7.11 Restrictive trade practices
From 21 July 1996, the restrictive trade practices provisions in Part IV of the Trade Practices Act 1974 (Cth) (the TPA) apply to all areas of the Queensland Government that represent the Crown, so far as the Crown carries on a business, either directly or an authority of the state.1 “Authority” means:
- body corporate established for a purpose of the state by or under a law of the state; or
- an incorporated company in which the state or the territory, or a body corporate referred to in (a), has a controlling interest.2
Part IV of the TPA will apply to all other organisations regardless of whether they carry on a business.
Part IV of the TPA prohibits restrictive trade practices. Restrictive trade practices include:
- exclusionary provisions (also known as primary boycotts): when competitors agree not to supply (or buy) goods or services to a particular person or class of persons, or when competitors agree to prevent or hinder the acquisition of goods or services from a particular person or class of persons.
- price fixing: a contract, arrangement or understanding with a competitor that has the purpose or the effect, or the likely effect, of fixing, controlling or maintaining prices, discount levels, allowances, rebates or credits in relation to goods or services.
- third line forcing: requiring a customer to acquire goods or services from another person as a condition of the supply of your goods or services to that customer. It also includes refusing to supply because the customer has not accepted the condition to acquire goods or services from another, or setting prices according to whether a customer has acquired goods or services from another person.
- resale price maintenance: when a supplier sets a minimum price below which resellers must not resell goods.
- anti-competitive contracts: the making or giving effect to general anticompetitive contracts, arrangements or understandings. These are any contracts, arrangements or understandings that have the purpose or likely effect of substantially lessening competition in a market.
- secondary boycotts: these provisions are primarily designed to combat union boycott activity.
- exclusive dealings: prohibits specified conduct involving product exclusivity, tying arrangements and customer and territory exclusivity, in circumstances where the conduct results in a substantial lessening of competition in the relevant market.
- mergers and acquisitions: if the effect would be to substantially lessen competition in a market.
- misuse of market power: when an entity that has a substantial degree of market power takes advantage of that power for one of the proscribed purposes. The proscribed purposes are eliminating or damaging a competitor, preventing a person from entering a market, or deterring or preventing a person from engaging in uncompetitive conduct.
Penalties for breaching Part IV are substantial, with fines of up to $10,000,000 per offence for bodies corporate. Officers and members of Government Boards who are involved in a contravention of Part IV may also be fined up to $500,000 per offence. Persons who suffer loss as a result of unlawful behaviour may seek damages and injunctions may also be granted to restrain illegal activities.
The TPA expressly provides that a State Government will not be liable to a pecuniary penalty under the Act.3 However, this protection does not extend to an authority of the state.4 Also, a breach of the restrictive trade practices provisions of the TPA by the state may render the government liable to pay damages to a person who suffers loss because of that breach.
Members of Government Boards need to ensure that:
- they are familiar with the provisions of Part IV of the TPA so as to avoid engaging in unlawful behaviour in that capacity
- the Government Board complies with its obligations under Part IV and the Competition Code – this will be particularly important where the Government Board is engaging in trading, commercial or business activities
- the Government Board implements an adequate trade practices compliance program to minimise the risk of contravening Part IV. This should be developed in consultation with the Government Board's legal advisers.
There is provision for a Government Board to engage in conduct which would otherwise breach Part IV, either by giving notice of the conduct to the Australian Competition and Consumer Commission (ACCC), or by seeking authorisation from the ACCC. Government Boards which are subject to control or direction from the government must obtain approval from Cabinet, via the relevant portfolio Minister, before taking either of these steps (after having consulted with Queensland Treasury's Economic and Structural Policy branch, which is responsible for ensuring whole-of-government compliance).
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