Client Update: Price signalling prohibitions one step closer to becoming law
8 July 2011
In brief: Following lengthy consideration, the House of Representatives yesterday passed the government's proposed price signalling laws. The good news for business is that the scope of the prohibition against private disclosures of pricing information has been significantly reduced with the last-minute inclusion of an 'ordinary course of business' exception. Partners David Brewster (view CV) and Fiona Crosbie (view CV) look at the implications of the new law.
The prohibitions on price signalling have not changed since the last iteration of the Bill. There are two prohibitions:
- a 'private disclosure' prohibition, which prohibits private disclosures of pricing information to competitors. This prohibition is a strict per se prohibition that operates regardless of whether the purpose or effect of the conduct is anti-competitive; and
- a 'general disclosure' prohibition, which prevents any disclosures, private or public, of information regarding
- prices for goods or services to be acquired or supplied by the corporation;
- the capacity of the corporation to acquire or supply goods or services; or
- any aspect of the corporation's commercial strategy.
The major change is that the private disclosure prohibition is now expressed not to apply to communications that occur in the ordinary course of business. This amendment is intended to address concerns that the strict per se nature of the prohibition would have otherwise captured a variety of legitimate day-to-day interactions between competitors. How the ACCC will interpret what activities constitute conduct in the ordinary course of business remains to be seen.
The numerous exceptions to the private disclosure prohibition previously proposed remain unchanged. These exceptions include communications between competitors in a supplier/customer relationship, communications made for the purposes of a proposed or existing joint venture, and communications made in connection with a proposed contract for the acquisition of shares or assets.
Three specific exceptions have been included to address the concerns that the per se prohibition would prevent banks from engaging in ordinary commercial transactions, such as syndicated or consortium loans, or from communicating during workout situations. The exemptions provide that the private disclosure prohibition does not apply to:
- communications between corporations that are jointly providing, or considering whether to jointly provide, loan or credit services to a person;
- communications between credit providers and providers of credit services (ie between banks and mortgage/finance brokers); and
- communications between corporations considering whether to take measures to return a borrower to solvency or reduce the risk of a borrower becoming insolvent.
We will keep you closely informed of developments in relation to the passage of the price signalling legislation. The additional exceptions are welcome, as they address many of the inadequacies in the Bill as initially introduced. However, the fact that there is now a large number of exceptions to the private disclosure prohibition highlights a fundamental problem with the introduction of a per se prohibition.
Having regard to the large number of exceptions, and in particular, the 'ordinary course of business' exception, the proposed laws will be confusing for business and will lead to increased competition compliance costs for businesses engaging in routine transactions, to ensure that pricing communications do not attract the per se prohibition.
For further background on the price signalling laws, please see our Client Update: Prohibiting price signalling, Client Update: Price signalling laws introduced, and Focus: Navigating the proposed price signalling legislation.
- David BrewsterPartner,
Ph: +61 3 9613 8707
- Fiona CrosbiePartner, Practice Leader, Competition Law,
Ph: +61 2 9230 4383
- Ted HillPartner,
Ph: +61 3 9613 8588
- Carolyn OddiePartner,
Ph: +61 2 9230 4203
- Kon StelliosPartner,
Ph: +61 2 9230 4897
- Jacqueline DownesPartner,
Ph: +61 2 9230 4850