Last week, the Minister of Commerce and Consumer Affairs announced that the Government is planning to introduce a new framework to make collaboration between competitors easier. The severe potential penalties for cartel conduct (like price fixing and market allocation), and uncertainty about the application of exceptions to cartel conduct, mean that businesses are understandably cautious about collaborating with competitors.
The changes stem from a review of the Commerce Act being undertaken by the Ministry of Business, Innovation and Employment (MBIE). The proposals announced last week include new processes for businesses to seek protection for some arrangements from the Commerce Commission (the Commission), such as:
- A streamlined process for seeking clearance for collaborative activities. The exception to cartel conduct for collaborative activities has been in place for eight years, but there has only been one clearance application to date. The proposal is intended to streamline the process for seeking clearance, though the underlying test for what is a collaborative activity is not expected to change
- A notification regime for resale price maintenance and small business collective bargaining. This change would bring us closer to the notification regime in Australia. While the details of the regime are not yet available, we expect it would shift the burden of proof such that a notified arrangement would be exempt from specified prohibitions of the Commerce Act unless the Commission objects to (or calls-in) the arrangement. Australia has had a notification regime for resale price maintenance since 2017, and in that time has had nine notifications (five of which were revoked or withdrawn)
- New class exemption powers to allow the Commission to exempt categories of conduct that are low-risk or clearly beneficial. The Australian competition regulator already has such powers, with one class exemption currently in force relating to small business collective bargaining (to allow eligible businesses to negotiate with their customers or suppliers as a group if certain requirements are met). In the discussion document released last year as part of the Commerce Act review, MBIE indicated that the class exemption power could cover a range of other issues that have arisen under the Commerce Act where an authorisation is not practical such as agreements on sustainability measures, scams or emergency responses.
While the changes have the potential to make the processes for getting protection for proposed arrangements simpler, this will depend on the detail of the new processes (which have not yet been released) and how they are implemented in practice.
The proposals also include changes to help protect confidential information provided to the Commission, to address concerns that businesses and individuals are reluctant to provide information to the Commission in case information is released under the Official Information Act. The changes proposed include a 10 year exemption from the Official Information Act for confidential information provided to the Commission, and protections for individuals against retaliation in relation to information provided to the Commission (based on whistleblower legislation). The Commission recently introduced an anonymous reporting tool for the electricity industry in light of similar concerns.
The Bill containing the changes proposed has not yet been released. Further updates on other competition law changes, including to the merger regime and potential new industry codes, are also expected to be released in the coming weeks.
If you have any questions about how the changes might impact your business, please contact a member of our competition law team.
This article was co-authored by Susie Kilty (partner), Anna Parker (special counsel), Hannah Lee (senior associate) and Larissa Wilkinson (law clerk).
