Watchdog will act but, unlike Toll/TWU deal, the effect on competition must be substantial
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has revealed his organisation’s keener interest in company-union deals.
In so doing, Sims gives the clearest indication yet on how its thinking on Toll’s agreement with the Transport Workers Union (TWU) affected its decision.
In a speech to Law Council of Australia’s business law competition and consumer committee on the ACCC’s role in industrial relations (IR,) Sims admits: “It is possible that in the past the ACCC has not looked sufficiently into such additional restrictive behaviour that could amount to a contract, agreement or understanding that has the purpose or effect of substantially lessening competition, thinking such matters were covered by . . . carve outs and exemptions.”
But Sims also sought to answer some of the Commission’s critics in this sphere, noting that there are limits to scope of the Competition and Consumer Act (CCA).
Some limits relate to issues that, with limited resources, it feels can be successfully prosecuted and others are subject to certain but not all industrial relations exemptions, including those that relate to ‘contract, arrangement or understanding’ (CAU).
“The effect of this IR carve out is that the ACCC does not have jurisdiction to deal with agreements, or aspects of agreements, that relate to employment conditions,” Sims says.
Some will no doubt find this outcome unsatisfactory.
“Nevertheless, the IR exemption has been part of the CCA and its predecessors, in one form or another, since 1965 and the fact is that where agreements or relevant provisions in agreements fall within the IR carve out, the CCA does not apply.”
Despite that, it seems the ACCC is watching agreements between unions and companies that provide for the union to hinder the company’s competitors.
“For example, the recent agreement between TWU and Toll Holdings during negotiations for an EA in which Toll was alleged to have agreed to make donations to a union affiliated entity and the TWU undertook certain KPIs such as auditing Toll’s competitors,” Simms says.
“Much turns on the facts of each matter.
“Unions have been given a clear role under the law to represent their members and take action seeking improved wages and conditions.
“However, this does not give them or businesses cooperating with them a licence to seek to regulate markets.
“They could take themselves outside the above exemptions if they seek to determine which firms may operate within markets, what prices they can charge or how bids for work will be determined.
“In a market economy it should be the market that sets prices and determines who participates and who wins work, not unions or businesses.”
While underlining the Commission would continue to examine such behaviour, as long as it “substantially lessens competition”, Sims says the ACCC’s probe showed the Toll deal failed to cross the threshold of being substantial in effect.
“It was a thorough investigation, in which we used our compulsory information gathering powers, conducted market enquiries and obtained legal advice from senior counsel,” Sims says.
“We ultimately concluded that the relevant provisions did not have the purpose of substantially lessening competition (they were not given effect to).
“This was in part because Toll faced many competitors in the market, and the competitors targeted were small companies.
“Many people were outraged by the Toll/ TWU arrangement.
“I totally understand this; nevertheless the CCA only applies in a case like this when there has been a substantial lessening of competition.”
Long critical of the ACCC’s stance, the Independent Contractors Australia welcomes the speech.
“We congratulate Rod Sims and the ACCC for the new direction just announced,” it says.
“The people who lose when some big businesses collude with some unions are small business people, employees and consumers.”
ACCC critic the Independent Contractors Australia welcomed the speech.
ICA Executive Director Ken Phillips believes the new position will give managers cause for pause and thought, saying that “if company executives want to engage in behaviour that could be arguably interpreted as anti-competitive and they were to do that in conjunction with the union, they’re now going to have to make sure they talk to their lawyers very, very closely”.