A leading competition lawyer believes the Government's attempts to curb price signalling have gone too far.
Gilbert + Tobin partner Luke Woodward, who has been touted as a possible successor to ACCC head Graeme Samuel when his current term finishes at the end of July, spoke to Lawyers Weekly about the Competition and Consumer Amendment Bill that was introduced into Parliament by treasurer Wayne Swan in March.
The Bill aims to curb anti-competitive price signalling, paying particular attention to the banking sector. Last week Gilbert + Tobin hosted a forum on price signalling, where the speakers included Woodward, ex-Blake Dawson lawyer David Bradbury, the current parliamentary secretary to the treasurer, former Federal Court judge and deputy president of the Australian Competition Tribunal, Peter Heerey QC, and Professor Stephen King, dean of the Faculty of Business and Economics at Monash University.
"The per se prohibition is really prone to being too strong, and it ought to have a legitimate business justification defence," Woodward said, by way of taking a brickbat to the proposed legislation. However, he also offered a bouquet on the other hand. "The government has taken on board a lot of the concerns expressed in relation to the earlier exposure draft, and has increased the number of exceptions and included a process of notification to the ACCC, which will provide a much easier process for gaining exemption."
The Federal Government was stung into enacting the Bill after the big four banks in Australia made a series of public statements which anticipated the decision of the Reserve Bank to raise interest rates in November last year. The banks intimated that their cost of funding had gone up and they needed to move above any RBA increase.
The RBA subsequently raised official interest rates by 25 basis points, with the big four banks then raising their standard variable mortgage rates by between 35 and 45 basis points.
Wayne Swan has previously commented that the price signaling measures are "fundamentally about stamping out conspiratorial behaviour by the big banks". Bradbury confirmed the Government's stance at the debate, telling the audience that "the laws will be targeted at the banking sector, where the Australian Competition and Consumer Commission has indicated there is strong evidence that anti-competitive price signalling has been occurring".
Bradbury also said the laws will "close an identified gap between Australian competition law and the laws of major international jurisdictions, such as the United Kingdom, United States and the European Union".
"A big question that was asked was 'Is anything untoward with that communication?'" Woodward said. "Would this Bill be able to effectively prohibit that conduct, because there is a legitimate reason why banks are talking to investors, such as they are clarifying what their position is and so forth?
"The parliamentary secretary pointed to advice from the ACCC that this is serious conduct that the law should apply to."
The proposed Bill would make it illegal to provide price-related information to a competitor or disclose information with regard to pricing or commercial strategies for anti-competitive purposes.
Woodward chaired the forum, with Bradbury providing the keynote address and taking questions from the floor. King and Heerey then formed part of a panel discussion that also took questions. A number of well-known lawyers from other firms attended, with Allens Arthur Robinson competition law partner Jacqueline Downes and David Poddar from Allen & Overy asking questions of the panel.
While targeting the banking sector, Bradbury has left open the possibility of the Bill extending its reach to other sectors in the future if it is passed.
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