Improved Cartel Bill introduced into Parliament

By Anna Modrak and Bruce Lloyd.

Key Points:
The Cartel Bill incorporates new exemptions to the prohibition on cartel conduct to ensure consistent treatment under the new provisions of currently exempt conduct.

The Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 was introduced into Parliament on 3 December 2008 after 12 months of Government consultation and the release of two Exposure Draft Bills (which we discussed here  and here).

The Cartel Bill contains all of the provisions in the second Exposure Draft Bill released in October 2008.

In addition, the Bill introduced to Parliament includes exceptions found in the existing civil provision which arguably should have been included, but were not, in either of the previous Exposure Draft Bills.

The inclusion of these exceptions provides welcome certainty for businesses which currently rely on these exceptions to ensure the legality of their vertical distribution or collective acquisition arrangements.

The six exceptions

The six new exceptions to the civil and criminal cartel provisions have been included to ensure that the new cartel provisions will operate consistently with the structure of the existing law.

Five of the six new exceptions are anti-overlap provisions, all of which exist under the current law:

• Agreements for the acquisition of shares or assets will continue to be considered under section 50 of the Trade Practices Act 1974 (TPA), rather than the cartel provisions.
• Dual listed company arrangements (where two publicly listed companies take steps to align the strategic directions and economic interests of their respective shareholders) will continue to be considered under section 49 of the TPA, rather than the cartel provisions.
• Exclusive arrangements, such as vertical distribution or franchise agreements, will continue to be considered under section 47 of the TPA, rather than the cartel provisions.
• Covenants made in real estate transactions will continue to be considered under section 45B of the TPA, rather than the cartel provisions.
• Resale price maintenance will continue to be considered under section 48 of the TPA, rather than the cartel provisions.

An exception for goods or services "collectively acquired" will also be included to replicate the exception currently in section 45A(4) of the TPA.

What other exceptions are available?

As previously discussed, the following conduct will also be exempt from the cartel provisions:

• collective bargaining by small business, if the ACCC is formally notified
• arrangements which have been formally authorised by the ACCC by reason of overriding public benefit
• joint ventures for the production and/or supply of goods and services; and
• contracts, arrangements or understandings between related bodies corporate.

Conclusions

The introduction of the Cartel Bill into Parliament signifies the end of the 12 month process of public consultation and extensive revision of the Government's cartel laws.

We expect that the final changes to Bill as introduced are a welcome clarification of the exceptions to the criminal and civil provisions and will ensure that, once enacted, Australia's new cartel provisions will operate consistently with the current structure of the TPA.

For further information, please contact Anna Modrak and Bruce Lloyd.