Competition Law in Australia
Introduction
Australian competition law is principally codified in the Competition and Consumer Act 2010 (Cth) (the CCA), originally enacted as the Trade Practices Act 1974 (Cth). The CCA prohibits anti-competitive conduct, regulates mergers, and establishes the Australian Competition and Consumer Commission (ACCC) as the independent enforcement agency. The statutory architecture follows a prohibitions-plus-authorisation model: certain conduct is prohibited per se or where it substantially lessens competition, but parties may seek authorisation from the ACCC or the Australian Competition Tribunal where the conduct generates net public benefits. The substantive provisions of the CCA have been shaped by successive reviews, including the Hilmer Report (1993), the Dawson Review (2003), and the Harper Review (2015).
Cartel Conduct
The CCA contains both criminal and civil prohibitions on cartel conduct, introduced by the Competition and Consumer Amendment (Cartels and Other Measures) Act 2009. The criminal prohibition (s 44ZZRF) applies where a person makes or gives effect to a contract, arrangement, or understanding containing a cartel provision, defined as a provision relating to price-fixing, restricting output or capacity, allocating customers, suppliers, or geographical areas, or bid-rigging. The civil prohibition (s 44ZZRG) mirrors the criminal provision. Both require proof of purpose or effect of substantially lessening competition, though price-fixing provisions are treated as having that purpose (ss 44ZZRL–44ZZRM). Criminal liability requires proof of fault (intention or knowledge) beyond reasonable doubt, whereas civil liability is determined on the balance of probabilities. The ACCC has stated that it will pursue criminal sanctions for the most serious cartel conduct. Individuals convicted of a cartel offence face imprisonment of up to ten years. The cartel immunity (leniency) policy encourages self-reporting by offering immunity from criminal prosecution to the first cartel participant to cooperate with the ACCC.
Anti-Competitive Agreements
Section 45 of the CCA prohibits contracts, arrangements, or understandings that have the purpose, effect, or likely effect of substantially lessening competition in a market. This provision applies to both horizontal and vertical arrangements, though the former are more likely to attract scrutiny. The “substantial lessening of competition” test requires a consideration of the market context, including market concentration, barriers to entry, and the dynamics of competition within the relevant market. Exclusions apply for arrangements that are the subject of authorisation or notification, or that fall within the ancillary restraints doctrine (conduct reasonably necessary to achieve a legitimate commercial purpose).
Misuse of Market Power
Section 46 of the CCA prohibits a corporation with substantial market power from engaging in conduct that has the purpose, effect, or likely effect of substantially lessening competition in a market. The provision was substantially amended in 2017 following the Harper Review, replacing the former “take advantage” test with the simpler “purpose, effect or likely effect” formulation. The amendment was intended to lower the threshold for establishing a contravention and to align the provision more closely with contemporary economic theory concerning unilateral anti-competitive conduct. The ACCC’s Misuse of Market Power Guidelines identify the key considerations, including market definition, the assessment of substantial market power, and the types of conduct that may contravene the provision, such as predatory pricing, margin squeezing, and refusal to supply.
Exclusive Dealing and Resale Price Maintenance
Section 47 prohibits exclusive dealing where it has the purpose, effect, or likely effect of substantially lessening competition. Exclusive dealing encompasses a range of vertical practices, including exclusive supply arrangements, third-line forcing, and minimum quantity requirements. Section 48 prohibits resale price maintenance — the practice of suppliers imposing minimum resale prices on retailers. Resale price maintenance is prohibited per se; it is not necessary to demonstrate a substantial lessening of competition. However, the ACCC may grant notification protection for certain forms of exclusive dealing.
Mergers and Acquisitions
Section 50 of the CCA prohibits acquisitions of shares or assets that would have the effect, or likely effect, of substantially lessening competition in a market. The ACCC reviews mergers through both a formal (court-determined) and informal (administrative) clearance process. The “substantial lessening of competition” test is applied prospectively, comparing the likely state of competition with and without the proposed acquisition. The ACCC considers market concentration, barriers to entry, countervailing power, the removal of a vigorous competitor, and the likelihood of coordinated effects. The “four pillars” policy, which prohibits mergers among the four major Australian banks (Commonwealth Bank, Westpac, NAB, and ANZ), is a government policy rather than a statutory prohibition, though it has been enforced through the Treasurer’s power to disallow foreign acquisitions under the Foreign Acquisitions and Takeovers Act 1975 (Cth).
Authorisation and Notification
The CCA provides a mechanism for parties to obtain immunity from prosecution by demonstrating that their conduct generates net public benefits. The ACCC (and on review, the Australian Competition Tribunal) may authorise conduct that would otherwise contravene the CCA where the public benefit outweighs any anti-competitive detriment. Public benefits include economic efficiency, product innovation, environmental protection, and consumer welfare. Notification is available for certain forms of exclusive dealing and resale price maintenance, providing automatic immunity unless the ACCC objects.
The Harper Review and Digital Markets
The Harper Review (2015) recommended significant reforms to Australian competition law, including the amendments to s 46, the introduction of a prohibition on concerted practices, and the strengthening of the authorisation process. The Government has implemented many but not all of the Harper recommendations. The Digital Platforms Inquiry (2019) conducted by the ACCC examined the market power of digital platforms and led to the introduction of mandatory news media bargaining rules (News Media and Digital Platforms Mandatory Bargaining Code 2021) and ongoing regulatory oversight of digital advertising markets. The ACCC’s Digital Platforms Branch continues to investigate competition issues in digital markets, including app stores, online search, and data markets.