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Client Update: Price signalling laws introduced

24 March 2011

In brief: The Federal Government today introduced into Parliament a Bill to prohibit the disclosure of pricing and other information to competitors. Partners Fiona Crosbie (view CV) and David Brewster (view CV) report.

Background

The Competition and Consumer Amendment Bill 2011 was released as an exposure draft last year. The Federal Government has made some minor changes, but the Bill as introduced today is in substantially the same terms as the exposure draft. It contains two civil prohibitions relating to the disclosure of information:

  • 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.

A general disclosure will only be illegal where it is made for the purpose of substantially lessening competition in a market.

The prohibitions will apply to any goods or services prescribed by regulations. The Government has stated that banking services will be the first to be prescribed.

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Key changes

The draft Bill adds a number of new or expanded exceptions to the prohibitions, the most notable being:

  • disclosures made for the purpose of complying with continuous disclosure obligations under the Corporations Act 2001 (Cth);
  • the ability to lodge with the Australian Competition and Consumer Commission (the ACCC) a notification of a proposed disclosure. Statutory immunity will apply 14 days after the notification is lodged, unless the ACCC revokes the notification;
  • expansion of the joint venture exception to cover conduct leading up to the creation of the joint venture; and
  • clarification that the communication by a supplier of supply prices to a customer that is also a competitor of the supplier is not captured by the prohibitions.

The Bill now specifies that the mere receipt of information will not result in a contravention of the prohibitions by the recipient.

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Comment

The new exceptions help address some of the more technical concerns we have raised regarding the scope of the law. However, they do not remove the potential for the prohibitions to apply to a range of legitimate commercial activity, including early pre-merger discussions, conduct by companies considering seeking authorisation from the ACCC and collaborative lending arrangements between banks. We question whether the authorisation and notification regimes will be of practical relevance in many circumstances.

If the Bill becomes law, it will have significant implications for companies in a wide variety of situations. We will provide a further update in coming days on key areas of business likely to be affected.

For further information, please contact:

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