Why should we be concerned about the ACCC?

November, 2012

Not for profit organisations in Australia need to be concerned with keeping many, if not all, of the following regulatory authorities happy: ATO, ASIC, the ACNC, the OSR and the OFT. One almost needs a degree to keep on top of all of the acronyms. What many not for profit organisations do not know, however, is that they also need to keep the ACCC happy. This has been the case for some time, including under the previous Commonwealth Trade Practices Act.

Trade Practices Act

In 2010, the Australian Competition and Consumer Commission (ACCC) published two booklets to assist not for profit organisations in complying with the requirements of the Trade Practices Act. Those publications were called ‘Industry Associations and the Trade Practices Act’, and ‘Professions and the Trade Practices Act’. The publications explained in simple English how the Trade Practices Act (Clth) 1974, which many members of the Australian public assumed only had application to for profit businesses in Australia, also had application to non profit organisations. Many industry associations and professional associations, which are not for profit in nature, engage in activities such as:

(a) self regulation;

(b) rules and codes of conduct and admittance;

(c) a recommended price list;

(d) advertising restrictions;

(e) membership restrictions; and

(f) member compliance.

Within the context of the previous Trade Practices Act, professionals and members of industry associations were deemed to be competitors for the purposes of that Act. Therefore, any conduct by a professional association or an industry association which could be interpreted as being anti-competitive, could be caught by the Trade Practices Act. This is notwithstanding the fact that many professionals, for example, operate within co-operative, collegiate structures such as associateships, and may not even consider themselves to be competing with the other practitioners they work with everyday.

Australian Competition and Consumer Law

As some of you may be aware, the Trade Practices Act was replaced with the new Australian Competition and Consumer Law on 1 January 2011. This is generally accepted as having been a profound change, and one where the full implications and applications are yet to be widely realised. As a consolidated set of laws which operate across Australia to promote fair trading and protect consumers, the Australian Competition and Consumer Law gives all consumers the same rights and imposes the same rules on businesses and not for profit organisations, wherever they are in Australia. It also gives the ACCC the State and Territory fair trading agencies a range of new tools to respond to breaches of consumer protection and fair trading provisions.

As a consequence of the change in the legislation, the ACCC has now published a new publication called ‘Cartels – What you need to know’. It was published earlier this year. This publication contains a section on industry associations. It is well worth having a look at this section, which is on pages 22 to 24 of the new booklet. Again, although the goal of many industry associations and professional associations is to promote high ethical standards and compliance with relevant laws, because such not for profit organisations bring competitors together, the ACCC has also recognised that there is a risk that the meetings of industry associations and professional bodies could be used, either directly or indirectly, to promote anti-competitive behaviour. In particular, there are two areas which require vigilance:

(a)     firstly, whenever an association deals with subjects such as pricing, territories, market shares or industry outputs, the ACCC acknowledges that there is a risk with the organisation ending up facilitating arrangements that may be in  breach of the Australian Competition and Consumer Law, irrespective of the aims or motives of that organisation.

(b)     secondly, whenever an association is involved in some form of regulation that restricts membership, for example, monetary, experience or education qualifications, again there is a risk that the association may unreasonably create barriers to entry to that association, and thereby restrict competition in that particular profession or market.

The ACCC warns that industry associations and professional bodies should approach these subjects with great caution, and ensure that any policies that they have in place are consistent with the Australian Competition and Consumer Law.

The booklet goes into more detail about the different subjects normally dealt with by an industry or professional association which may create risk, being:

1.    price recommendations;

2.    meetings; and

3.    discipline.

For example, in relation to discipline, the ACCC states in its booklet that any association is entitled to make rules regarding the behaviour of its members, and to provide sanctions if these standards are not complied with. The ACCC warns, however, that the rules, codes of conduct, codes of ethics (or any other similarly titled list of rules) must be transparent, and not relate to enforcing pricing policies within that sector. Industry and professional associations also need to ensure that their disciplinary policies are not exclusionary in a manner which results in the restriction and reduction of competition in that particular industry or profession.

What does all of this mean for industry and professional associations?

The following are a few practical ideas you may wish to consider implementing in order to reduce the likelihood of your industry or professional association falling foul of the ACCC:

 

Contact Mills Oakley

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Vera Visevic | Partner
T: +61 2 8289 5812
E: vvisevic@millsoakley.com.au

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