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Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has granted a number of urgent, interim authorisations to allow competitors  to coordinate their conduct in response to the COVID-19 pandemic.

The Competition and Consumer Act 2010 (Cth) prohibits cartel conduct in a contract, agreement or undertaking between competitors, which includes price-fixing, restricting outputs in the production and supply chain, allocating customers, suppliers or territories, or bid-rigging.

Companies may make an application to the ACCC for authorisation to engage in the prohibited conduct, but it is often a long, drawn out process, requiring a lot of submissions, evidence and public consultation. But in these unusual times, the ACCC has indicated its willingness to expedite the grant of authorisations on the basis of public good and in the case of supermarkets and banks, the decision was made by the next business day.

The authorisations granted so far include:

  • Regional Express (Rex), Virgin Australia and Qantas Airways being allowed to coordinate on 10 important regional flight routes, allowing the airlines to share revenue from providing services on the routes.
  • Supermarkets Coles, Woolworths, Aldi and Metcash are able to coordinate in their dealings with manufacturers, suppliers, and transport and logistics providers, to ensure the supply and the fair and equitable distribution of fresh food, groceries, and other household items to Australian consumers.
  • The Australian Banking Association (ABA) has received two authorisations. One allowing the banks to work together to implement a small business relief package. The package will allow for the deferral of principal and interest repayments for loans to small businesses in all sectors impacted by the COVID-19 pandemic. The ABA was granted a second authorisation to extend the package to businesses including commercial landlords with up to $10 million loans.
  • Medical technology companies have been allowed to work together to coordinate the supply and potential manufacture of ventilators, testing kits, personal protective equipment and other medical equipment needed to deal with the pandemic.
  • Shopping centre owners and managers can coordinate their rent relief measures for small and medium business tenants facing financial hardship due to COVID-19.
  • NBN Co along with Telstra, Optus, Vodafone, TPG and Vocus are allowed to coordinate their measures to keep Australia’s telecommunications networks operating effectively during significant demand changes due to the large number of people now at home during the day.

To obtain authorisation for cartel conduct, the public benefits flowing from the conduct need to be very significant to outweigh the very serious anti-competitive detriment. However, the ACCC has indicated that applications for authorisation will be prioritised and acted on extremely quickly during the current crisis.

If you are considering entering into deals with your competitors – even if for good purposes -you need to make sure you can do so lawfully.  For advice and assistance, contact us.

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ACCC authorises competitors to coordinate responses to the COVID-19 crisis

27 March 2020
jacquie blazey

Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has granted a number of urgent, interim authorisations to allow competitors  to coordinate their conduct in response to the COVID-19 pandemic.

The Competition and Consumer Act 2010 (Cth) prohibits cartel conduct in a contract, agreement or undertaking between competitors, which includes price-fixing, restricting outputs in the production and supply chain, allocating customers, suppliers or territories, or bid-rigging.

Companies may make an application to the ACCC for authorisation to engage in the prohibited conduct, but it is often a long, drawn out process, requiring a lot of submissions, evidence and public consultation. But in these unusual times, the ACCC has indicated its willingness to expedite the grant of authorisations on the basis of public good and in the case of supermarkets and banks, the decision was made by the next business day.

The authorisations granted so far include:

  • Regional Express (Rex), Virgin Australia and Qantas Airways being allowed to coordinate on 10 important regional flight routes, allowing the airlines to share revenue from providing services on the routes.
  • Supermarkets Coles, Woolworths, Aldi and Metcash are able to coordinate in their dealings with manufacturers, suppliers, and transport and logistics providers, to ensure the supply and the fair and equitable distribution of fresh food, groceries, and other household items to Australian consumers.
  • The Australian Banking Association (ABA) has received two authorisations. One allowing the banks to work together to implement a small business relief package. The package will allow for the deferral of principal and interest repayments for loans to small businesses in all sectors impacted by the COVID-19 pandemic. The ABA was granted a second authorisation to extend the package to businesses including commercial landlords with up to $10 million loans.
  • Medical technology companies have been allowed to work together to coordinate the supply and potential manufacture of ventilators, testing kits, personal protective equipment and other medical equipment needed to deal with the pandemic.
  • Shopping centre owners and managers can coordinate their rent relief measures for small and medium business tenants facing financial hardship due to COVID-19.
  • NBN Co along with Telstra, Optus, Vodafone, TPG and Vocus are allowed to coordinate their measures to keep Australia’s telecommunications networks operating effectively during significant demand changes due to the large number of people now at home during the day.

To obtain authorisation for cartel conduct, the public benefits flowing from the conduct need to be very significant to outweigh the very serious anti-competitive detriment. However, the ACCC has indicated that applications for authorisation will be prioritised and acted on extremely quickly during the current crisis.

If you are considering entering into deals with your competitors – even if for good purposes -you need to make sure you can do so lawfully.  For advice and assistance, contact us.