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(范凱敦)
1 What is collective bargaining?
Collective bargaining refers to a number of businesses coming together to undertake joint negotiations regarding the terms and conditions of supply with another, usually larger, business.
2 The risk of collective bargaining
If collective negotiations involve competitors, there is a risk that any resulting contract, arrangement or understanding could contravene either:
- the prohibition against price fixing contained in sections 45 and 45A of the Trade Practices Act, or
- the prohibition against exclusionary provisions, or collective boycotts, contained in sections 45 and 4D of the Trade Practices Act.
In certain circumstances the law recognises that public benefits flow from collective arrangements. Hence, strict application of the provisions prohibiting anti-competitive conduct is not always in the public interest.
The Trade Practices Act allows the ACCC to grant immunity for parties to engage in anti-competitive conduct in some circumstances, including collective bargaining. This is in recognition of that fact that collective bargaining can address the disparity between the bargaining power of big and small businesses.
3 Major amendments to the Trade Practices Act: how businesses can obtain immunity from liability for collective bargaining
Major amendments to the Trade Practices Act came into force on 1 January 2007, following the passing of the Trade Practices Legislation Amendment Bill (No 1) 2005 in October 2006.
The amendments enact several of the recommendations made in the Dawson Review of 2003, one of the most comprehensive independent reviews of trade practices legislation.
The amendments introduce a new notification process to permit collective bargaining by small businesses where:
- the value of the transaction is not reasonably expected to exceed $3 million over a 12 month period,
- there are public benefits which outweigh any public detriments, and
- the notification of the collective bargaining is lodged with the ACCC.
Although designed to assist small businesses, it is important to note that the notification process can also be used by medium or large businesses, so long as the value of the transaction does not exceed the $3 million limit.
The government can set a higher transaction limit by regulation. Recognising that some small businesses have high turnover with low profit margins, the government has indicated that special thresholds above the general $3 million limit may be made available in industries such as farm equipment sales, car sales or petrol station retailing.
Parties who can lodge a notification with the ACCC
Together with a small fee, a collective bargaining notification is made by lodging a proscribed form with the ACCC. Any party to a collective bargaining arrangement can lodge a notification, and can also do so on behalf of the other businesses that will be party to the arrangement.
Collective bargaining notifications may also be lodged by a nominated representative who is not a member of the collective bargaining group. For example, an industry association may lodge a notification on behalf of its members.
Immunity is granted 14 days after the date the notification is lodged with the ACCC
During the initial 12 months of the new collective bargaining notification process, a notification will come into force 28 days after the notification is made, unless the ACCC objects within that period. From 1 January 2008, the timeframe for a notification to become effective will be reduced to 14 days after lodgement. The businesses then receive immunity from legal action in respect of the collective bargaining arrangement for 3 years, unless the notification is withdrawn or later objected to by the ACCC. The ACCC may remove the immunity at any time during this 3 year period if it believes that the collective bargaining arrangement is no longer in the public interest.
When the ACCC can object: the public benefits test
The ACCC may only issue an objection notice if:
- it determines that the proposed collective bargaining contains an exclusionary provision, constitutes price fixing or is otherwise a contract, arrangement or understanding which has the purpose, effect or likely effect of substantially lessening competition, and
- the public detriments of the collective bargaining outweigh the public benefits.
In other words, the ACCC will apply a public benefits test. In assessing public benefits and detriments, the ACCC can consider a wide range of factors. Public benefits are typically considered to be anything of value to the community for example, efficiency gains.
4 Authorisation vs notification: a comparison of the two different ways parties can seek immunity from liability
The new notification process is intended to provide small businesses with a simpler, more efficient mechanism to collectively bargain with big businesses without running the risk of breaching Australia’s competition laws.
Before the amendments to the Trade Practices Act came into force on 1 January 2007, parties who wished to engage in collective bargaining could seek statutory immunity for that conduct only by obtaining an authorisation from the ACCC under sections 88 and 90 of the Trade Practices Act. This authorisation process is still available as an alternative to notification however, from a practical perspective, seeking an authorisation is often expensive and time-consuming.
Under the authorisation process, a party must first lodge an application for authorisation with the ACCC and detailed supporting submissions are required. The onus is on the applicant to demonstrate that permitting the collective bargaining would be likely to result in a net public benefit, and interested third parties can raise concerns and objections. There is no set time limit within which the ACCC’s decision must be made, but it may be issued around 6 months after the application is received.
By contrast, under the notification process, the onus is on the ACCC to establish within 14 days (and 28 days prior to 1 January 2008) that there would be no net public benefit. If the ACCC cannot establish that the public benefits do not outweigh the public detriment resulting from the conduct, the notification will stand. There is significantly reduced public consultation.
There are 3 key limitations to the notification procedure.
- It is only possible to notify collective bargaining with one target supplier (multiple suppliers instead require the authorisation route),
- To lodge a notification, the value of the transaction cannot exceed $3 million,
- Although there is less public consultation in comparison with the authorisation process, other parties can still raise objections to the notification. This has the potential to extend the process significantly.
5 The ACCC encourages small businesses to take advantage of collective bargaining
The ACCC has said that it is keen to help small business groups that want to take advantage of the new notification process. For example, in July 2007, ACCC Chairman Mr Graeme Samuel said that retail tenants should consider taking advantage of collective bargaining to strengthen their position when negotiating leases with landlords.