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10 May 2012

Genuine market reality is OK: ACCC indicates how it will enforce price signalling laws

by Michael Corrigan

A bank tipping its pricing strategy to competitors and testing how they might respond, without committing itself to action, will get the ACCC interested.

Australia's competition watchdog the ACCC has started giving some indication on how it will enforce the new price signalling laws in the banking industry – and it seems to be a commonsense approach.

Price signalling is behaviour that falls short of collusion but involves communicating or signalling a company's price rises or some other initiative to its competitors for the purpose of having them follow. The new laws in the Competition and Consumer Act 2010 come into effect on June 6, and will , at this stage, only affect banks and other ADIs in relation to services such as the taking of deposits and making advances of money or loans. They will not be able to disclose prices to competitors in private where doing so is not in the ordinary course of business.

Speaking at the 2012 Competition Law Conference, ACCC Chairman Rod Sims said that “statements that genuinely describe market reality are unlikely to raise concerns of anti-competitive conduct.”

What will get the ACCC interested?

“The ACCC’s attention would be attracted where a bank offers its support for a change in pricing strategy, effectively tipping that strategy to competitors and testing how they might respond, without committing itself to action.”

“Further, we would be concerned if an Australian banking executive announced that he or she would be reluctant to lift rates beyond that of the Reserve Bank cash rate or introduce new fees, but they would follow if other banks did so.”

 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.