Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Link to this | Hansard source

I rise to speak on the Competition and Consumer Legislation Amendment Bill 2010and, for those who are listening, this is a different one from the one we have just been discussing. There has been quite a lot of traffic through Dr Emerson’s portfolio around these issues. This bill has two particular aims. The first is to clarify the operation of provisions relating to mergers and acquisitions by removing potential ambiguity in the definition of the market that is applied by current law. The second is to insert interpretive principles into unified unconscionable conduct provisions for consumers and business related provisions to assist the courts in applying the law and to assist stakeholder understanding of the law.

In the past 10 years concerns have been raised within the community about market concentration in key sectors, including retail, fuel, groceries and banking, and the ability of section 50 of the Trade Practices Act 1974 to deal effectively with what is known as creeping acquisitions. The Baird committee considered creeping acquisitions in its 1999 Fair market or market failure? report. The committee recommended a code of conduct be established requiring the mandatory notification of supermarket acquisitions by publicly listed corporations. The Baird committee also recommended that section 50(6) be amended to specifically allow consideration of regional markets in order to address creeping acquisition concerns at a regional and rural level.

The interpretation by the ACCC of section 50(6) has not been tested by the courts. However, it was considered by Justice French in his 2003 decision in the Federal Court case of AGL v ACCC. Justice French left open the possibility that whether a market is considered substantial under section 50(6) may be determined by reference to Australia as a whole. It has been conveyed to the ACCC that a major supermarket chain may press this interpretation to resist any objection to acquisitions in geographically confined markets from being considered under section 50.

Given the lack of jurisprudence, the bill seeks to remove the term ‘substantial’ in defining the market to be considered that might otherwise prevent the application of section 50 to a local or any other relevant market. Put in simple terms, the concern, and the argument advanced by an experienced and highly regarded trade practices lawyer to the ACCC, was that if there was a challenge about whether a market could be defined as a regional, outer metropolitan or contained area and there was a suggestion that that would prohibit the acquisition of a greenfields site or of a site generally or of a property then they would run the argument that it needs to be considered against the market of Australia as a whole.

You and I, Madam Deputy Speaker, would probably realise that if we are looking for choice and variation in our supermarket shopping we do not tend to commute right across the continent of Australia to determine what supplier we might choose. So that common sense practical application of the law was being challenged by a threat, not in a malicious sense but challenged by an argument the prospect of which may have been put in challenging some determinations by the ACCC where a supermarket chain was unhappy with their conclusion. As a result, the bill contains no new provisions to deal with creeping acquisitions but simply removes the prospect of this broader definition of the market under the banner of ‘substantial’ from being a constraint in the application of the law.

So, essentially, that first provision is seeking to change the law so that the law is implemented in a way the law was intended to be implemented. It is a bit of a stretch. The minister has left, but I was going to point out to him that his second reading speech is a Herculean projection of what he hopes this bill is about—that is, the claim that it fulfils a government election commitment to enact new laws to deal with creeping acquisitions. This is not really a new law. In fairness, he did not use the word ‘law’. I will quote:

The bill will implement the government’s election commitment to enact laws to deal with creeping acquisitions by amending section 50 …

That bit ‘by amending section 50’ is an addition to what the election commitment was. This is a modest measure at best. It is a very modest measure. It is really an action taken in anticipation of the prospect that a lawyer might run an argument that was mooted in a discussion in a court many years ago to challenge the application of the law as it was intended.

This is what has caused some disquiet in the community, where there is legitimate concern about creeping acquisitions and at times a seeming inability or unwillingness to address market concentration issues achieved by creeping acquisitions. Sadly, this amendment adds no new tool to the toolkit—nothing. For people claiming it is some miraculous beefing-up of the toolkit available to the ACCC in relation to creeping acquisitions to create dominant market positions, they will be very disappointed. There are no new tools in this. On the suggestion that the election commitment would introduce a law, technically a bill is a law. I am sure people who read that election commitment from Labor prior to the last election probably expected a little bit more than a line being put through the word ‘substantial’. In fact, I am certain that was their expectation.

So to some extent the small business community in particular have been wooed by the prospect of some more meaningful change in this area and have been, frankly, underwhelmed by the nature of the change that has been proposed, the change that, as I have said, will not change in any way the intended operation of the law or the toolkit. It is designed to cut off at the pass the prospect of a legal argument, not put at this stage anywhere, not advanced, but a prospect of it. This is cutting off that possibility. I can just sense how, having been seduced by the prospect of genuine strengthening of the tools, many in the small business community will feel somewhat betrayed by what has been produced.

Having said all that, we are not opposing that change. We do not think it will achieve much, but it causes no harm. But it is important to note it is still an issue. The step-by-step acquisition of properties and sites to accumulate a dominant market position is still an issue. This is why the opposition have signalled our intention to review these provisions—not to pronounce some prescription now. That is a very difficult proposition for an opposition to do. We do not have the enormous resources of government and access to football teams of trade practices lawyers and the like. We are not so blessed. What we do, though, is confront the reality of the issue and the need to properly diagnose that issue so that any response is properly calibrated, objectively tested and implemented to achieve what it intends.

I say that because in more recent times there has been quite a discussion around this subject and in relation to Senator Xenophon’s Richmond amendment that was being canvassed in the Senate. Considerable attention was given to that. It was called the Richmond amendment because it related to a petrol station in the Adelaide suburb of Richmond where it was believed that some of the actions of a major petrol retailer were going to greatly compromise and in fact blow out of the water an independent petrol retailer. There are not many independent retailers, they are an endangered species, and Senator Xenophon brought forward some ideas about how that might be responded to. Both major parties concluded that the remedy being advocated by the Richmond amendment was not going to achieve the outcome people were looking for, so both Labor and the coalition agreed that the Richmond amendment was not in a form that could be supported.

Where the major parties diverge, though, is that the coalition recognises that there is still an issue there. The Rudd Labor government seems to think there is not. In fact, upon the announcement of our intentions in relation to an examination of competition law the minister was quite vitriolic in his response, suggesting it had all been done and that there was no real challenge or issue that needed to be addressed. I suspect he has very few people who agree with him there. As I move around Australia and talk with business organisations and individual enterprises, small and large, and I talk with academic experts of considerable stature and insight such as Professor Zumbo, and as I talk to trade practices lawyers in major firms and smaller firms with a whole range of clients, I can only think of one occasion where it has been asserted that there is no need to examine these issues. That was from the minister. That was a crushing blow to all those in the business community that see conduct that is unbecoming in the marketplace, that feel that either the toolkit available to the ACCC is not adequate or perhaps its application is inconsistent and needs further consideration. To all those people the words of the minister in being very hostile to the opposition’s approach came as a great disappointment. This is perhaps an example why.

Some organisations have welcomed these changes because they change nothing. If all you value in public policy is certainty, the best thing you can do is change nothing; you are certain to get certainty. Change nothing and you will get certainty because nothing has altered. But that is a very narrow and self-serving view of public policy by those advocating the no-change case when there are legitimate concerns that need to be addressed. If those legitimate concerns and some suboptimal outcomes in terms of the national interest and sound public policy objectives remain, arguing a do-nothing strategy is abandonment of the responsibility and duty of all of us in this place.

So on this creeping acquisitions issue and the Richmond amendment, which was Senator Xenophon’s private member’s bill, as I mentioned, the two major sides of politics did not support that, feeling it was not fit for the purpose it was intended for. But let me be clear, and I concur with the coalition senators’ remarks in the report, that that does not mean that the issue is not legitimate and that certainly does not mean that we should stop the constant pursuit of examining what is required to deal with it. So that is the issue around creeping acquisitions. There is a question mark about ‘substantial’. Okay, we are putting a line through that so that there is not an argument that can be mounted that ‘substantial’ needs to be judged against the continent as a whole.

The second area relates to its application to greenfield sites. There are no specific provisions in the bill to deal with that. The operative segment of this debate that deals with that are the words delivered by the minister in his second reading speech. He is asserting the intention of the law to extend to greenfield sites, and that is appropriate, that is an interpretation that I agree with and I think most people would, and that is certainly the intention of the parliament.

And whether the acquisition of greenfield sites can be argued to be part of the normal course of business and not subject to the oversight and intervention of the ACCC may also be challenged. This is designed to say to someone who might consider running that argument that that is not the intention of the parliament. The minister has made it clear that, if the court subsequently interprets a matter in that way, it will be revisited by the parliament. You are looking for some substantive change, but that is jawboning the judiciary to make it clear what the parliament is on about. There is no change to the tool kit that is available to deal with creeping acquisitions, and I would say that the bill falls a considerable way short of the expectation that was created in the small business community. In that respect, it is situation normal. Labor went out prior to the election with all these enormous expectations and seduced people into thinking everything was going to be new, shiny and different. They got elected and have done what can only be described as a stealth-like set of reforms that are so minimal they will make not a jot of difference whatsoever—and they now claim that that fulfils an election promise! I understand the deep cynicism in the small business community because of that behaviour—but I will not call it unconscionable conduct, because I am about to get onto those provisions.

The other area of the bill relates to the unconscionable conduct provisions and essentially does two things: it seeks to bring together and harmonise the unconscionable conduct provisions as they might affect consumers and business—therefore removing any potentially confusing distinctions that may exist between those two audiences—and it sets out a range of principles. This is another area where Labor in government and in opposition created considerable expectations that it would address the concerns within the small business community—in my view, legitimate concerns—about the accessibility of unconscionable conduct relief. The expectation was that there would be some meaningful action. Quite a lot of work was done to deal with the legitimate concerns about the fairness of conduct towards business and consumers. That issue has been dealt with and provisions have been in place since 1986 and 1988.

The provisions in this bill, though, seek to implement the recommendations of an expert panel that was set up to consider the recommendations of a Senate economics committee inquiry into whether there was a case for a statutory definition of unconscionable conduct. The motive behind that was to try to create a greater sense of certainty and dependability in the relief and protections of unconscionable conduct. There was a sense that they were complex concepts that were not well understood in the marketplace. Many in small business felt that the relief was not there when they felt that the conduct that they had been subjected to by, in many cases, larger businesses was indeed unconscionable.

The Senate committee recommended that the government set up this inquiry process to determine what examples could be incorporated to provide greater clarity. In the end the committee that examined the Senate committee’s report came back to the government and said that the proposition was so difficult that they could read into example A, with certain characteristics and certain factors taken into account, a judgment of unconscionable conduct. Someone who is aggrieved might see that case study and project their circumstances into that set of facts and feel quite convinced that an act or behaviour that would fall within the definition of unconscionable conduct had been inflicted upon them. That has its dangers. An individual can look at cases that have the outcome they desire and then conclude that a similar set of circumstances and the law and the precedent apply to them. That is hazardous. It does not rule out the need, though, for greater clarity and greater certainty. It certainly does not do that. But going about it by, let us say, modelling cases to project them into other circumstances does have its hazards.

The expert panel found that these provisions have been regularly enforced since their inception and that the case law is still developing. For many in the small business community that would probably come as a surprise, but I do understand, from briefings from the ACCC, that an amount of enforcement activity has been undertaken and that the case law is still developing. Many would like to see that case law accelerated and the ACCC more prepared to take on cases that may be challenging and hotly contested but may well add to people’s understanding of the case law and the way in which these provisions apply.

The other thing that needs to be talked about is this. So much of the decision about whether to pursue an unconscionable conduct case happens through internal processes within the ACCC. It is quite fair enough for them to work through their own processes and arrive at their own judgments about which cases to pursue and which not to pursue. I guess what I would like to see, though, is the broader Australian public and enterprises understanding why those decisions are being made and what the decision support framework looks like. Is it that the case is poor? Is there some aspect of the case that might undermine a successful litigation? Is there a conflicting or problematic precedent that might fly in the face of what might seem on the surface to be a very clear case of unconscionable conduct?

I guess the point I am making is that there is so much mystery surrounding unconscionable conduct that it is hard for me and many others to see that the way in which the law is being applied is actually promoting conscionable conduct. That is, are we getting the message out that certain cases and enforcement activity proves that this kind of behaviour is wrong and that therefore the market should not go there or should take these factors into account? I just do not think that that educative process is working terribly well at the moment.

I am hoping that these principles will add something. They seek to tease out the kind of conduct that can fall within the reach of the unconscionable conduct provisions. They seek to provide some clarity to the business community, consumers, enforcement agencies and the courts. They seek not to give rise to confusion and misguided expectations as to case law. They do not say: ‘Here is a case study; do you fit into one of these?’—a kind of cookie-cutter approach. They do not do that. But the interpretive principles do seek to tease out some of these legal concepts. They seek to make sure that the courts do not apply too narrow a definition; the common law concept of one of the parties being disadvantaged in some way and the other taking advantage of that disadvantage—that is quite a narrow interpretation. But the law seeks to say, ‘No, it goes beyond that’—that it can include the nature of the relationships between the parties; go to questions about the way in which contracts are formed, and the terms and the manner in which contracts are carried out; and go to questions of systematic conduct and patterns of behaviour. And there is no requirement to identify a person at a disadvantage to pursue and enforce those provisions. So that is all reasonably good stuff but, again, it does not change the tool-kit. Hopefully it will inform people more, in a legal sense, about what is going on.

I have sought and I hope to get more advice about how the ACCC will carry out its role in the context of these principles. At the end of the day, the way they are applied and utilised is as important as the black letter law, and that is often where there seems to be some confusion and inconsistency in the marketplace.

So the opposition is happy to support this bill because, frankly, its provisions are unobjectionable. They do not achieve much. In fact, to use the medical analogy, these are placebo provisions. They do not do a whole lot of anything. They do not harm anybody. They do not present any new tools for the tool-kit. They resolve a problem that may possibly arise if someone takes a particular argument to the courts—we have cut that off at the pass. Had someone wanted to run the line that greenfield sites were not included, Dr Emerson has given the parliamentary jawboning exercise here to the courts to make it clear that that was the intention. And we have got these principles, which tease out the law as it currently stands but which do not, of themselves, alter the law. So that is where we are today.

I have touched on why I think there is a need to revisit the tool kit. I have provided some examples about where I think suboptimal outcomes are occurring. I am not so reckless and lacking in care as to stand before you and prescribe what the remedy is. I am saying, though, that an objective evidence base examination of whether the tool kit is fit for purpose and relevant for the current state of commerce and future trends in competition is the way to go. Having established that quite clearly, then we can be careful and thoughtful in the remedies we seek to bring to the parliament. That is our approach.

Just in closing, I would like to place on record the opposition’s condolences to the family of John Martin, who has passed away. John is a former commissioner of the Australian Competition and Consumer Commission. He held that role for a decade. He passed away quite suddenly over the weekend. He served the nation in a very distinguished way. I think his family can be very proud of John and his contribution, not only on the ACCC but also in other areas. He was chairman of the International Air Services Commission, he held an executive director role at the Australian Chamber of Commerce and Industry and he made a very important contribution on the board of Standards Australia and also in international work representing Australia on a business and industry advisory committee to the ACCC. He served the nation through those roles and also as a policy adviser and program manager in Treasury and the department of industry and as a regional consultant for the UN in Bangkok. He was a distinguished Australian. He will be missed. By those in the small business community he was admired for his supermarket inquiry in the Australian Capital Territory and for trying to make a positive contribution around issues of dominant presence in that sector. His family and those near and dear to him, particularly his children, must be having a terrible time now. I would like to put on the record the coalition’s condolences and hope that in this difficult time the family can comfort each other and take great comfort from his contribution to Australia, to the Commonwealth government and also here in Canberra.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I thank the Deputy Speaker for facilitating this opportunity for me to speak on this bill. My comments on the Competition and Consumer Legislation Amendment Bill 2010 will focus on schedule 2 of the bill. I entirely agree with the member for Dunkley, my colleague, that this does not really take us any further than we have been for a very long time. It just tinkers around the edges. The provisions of schedule 2 before the House arise from the Strengthening statutory unconscionable conduct and the Franchising Code of Conduct report delivered to the government in February this year. To frame my remarks, I will say that despite the report’s name the recommendations regarding franchising and unconscionable conduct—especially in regard to ‘good faith’—do little to strengthen the statutory regime. It is very disappointing.

Since I first came to this place—and I was shadow minister—successive governments have talked about strengthening the provisions and there have been some changes made—we made some when we first came into government in 1996—but they have proven not to be satisfactory in cases where there does not seem to be good faith bargaining between the parties in the franchise sector. The response by the government was an opportunity that has been missed, especially given the importance of franchising in Australia’s business sector. The importance of franchising was recently highlighted by the Minister for Small Business, Independent Contractors and the Service Economy in March this year when he spoke at a BRW conference in Sydney. He said that buying a franchise was an increasingly popular way of getting into business. He is right about that, with 71,000 franchise agreements in place across the nation. It is true that most of them operate fairly successfully. He went on to say:

Australian franchises employ more than 400,000 people and turn over $130 billion a year—that’s a lot of jobs, and a lot of money. When a franchising agreement works well, it can be a great way for people to break into business.

I agree with him about that and I agree with a number of commentators who rightly say that most of these agreements work reasonably smoothly but we do get a few rogue elements within the sector. Because it is such an important sector within the business community, we need to make sure that the integrity of the franchising sector is retained. We can only do that by making sure in this place that we have laws that are meaningful and laws that are fair to both parties in these agreements.

The minister’s focus on the entry into a franchising agreement is echoed in the reforms presented in this bill, but little attention has been paid to the ongoing relationship between the franchisee and the franchisor, which sets the franchising model apart from other types of business systems. As the minister’s own figures show, franchises employ a vast number of people and generate a significant amount of money. That is exactly why the conduct surrounding agreements must be framed with greater certainty.

False analogies are often drawn between franchises and retail leases. Retail leases are a simple quid pro quo—a business pays money for space to sell their wares. The relationship between the parties is quite distinct. In contrast, franchises are characterised by a cooperative, symbiotic nature. The franchisor’s part of the bargain is to provide value through trademarks and the system of operation, while the franchisee’s part of the bargain is to earn the net profits from which a royalty is paid in recognition of the value of the trademark and system. Obviously it is also incumbent upon them to run the business according to the agreement.

The differences affect how the business is run. Retail tenants organise their finance to ensure it is repaid at the end of the term. The franchisee model promotes investment in the business with the aim of growing and expanding the business over time. This fact is not only recognised but promoted by John O’Brien, the CEO of PoolWerx and chair of the Franchise Council of Australia. The PoolWerx website informs would-be franchisees:

A … franchise is not a ‘job’, but rather a path to success through careful growth strategies.

I have always been somewhat at a loss to know why the peak industry body, of which Mr O’Brien is currently the CEO, has been implacably opposed to introducing a good faith provision to ensure that there are sensible agreements between franchisors and franchisees.

As franchising focuses on growth and expansion through the term of the agreement, attention should be paid to both the precontractual disclosure and the end-of-term conduct and that does not happen. But the provisions of this bill focus only on precontractual disclosure. The rationale is stated by the minister in his press release of 4 June this year, is that:

By requiring disclosure upfront, potential franchisees have the information they need to decide whether the franchise is the right business for them.

What the minister does not take into account is that many potential franchisees face a ‘take it or leave it’ standard contract which does not recognise the value of the growth of the business through the franchisee’s hard work and business acumen.

A potent example of that is the case of Competitive Foods Australia and Yum! Restaurants International. It is a well-publicised, well-documented case. Competitive Foods operates 46 KFC outlets, primarily in Western Australia, on a franchise agreement. In 2007 the Rockingham KFC was forced to close after Yum! decided not to renew the franchise agreement. The remaining stores are all expected to close progressively as their 10- to 20-year contracts expire. It was reported on Channel 7 in Western Australia at that time that Yum! had told Competitive Foods that they wanted to take over the Western Australia KFC outlets. They offered to buy the physical facilities of the restaurants at their depreciated book value, with no ongoing concern value even though they are $2 million-a-year stores.

Over the years of the contract, Competitive Foods diligently worked to build the business to the point of turning over $2 million a year. If the company were to agree to Yum!’s proposal, they would essentially be handing over all of the goodwill that their hard work, along with the franchisor, had developed, with no compensation or monetary recognition of the built-up value. It is a no-win situation for Competitive Foods, frankly. They cannot onsell the business, because their franchise rights have expired, and they are left holding leases to buildings branded with KFC’s logos. The logical buyer is therefore the franchisor who has a vastly superior bargaining position. Essentially, Yum! can offer to buy the established sites—if they do not already own them—but if their terms are not agreed to they can simply enter into a new franchise agreement with another party and leave the new franchisee to find suitable sites. Competitive Foods has no bargaining leverage in this case. But, if, hypothetically, the franchise was just breaking profit, the franchisor’s interests might best be served by renewing the franchise, because they would still receive the royalty for using the trademarks and system. The decision is in the hands of the franchisor.

The point is highlighted by the evidence given by Mr Bryden on behalf of Yum! to the 2008 Parliamentary Joint Committee on Corporations and Financial Services which produced the Ripoll report, in which Mr Bryden, speaking about the reasons why Yum! may or may not grant a renewal, commented:

The point is that the contract is absolutely clear. … If it is just a matter of strict reliance on contract, then our motivations, intentions, whether it is lack of trust or anything else, are absolutely irrelevant.

It seems extraordinary to me that this is an issue that cannot be resolved. I know that members on both sides of this House have the goodwill to see that something is done to make these agreements fair—where you have something that talks about what happens at the conclusion of a contractual period, where it is not going to be renewed and, obviously, where the franchisee has met the conditions of their contract.

In any other business agreement, in a partnership—and these are not unlike partnerships—you would have a situation where there would be some arrangement, some agreement, on how the partnership would split and who would get what out of that partnership. The assets of the business would be valued, including the goodwill, and there would be an arrangement as to an equitable split. I cannot see why it is so difficult to have those kinds of arrangements in existing franchise contracts. If the contracts remain silent on that, then we should ensure that there is an arbitration or tribunal system that makes a determination based on proper valuation of the business, including its goodwill. I have here every review about this since 1976. This matter has been reviewed and reviewed and reviewed. In 1976 it was the Swanson inquiry. In 1979 it was the Blunt inquiry. There was the Petroleum Retail Marketing Franchise Act in 1980. Service stations in that era were facing similar sorts of problems to what franchisees face today, and that was dealt with under that act—into which there was an inquiry.

There were the failed exposure drafts of a Franchise Agreements Bill 1986. There was the Beddall committee report in 1990, just prior to my coming into this place and taking on the job as shadow minister. There was the voluntary franchising code of 1993 and related reports. There was the Reid committee in 1997, the franchising code and section 51AC. There was the Matthews review 2006 and code amendments, and state inquiries in both Western Australia and South Australia in 2008.

Madam Deputy Speaker, I know that time is short, and I had wanted to speak to my full time because I see this as a very serious and important matter.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

The honourable member can speak to her full time.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

Thank you, but I will try to keep my speech to the minimum. If you go through some of the evidence that has been given over the years, there has been plenty of evidence to suggest that a good faith provision is a logical step forward. Professor Warren Pengilley stated in his submission:

There are good grounds for inserting in the Franchising Code an obligation for parties to act in good faith. This obligation should be imposed on both parties and not on one party only …

He also stated that he recommended in 1981 to the Minister for Business and Consumer Affairs that an obligation to act in good faith could be enacted, and that his belief has strengthened since then because, he said:

… a franchise (properly defined) is an ongoing relationship involving the trust of one party in dealings with another.

He gave evidence to similar effect again when he said:

I have no objections at all to an obligation to act in good faith. I know lawyers say that the cases differ, the law is developing and so on.

I have to say that it is taking an awfully long time to develop. But he goes on:

It almost seems to me to be a case for saying, ‘Let’s put it in so that we know clearly where we are.’ It is not true that the concepts are unknown. There are obligations in insurance law and partnership law, for example, to act in good faith, and no doubt there are many more.

I say, ‘Hear, hear!’ to that.

The Law Institute of Victoria, representing 15,000 legal professionals in Victoria, recognised the need for franchisors to have certain scope to their allowable discretionary powers when dealing with franchisees, but they concluded:

The LIV recognises the uniqueness of franchising in commercial relationships. They are based on a high degree of trust and universally accepted notions of goodwill. Therefore, it is important to balance this against the arguments not to regulate, which by their nature present an unworkable economic model which assumes all franchise relationships have equal power balance and remedies to resolve disputes cost effectively. This is simply not the reality in our emerging commercial markets.

They go on to say:

The addition of a statutory obligation on franchisors to act in “good faith” is not out of step with the approach by some courts.

They give an example of a case in the New South Wales court and then go on to say:

Although there is currently some uncertainty about the exact extent of the content of an obligation of “good faith”, the insertion of a statutory obligation will allow the courts to flexibly apply the concept to individual factual circumstances.

My colleague the member for Dunkley mentioned Professor Zumbo, who has long argued the case for a good faith provision in this legislation and has considered this quite closely—he is probably one of the foremost experts on this matter. And he argues that enacting a statutory duty of good faith:

… offers considerable potential as a mechanism for promoting ethical business conduct—

and submits:

Such a statutory duty of good faith should operate generally—

within the franchising relationship—

… including requiring the parties to resolve disputes in good faith.

I do not understand why successive administrations have been so implacably opposed to doing what is really a good-sense measure in the interests of maintaining, as Professor Zumbo said, ethical business conduct and the integrity of the great franchising industry that we have in this country—there seems to be no reason in the wide world. But the South Australian government submission to the 2008 federal franchising inquiry stated:

The Committee recommends that the exclusion or inadequate determination of goodwill or other such exit payments by a franchisor during negotiations with a franchisee regarding a franchise agreement constitutes “unconscionable conduct” …

I agree with that. I think it is like robbing somebody. If you are working together in a partnership to build the goodwill of the business in the interests of both parties, there is absolutely no reason in the wide world why there should not be an equitable split, all things being equal, at the end of the contractual period of that agreement. To do otherwise is to continue to perpetrate what is a very, very unfair practice that prejudices the rights of the little people, the franchisees in most cases. The submission goes on:

The Committee recognises that goodwill presents a challenge to the franchise industry because of the unique structure of franchise businesses, the location of brand ownership and the distribution rights and responsibilities between the parties. Yet inherent in recognising that the success of a franchise depends on both parties is the need to recognise and, where necessary, quantify the value of the franchisee efforts over the term of the contract.

This cannot be too difficult. I spent many, many years in business before I came into this place and I do not understand why this cannot be done in a fair way. While an individual franchise may not succeed without the brand power and resources provided by the overarching system, the efforts—(Time expired)

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I rise today, as I think every member so far has, to support the Competition and Consumer Legislation Amendment Bill 2010. The bill before the house today does two very significant things in bringing clarity and certainty to the applications of key provisions in competition and consumer laws. Firstly, it implements the government’s election commitment to deal with creeping acquisitions by clarifying the Trade Practices Act to ensure that the Australian Consumer and Competition Commission has power to reject acquisitions that would subsequently lessen the competition in any local, regional or national market. Secondly, and equally importantly, it also provides greater clarity in relation to unconscionable conduct provisions, implementing the recommendations of the expert panel appointed by the minister in 2008, which made recommendations in November 2009.

These are two significant pieces of kit, if I can use the member for Dunkley’s analogy, to improve the consumer competition law in this country. This has by no means been put forward as a total panacea to all business conjecture or all business difficulties. Like you, Madam Deputy Speaker, being a person who came from a business background I know that the challenges out there are often great, but this is moving to deliver a greater degree of certainty in an area where it is clearly required. People have asked for this and we are trying to deliver that certainty so they have a degree of understanding of how to propose their businesses and run them into the future.

There has been a long-standing concern in most communities about creeping acquisitions, whether they be the discussions a few years ago about banks or petrol stations. Certainly in my own backyard in Werriwa every time one of the mainstream supermarkets wants to set up we are inundated with concerns about what that does to local competition, the local fruit grower and the local community. The local community, apart from everything else, has a fair degree of association or perceived ownership of who supplies the goods and services to them. There is an element of parochialism. Essentially, when it comes down to dealing with mums and dads locally, we need to ask: is this good for us? Can people come in and undercut now and force us to suffer a higher price regime in the future through their monopolistic powers? This very much applies to local supermarkets.

Following the release of the ACCC’s grocery inquiry in 2008, the government committed to undertake a consultation process to evaluate the various models to address creeping acquisitions. It is important to bear in mind that what we are talking about here is creeping acquisitions. Essentially, a series of small-scale acquisitions individually do not substantially lessen competition in the market but a series of acquisitions may over time substantially impact on the market. This is very significant. These small retailers are being bought out systematically with a view to eventually having a dominant pricing position in a market.

In 2008 and 2009 two discussion papers were released by the government. Four broad models of reform were put up for discussion. Regrettably, like a lot of things we deal with in business, there was not substantial agreement or consensus in terms of the outcome. There were certainly varying views about how to address these problems and, regrettably, there was no consensus for any one model.

As a result of the public consultation, the government identified two areas of existing law where clarification would assist in addressing growing creeping acquisition concerns. These were set out in the 2008 publication entitled Merger Guidelines. In taking this approach the government responded to the specific problems with specific remedies rather than with general remedies that could have unintended consequences elsewhere and impact on economic activity—and, when we talk about local communities, it could very much impact on employment.

In January 2010 the government announced that it would amend the Trade Practices Act to ensure that the Australian Competition and Consumer Commission had the power to reject acquisitions that would substantially lessen competition in any local, regional or national market. That is significantly different to saying that an acquisition can have a substantial impact on a market. This is going to address that on a multi-level plane, if you like.

Importantly, in its announcement the government also confirmed the view that site acquisitions, including entry into a lease for land or acquisition of freehold land, are acquisitions of an asset under section 50 of the Trade Practices Act. This policy announcement reduced the uncertainty surrounding the application of section 50 in the Trade Practices Act to leases and acquisitions of greenfields market sites.

South-western Sydney, where I come from, is Sydney’s growth area at the moment. It is predicted that Camden alone is going to double in size within the next 15 years and Liverpool is likely to grow by one-third of its current size. All this land is being developed out there, and it is certainly being looked at in terms of developing various business components of that as well. When we look at not only the markets of today but also the markets that will develop in those regional committees, the development of greenfield sites becomes very important. I think it is quite significant that the ACCC will have powers in that respect. The amendments to section 50 of the act will clarify for the courts and for the ACCC the ability to consider more geographically confined markets where there might be regional markets. Small acquisitions can be assessed in relation to section 50. It also clarifies for the courts and for the ACCC that they can consider the impact of a proposed acquisition on the competition in any market, ensuring consideration can be given to the competition impacts of acquisitions in a multi-market regime.

These amendments go a long way to respond to community concerns and matters that have been raised with me by the chambers of commerce in Campbelltown, Ingleburn and Liverpool. These matters are significant to small players who want to remain in a market, and they are equally important for assessing not only the effect on business but also the effect on the market itself. That is why it is quite crucial to clarify these provisions, particularly as they apply to the small and regional markets within my electorate.

Another thing the Senate Economics Committee recommended in 2008 was that the government engage in an inquiry process to consider the merits of introducing a listing of examples or a statement of principles into the law, particularly with regard to retail tenancy leasing and trend sizing, which you, Madam Deputy Speaker, have spoken about at great length. I acknowledge your commitment in this regard, and it is not the first time you have dealt with these matters in this place.

As I stated at the outset, the Minister for Competition Policy and Consumer Affairs, Dr Emerson, appointed an expert panel near the end of 2009 to consider whether a listing of examples or a statement of principles would assist in defining the application of unconscionable conduct and should be incorporated into the Trade Practices Act. It comes as no surprise that the panel, all of whom have considerable knowledge and experience—and I do not think anyone would challenge that—came up with a recommendation that the principles should be incorporated into the Trade Practices Act. The proposed changes will do two things. Firstly, they will identify that the consumer and business related provisions of the Trade Practices Act and the ASIC Act are fundamentally the same. This unification will ensure that the provisions will be interpreted in the same way by the courts and that any legal precedents will apply equally and consistently to proceedings brought by either consumers or businesses. Secondly, they will introduce interpretive provisions to the Trade Practices Act and the ASIC Act.

This principle is not intended to change the law. Unlike what my colleague the member for Dunkley said, it is not designed to do something other than deliver consistency. But in terms of unconscionable conduct it will draw upon existing cases applying statements of principles which will assist the courts or the ACCC in assessing these matters. It will actually give greater codification, if you like, to the courts as to what the intention of the parliament is in making these laws and aiding their ability in statutory interpretation of these provisions. It will be a good thing to have this in relation both to actions taken by consumers as well as businesses. The changes reflect the view of the Senate Standing Committee on Economics, and the recommendations are clearly now reflected in this bill.

In conclusion, all the amendments contained in this bill will bring greater clarity and certainty to the application of key provisions in competition and consumer laws. I commend the efforts of the minister for introducing the bill and his continued contribution to improving laws that will protect Australian small businesses and consumers. It is true that all Australians prosper when there is competition in our markets. These amendments will ensure that competition can be more effectively promoted and that conduct designed to undermine that competition can be addressed more effectively. I commend the bill to the House.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

In rising to give my strong support for the Competition and Consumer Legislation Amendment Bill 2010 I commend you, Madam Deputy Speaker, for your contribution to the debate, and I also commend the member for Werriwa.

I love going to the Gabba in Brisbane to watch the Brisbane Lions or the Queensland Bulls, or even going to Lang Park to support the Broncos. I have even been to see some Brisbane Strikers’ games in recent years. Unfortunately, as a politician I do not have a lot of time to do that nowadays. But anybody who has been to the Gabba or to Lang Park and bought a pie knows something about the concept of a monopoly. A simple pie and a drink will set you back quite a hefty sum; you almost have to take out a mortgage.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I love a meat pie, and it is for a captive audience so it just goes with the sporting event. I know that stadium owners need to make a quid, but it is obvious to all sporting fans that when there is no competition consumers lose out.

That is why it is so important that in the broader marketplace, beyond pies at the footy, that we have strong and effective competition policy. That is what our economic system is based on. We need strong competition laws to keep down grocery and fuel prices and the many other cost-of-living pressures. I should go on the record and say that my pecuniary interests state that I am a shareholder in one of the major supermarkets. Nevertheless, I think there was a Choice investigation that showed whenever you have Woolies and Coles it is almost like a duopoloy. But when you put an Aldi in the same area, the prices go down at all three supermarkets. It just goes to show that it is not even simple enough to have Woolies and Coles, or two competing people; you need a real market. A real market is where you have the best possible price for the consumers.

This is why the Rudd government made an election commitment in 2007 to address threats to market competition such as creeping acquisitions. It is where the market is not operating as it should. These are acquisitions that of themselves are no threat to competition, but together with a number of small acquisitions over time actually lessen competition. That is when the economic system breaks down and we end up paying too much for goods.

The bill before the chamber amends section 50 of the Trade Practices Act to ensure the courts and the ACCC have the power to consider local or geographically confined markets. This will enable individual acquisitions to be assessed in small markets under section 50 of the act. Section 50, subsection 6, of the Trade Practices Act limits the power of the court and the ACCC to substantial markets, so this bill before the chamber will remove the word ‘substantial’ to ensure that even geographically confined markets are covered by the act. In doing so, this bill removes any legal doubt about the power of the ACCC or a court to look at creeping acquisitions in small local markets, as detailed by the member for Werriwa, in the merger guidelines publication.

The bill also clarifies that a court or the ACCC can consider the impact of a proposed acquisition on competition in any market—that is, a local market, a regional market or a national market. It ensures that a court or ACCC ruling cannot be challenged on the grounds that competition would be impacted in markets other than the primary market.

This bill also implements the recommendations of an expert panel set up to investigate the benefits of introducing a statement of principles into the Trade Practices Act. Workable unconscionable conduct provisions are important in trade and commerce to ensure that no party is disadvantaged in dealings with another party. It is a basic tenet of law. I would differ with you slightly on a couple of these points, Madam Deputy Speaker Moylan, but it is not appropriate while you are sitting in the chair, I guess, that we have that exchange. The bill amends the unconscionable conduct provisions of the Trade Practices Act and the ASIC Act to cover both supply and acquisition of goods under the one provision. It also expands what a court should consider when judging whether conduct is unconscionable. The bill also attempts to mirror the principles previously applied by the courts when making rulings on unconscionable conduct.

The interpretive principles do not change the effect of the law but will help the court interpret and apply unconscionable conduct laws. The principles include: (1) unconscionable conduct is not limited by the unwritten law, (2) the prohibition on unconscionable conduct may applied to systems of conduct or patterns of behaviour, and, (3) the court may consider the terms and progress of a contract—because it is important that we see it in the particular circumstances. As well as helping courts interpret the law, these principles will give all stakeholders a clearer understanding of the meaning and scope of unconscionable conduct law.

The Rudd government is committed to putting downward pressure on the cost of living. That is what Labor governments do. It might have escaped the media’s attention, or your attention, Madam Deputy Speaker, but to do that we have proposed a resource super profits tax. This would give tax relief to the 770,000 companies throughout Australia, bringing down their company tax rate from 30 per cent to 28 per cent, something that could then flow on to people at the petrol pump, flow on to people in the small businesses, flow on to people at the supermarket. There is an alternative policy, obviously, about whacking two per cent on top of it—the maternity leave for millionaires rate, which would then flow on to people at the checkout—but that is an alternative policy that hopefully will not see the light of day. We are also, as part of the RSPT, talking about tax breaks for the 2.4 million small businesses throughout Australia who, as anyone knows, are the drivers of our economy—the people who get tangled up in red tape, the people who are benefiting from so many of the initiatives that we have put forward.

What else do you do to apply downward pressure? You look after people when times are tough. That is why we have been able to come through the global financial crisis with an unemployment rate of only 5.2 per cent. When you look around the world you see it is a disaster in the OECD countries. If we had not brought the stimulus into the economy when we did, we would have had 200,000 extra people out of work—200,000 households, 200,000 families, 200,000 sad stories spread throughout the community, 200,000 people who are not going into the shops, the small businesses and the companies that we need to tick over to keep the economy strong. It is only a few days until the tax cuts will kick in, from 1 July, which will benefit many people throughout Australia to keep the pressure down.

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

Who do you thank for that?

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

You thank the government; that is who you thank. Someone making over $50,000 will effectively have received about an 18 per cent cut from about three years ago, and that obviously helps to make sure that households can manage the cost of living.

It is true that in our global capitalist market there are many pull factors that influence local prices. World commodity prices can impact on things—the terms of trade, local demand et cetera. Most of these factors the government cannot control. There are not a lot of levers we can pull. However, what government can do—and good government does—is to ensure that our regulatory bodies have the power to ensure that real competition exists in our local markets. This bill gives the ACCC the power to reject acquisitions that would substantially lessen competition and ensure that Australian workers and their families get the best deal possible. That is what capitalism is about. You must make sure that the market is real and where the market fails you step in and have some guidance and control. Do not just let it rip. That is a system that brings tears to families.

Finally, I thank the Minister for Competition Policy and Consumer Affairs for introducing this bill and, in doing so, recognise his strong commitment to Australia’s 2.4 million small businesses—and 770,000 companies—and to competition in the marketplace generally. I know he has a PhD in this and he is quite passionate about small businesses and the economy generally. I look forward to hosting the minister in my electorate next week when he will address the South-West Chamber of Commerce at the Pat Rafter tennis centre in Tennyson, a beautiful place to visit. I recommend you come up there next January if you have any time on your hands—

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

and if we are not getting ready to come back to parliament, to look at the Brisbane tennis tournament. I will be happy to host you.

The South-West Chamber of Commerce does great work. Under its president, Alice Langford, who is a quality community leader on Brisbane’s south side and a great supporter of the local business community, the chamber has been getting on with the job of making sure small businesses are supported and guided through the tough times. I particularly commend them for their work during the global financial crisis. More importantly, they also make sure that local businesses are ready to take advantage of the good times—or perhaps I should say the less bad times. This has also been the approach of the Rudd Labor government. We have learned from the efforts of governments during past downturns: do not just stand back and let the market rip; step in and help when you can. Look at some of the things we are doing for small businesses. We have standard business reporting, which will start on 1 July; the superannuation clearing house, which is obviously a good thing for some of the smaller businesses; and the national small business name registration, to name just a couple of the efforts of Minister Emerson in terms of reducing red tape.

I have already touched on the RSPT earlier in the speech, but I am sending a letter out to my small businesses talking about it because there is obviously a lot of misinformation out there. Not a lot of the small businesses are aware of the tax breaks that will be in it for them, the benefits for the 2.4 million small businesses—and the companies, for that matter—with the tax rate going down from 30 per cent to 28 per cent. Obviously it is hard sometimes to get the message through, because the fear campaigns can be strong, but if we had gone the way of those opposite and, obviously, the people who voted no all the way through to the economic stimulus package, our local council would not have benefited. I have a Liberal local government, a Liberal lord mayor—

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

They love it. Every local government throughout Australia loved it—the infrastructure project and the libraries. We have 2,000 libraries. What did the Howard government give the Australian public? He gave 2,000 flagpoles. We believe in education, knowledge and the future; they believe in symbolism. I love the flag and a flagpole but you have to have a better plan than just having flagpoles. We give language centres and classrooms to schools such as Gracefield State School, Kuraby State School, Eight Mile Plains State School, Southside Christian College—just to a name a few that I have been at in the last couple of weeks.

The Competition and Consumer Legislation Amendment Bill is a fantastic piece of legislation which goes a long way towards cutting the red tape. I commend the bill to the House.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the introduction of the Competition and Consumer Legislation Amendment Bill 2010 and the opportunity to speak on it. Members of this House might recall that on 22 January 2008 the government directed the ACCC to carry out an inquiry into grocery prices. That inquiry was effectively concluded in July, with a report being received by the government on 31 July 2008. On 5 August 2008, the government responded with a preliminary action plan in respect of that inquiry. I well recall the inquiry because I made a lengthy submission to it. I also well recall that at the time there was widespread community concern in respect of the uncompetitive nature of some of the major retailers throughout this country. As a result of the uncompetitive business being carried out by the two main companies, there were also, I recall, substantial submissions made to the inquiry at the time.

As a result of the report handed down to the government of the day a number of recommendations were made. I believe that this bill goes a long way to responding to and implementing some of the matters that were raised in the course of an inquiry. While the bill raises several matters, I want to highlight three of them. They are the matters relating to what is generally known as creeping acquisitions, consistency between the ACCC and the Trade Practices Act in the interpretation of the laws, and guidance with respect to the interpretation by the ACCC and the Trade Practices Act of the term ‘unconscionable conduct’. While this bill will provide some guidance in respect of that interpretation, I have no doubt that, once it is passed and becomes legislation, it will ultimately have to be tested in the courts, as most pieces of legislation often are.

We live in a free-market society in which ongoing healthy and fair competition benefits consumers. The member for Moreton used an example of purchasing food products at some of our sporting venues. He is absolutely right in using that example, but that example applies in respect of a range of measures right throughout the country when it comes to the sale or resale of any product. It is with respect to ensuring that unhealthy competition is ongoing that this bill is so important. We often see competition in the marketplace for a short period and during a time in which perhaps a major player in the marketplace is simply competing in a very deliberate fashion in order to put the opposition out of business. Once that happens, the competition is no longer there and we begin to see an escalation in prices.

One of the most important things we can do for small business in this country, as well as for consumers, is to ensure they are able to survive in the face of the opposition from much larger operators in their very industry. I am sure that all of us in this place can think of so many small businesses which have literally been squeezed out of the marketplace by the unfair advantage which larger operators have. If time permits, I am happy to talk about some of them, because I have seen it at first hand. I have been in business myself, I have competed with chain store operators and I have seen exactly how they operate. Having said that, I accept that competition, if it is fair and reasonable, is in the interest of consumers and does benefit the Australian people. It has to be the case that that competition does benefit the Australian people and not disadvantage them.

I mentioned earlier that the government has committed to a number of reforms in regard to the grocery prices inquiry to which I referred earlier. I want to go through the five critical areas where the government has already made some announcements. They include, firstly, relaxation of foreign investment rules for overseas-owned supermarkets; secondly, the removal of restrictive clauses in tenancy agreement between major supermarket chains and shopping centre owners which inhibit the entry of rivals; thirdly, the agreement of the Council of Australian Governments to begin removing unwarranted, uncompetitive provisions in planning and zoning laws; fourthly, the announcement of amendments to the competition laws to address the issue of creeping acquisitions; and, fifthly, the introduction of compulsory unit pricing in large supermarkets to empower consumers to identify the supermarket items representing the best value for money

Let me go through each of those points one at a time. Firstly, I referred to the restrictive provisions in leases. We are all aware of shopping centres in years gone by that would be dominated by one major retailer or another who effectively had control over that shopping centre in the form of a lease which said that no competition would be allowed into the shopping centre. I understand that there were something like 750 such leases around Australia. The government has reached agreement with the two major retailers, Coles and Woolworths, to ensure that, of those leases, at least 80 per cent will cease immediately and those that have only been implemented in recent years will be phased out over the next five years. That effectively does away with that monopoly that individual retailers have within shopping centres.

I can use a classic example of that. In the largest shopping centre closest to where I live, that provision has existed from the day the shopping centre opened in the seventies up until now. When some floor space became available within the shopping centre, the retailer that was already there actually took up the vacant space just to prevent anyone else coming in and being in competition with them. That kind of thing needs to be stopped.

On the foreign investment rules, I welcome the decision by the government to give an investor up to five years to get their planning and development underway. We all know that, if you purchase a parcel of land for the purpose of putting up a development, five years is not a long time and quite often it takes every bit of that time to see a development put into place.

I also welcome the issue relating to planning laws and the negotiations with local government and the Council of Australian Governments, because ultimately planning laws in each state are administered by the state government. Again, I can talk about a personal experience. When I was the Mayor of the City of Salisbury, in the major shopping centre of the town there was one key retailer. That retailer owned some land that it no longer required. The land was allowed to deteriorate to the point that it became an eyesore. I travelled to Melbourne to negotiate with the CEO of the company concerned to enable the local council to purchase the land to do something for the community with it. Their fear was that we would in turn on-sell it, perhaps to another retailer. For years that fear prevented them from selling it, even to the local community, so as to ensure that they would not have competition in the town. That kind of practice needs to be stopped. Ultimately, after many years, we did purchase the land and it was turned into a community open space public area.

I am familiar with the issue of creeping acquisitions as well. I note that it was only towards the end of last year that Caltex was prevented by the ACCC from purchasing some 300 Mobil outlets. I am very familiar with this; I have seen it. As I said earlier, I have been in businesses where we competed against chain stores. One of those businesses, years ago, was a petrol outlet business. I can recall that at the time we went into the business—this was some three decades ago—there were probably 10 different operators in the market. Today you would be lucky to have four or five major operators, because all the others have been bought out and, along the way, so has the competition.

The question of unit pricing has been introduced. I am aware that it is already in existence in the USA and the European Union. I think it makes shopping much easier for consumers. It certainly makes it much easier for consumers to determine where they are getting the best price.

Can I just sum up by saying that there are a whole raft of measures that affect competition throughout this country. I could talk about not only the matters that I have already spoken about but other matters that need to be addressed. The minister came into the chamber just a few moments ago. I take this opportunity to commend the minister for all of the reform work he has done since being made Minister for Small Business, Independent Contractors and the Service Economy with respect to not only providing the kind of support that small business needs but, just as importantly, putting through the law reforms that were required to ensure that consumers and business get the best possible deal out of the opportunities that are available in this country.

This bill is just one of a number of measures that the minister has put to the parliament. I have absolutely no doubt that these measures will be very welcome and will be supported by the broader community at large. Certainly in my electorate I have had numerous representations from people over the last almost three years urging me to pass their concerns through to the minister to bring about these kinds of reforms. I welcome the reforms and I certainly commend the minister for having brought them in. I commend this bill to the House.

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

in reply—I thank members who have taken part in the debate today on the Competition and Consumer Legislation Amendment Bill 2010. I take this opportunity to reciprocate the comments of the member for Makin. He has displayed again in that speech that he has just given a deep understanding of the issues affecting competition in this country and the need to generate conditions where there is more competition, including, in particular, in grocery retailing. The member for Makin outlined a number of important measures that the Rudd government have taken in relation to foreign investment rules and the removal of restrictive covenants. We are also working in the area of planning and zoning laws to ensure that rivals to major supermarket chains in this country have the opportunity to compete head to head with those supermarket chains, because in our view competition is good and more competition is better for consumers.

It is in this context that we have developed this bill, the Competition and Consumer Legislation Amendment Bill 2010. The bill amends the mergers and acquisitions provisions of the Trade Practices Act 1974 to enable the Australian Competition and Consumer Commission to reject acquisitions that would substantially lessen competition in any local, regional or national market. The reforms remove the requirement that a market in which the competition effects of a merger are assessed must be a substantial market. The amendments will also ensure that the courts and the ACCC can consider the totality of the competitive effects resulting from an acquisition, including those where creeping acquisition concerns have been raised within the community.

The bill will also clarify the meaning of ‘unconscionable conduct’ by inserting interpretive principles into those acts to assist consumers, businesses, regulators and the courts. On 27 May 2010 the bill was referred to the Senate Economics Legislation Committee for inquiry and report. Public hearings were conducted and the committee reported on 15 June 2010. The government will consider the committee’s recommendations prior to debate in the Senate.

I thank all those who made contributions to the consultation process. I also thank my colleagues on the Ministerial Council on Consumer Affairs for their ongoing cooperation. I thank members of the expert panel, Professor Bryan Horrigan, Mr David Lieberman and Mr Ray Steinwall, for their hard work in developing recommendations for reform to the unconscionable conduct provisions of the Australian Consumer Law. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.