THE federal government has released exposure draft legislation seeking to amend the Competition and Consumer Act 2010 to significantly increase maximum penalties for secondary boycotts.

Background to the proposed changes

In March 2015, the Harper Competition Policy Review released its final report, recommending 56 changes to competition policy and the Competition and Consumer Act (the CCA).

In November 2015, Federal Treasurer Scott Morrison released the government’s response to the Harper review, announcing it would support 44 of the 56 recommendations in whole or in part, and was open to the remaining 12 recommendations depending on further consultation.

Increased penalties included in exposure draft

The exposure draft of the Competition and Consumer Amendment (Competition Policy Review) Bill 2016 takes up the Harper Review recommendation for the maximum penalty applying to secondary boycotts to become the same as that applying to other breaches of competition law.

The current maximum penalty for a breach of the CCA’s secondary boycott provisions is $750,000. The proposal in the exposure draft is for the maximum penalty to become the higher of:

• $10 million;
• Three times the total value of the benefit obtained from the secondary boycott; or
• 10 per cent of the annual turnover of the corporation for the 12 months leading up to the secondary boycott occurring.

The explanatory material accompanying the exposure draft states:

“Secondary boycotts are harmful to trading freedom and therefore harmful to competition. There is no good reason why the maximum penalty for breaches of the secondary boycott provisions should be lower than the maximum penalty for breaches of other provisions of the competition law.”

Secondary boycotts are typically a work ban effected by a group of people (usually trade union members) coercing a third party (i.e. an employer) to cease trading with another person (i.e. another company or employer that is being targeted), with the aim of pressuring the targeted employer into conceding to an industrial demand by the union.

Secondary boycotts have been rare in Australia due to long standing prohibitions against such conduct, including those currently included in the CCA.  Employers have defended protections against secondary boycott conduct over many years, but it remains important that maximum penalties be set at a level that continues to offer real protections against such damage.

Recommendation 36 of the Harper Review advocated the increased penalties and also says the competition regulator, the Australian Competition and Consumer Commission (ACCC), should pursue secondary boycott cases with “increased vigour”.

Contractor clauses not addressed in exposure draft

The Harper Review made two recommendations on secondary boycotts.  Despite the review’s further recommendation 37 that s45E and s45EA of the CCA be amended to apply to awards and industrial agreements, this has not been taken up in the current exposure draft of the Bill.

Section s45E prohibits an employer from making a contract, arrangement or understanding with an organisation of employees that contains a provision restricting the freedom of the employer to supply goods or services to, or acquire goods or services from, another person. Section 45EA prohibits a person from giving effect to such a contract, arrangement or understanding.

However, the Harper report stated that:

“There appears to be a possible conflict between the intended operation of sections 45E and 45EA and the regulation of awards and industrial agreements under the Fair Work Act.”

The report noted that it was apparently lawful under the Fair Work Act to make awards and register enterprise agreements that placed restrictions on the freedom of employers to engage contractors or source certain goods or non-labour services. According to the review report, it was ‘desirable that this apparent conflict be resolved’.

Recommendation 37 of the review, which would have extended the application of s45E and s45EA prohibitions to industrial agreements and awards, in the process outlawing ‘contractor clauses’ in enterprise agreements, has not been included in the current exposure draft. AREEA intends, subject to member input, to argue for the adoption of this additional Harper Review recommendation.

Submissions to the exposure draft and its provisions are due by 30 September 2016.

To provide input on these issues, please contact AREEA principal adviser – workplace policy, Lisa Matthews on (03) 6270 2256 or at [email protected].

For the final report of the Harper review, released in December 2015, click here.