Section 45 of the Trade Practices Act—the Law and Administration to Date*
| Author | Warren Pengilley |
| DOI | 10.1177/0067205X7600800102 |
| Published date | 01 March 1976 |
| Date | 01 March 1976 |
| Subject Matter | Article |
SECTION 45
OF
THE
TRADE PRACTICES
ACT-
THE
LAW AND ADMINISTRATION
TO
DATE~
By
WARREN
PENGILLEY*
*
One
of
the most important sections
of
the Trade Practices
Act
is
section 45, which concerns restraint
of
trade. Dr Pengilley
begins
by
outlining the provisions
of
the Trade Practices
Act
dealing with restraint
of
trade and the role
of
the Trade Practices
Commission in relation to those provisions and in comparison to
the courts. Detailed analysis
is
then given to numerous decisions,
from anumber
of
jurisdictions, relevant to the interpretation
of
section 45. Extensive examination
is
also made
of
alarge number
of
Trade Practices Commission decisions regarding clearance or
authorisation
of
conduct which
is,
or
may
be, contrary to section
45. The article concludes
by
discussing and assessing the impli-
cations
of
the High Court's only decision to date on
the
interpretation
of
section 45.
I. LEGISLATIVE STRUCTURE
OF
THE
ACT
The restraint of trade provisions of the Trade Practices Act 1974
(Cth),
primarily contained in section 45, are basic to its entire oper-
ation. Certainly control of restraint of trade activities
is
abasic starting
point in almost all systems of trade practices control.
The Trade Practices Act 1974 was proclaimed on 1October 19741
although, except as regards price fixing for goods, the operation of its
restraint of trade provisions was postponed until 1
February
1975.2
The legislative provisions covering restraint of trade may be briefly
summarised as follows:3
*This article sets
out
the position as
at
1August 1976.
**
J.D. (Vanderbilt); M.Com. (Newcastle), B.A., LL.B. (Sydney), A.A.S.A.;
Barrister-at-Law (N.S.W.); Solicitor and Barrister
(A.C.T.);
Member
of
the
Australian Trade Practices Commission.
The
views expressed are the personal views
of
the writer.
The
writer is indebted
to
Mr
J.D.
Pyne
and
Dr
G. de Q. Walker for their reading
of
the drafts
of
this
article
and
the helpful comments they have made
on
such drafts.
1
S.
2(3)
and Australian Government Gazette No. 75B,
13
September 1974,
1.
2
S.
2(4).
3
In
this article, it
is
not intended to deal with anumber
of
aspects which may
touch
on
restraint
of
trade under the Trade Practices Act. Thus, for example, the
constitutional reach
of
the Act
is
not
covered. Neither are the exemption pro-
visions set out in the statute (s.
51).
Questions
of
"severance", though
of
great
practical importance, are similarly
not
dealt with. Corporate and individual
responsibility for breaches of the legislation
is
aseparate topic as are the principles
of
private action. The inter-action
of
SSe
45 and 47
is
also not dealt with. With the
intent
of
conserving space
s.
45
(3)
is
not
covered. Though important, the general
thrust
of
section 45
(3)
is
covered by the comments in this article relevant to
s.
45
(4).
The summary given
is
the legal position as at 1August 1976.
It
is
a
summary only for the purpose
of
giving the legislative background against which
this article has
to
be viewed.
It
is
not
an
all encompassing summary.
15
16 Federal Law Review
[VOLUME
8
(1)
Acontract in restraint
of
trade4made before the commence-
ment
of the
Act
is
unenforceable.5
(2)
A"contract or arrangement" shall
not
be made in restraint
of
trade
or
commerce
nor
shall "an understanding" in
restraint of trade
or
commerce be entered into.
'6
(3)
Aparty shall
not
"give effect to acontract, arrangement
or
understanding to the extent
that
it is in restraint of trade
or
commerce
...
". This prohibition applies whether the contract
or
arrangement was made
or
the understanding reached
before
or
after
the commencement of the
Act.'
(
4)
The
above prohibitions are
not
contrary to the
Trade
Prac-
tices
Act
"unless the restraint has
or
is likely to have a
significant effect
on
competition between the parties to the
contract, arrangement
or
understanding
or
on
competition
between those parties
or
any
of
them and
other
persons".8
(5)
Abreach
of
the above legislative prohibitions may involve a
body corporate in apecuniary penalty of up to $250,000 and
an
individual in apecuniary penalty of up to $50,000.9
Proceedings for penalty
may
be brought by the
Trade
Prac-
tices Commission
or
the Attorney-GeneraltO in the Australian
Industrial Court.
It
Both the Attprney-General and the Trade
Practices Commission may also seek injunctive relief in the
Australian Industrial Court.
12
An
individual may seek injunc-
tive relief in such
court
13
and may seek to recover there any
damages suffered.
14
The
above provisions show alegislative mechanism which is clearly
modelled
on
the United States principles of anti-trust legislation. How-
ever, the U.S. principles were
not
imported in toto into Australia.
4:
The italics here and elsewhere are that
of
the writer.
5
S.
45(1).
6
S.
45
(2)
(a).
The section states that
"a
corporation" shall not be party to the
prohibited activities and this terminology
is
general in the Act. The word "corpor-
ation", however, generally covers individuals (s. 6(2)
(h».
This raises questions
as to the Constitutional reach of the Act into which it
is
not intended here to
delve.
'7
S.
45
(2)
(b).
See
also comments supra,
n.
6.
8
S.
45
(4) but
see
also
45
(3) and
n.
3supra.
9S.76.
10
S.
77.
It
S.
76; see also
s.
169
and definition
of
"Courts" in
s.
4.
[Editor's note: Since the creation
of
the Federal Court
of
Australia (see
Federal Court of Australia Act 1976) and the abolition
of
the Industrial Court
(see Conciliation and Arbitration Amendment Act
(No.3)
Act 1976,
s.
4) the
Federal Court
of
Australia has jurisdiction over matters arising under the Trade
Practices Act. The definition of "Courts" in the Trade Practices Act,
s.4
has been
amended accordingly (see Federal Court
of
Australia (Consequential Provisions)
Act 1976,
s.
3).]
12
S. 80.
13
Ibid.
t4
S.
82.
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