Competition and Consumer Amendment Act (No. 1) 2011

The Competition and Consumer Amendment Act (No. 1) 2011 amended the Competition and Consumer Act 2010 by inserting a new Division 1A into Part IV. That new Division dealt with anti-competitive disclosure of pricing and other information.

The amendments created a stand-alone regime aimed at disclosures of commercially sensitive information, especially where information is shared with competitors or potential competitors. The structure of the regime is important. It did not simply ban all information sharing. Instead, it set threshold rules about which goods or services were covered, defined when a disclosure is treated as being made to a competitor, created two main prohibitions, and then set out a series of exceptions and authorisation pathways.

The Act also made related amendments to authorisation and notification provisions so that some disclosures could be authorised by the ACCC or covered by notification. In short, the legislation was designed to regulate information exchanges that could distort competition, while still allowing some disclosures in recognised commercial settings.

The first practical question is scope. Division 1A applies to goods and services of classes prescribed by regulation for that purpose. The regulations can describe a class by reference to matters such as the kind of supplier, the kind of industry or business, or the circumstances in which the goods or services are supplied.

That means the regime was not automatically economy-wide. A corporation only needed to analyse these specific Division 1A rules if the relevant goods or services were prescribed. Businesses outside prescribed classes were generally outside this particular regime, although they still needed to consider the broader competition law rules in the Competition and Consumer Act.

The legislation also required regulations to prescribe a process to be followed before new classes of goods or services were prescribed, except for the first regulations. So businesses should not assume that a sector is covered just because it is concentrated or commercially sensitive. The correct approach is to check the current regulations and identify whether the exact goods or services your business supplies or acquires are prescribed.

If your goods or services are prescribed, the Act creates two main prohibitions.

First, a corporation must not make a disclosure of information if the information relates to a price for, or a discount, allowance, rebate or credit in relation to, prescribed goods or services supplied or likely to be supplied, or acquired or likely to be acquired, by the corporation in a market, the disclosure is a private disclosure to competitors in relation to that market, and the disclosure is not in the ordinary course of business.

Second, a corporation must not make a disclosure of information if the information relates to pricing, capacity or likely capacity to supply or acquire prescribed goods or services, or any aspect of the corporation's commercial strategy relating to those goods or services, and the corporation makes the disclosure for the purpose of substantially lessening competition in a market.

The second prohibition is broader in one key respect. It is not limited to private disclosures to competitors. The statutory focus is the purpose of substantially lessening competition. The Act says a court may consider matters including whether the disclosure was private, how specific the information was, whether it related to past, current or future activities, how readily available it was to the public, and whether it formed part of a pattern of similar disclosures. The Act also makes clear that purpose can be inferred from conduct and surrounding circumstances.

The Act contains detailed rules about how disclosures are attributed. These rules matter because businesses often communicate through staff, agents, advisers and intermediaries rather than directly.

If a corporation discloses information to a person in that person's capacity as a director, employee or agent of another body corporate, the disclosure is taken to have been made to that body corporate. A similar rule applies where the recipient is an employee or agent of another non-corporate person.

A disclosure to the corporation's own agent is generally disregarded, unless the intermediary rule applies. Under the intermediary rule, if a corporation gives information to a person for the purpose of that person disclosing or arranging disclosure to others, and the information is then disclosed to those recipients, the disclosure to the recipients is taken to have been made by the corporation. The disclosure to the intermediary is disregarded unless the intermediary is itself a competitor or potential competitor.

The Act also contains an accidental disclosure rule. A disclosure is to be disregarded if it occurred because of an accident, the default of someone other than the corporation, or some other cause beyond the corporation's control. But that disregard does not apply to disclosures covered by the intermediary rule.

For private disclosure to competitors, the Act says the disclosure must be to one or more competitors or potential competitors in a particular market and not to any other person. There is also an anti-avoidance rule. If a non-competitor is included only to avoid the operation of the prohibition, that can be disregarded. The fact that the information is otherwise available or later becomes available does not stop the disclosure being treated as a private disclosure to competitors.

The Act contains a number of exceptions. Some apply to both main prohibitions and some only apply to the private disclosure prohibition.

Exceptions applying to both sections 44ZZW and 44ZZX include disclosures authorised by or under a Commonwealth, State or Territory law, but only if the disclosure occurred before the end of 10 years after the Act received Royal Assent on 6 December 2011. The Act also preserves a separate exception for compliance with continuous disclosure requirements under Chapter 6CA of the Corporations Act 2001. Other shared exceptions cover disclosures to related bodies corporate only, disclosures for collective bargaining where the required notice has been given and is in force, disclosures made in the course of conduct covered by an existing authorisation, and disclosures covered by a notice under section 93 that is in force.

Additional exceptions applying only to the private disclosure prohibition include disclosures to an acquirer or supplier where the information relates to goods or services supplied or likely to be supplied to that recipient, or acquired or likely to be acquired from that recipient. There is also an exception where the recipient was a competitor or potential competitor but the corporation did not know, and could not reasonably be expected to have known, that fact.

Further private-disclosure-only exceptions cover disclosures to participants or proposed participants in a joint venture where the disclosure is for the purposes of the joint venture or in the course of negotiations for it. The Act also includes specific credit-related exceptions, including some disclosures between corporations considering or providing loans or credit to the same borrower, some disclosures between a credit provider and a provider of a credit service in the course of that relationship, and some disclosures connected with borrower insolvency concerns. Another exception applies to disclosures made in connection with contracts, arrangements or understandings for the acquisition of shares or assets, including proposed transactions.

These exceptions are practical, but they are not self-proving. A business should be able to show exactly which exception it relies on and why the statutory conditions were met.

The Act expanded the ACCC authorisation framework so a corporation can apply for authorisation to make a particular disclosure of information to which either prohibition would or might apply. The ACCC cannot authorise a disclosure retrospectively after it has already occurred. An application can also be framed to cover one or more similar disclosures.

The statutory tests differ depending on which prohibition is engaged. For a proposed disclosure that would or might fall within the private disclosure prohibition, the ACCC must be satisfied in all the circumstances that the proposed disclosure would result, or be likely to result, in such a benefit to the public that the proposed disclosure should be allowed. For a proposed disclosure that would or might fall within the purpose-based prohibition, the ACCC must be satisfied that the proposed disclosure would result, or be likely to result, in a public benefit and that the benefit would outweigh the public detriment constituted by any lessening of competition that would result, or be likely to result, from the disclosure.

The Act also links some disclosures to the notification regime under section 93 and to collective bargaining notices.

Just as important, the Act places the evidential burden on the person relying on certain disregard provisions and exceptions. If proceedings are brought in relation to the main prohibitions and the person seeks to rely on the own-agent rule, the accidental disclosure rule, or one of the listed exceptions, that person bears the evidential burden in relation to the matters in that provision. In practical terms, your business should keep records that show the commercial context, the identity of recipients, the reason for the disclosure, and any authorisation or notice relied on.

Businesses that may fall within a prescribed class should review how commercially sensitive information moves through the organisation. The Act is not limited to formal written agreements. It can apply to disclosures made directly, through staff, or through intermediaries. It also looks at purpose, which means context and internal records can matter.

Useful review areas include board and executive reporting lines, competitor contact protocols, industry association participation, banker and lender communications, supply negotiations, joint venture term sheets, M&A due diligence processes, and templates used by sales and procurement teams. If your business relies on an exception, the file should show why the disclosure was made, who received it, and why the statutory conditions were met.

Because the regime only applies to prescribed classes of goods or services, a compliance review should start with scope rather than assumptions. If your sector is not prescribed, these specific provisions may not apply. If it is prescribed, then the next step is to map common disclosure scenarios against the prohibitions, exceptions and any available authorisation or notification pathway.

The Act received Royal Assent on 6 December 2011. Sections 1 to 3 commenced on that date. Schedule 1, which inserted the substantive amendments, commenced on 6 June 2012, being the day after the end of 6 months beginning on the day of Royal Assent.

One date-sensitive feature of the legislation is the general exception for disclosures authorised by or under a Commonwealth, State or Territory law. That exception only applied to disclosures occurring before the end of 10 years after Royal Assent. Businesses should therefore check the timing of any disclosure before assuming that exception is available.

Because this page explains the amending Act, businesses should also check the current consolidated Competition and Consumer Act 2010, current regulations prescribing any classes of goods or services, and any later amendments affecting Division 1A before relying on this summary for a live issue.

Does this regime automatically apply to all businesses? No. It only applies to classes of goods or services prescribed by regulation for Division 1A.

Is every disclosure to a competitor banned? No. The Act targets particular disclosures that meet the statutory tests, and it also contains several exceptions and authorisation pathways.

Can a business rely on an exception without records? That is risky. The person relying on an exception or disregard provision bears the evidential burden, so records matter.

Can disclosures through advisers or intermediaries still count? Yes. The Act can attribute disclosures made through intermediaries or to people acting as employees or agents of another business.

Can the ACCC authorise a disclosure after it has already happened? No. The Act says the Commission does not have power to grant an authorisation for a disclosure that occurred before the Commission makes its determination.

This page is based on the Federal Register of Legislation text for the Competition and Consumer Amendment Act (No. 1) 2011, including the commencement table and Schedule 1 amendments inserting Division 1A into Part IV of the Competition and Consumer Act 2010 and related authorisation and notification amendments.

Before acting, check the current Competition and Consumer Act 2010, any regulations prescribing classes of goods or services for Division 1A, and any current ACCC materials relevant to authorisation or notification processes.