Trade Practices Breakthrough

The BCA today welcomed the long awaited passage of the Bill giving effect to many of the recommendations of the Dawson Committee’s review of the competition provisions of the Trade Practices Act.

“This Bill brings the Trade Practices Act up to date to reflect business realities in Australia,” BCA CEO Katie Lahey said.

“We should all want Australian businesses that can compete internationally. The new merger processes will provide better opportunities to balance the need for strong domestic competition with the reality that Australian companies must be internationally competitive.

“The Bill is also an important step in improving the governance of the mergers approval process. It closes the gap that saw merger decisions the only major government decision not subject to some form of review,” Ms Lahey said.

The BCA supports the reforms to the merger processes that mean the ACCC will continue to play the central role in merger approvals. Under the amended Act, companies will have three options when seeking approval for a merger.

The options for seeking merger approvals will include:

  • through the ACCC’s improved informal merger clearance process, which will remain the preferred approach for most mergers;
  • through a formal merger process, which for the first time means the ACCC’s decisions on a merger can be independently reviewed; and
  • taking mergers to the Australian Competition Tribunal, when companies believe the public benefits of the merger outweigh its competition impacts.

“Prior to these amendments and recent changes implemented by the ACCC, companies had no choice but to deal with the ACCC. The ACCC’s decisions were not subject to appeal and it did not have to provide reasons for its decisions,” Ms Lahey said.

“The merger regime has now been brought into line with expectations for transparent and accountable decision making.”

Under the new merger regime, no merger will be allowed that substantially lessens competition, unless it can be shown that other public benefits outweigh the harm to competition. This remains a very high threshold to achieve.

The BCA also welcomed the introduction of improved processes for allowing collective bargaining by small business.

“Many of the concerns expressed by small business with the approvals process for collective bargaining reflected the BCA’s concerns with the approvals process for mergers,” Ms Lahey said.

“The BCA has therefore supported small business’ campaign for a better process.”

Ms Lahey warned, however, that collective bargaining needed to be in the interests of competition and ultimately beneficial to consumers.

She said collective bargaining should not be allowed where it was anti-competitive or where, through collective boycotts for example, it allowed businesses to abuse their collective market power.

She congratulated the Treasurer on the passage of the Bill.

“This result is greatly to the credit of the Treasurer and his determination to see the Dawson Bill through as a balanced package of reforms,” Ms Lahey said.

“We also acknowledge the role played by Senator Fielding, of Family First, in ensuring the passage of the Bill.”