Broadening the Definition of Collusion? a Call for Caution
| Author | Caron Beaton-Wells,Brent Fisse |
| Published date | 01 March 2010 |
| Date | 01 March 2010 |
| DOI | 10.22145/flr.38.1.3 |
| Subject Matter | Article |
BROADENING THE DEFINITION OF COLLUSION?
A CALL FOR CAUTION
Caron Beaton-Wells* and Brent Fisse**
1 INTRODUCTION
In Australian competition law, the notion of collusion between competitors is
encapsulated in the concepts of 'contract', 'arrangement' and 'understanding' under the
Trade Practices Act 1974 (Cth) ('TPA'). These concepts have been integral to the civil
prohibitions on cartel conduct under s 45(2) of the TPA since 1974. The same concepts
are used in the new cartel offences and civil per se prohibitions which took effect in
July 2009 as a result of amendments made by the Trade Practices Amendment (Cartel
Conduct and Other Measures) Act 2008 (Cth).
In 2007, the Australian Competition and Consumer Commission ('ACCC')
recommended amendments to the TPA in connection with the interpretation of
'understanding' in the wake of its largely unsuccessful cases against petrol retailers for
alleged price fixing in Ballarat1 and Geelong2 and its subsequent petrol pricing
inquiry.3 In this article it is argued that the proposed amendments should be rejected.
Broadly speaking, the ACCC's proposal is misconceived, problematic and, to a
significant extent, symptomatic of a failure to grapple with the fundamental issues.
The former Minister for Competition Policy and Consumer Affairs, Christopher
Bowen, announced that the government would give the proposals 'careful
_____________________________________________________________________________________
* Associate Professor, Melbourne Law School, The University of Melbourne.
** Brent Fisse Lawyers, Sydney, Senior Fellow, Melbourne Law School, The University of
Melbourne. The views expressed in this article reflect the submission by the authors to
Treasury in its consultation on the Australian Competition and Consumer Commission's
proposal: see Submission to Treasury on the Meaning of 'Understanding' in the Trade
Practices Act 1974, Parliament of Australia, 7 April 2009, Submission No 3 (Caron Beaton-
Wells and Brent Fisse) <http://www.treasury.gov.au/documents/1511/PDF/Beaton-
Wells_and_Fisse.pdf> at 19 July 2009. The authors gratefully acknowledge the research
assistance of Christopher Tran. The usual disclaimers apply.
1 Apco Service Stations Pty Ltd v Australian Competition and Consumer Commission (2005) 159
FCR 452 ('Apco').
2 Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (2007) 160 FCR
321 ('Leahy').
3 ACCC, Petrol Prices and Australian Consumers: Report of the ACCC Inquiry into the Price of
Unleaded Petrol (2007) 228–9 <http://www.accc.gov.au/content/item.phtml?
itemId=806216&nodeId=d5fc6a56fb589b453abc58f22e0b78bd&fn=Petrol%20prices%20and
%20Australian%20consumers%20all%20chapters.pdf> at 11 March 2009.
72 Federal Law Review Volume 38
____________________________________________________________________________________
consideration'4 and the Treasury subsequently released a discussion paper seeking
submissions.5 With one exception, the submissions were opposed to the ACCC's
proposed amendments.6 Subsequent statements by the new Minister, Craig Emerson,
suggested that there will be no rush to make a decision on the issue.7 However, the
ACCC has since renewed the pressure for reform in its decision to oppose the
Caltex/Mobil Oil acquisition and in its annual monitoring report on petrol prices. In
both, the ACCC emphasised again its concern about coordinated conduct in this
industry and the inaptness of the cartel prohibitions of the TPA in their current form to
address the issue.8 It would be unfortunate if the issues raised by the ACCC in its
amendment proposal were seen as issues specific to the petrol industry. The TPA is
legislation with economy-wide impact and should not be tailored to address sector-
specific concerns.9
The proposed amendments are set out below in Section 2. A brief summary of the
current law on the meaning of 'contract', 'arrangement' and 'understanding' follows in
Section 3. The main argument of this article is that the meaning to be given to
'understanding' should be determined having regard to economic theory and the
experience with overseas models. The relevant theory and overseas experience are
examined in Sections 4 and 5 respectively. A detailed critique of the ACCC's proposed
amendments ensues in Section 6. Recommendations on the way forward are set out in
Section 7.
2 THE ACCC'S PROPOSED AMENDMENTS
The ACCC's proposed amendments would insert the following provisions in the TPA:
(a) The court may determine that a corporation has arrived at an understanding
notwithstanding that:
_____________________________________________________________________________________
4 Chris Bowen and Kevin Rudd , 'A National Fuelwatch Scheme' (Press Release, 15 April
2008) <http://assistant.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2008
/023.htm&pageID=003&min=ceb&Year=2008&DocType=0> at 13 March 2009.
5 Treasury, Australian Government, Discussion Paper: Meaning of 'Understanding' in the Trade
Practices Act 1974 (2009) <http://www.treasury.gov.au/documents/1459
/PDF/Discussion_paper.pdf> at 30 March 2009.
6 The submissions are available at Treasury, Australian Government, Submissions: Discussion
Paper — Meaning of 'Understanding' in the Trade Practices Act 1974 (2009)
<http://www.treasury.gov.au/contentitem.asp?ContentID=1511&NavID=037> at 19
July 2009. The exception was the submission by Maurice Blackburn Pty Ltd.
7 See David Crowe, 'If in Doubt, Just Stop It', The Australian Financial Review (Melbourne), 26
August 2009, 11.
8 See ACCC, 'ACCC To Oppose the Acquisition of Mobil Retail Assets by Caltex' (Press
Release, 2 December 2009) <http://www.accc.gov.au/content/index.phtml
/itemId/904296> at 20 January 2010; ACCC, Monitoring of the Australian Petroleum
Industry: Report of the ACCC into the Prices, Costs and Profits of Unleaded Petrol in Australia
(2009) xxiii–xxvi <http://www.accc.gov.au/content/index.phtml/itemId/906872> at
20 January 2010.
9 As emphasised by the Dawson Committee, see Trade Practices Act Review Committee,
Review of the Competition Provisions of the Trade Practices Act (2003) ch 1
<http://www.tpareview.treasury.gov.au/content/report/html/Chpt1.asp> at
22 January 2010.
To continue reading
Request your trial