periodic meetings.

 

Proposals for reform

39. Are there any proposals for reform of competition law?

There are no current proposals for reform of Australian competition law. However, the Productivity Commission is currently conducting a review of Part IIIA of the CCA, which provides for a statutory access regime allowing third parties to acquire services provided by monopoly infrastructure (see Question 27).

 

Online resources

W www.comlaw.gov.au/

Description. ComLaw is an Australian government website which contains the full official text of Australian Commonwealth government legislation, including the CCA. ComLaw is managed by the Office of Parliamentary Counsel.



The regulatory authorities

Australian Competition and Consumer Commission (ACCC)

Head. Rod Sims (Chairman)

Contact details. 23 Marcus Clarke Street
Canberra ACT 2601
Australia
T +61 2 6243 1111
F +61 2 6243 1199
W www.accc.gov.au

Outline structure. The ACCC has a Chairman, two deputy chairs, four members and four associate members. The ACCC's divisions and groups include the:

  • Corporate Division.

  • Enforcement and Compliance Division.

  • Compliance Operations Group.

  • Enforcement Operations Group.

  • Legal Group.

  • Mergers and Adjudication Group.

  • Competition and Consumer Economic Unit.

  • Communications Group.

  • Regulatory Development Branch.

  • Fuel, Transport and Prices Oversight Branch.

  • Water Branch.

Responsibilities. The ACCC is responsible for administering, and enforcing compliance with, the CCA. It is also responsible for prosecuting breaches of the civil prohibitions of the CCA, and where appropriate, granting immunity (or leniency) from civil prosecution.

Procedure for obtaining documents. See Question 21.

Australian Competition Tribunal (Tribunal)

Head. Hon. Justice John Ronald Mansfield AM (President)

Contact details. 305 William Street
Melbourne
VIC 3000
T +61 3 8600 3333
F +61 3 8600 3281
W www.competitiontribunal.gov.au

Outline structure. The Tribunal comprises a President, a number of Deputy Presidents and other members as appointed by the Governor-General. A presidential member must be a judge of the Federal Court. Other members must have knowledge of or experience in industry, commerce, economics, law or public administration.

Responsibilities. The Tribunal hears applications for:

  • Review of ACCC's determinations granting or revoking authorisations permitting conduct that would otherwise be prohibited by the CCA.

  • Review of the ACCC’s decisions on formal clearances for mergers and acquisitions.

  • Authorisation of mergers and acquisitions.

Procedure for obtaining documents. The CCA outlines different procedures depending on the subject matter.



Contributor profiles

Sharon Henrick

King & Wood Mallesons

Partner

T +61 2 9296 2294
F +61 2 9296 3999
E sharon.henrick@au.kwm.com
W www.kwm.com

Qualified. Australia, 1994

Areas of practice. Large scale commercial transactions and investigations in relation to competition law in Australia/Asia Pacific in a number of client sectors.

Recent transactions.

Advised:

  • The Port of Gladstone in relation to export coal arrangements and Svizter’s unsuccessful application to revoke the Port of Gladstone’s immunity.
  • British Airways across the Asia-Pacific region in relation to air cargo cartel investigations and other matters.
  • Lion on its bid for Coca Cola Amatil, its privatisation by Kirin and other matters.
  • Glencore on its acquisition of Viterra.
  • Nestlé on its acquisition of Pfizer’s infant nutrition business.
  • Chinalco on its acquisition of stakes in Rio Tinto.
  • Citi, on the sale of EMI to Sony and Universal.
  • Universal Pictures on its joint venture with Sony.
  • ArcelorMittal on its bid with Peabody for MacAuthur Coal.
  • Microsoft on various matters.

Professional associations/memberships.

  • Law Council of Australia - Trade Practices Committee - Member.
  • International Bar Association - Antitrust Section - Member.
  • The American Bar Association - Section of Antitrust Law - Member.
  • The Interdisciplinary Centre for Competition Law and Policy, Queen Mary, University of London – Affiliate.

Publications.

  • Co-author of a chapter on Australian merger law in Merger Control Worldwide, published by Cambridge University Press.

  • Published several articles on competition law, including in the Australian Trade Practices Law Journal and Competition Insights, and regularly contributes to PLC's and Global Competition Review's publications.

Wayne Leach

King & Wood Mallesons

Partner

T +61 2 9296 2327
F +61 2 9296 3999
E wayne.leach@au.kwm.com
W www.kwm.com

Qualified. Australia, 1996

Areas of practice. Large scale commercial transactions and investigations in relation to competition law in Australia/Asia Pacific in a number of client sectors.

Recent transactions.

Advised:

  • Glencore and Xstrata in relation to their proposed US$36 billion merger.
  • Telstra on its proposed acquisition of Adam Internet and various other matters.
  • BG Group, on its proposed hostile takeover of Origin Energy, acquisition of Queensland Gas and establishment of an export LNG joint venture facility.
  • Cargill, on its proposed takeover of Goodman Fielder's edible fats business.
  • Viterra in relation to port terminal access undertakings to the ACCC and introduction of a port capacity auction system.
  • Sydney Airport Corporation, on third party access proceedings by Virgin Blue, including before the National Competition Council, ACCC, Australian Competition Tribunal and Federal Court.

Professional associations/memberships.

  • Law Council of Australia - Trade Practices Committee - Member.
  • The American Bar Association - Section of Antitrust Law - Member.

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