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16 August 2006

In brief

Still hard to get a fix - the High Court refuses the ACCC special leave to appeal the Apco decision

On 2 June 2006 the High Court dismissed the ACCC’s application for special leave to appeal the Full Federal Court’s decision in Apco Service Stations Pty Limited v Australian Competition and Consumer Commission (2005) ATPR 42-078. The High Court did not consider that the application raised any serious issue of interpretation of the relevant provisions of the TPA. The ACCC was ordered to pay the respondents’ legal costs.

In December 2004, Merkel J found that Apco, its managing director and others had engaged in a price fixing arrangement with retail petrol companies in the Ballarat region in contravention of section 45(2) of the TPA. Penalties of $3 million and $200,000 were imposed on Apco and its managing director respectively.

On appeal, the Full Federal Court did not accept that a mere expectation that a person will act in a particular manner is sufficient to constitute an “understanding” for the purposes of the TPA.

For more information on the Federal Court and Full Federal Court decisions, see our November 2005 Competition law update.

Fortescue Metals de-railed?

On 13 June 2006 Fortescue Metals applied to the Australian Competition Tribunal for review of the Treasurer’s decision not to declare BHP Billiton’s Mt Newman rail line under Part IIIA of the TPA. Declaration would have provided Fortescue Metals, as well as other third parties, with the right to negotiate access to the service.

Peter Costello’s failure to make an announcement by midnight on 22 May 2006 indicated that the Treasurer had declined to uphold the National Competition Council’s (NCC) recommendation that the service provided by the railway line be declared. Fortescue Metal’s application had been vehemently opposed by both BHP Billiton and Rio Tinto, which had argued that the rail lines are integrated production processes and therefore not subject to the TPA.

In other Access news, the NCC released a template in July 2006 setting out the information that should be included in applications for declaration of bottleneck facilities under Part IIIA of the TPA. The NCC encourages use of the template and has stated that it covers all TPA criteria as well as any other factors which should be considered before a declaration is made.

Vitamins class action settles

On 17 July 2006 the Federal Court was notified that the parties in the vitamins cartel class action sought the Court’s approval to settle for the amount of $30.5 million.

The class action, which was commenced seven years ago, was brought on behalf of many businesses that had been adversely affected by the price-fixing arrangements between the Roche, BASF and Aventis companies.

The Court’s decision on the settlement is expected at the end of August 2006.

ACCC releases the “Franchisee start-up checklist”

The ACCC released a “Franchisee start-up checklist” on 28 June 2006. The publication aims to assist aspiring franchisees with their plans.

Described as a “checklist to help prospective franchisees assess business opportunities before making an investment decision”, the publication reiterates franchisees’ rights and protections under the Franchising Code of Conduct. Franchisees are warned to undertake proper research and to seek adequate advice.

Commissioner Martin has said that the franchising sector is one of the ACCC’s targets and the ACCC’s main message is for potential franchisees to “be diligent and make informed decisions before signing on the dotted line”. For more information on franchising issues see our May 2006 Competition law update.

ACCC releases guidelines on media mergers

On 9 August 2006, the ACCC released a paper designed to provide guidance to industry as to how cross-media merger proposals will be assessed by the ACCC.

While prompted by changes in technology and the Federal Government’s ongoing consultation on reform to Australia’s media laws - and in particular cross-media ownership laws - the Media Merger Guidance Paper does not propose any change to the framework that the ACCC currently applies in assessing mergers, either in terms of:

  • the ACCC’s primary concerns in the media sector; or
  • the analysis that the ACCC will apply when approaching a proposed transaction.

However, the Media Merger Guidance Paper does provide a timely reminder that - as for all mergers - the ACCC will require parties to provide extensive information in support of any merger proposal. Accordingly, parties should have a well-framed proposal and have developed their evidence before approaching the ACCC.

The Dawson Bill and other amendments to the TPA

On 19 June 2006 Bob Katter, the Independent Member for Kennedy, introduced into the House of Representatives the Trade Practices Legislation Amendment Bill 2006, a private member’s Bill. The Bill is substantially similar to the Dawson Bill.

Aside from this, there has been no progress with the Dawson Bill since the Senate passed its amendments in October 2005. The Senate’s amendments have not been considered by the House of Representatives.

The Government’s proposed legislative program for the Spring Sitting (8 August to 7 December 2006) was recently released. It includes:

  • Trade Practices Legislation Amendment Bill (No. 2): implementing the Government’s response to the Senate inquiry into the “The Effectiveness of the Trade Practices Act 1974 in Protecting Small Business” and providing for an additional Deputy Chairperson for the ACCC
  • Trade Practices Legislation Amendment Bill (No.3): amending the TPA and related legislation in relation to component pricing
  • Trade Practices Amendment (2006 Measures No. 2) Bill: implementing recommendations from the Dawson Review to introduce criminal penalties for cartel conduct, and
  • Trade Practices Amendment (Small Business Protection) Bill: amending the TPA to allow the ACCC to take representative action and intervene in proceedings in matters of secondary boycotts.