accc annual report 2001-02 - australian competition and ... annual report 2001-02.pdf · accc...

ACCC ANNUAL REPORT 2001–2002

© Australian Competition and Consumer Commission 2002

ISSN 1327-4767

ISBN 1 920702 12 1

This work is copyright. Apart from any use as permitted under theCopyright Act 1968, no part may be reproduced by any process withoutprior written permission from the Australian Competition andConsumer Commission. Requests and inquiries concerningreproduction and rights should be addressed to the Director Publishing,Australian Competition and Consumer Commission, PO Box 1199,Dickson, ACT 2602.

Produced by the ACCC Publishing Unit 09/02.

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Glossary and abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Chairman’s review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Current issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Highlights of the year’s activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Professions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3The New Tax System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Consumer protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3E-commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Small business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Adjudication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Regulatory activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Summary of financial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7ACCC staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Liaison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Major amendments to the Trade Practices Act . . . . . . . . . . . . . . . . . . . . . . . . . 7

Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ACCC organisation chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

CONTENTS

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1 Overview of the ACCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Trade Practices Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Prices Surveillance Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Related legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Exceptions under Commonwealth, state and territory legislation . . . . . . . . . . 11

Outputs and performance indicators for 2001–02 . . . . . . . . . . . . . . . . . . . . . . . . . 13

Structure of the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Social justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Other documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

External scrutiny . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Freedom of information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2 The New Tax System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Year in review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19The Commission's role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Promoting compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Price monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Court cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

3 Achieving compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Chapter contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Price fixing, market sharing, bid rigging, boycotts and other collusive behaviour . . . 30Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Misuse of substantial market power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Exclusive dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Resale price maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Exercise of powers under section 155 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Leniency and cooperaton policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Intervention guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

E-commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

The professions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Cases and undertakings under the ASIC Act . . . . . . . . . . . . . . . . . . . . . . . . . . 40Cases and undertakings under the TPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Consumer protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Consumer initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

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Advertising and prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Country of origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Food and beverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Employment and education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Cases and understandings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Product safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Amendments and new mandatory standards and bans . . . . . . . . . . . . . . . . . 54National survey program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Unconscionable conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Undue harassment and coercion & debt collection . . . . . . . . . . . . . . . . . . . . . . . . . 59Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Business investment, leasing and franchising and finance . . . . . . . . . . . . . . . . . . . 60Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Uncolicited goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Pyramid/referral selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Small business and rural and regional programs . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Aviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Cases and undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Industry codes of conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Compliance programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Cooperation with other government agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Infocentre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Small business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

International overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67International cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67Cooperation in enforcement matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68International forums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

4 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Why is the Commission concerned with mergers? . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Year in review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72Key statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72International liason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

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Outlook and priority areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74Section 87B undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74Major merger matters assessed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

5 Assessing the public benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

The adjudication role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Authorisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Notifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Certification trade marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

The year in review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Rural and regional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80The professions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Aviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Banking and financial markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Australian Competition Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Major authorisations and notifications finalised during 2001–02 . . . . . . . . . . . . . . 84

6 Regulatory activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88Chapter contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Major decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Other major developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Reforming Australia's Energy Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91Significant events during 2001–02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91Review of the performance of the national electricity market . . . . . . . . . . . . . 91Authorisations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94Regulatory work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103Access arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104Victorian market and system operations rules . . . . . . . . . . . . . . . . . . . . . . . 107Ring fencing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108NT Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108South-West Queensland Producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108Ring-fencing compliance reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109Gas pipeline competitive tender processes . . . . . . . . . . . . . . . . . . . . . . . . . 109Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110Liaison activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Telecommunications competitive safeguards—Part XIB . . . . . . . . . . . . . . . 111Major investigations raising competition issues . . . . . . . . . . . . . . . . . . . . . . 113Telecommunications access—Part XIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115Responsibilities under other legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120Other activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

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PC Inquiry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121Australian Communications Industry Forum . . . . . . . . . . . . . . . . . . . . . . . . . 121

Aviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122Air transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122Changes in airport regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123Virgin Blue access determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123Sydney airport-apron charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123Regulatory reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124Airservices Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

Rail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126Australian Rail Track Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

Waterfront and shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128Container stevedore monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128Part X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128Harbour towage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

Post . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129AdPost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129Proposal to increase the price of the stamp . . . . . . . . . . . . . . . . . . . . . . . . . 130

Petrol monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130Outline of price monitoring program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130Monitoring outcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130Inquiry into reducing fuel price variability . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Utility Regulators' Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

Government response to the Intellectual Property andCompetitive Review Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Section 51(3) of the TPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133Copyright collecting societies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

International forums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134APEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

7 Corporate governance and management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136Decision-making structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136Service charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Conflict of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Senior management conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Financial management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Tax reform price monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Legal costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137Airport regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

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Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

People management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Staffing levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Training and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139Graduate program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139International staff development programs . . . . . . . . . . . . . . . . . . . . . . . . . . 139Staff secondments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140Workplace relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140Occupational health and safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

Legal services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145The Legal Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

Information and communications technology and service . . . . . . . . . . . . . . . . . . . 145Infrastructure services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145Business applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146Videoconference equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Information management and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146Redevelopment of the Internet and Intranet . . . . . . . . . . . . . . . . . . . . . . . . . 146Records management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146Public registers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146Library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Consultancy services, competitive tendering and contracting . . . . . . . . . . . . . . . . 148Consultancy services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148Advertising and market research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148Office accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

Appendixes

1 Amendments to the Trade Practices Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

2 Number of inquiries and complaints received during 2001–02 . . . . . . . . . . 186

3 Information statistics for 2001-02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

4 Statement required under s. 8 of the FOI Act 1982 . . . . . . . . . . . . . . . . . . . . 189

5 Commissioners' biographies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

6 ACCC Decision making structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202

7 Commission publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203

ACCC contacts and offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

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GLOSSARY AND ABBREVIAT IONS

AAT Administrative Appeals Tribunal

ABA Australian Bankers' Association

ABDP Amadeus Basin to DarwinPipeline

ABS Australian Bureau of Statistics

ACA Australian CommunicationsAuthority OR

Australian ConsumersAssociation

ACCC Australian Competition andConsumer Commission

ACIF Australian CommunicationsIndustry Forum

Act, the The Trade Practices Act

ADFF Australian Dairy Farmers'Federation

ADR alternative dispute resolution

ADSL asymmetric digital subscriber line(provides high speed dataservices)

AITA Australian Indoor TanningAssociation

AMA Australian Medical Association

amicus curiaefriend of the court

ANZFA Australian and New Zealand FoodAuthority (now FSANZ—seebelow)

APEC Asia-Pacific EconomicCooperation

APL Australian Pensioners League

APT Australian Pipeline Trust

ARTC Australian Rail Track Corporation

ASIC Australian Securities andInvestments Commission

ASX Australian Stock Exchange

ATO Australian Taxation Office

ATSI Aboriginal and Torres StraitIslander

BCS basic carriage services

B2B business to business

capex capital expenditure

CDMA code-division multiple access

CFF Competing Fairly Forum

CGP Commercial & GeneralPublications Pty Ltd

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COAG Council of AustralianGovernments

code, the National Electricity Code OR

National Third Party AccessCode for Natural Gas PipelineSystems

Commission, theThe Australian Competition andConsumer Commission

CPI consumer price index

cpl cents per litre

CTM certification trade mark

CTP compulsory third party

CWO Cable & Wireless Optus

Dawson InquiryThe inquiry dealing with theReview of the Trade PracticesAct, chaired by Sir Daryl Dawson

DPP Director of Public Prosecutions

DRM dry recyclable material

EAPL East Australian Pipeline Limited

EC European Commission

EPO electricity pricing order

FFE Fire Fighting Enterprises

FID financial institutions duty

FOI freedom of information

FRC full retail competition or fullretail contestability

FSANZ Food Standards Australia NewZealand

FTC Federal Trade Commission (US)

FTE full-time equivalent employee

GDEs gift deductible entities

GSM global system for mobile

GST Goods and Services Tax

HPV Health Purchasing Victoria

IATA International Air TransportAssociation

ICN International CompetitionNetwork

IEA International Energy Agency

IHA inter hospital agreement

IMCC International MaritimeCorrespondence College

IMSN International MarketingSupervisory Network

INPA Infant & Nursery ProductsAssociation of Australia

IRPC Inter-Regional PlanningCommittee

ISP Internet service provider

LCS local carriage service

LNP local number portability

LNSP local network service provider

LSS line-sharing services

LTIE long-term interests of end-users

MLS Multiple Listing Service

MNP mobile number portability

MNSP market network service providers

MOU Memorandum of Understanding

MRF materials recycling facility

MSOR Market and System OperationsRules

MSP Moomba to Sydney Pipeline

MTC Murraylink TransmissionCompany Pty Ltd

MTO maximum take-off weight

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MUA Maritime Union of Australia

NCC National Competition Council

NEC National Electricity Code

NECA National Electricity CodeAdministrator

NEM national electricity market

NEMMCO National Electricity MarketManagement Company

NESB non-English-speaking background

NGPAC National Gas Pipelines AdvisoryCommittee

NSP network service provider

NTS New Tax System

New Tax System changesA New Tax System change isdefined by the legislation as theending of Wholesale Sales Tax,the introduction of the GST, andchanges to other taxes, excises,subsidies and rebates prescribedin regulations.

OCH Options Clearing House Pty Ltd

OECD Organisation for EconomicCooperation and Development

OFT Office of Fair Trading (UK)

opex operating expenditure

OTTER Office of the Tasmanian EnergyRegulator

PASA projected assessment of systemsadequacy

PC Productivity Commission

PSA Prices Surveillance Authority

PS Act Prices Surveillance Act 1983

PSTN public switched telephonenetwork

PTRM Post-tax Revenue Model

PTS principal transmission system

QGP Queensland Gas Pipeline

QNI Queensland–New South Walesinterconnector

RACGP Royal Australian College ofGeneral Practitioners

RACS Royal Australasian College ofSurgeons

RAF Regulatory AccountingFramework

RCSA Recruitment and ConsultingServices Association

REIWA Real Estate Institute of WesternAustralia

RIEMNS review of integrating the energymarket and network services

RKRs record-keeping rules

RoE return on equity

ROO Regional Outreach Officer

s. 87B undertakingcourt enforceable undertakingmade under s. 87B of the TradePractices Act

SACL Sydney Airports CorporationLimited

SAOs standard access obligations

SFE Sydney Futures Exchange

SWQP South-West QueenslandProducers

TARBS Television and Radio BroadcastingServices

TEU twenty-foot equivalent unit

TGP terminal gate pricing

TPA Trade Practices Act

TNSP transmission network serviceprovider

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tribunal, thethe Australian CompetitionTribunal

TUOS transmission use of system

ULLS unconditioned local loop service

UNCTAD United Nations Conference onTrade and Development

USCL Universal Sports Challenge Ltd

VOLL value of lost load

VMDA Veterinary Manufacturers andDistribution Association

VWA volume weighted average

VTO Victorian tariff order

WACC weighted average cost of capital

WAFDA Western Australian FuneralDirectors Association

WHO World Health Organisation

xDSL variations of digital subscriberline technology (such as ADSL,HDSL etc.)

WST Wholesale Sales Tax

WTO World Trade Organisation

WTS western transmission system

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CHAIRMAN’SREVIEW

Current issuesThe inquiry dealing with the Review of the TradePractices Act, which is being chaired by Sir DarylDawson, presented the Commission and otherinterested parties with an opportunity tocomment on the efficacy of the legislationprimarily enforced by the Commission. TheCommission has always encouraged criticaldebate on the role it plays in administering theAct, and welcomes the opportunity presented bythe Dawson Inquiry to provide public commenton its processes and procedures.

The Commission has made a comprehensivesubmission to the inquiry outlining its proposalsfor changes to the Act, particularly in relation toan ‘effects’ test for matters involving allegationsof misuse of market power, and criminal sanctionsfor hard-core cartel behaviour. The theme of theCommission’s submission is that these changesare necessary to strengthen the existingprotections in the Act for consumers and smallbusiness, and to bring Australian competitionlaws into line with international best practice.

The Dawson Inquiry has also given the businesssector the opportunity to raise issues about theCommission’s accountability, transparency andits approach to publicity.

The Commission regards itself as being at thehigh end of the accountability spectrum amongregulators. The organisation as a whole isaccountable to many parties. Like any privatelitigant, the Commission must make its case to

the court, which is the ultimate arbiter of factand law, as well as being subjected to its scrutiny.Furthermore, decisions made by the court areappealable. Similarly, decisions made by theCommission on authorisations and notificationsare reviewable by the Australian CompetitionTribunal.

The Commission, as with all regulators, isaccountable to the public in many ways. Thepublic has the right to know about the Act andhow the Commission enforces it. Parliament’sintention in this regard is reflected in section 28of the Act, which obliges the Commission topublicise the Act and its work. The Act is animportant, far reaching law intended to promotethe welfare of all Australians. All Australians areentitled to know how the Act affects their rights,their obligations and their welfare, to know howit is being implemented.

Making the public aware also builds publicconfidence in the law and its administration, andenables informed debate and criticism of itsshortcomings.

The taxpayer is entitled to a full explanation ofhow the Commission’s budget is being spent, asare relevant ministers and parliament. TheCommission must also be prepared to explain itsactions to other bodies such as theCommonwealth Ombudsman, theAdministrative Appeals Tribunal,the Australian CompetitionTribunal and variousconsultative committees.

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The media therefore has a vital role indisseminating important information to thepublic and the business community, and inprovoking debate about the law. The Commissionhas found that the most efficient and effectiveway to bring matters to the attention of thepublic is by issuing a media release. The purposeof such releases is to publicise outcomes in courtcases, whether the Commission has beensuccessful or otherwise, to let business know thatthe court has deemed certain conduct as illegal,and to heighten the awareness of consumers andbusinesses in similar situations.

Fewer than 15 per cent of this year’s mediareleases announce the fact that the Commissionhas instituted court proceedings. The rationalefor doing so lies in the fact that the Commissionis part of a system of public justice—that is, oncethe Commission or any law enforcement agencyinstitutes proceedings, it is a public matter.

The Commission also publicises its deliberationson merger proposals for two reasons—first, whenthere are no competition concerns arising from amerger, it tells the public that the parties haveapproached and obtained the Commission’ssanction for the transaction. Second, if aproposed merger potentially raises competitionconcerns, media coverage can generate interest inthe transaction and prompt all interested partiesto come forward. The Commission is then betterplaced to assess any competition effects byspeaking to all those affected.

Media coverage and scrutiny of theCommission’s activities also plays a significantrole in ensuring that the Commission istransparent. By consulting widely, describing itsprocesses and explaining its decisions, theCommission maintains its transparency. It is veryclear to the Commission that it cannot beaccountable without also being transparent.

The publicity accorded to competition andconsumer protection law and its regulation hasincreased in most countries, reflecting greateractivity by regulators and the greater importanceof their activities to their countries’ economies.

Highlights of the year’sactivities

EnforcementThe Commission continued its commitment tostamp out the most serious contraventions bybusiness, such as price fixing and market sharing.In one recent judgment, the Federal Courtimposed almost $15 million in penalties againstseveral electric transformer corporations for pricefixing and market sharing arrangements coveringthe supply of power and distributiontransformers. Penalties were also imposed againstthe corporations’ managing directors for theirparticipation in the covert and illegal conduct.

Another multinational corporation, Colgate-Palmolive, was found to have engaged in resaleprice maintenance, trying to stop discountretailer, Chickenfeed Bargain Stores, fromadvertising various Colgate and Palmolive lines atcheap prices. In this case, the Federal Courtimposed penalties of $500 000.

The Commission also appeared as amicus curiae(or friend of the court) in an intellectual propertyaction brought by Sony regarding chipping ofgame consoles—a case which will benefitconsumers wanting to use games bought overseasin their consoles.

In a drive to enhance compliance in the travelindustry, the Commission accepted courtenforceable undertakings from Qantas and VirginBlue not to exclude additional taxes, levies andcharges from the advertised price of theirairfares.

During the year, over 60 proceedingscommenced and as at 30 June 74 matters werestill in court. The Commission also accepted 38court enforceable undertakings under section87B of the Act.

Education and information about the Actremained a priority, with the Commissionreminding the business community thatcompliance with the law is ultimately the bestfor business and consumers. It held a high profilelaw enforcement conference, with expert

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speakers from the US and the UK, as well asAustralia, at which it invited comment on a draftleniency policy for cartel behaviour. The draftpolicy is aimed at encouraging individualspossibly in breach of the law, to come forward toassist Commission investigations.

Professions

The Commission continues to give high priorityto the conduct of business in the professions,especially the health and medical sectors. It isincumbent on professional people and theirorganisations to deal fairly with consumers and topractise ethically within the law. Illustrating theimportance of this position, the Federal Court ina landmark judgment ordered the AustralianMedical Association (WA branch) and twoofficers to pay penalties and costs of $285 000for price fixing and primary boycott breaches. Itwas the first time the Federal Court had imposedpenalties on a professional association for pricefixing and primary boycott conduct in breach ofthe Trade Practices Act.

The Commission engaged extensively withrelevant organisations, and made submissions togovernments about professions issues. Claimsabout private health insurance coverage and otherhealth-related goods and services have alsoattracted Commission attention.

One of the Commission’s important roles is toeducate the professions about theirresponsibilities under the Trade Practices Act.During the year it released the draft GeneralMedical Practitioners Guide to the Act. Theguide will be published after final determinationof the Royal Australian College of GeneralPractitioners’ authorisation application to theCommission, and completion of the federalgovernment’s Review of the impact of Part IV ofthe Act on the recruitment and retention ofmedical practitioners in rural and regionalAustralia.

The New Tax System

During its third and final year of responsibilityfor the price exploitation provisions of the NewTax System (NTS), the Commission was againhighly successful in ensuring compliance. Since

July 1999 the Commission has investigated about6700 relevant matters. As a result numerousbusinesses have taken corrective action toremedy contraventions related to the taxchanges, resulting in nearly $18 million beingrefunded, benefiting around two millionconsumers.

In the last financial year alone, the Commissionhandled just under 5000 NTS-related inquiries,including around 3500 complaints. Considerableresources were also devoted to ensuring thatbusinesses did not misrepresent the price ofgoods and services using GST-exclusive pricedisplays. For example, in a case brought by theCommission, Domaine Homes agreed to refundalmost $2 million in GST collections to 260 newhomebuyers who had been misled about theeffect of the New Tax System on theconstruction costs of their homes.

MergersIn 2001–02 the Commission finalised 237mergers, asset sales and joint ventures. Of theseit objected to nine because they were likely tosubstantially lessen competition, and four ofthese proceeded following enforceableundertakings being provided under s. 87B of theAct. One matter, API/Sigma, has beenresubmitted for authorisation under s. 88. Oneother matter was withdrawn before decisionafter the Commission expressed concerns.

Transport and health industry mergers formed alarger proportion of mergers considered than inthe previous year while the proportion ofcommunications, mining/forestry and finance/banking matters remained broadly stable.

Consumer protection

Misleading and deceptive advertising continuesto be the Commission’s enforcement priority inthe protection of consumers, with the misuse offine print and deceptive pricing of specialconcern.

In July 2001 the Commission obtained urgentinterim orders against Telstra in relation to itsconduct following the collapse of One.Tel. TheCommission alleged that Telstra had misled

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former One.Tel customers about the transfer ofmobile services to Telstra, including thatcustomers would be liable for early terminationfees if they did not switch their service to Telstrabefore a certain date. In December the FederalCourt in Melbourne made orders against Telstra,by consent, for the partial repayment ofminimum monthly access fees and costs to about3000 former One.Tel mobile phone customers.

Product safety and compliance with mandatoryproduct standards and bans under the Act arealso an important part of the Commission’sconsumer protection objectives. The focus is onimproving industry awareness of mandatorystandards and bans, and surveying for compliance.The Commission accepted s. 87B undertakingsand took proceedings concerning non-complyingbicycles, toys, sunglasses, vehicle ramps, andvehicle and trolley jacks during the year.

The Commission established the ConsumerConsultative Committee, to ensure bettercommunication between the Commission andconsumer groups. This committee is comprisedof peak national consumer advocacy and researchorganisations.

The Commission also commenced a monthlypublication Consumer express to provide asnapshot of matters affecting consumers, and‘how to’ guides to help resolve consumer concerns.

E-commerceElectronic communications are an integral part ofbusiness, and the Commission’s enforcementactivities routinely address matters involvingelectronic documents and Internet trading. InAugust 2001 the Commission established anElectronic Investigation Support Unit, to providetechnical support to investigators in identifyingand obtaining electronic evidence, storing it, andpresenting it to the court. The unit has respondedto over 150 requests for assistance in investigations,indicating the increasing need for these types ofservices in modern law enforcement.

More accessible telecommunications facilitiesand growing acceptance of web-based marketinghave seen perennial consumer and businessproblems (such as pyramid selling, referralselling, miracle cures, unsolicited and

undelivered goods and services, and scams ingeneral) migrate to these networks.

The borderless nature of transactions, relativelylow cost and high speed, and instant paymentand money transfer facilities, enhance returns forunscrupulous traders around the globe.

The Commission is working to address thesecircumstances and again led an annualinternational Internet Sweep Day to detect web-based misrepresentation. The Slam-A-Cyberscamwebsite continued to enable consumers to lodgecomplaints against online traders.

It also hosted a 2-day e-commerce conference inNovember 2001 to bring consumers, businessand regulators together to discuss the burgeoningglobal e-commerce trade and how the challengesinherent in it are being met.

Small businessSmall businesses are always vulnerable whendealing with larger more powerful companies.The Commission has been especially active thisyear in targeting unconscionable conduct toprotect the interests of small business. Onelandmark case involving Farrington Fayreshopping centre and a tenant, is now waiting tobe heard in the High Court, the outcome ofwhich will have a profound impact on futurecases. Another case involved the supply of waterunder market garden leases to people lackingformal education, English language skills andcommercial experience. In a successful outcomefor the Commission and the lessees, the FederalCourt declared Avanti Investments hadcontravened the unconscionable conductprovisions of the Act.

The Commission’s Small Business Programentered its fourth year of providing specialisedinformation and guidance for small businessesabout their rights and obligations under the Act.

The Commission continued as an officialObserver at the Franchising Policy Council. Italso continued to liaise with its Small BusinessAdvisory Group, which is comprised of businessand professional representatives who meetbiannually to discuss trade practices mattersaffecting small business.

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On 19 March 2002, with the Minister forRegional Services, Territories and LocalGovernment, the Hon. Wilson Tuckey, Ilaunched the Rural and Regional Program inBendigo Victoria. Dedicated Regional OutreachOfficers, or ROOs, have been appointed toimplement the program. It aims to improvecommunication between the Commission andpeople in rural and regional Australia, promotingunderstanding of the Trade Practices Act.

The Competing Fairly Forum satellite broadcaststo rural and regional communities continued,providing an opportunity for these communitiesto communicate with the Chairman of theCommission, Commissioners and other expertsin trade practices and related fields.

Adjudication

The Commission’s adjudication process involvesassessing the public benefits and detrimentsresulting from certain anti-competitive practices.If there is a net public benefit, the Commissionmay grant immunity from legal proceedings. Acase in point is the Commission’s considerationof the application from the Royal AustralasianCollege of Surgeons to authorise its selection,training and examination of surgical trainees. TheCommission has long held concerns that RACS’procedures may constitute a breach of the Actbecause they restrict entry to advanced medicaland surgical training.

Many businesses operating in rural and regionalAustralia have taken advantage of theauthorisation process to help them make thetransition from a regulated to a more competitiveenvironment. In particular, the Commission hasconsidered applications relating to collectivebargaining arrangements between primaryproducers and their processors.

The Commission has continued to receive andconsider applications relating to distribution andmarketing arrangements in the electricityindustry, particularly those relating to thenational electricity market. It has also consideredand finalised several applications regarding gastransmission.

During 2001–02 the ACCC received 36 newapplications for authorisation and 307notifications for exclusive dealing. TheCommission made 51 determinations, three ofwhich were subject to applications for review tothe Australian Competition Tribunal. Two ofthose appeals were withdrawn and one wasresolved by the Tribunal agreeing to issue adetermination consented to by interested parties.

Regulatory activitiesAcross the industries for which it has regulatoryresponsibility, including telecommunications,energy, airports and rail, the Commissionreleased a number of major decisions this year.

The Commission published several pricing papersin telecommunications, which will helpencourage ongoing competition in thetelecommunications market. Earlier this year, theCommission issued information on prices that itbelieves Telstra should be charging othertelecommunications companies for access to itscopper lines. The Commission also issued Telstrawith a Competition Notice when it believed thatTelstra was effectively charging its wholesaleADSL (which provides high speed data services)customers more than it charged its BigPond retailcustomers. As a result, Telstra reduced itswholesale prices by around 25 per cent. TheCommission also now regularly updates itsSnapshot of Broadband Deployment, a report ofstatistics on broadband take-up across Australia.

In electricity, a series of changes to the NationalElectricity Code were assessed, covering issuessuch as full retail competition in the industry,Tasmania’s entry into the national electricitymarket, and network planning and development.The Commission also released its revenue capdecision for the Queensland electricity transmissionnetwork—that is, capping the revenues oftransmission networks to constrain monopolypricing but allowing a high enough return to fundthe network’s operation and expansion. Duringthe year, work began on setting revenue caps forthe Victorian and South Australian electricitytransmission networks. The Commissionassumes regulatory responsibility for thesetransmission networks from 1 January 2003.

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Final decisions were released on the terms andconditions of transporting gas via the Moomba toAdelaide Pipeline system; Ballera to Mt Isa; andRoma to Brisbane pipelines. Final approvals forthe Wallumbilla to Rockhampton; and Ballera toWallumbilla pipelines were also released. TheACCC is concerned that the access arrangementsproposed by the suppliers of the gas are fair, sothat suppliers do not receive a revenue streamthat is higher than the efficient costs of providingservices. Otherwise consumers and industrywould face excessive energy charges in thefuture, which would discourage investment andharm the economy. The cost of energy inputs formanufacturers is critical. In South Australia, forexample, natural gas accounts for about 45 percent of energy use in the industrial sector. Gas isincreasingly an input to electricity generation. Inthe Commission’s view these accessarrangements are very much a material factor inthe cost of doing business.

The Commission has dealt with complexaeronautical pricing issues at Sydney airport andthe Federal Court ruled on taxi charges. In May2002 the federal government released theProductivity Commission’s inquiry Report onPrice Regulation of Airport Services,recommending that Sydney, Melbourne,Brisbane, Perth, Adelaide, Canberra and Darwinairports be subject to price monitoring for fiveyears. In adopting the report’s recommendations,the government also removed the Commission’sregulatory role of administering price caps on thecharges for aeronautical services applied byairports. The situation will be reviewed in fiveyears. The Commission also released its VirginBlue access determination, deciding not to applyaccess regulation in relation to the domesticterminal at Melbourne airport because the airlinewas already using the facilities under acommercially negotiated contract.

There were also other major developments in theCommission’s transport and prices oversightactivities in the past year. In rail, the accessundertaking submitted by the Australian RailTrack Corporation was accepted. Covering accessto interstate rail track, this is the first rail accessundertaking accepted by the Commission. TheCommission completed its report to theTreasurer on fuel price variability in December

2001. Work also started on the assessment of theproposed increase in the price of assorted postalservices, including the price of the basic postagestamp.

Much of the framework governing theCommission’s regulatory work has recently beenreviewed, or is currently being reviewed. TheProductivity Commission has reviewed the PricesSurveillance Act 1983, the regime for access toessential facilities under the Trade Practices Act1974, the telecommunications-specificcompetition regulation (including Parts XIB andXIC of the Trade Practices Act 1974) and, asnoted above, the airport price oversightarrangements. The Council of AustralianGovernments has also established a review offuture directions in the electricity and gasmarkets. As the declaration of the harbourtowage service expires in September, the pricesoversight arrangements are being reviewed by theProductivity Commission.

While the Commission is largely responsible fortelecommunications, airports, postal services andliner shipping conferences, the states andterritories retain very significant roles inelectricity, gas, rail and waterfront regulation.The consistency of regulatory approach by theCommission and state and territory regulators isfacilitated through the Utility Regulators Forum,a committee of all Commonwealth, state andterritory regulatory agencies.

InternationalThe Commission’s international activities aim tohelp other countries achieve effectivecompetition and consumer protection regimes.This can mean more competitive and faireroverseas markets, and better access to thosemarkets for Australian exporters.

On 16 May 2002 the Commission entered into aMemorandum of Understanding with theCommerce Commission of the Fiji Islands topromote cooperation and coordination ofenforcement, training and technical assistanceactivities in respect of consumer protection andcompetition issues.

Negotiations with a number of other competitionand consumer protection agencies around the

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world are currently under way. These negotiationscan lead to the exchange of information,cooperation and assistance in enforcementmatters, and the provision of technical assistancefrom Australia to emerging economies.

The Commission is increasingly cooperating withits international counterpart agencies oncompetition, consumer protection and regulatorymatters to facilitate the effective enforcement oflaws both in Australia and overseas.

One avenue through which this is occurring is therecently established International CompetitionNetwork (ICN), a global forum through whichindividual national competition agencies areliaising on common issues.

Summary of financial report

The Commission’s budget for 2001–02 was$83.4 million, an increase of 10 per cent from2000–01. The appropriation includes an amountof $10 million towards a litigation reserve fund.This fund, which will increase yearly by$1 million up to a cap of $20 million, is to enablethe Commission to meet unusual litigation costs.

The budget appropriation for the 2002–03 year is$61.8 million. Apart from the once onlyappropriation of $10 million towards a litigationreserve fund the reduction from the previousyear is due to the cessation of funding for theCommission’s role in the transition to the NewTax System.

ACCC staffThe Commission continued its tradition ofrecruiting high quality staff in 2001–02, with26 graduates selected from a highly competitivefield of around 450 applicants.

The graduates and two international internscommenced at the beginning of 2002, and will dothree rotations during their 10-month program.

Total full-time equivalent employees increased to478 (up from 438 in 2000–01), including six full-time holders of public office (Commissionmembers). The increase in the staffing levels wasreflected in the various areas of regulatoryactivity, the new professions unit, the

establishment of the regional program and theACCC Infocentre.

The Commission also continued to provide itsstaff with job learning opportunities, access toinformation and formal training programs with agreater emphasis on the online environment as adelivery medium.

LiaisonThe Commission’s activities greatly benefitedduring 2001–02 through effective liaison withcommunity organisations, businesses, consumersand federal, state and territory agencies. TheCommission also works with many overseasagencies in promoting trade practices compliance.

Major amendments to the Trade Practices ActOn 26 July 2001 amendments to the TradePractices Act relating to small business andstrengthening the enforcement provisions cameinto effect. These amendments (see appendix 1)include:

! raising penalties for breaches of the consumerprotection provisions to $1.1 million forcorporations and $220 000 for individuals

! extending the protection for small businessesfrom unconscionable conduct by a strongerparty to transactions up to $3 million in value

! broadening the powers for the Commission totake representative actions and seekdeclarations

! altering the ‘market’ definition in the mergersand acquisitions test to include a substantialmarket in a region in Australia.

On 15 December 2001 a new Part VC(Offences) of the Act came into operation, givingeffect to the requirements of theCommonwealth Criminal Code by separating thecivil and criminal elements of Part V (ConsumerProtection). The new Part VC establishes aseparate criminal consumer protection regime bymirroring many of the Part V consumerprotection provisions. However the newprovisions are drafted to comply with the generalprinciples of criminal responsibility contained inthe Criminal Code. Part V retains the civilconsumer protection provisions, as they

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previously operated. The consumer protectionprohibitions should remain substantially the sameand the introduction of Part VC is unlikely tohave a significant practical impact on theconsumer protection regime under the Act.

The Financial Services Reform Act 2001 began on11 March 2002 and amended the AustralianSecurities and Investments Commission Act 2001.Consequential amendments were also made toother legislation, including the Trade PracticesAct 1974. The main thrust of these changes hasbeen a shift in legislative responsibility forconsumer protection issues in relation to:

! foreign exchange contracts and credit fromthe ACCC to the Australian Securities andInvestments Commission (ASIC)

! health insurance from ASIC to the ACCC(although note that before the amendment,the ACCC had, for a number of years, beenempowered to deal with consumer protectionissues for health insurance pursuant to astatutory delegation from ASIC).

The Trade Practices Amendment(Telecommunications) Act 2001 commenced on27 September 2001, making a series ofamendments to Part XIC of the Act tostreamline the telecommunications accessregime. The amendments encourage commercialnegotiation and expedite the resolution of accessdisputes notified to the Commission.

OutlookThe Commission operates in a constantlyevolving environment. Each year a substantialeffort is made by the Commission to confrontnew issues that have the potential to affect theCommission’s performance and the law underwhich it operates.

For example, the Commission is involved inseveral reviews involving various aspects ofcompetition and consumer protection law. TheCommission regards its participation in thesereviews as being of the utmost importancebecause they give all parties an opportunity tocomment on existing laws and practices with theaim of refining their future implementation.

Similarly, the Commission’s actions in testing thescope and application of the Act are based ontwo important objectives: to ensure that thosewho contravene the law are dealt withappropriately by the court; and that the courtgives due consideration to the application of thelaw as Parliament intended. To meet theseobjectives the Commission is currently involvedin an unprecedented number of court actions—seven of which are before the High Court ofAustralia, and 10 are on appeal to the Full Courtof the Federal Court of Australia. These casesinvolve important tests of key provisions of theAct, and whatever the outcome in each case,there is likely to be some impact on the way theCommission enforces the Act in the future.

The Commission faces a number of majordecisions in its regulatory activities. In electricityin particular the Commission has taken on thefunction of transmission regulator and will bemaking revenue cap decisions for the networks inVictoria and South Australia. The Commission isalso moving to continually improve the practiceof regulation especially as it applies to new or‘greenfield’ projects.

A number of reviews of the regulatory lawsaffecting network industries have either beencompleted or are under way. A challenge for theCommission will be to implement changes to theregulatory schemes that have either beenannounced or are under consideration.

The Commission continues to secure positiveoutcomes for consumers and business by activelyenforcing and promoting the benefits ofcompliance with the Act. I would like to thankCommission staff for their dedication,professionalism and integrity, and in particular fortheir ability to meet the challenges and demandsplaced on them in such a dynamic workenvironment.


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OVERVIEWOF THE ACCC

The Commission is an independent statutoryauthority that administers the Trade PracticesAct 1974, state and territory Application Actsand the Prices Surveillance Act 1983.

The Commission seeks to improve competitionand efficiency in markets, foster adherence tofair trading practices in well-informed markets,promote competitive pricing wherever possibleand restrain price rises in markets wherecompetition is less than effective. It is especiallyconcerned to foster a fair and competitiveoperating environment for small business.

In seeking to prevent or limit anti-competitiveconduct and to ensure adherence to fair tradingprinciples the Commission:

! takes action through compliance educationprograms, investigations, litigation orenforceable undertakings if necessary toovercome market problems

! adjudicates on business practices (includingmerger proposals)

! considers access issues concerning essentialfacilities

! enforces product safety standards

! has functions under provisions of the TradePractices Act which impose a liability onmanufacturers for damage caused by defectivegoods

! undertakes certain functions relating to pricessurveillance, public inquiries and monitoringof goods and services under the PricesSurveillance Act

! administers the prohibition on priceexploitation in relation to the New TaxSystem

! maintains close liaison with federal, state andterritory governments, and regulatoryauthorities on economic structural reform

! provides guidance to business and consumersabout the Trade Practices Act and the PricesSurveillance Act.

Legislation

Trade Practices ActThe object of the Trade Practices Act is toenhance the welfare of Australians by promotingcompetition and fair trading and providing forconsumer protection.

Prices Surveillance ActThe Prices Surveillance Act enables theCommission to examine the prices of selectedgoods and services. It aims to promotecompetitive pricing wherever possible and torestrain price rises in markets where competitionis less than effective.

Chapter 1

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Related legislationThe Commission has responsibilities under otherlegislation as follows:

Airports Act 1996—to perform quality of servicemonitoring and reporting, to facilitate access toairport services of national significance, and toreceive accounts and reports which facilitate itsprice oversight role.

Australian Postal Corporation Act 1989—toinquire into disputes about the amount of postalrate reduction given by Australia Post to bulkmailers interconnecting or attempting tointerconnect to the Australian Postal System.

Broadcasting Services Act 1922—to report, interms of the merger and authorisation provisionsin the Trade Practices Act, on the allocation ofsubscription television broadcasting licences toapplicants. To monitor, in conjunction with theAustralian Broadcasting Authority, the cross-media ownership of the holders of subscriptiontelevision broadcasting licences.

Gas Pipelines Access (Commonwealth) Act1998—gives effect to the Commission’s role asregulator of third party access to natural gaspipeline systems under the National Third PartyAccess Code for Natural Gas Pipeline Systems.This role includes arbitration of disputes overspare capacity, and regulation of increases incapacity and the terms and conditions uponwhich haulage services are provided.

Moomba–Sydney Pipeline System Sale Act1994—arbitration of disputes over the existenceof spare capacity, the interconnection of apipeline to the Moomba–Sydney pipeline,increases in capacity, and terms and conditions ofprovision of haulage service.

Telecommunications Act 1997—theCommission’s main functions under the Actrelate to telecommunications competitionmatters. Various provisions give the Commissiona role wider than it has under the Trade PracticesAct.

Trade Marks Act 1995—responsibilities inrelation to the approval of Certification TradeMarks.

Exceptions under Commonwealth, state andterritory legislation

Some Commonwealth, state and territory Actspermit conduct that would normally be anoffence under the Trade Practices Act.Section 51(1) of the Trade Practices Act providesthat such conduct may be permitted if it isspecifically authorised under those other Acts.

Below is a list of legislation that allows suchconduct.

Commonwealth Trade Practices Amendment (Country of Origin) Act 1998

Wheat Marketing Act 1989

Trade Practices Amendment (International Liner Cargo Shipping) Act 2000

New South Wales Totalizer Act 1997

Registered Clubs Act 1976

Liquor Act 1982

Competition Policy Reform (NSW) Regulation 1996

Marketing of Primary Products Act 1983

Farm Produce (Repeal) Act 1996

Coal Industry Act 2001

Industrial Relations Amendment (Public Vehicles and Carriers) Act 2001

Industrial Relations (Ethical Clothing Trades) Act 2001

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New South Wales Olympics Arrangements Act 2000*

continued Olympic Roads and Transport Authority Act 1998*

Sydney Organising Committee for the Olympic Games Act 1993*

Northern Territory Electricity Reform Act 2000

Water Supply and Sewerage Act

Consumer Affairs and Fair Trading (Tow Truck Operators Code of Practice)Regulations

Year 2000 Information Disclosure Act 1999*

Queensland Competition Policy Reform (Queensland) Public Passenger ServiceAuthorisations Regulation 2000

Petroleum Act 1923

Gladstone Power Station Agreement Act 1993

Forestry Act 1959

Chicken Meat Industry Committee Act 1976

Sugar Industry Act 1999

Year 2000 Information Disclosure Act 1999*

Competition Policy Reform (Queensland – Dairy Industry Exemptions)Regulation 1998*

Competition Policy Reform (Queensland – Sugar Industry Exemptions)Regulation 1998*

Competition Policy Reform (Queensland) Act 1996*

South Australia Barley Marketing Act 1993

Authorised Betting Operations Act 2000

Tasmania Electricity Supply Industry Act 1995

Electricity Supply Industry Restructuring (Savings and TransitionalProvisions) Act 1995

Victoria Gas Industry Act 2001

Gas Industry Act 1994

Gas Industry (Residual Provisions) Act 1994

Barley Marketing Act 1993*

Competition Policy Reform (Victoria) Act 1995*

Electricity Industry (Amendment) Act 1996*

Electricity Industry (Trade Practices) Regulations 1994*

Western Australia North West Gas Development (Woodside) Agreement Act 1979

*Subsection 51(1) exceptions no longer current.

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Outputs and performanceindicators for 2001–02The Commission has one overall outcome, whichis strong, sustainable economic growth and theimproved well being of Australians. The outcomedefines the Commission’s role in deliveringgovernment competition and consumer policy—that is, to enhance the social and economicwelfare of the Australian community by fosteringcompetitive, efficient, fair and informedAustralian markets.

The Commission’s outputs and performanceindicators, as published in the Portfolio BudgetStatements in 2001–02, and how they weremeasured, are listed below.

Outcome 1—Contribution of outputs

Table 2.2. Performance information for Outcome 1

IndicatorsIndicatorsIndicatorsIndicatorsIndicators OutcomesOutcomesOutcomesOutcomesOutcomes

EFFECTIVENESS—OVERALL ACHIEVEMENT OF THE OUTEFFECTIVENESS—OVERALL ACHIEVEMENT OF THE OUTEFFECTIVENESS—OVERALL ACHIEVEMENT OF THE OUTEFFECTIVENESS—OVERALL ACHIEVEMENT OF THE OUTEFFECTIVENESS—OVERALL ACHIEVEMENT OF THE OUTCOMECOMECOMECOMECOME

Secure compliance by business with the TSecure compliance by business with the TSecure compliance by business with the TSecure compliance by business with the TSecure compliance by business with the Trade Prade Prade Prade Prade Practices Act.ractices Act.ractices Act.ractices Act.ractices Act.

Investigating complaints, developing and Prescribed time limits and standards were met;implementing compliance programs, decisions were based on relevant facts; publicevaluating and reviewing applications relations program—including media releases,for authorisations, access undertakings, publications and liaison meetings—was effective.monitoring them and arbitrating disputes.A small business focus which informs and These indicators were thereby met.educates small business about its rights andobligations under the Trade Practices Act(TPA) with a view to assisting in enforcingthe TPA in relation to small business issues.A focus in the non-traded goods and servicessector to encourage competition in marketsand consumer protection.

Secure improvement in market conduct.Secure improvement in market conduct.Secure improvement in market conduct.Secure improvement in market conduct.Secure improvement in market conduct.

Assisting with the development and Decisions resulting in improved access and serviceimplementation of regulatory frameworks delivery and development of pro-competitivewhich maximise the potential for promotion regulatory frameworks were timely. Price notificationsof competition and efficient outcomes were published within statutory timeframes.including through access to essential facilities,liaising widely with key stakeholders, and These indicators were thereby met.reviewing price notifications from declaredcompanies and monitoring prices as requiredunder the Prices Surveillance Act.

Community informed about the TCommunity informed about the TCommunity informed about the TCommunity informed about the TCommunity informed about the Trade Prade Prade Prade Prade Practices Act and the Practices Act and the Practices Act and the Practices Act and the Practices Act and the Prices Surrices Surrices Surrices Surrices Surveillance Act and their implications forveillance Act and their implications forveillance Act and their implications forveillance Act and their implications forveillance Act and their implications forbusiness and consumers.business and consumers.business and consumers.business and consumers.business and consumers.

Information programs, publications and Level of community awareness and responsibilitypublicity are used to promote general was monitored; number of complaints, inquiries,awareness of the Acts and the ACCC’s attendance at seminars was counted; andpriorities and procedures. By these means community surveys were undertaken.also the deterrent and educational potentialof the ACCC’s enforcement work is reinforced. These indicators were thereby met.

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PERFORMANCE INFORMAPERFORMANCE INFORMAPERFORMANCE INFORMAPERFORMANCE INFORMAPERFORMANCE INFORMATION FOR ADMINISTERED ITEMS TION FOR ADMINISTERED ITEMS TION FOR ADMINISTERED ITEMS TION FOR ADMINISTERED ITEMS TION FOR ADMINISTERED ITEMS (including third par(including third par(including third par(including third par(including third party outputs)ty outputs)ty outputs)ty outputs)ty outputs)

Output group 1.1 Output group 1.1 Output group 1.1 Output group 1.1 Output group 1.1 — Australian Competition and Consumer Commission

Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the TTTTTrade Prade Prade Prade Prade Practices Act 1974ractices Act 1974ractices Act 1974ractices Act 1974ractices Act 1974, the , the , the , the , the PPPPPricesricesricesricesricesSurSurSurSurSurveillance Act 1983veillance Act 1983veillance Act 1983veillance Act 1983veillance Act 1983 and related laws. and related laws. and related laws. and related laws. and related laws.

Collection of statutory fees and judgment Banking and recording of statutory fees anddebts. judgment debts was timely.

This indicator was thereby met.

PERFORMANCE INFORMAPERFORMANCE INFORMAPERFORMANCE INFORMAPERFORMANCE INFORMAPERFORMANCE INFORMATION FOR AGENCTION FOR AGENCTION FOR AGENCTION FOR AGENCTION FOR AGENCY OUTPUTSY OUTPUTSY OUTPUTSY OUTPUTSY OUTPUTS

Output group 1.1 Output group 1.1 Output group 1.1 Output group 1.1 Output group 1.1 — Australian Competition and Consumer Commission

Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the Output 1.1.1: The proper administration and enforcement of the TTTTTrade Prade Prade Prade Prade Practices Act 1974ractices Act 1974ractices Act 1974ractices Act 1974ractices Act 1974, the , the , the , the , the PPPPPricesricesricesricesricesSurSurSurSurSurveillance Act 1983veillance Act 1983veillance Act 1983veillance Act 1983veillance Act 1983 and related laws. and related laws. and related laws. and related laws. and related laws.

Increasing resolution speed of arbitrations Number of outstanding arbitrations was reduced to 2.in telecommunications. This indicator was thereby met.

Reducing the number of outstanding Number of outstanding access disputes wasregulatory decisions in telecommunications. reduced to 2, and the indicator was thereby met.

Increasing number of telecommunications From 210 complaints, 13 issues progressedinvestigations. to substantial investigation. The indicator was

thereby mostly met.

Reducing the number of outstanding Outstanding applications reduced to 4, and theregulatory decisions in gas. indicator was thereby met.

Development and finalisation of regulatory Draft guidelines released on 25 June 2002;guidelines in gas. on schedule to finalise in early 2003.

Increasing resolution speed of arbitrations Currently there is only 1 arbitration on foot;in gas. the indicator is thereby met.

Extending Commission small business 115 remote communities reached by satellitecommunications programs to remote broadcast. The indicator is thereby met.business and community organisations.

Development of tailored compliance Compliance tools and information for small businessinformation tool kits for distribution to for distribution developed by June 2002.small business. Information leaflets tailored to 4 key problem areas

of small business by June 2002. The indicator isthereby met.

Development and finalisation of regulatory Regulatory principles guidelines for transmissionguidelines in electricity. networks are well advanced and will be finalised by

December 2002. The indicator is thereby partially met.

Reducing the number of outstanding Network ring fencing and accounting separationregulatory decisions in electricity. rules were finalised by December 2001. The

indicator is thereby met.

Reducing the time taken to authorise National electricity code changed to incorporatenational electricity market code changes. move towards nodal pricing on transmission network

by December 2001. Outstanding authorisationsreduced from 60 to 6. The indicator is thereby met.

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Extending Commission communications Support arrangements agreed with 430 locations inprograms to remote business and community regional Australia. Rural and regional consultationorganisations in rural and regional Australia. developed on a state-by-state basis with a pilot in

Tasmania. Regional visits program implemented.ACCC services advertised in regional and rural pressat least 4 times during the year.The indicator is thereby met.

Reduction in number of irrelevant complaints. Percentage of irrelevant complaints reduced from53 per cent to 25 per cent. This indicator, which wasscheduled to be met by June 2003, is thereby met.

Development of domestic and international Networks with international and domestic agenciesinformation exchange networks on to gain expertise in information/Internet-basede-commerce. conduct were established by December 2001.

Internet-specific strategy to improve the handling ofpotential competition and consumer protectionissues by government agencies and to encourageexchange of information on relevant e-commerceactivities, was developed.The indicator was thereby met.

Establishment of an e-commerce External consultants are currently being relied uponinvestigatory capability. to provide computer forensic capacity. Feasibility

studies are currently being undertaken in relation tointernal provision. Relevant skills are beingdeveloped. Strategies to manage Commission’scapacity to respond quickly to emerging issues arebeing developed.The indicator is therefore mostly met.

Extending production of compliance Over 25 presentations made to seminars andinformation for the health and other conferences. Sector specific publications not yetprofessions sector. produced. The indicator is therefore partially met.

Undertake compliance/adjudication actions Four adjudication and 4 compliance actionsin the health and other professions sector. commenced. This indicator is thereby met.

Output 1.1.2: POutput 1.1.2: POutput 1.1.2: POutput 1.1.2: POutput 1.1.2: Perererererformance of actions that promote competition and fair trading and enable well functioningformance of actions that promote competition and fair trading and enable well functioningformance of actions that promote competition and fair trading and enable well functioningformance of actions that promote competition and fair trading and enable well functioningformance of actions that promote competition and fair trading and enable well functioningmarkets.markets.markets.markets.markets.

The number of stakeholder visits. Increase in number of stakeholder contactsfrom 10 to 50.

Increasing the level of awareness of ACCC Awareness of the Trade Practices Act in the smalland its role. business and other emerging markets sectors

increased as measured by provision of an additional5000 copies of compliance publications. ACCCConsumer Committee met twice.This indicator is thereby met.

Development of tailored compliance Two new publications provided to remoteinformation tool kits for distribution to communities. This indicator is thereby met.organisations in rural and regional Australia.

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Table 1.1 Financial and staffing resources 2000–01

RRRRReporeporeporeporeporting of outcomesting of outcomesting of outcomesting of outcomesting of outcomesTotal cost/contribution of outcomes (Whole of Government)

Outcome 1Outcome 1Outcome 1Outcome 1Outcome 1 TTTTTotalotalotalotalotal

BudgetBudgetBudgetBudgetBudget ActualActualActualActualActual BudgetBudgetBudgetBudgetBudget ActualActualActualActualActual$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Net taxation, fees and fines revenue (40 000) (6 780) (40 000) (6 780)Other administered revenues - (372) - (372)Administered expenses 200 - 200 -Net cost of departmental outputs 77 699 71 104 77 699 71 104Cost of outcome before extraordinary items 37 899 63 952 37 899 63 952Extraordinary items - - - -

Net cost to budget outcomeNet cost to budget outcomeNet cost to budget outcomeNet cost to budget outcomeNet cost to budget outcome 37 89937 89937 89937 89937 899 63 95263 95263 95263 95263 952 37 89937 89937 89937 89937 899 63 95263 95263 95263 95263 952


20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

Operating revenuesOperating revenuesOperating revenuesOperating revenuesOperating revenuesFines and costs 6 7806 7806 7806 7806 780 42 807 6 7806 7806 7806 7806 780 42 807Authorisation fees 361361361361361 432 361361361361361 432Other 1111111111 6 1111111111 6

TTTTTotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenues 7 1527 1527 1527 1527 152 43 245 7 1527 1527 1527 1527 152 43 245

Operating expensesOperating expensesOperating expensesOperating expensesOperating expensesNet write-down of assets ----- 101 ----- 101

TTTTTotal operating expensesotal operating expensesotal operating expensesotal operating expensesotal operating expenses ----- 101 ----- 101

Output Group 1Output Group 1Output Group 1Output Group 1Output Group 1 Output Group 2Output Group 2Output Group 2Output Group 2Output Group 2 Non-attributableNon-attributableNon-attributableNon-attributableNon-attributable TTTTTotalotalotalotalotal

20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

Operating revenuesOperating revenuesOperating revenuesOperating revenuesOperating revenuesRevenue from government 57 71657 71657 71657 71657 716 ----- 25 74425 74425 74425 74425 744 ----- ----- 75 68775 68775 68775 68775 687 83 46083 46083 46083 46083 460 75 68775 68775 68775 68775 687Sale of goods and services 198198198198198 ----- 192192192192192 ----- ----- 1 0451 0451 0451 0451 045 390390390390390 1 0451 0451 0451 0451 045Other non-taxation revenues 481481481481481 ----- 249249249249249 ----- ----- 237237237237237 730730730730730 237237237237237

TTTTTotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenues 58 39558 39558 39558 39558 395 ----- 26 18526 18526 18526 18526 185 ----- ----- 76 96976 96976 96976 96976 969 84 58084 58084 58084 58084 580 76 96976 96976 96976 96976 969

Operating expensesOperating expensesOperating expensesOperating expensesOperating expensesEmployees 21 00921 00921 00921 00921 009 ----- 12 85012 85012 85012 85012 850 ----- ----- 29 70629 70629 70629 70629 706 33 85933 85933 85933 85933 859 29 70629 70629 70629 70629 706Suppliers 27 71827 71827 71827 71827 718 ----- 8 2738 2738 2738 2738 273 ----- ----- 37 34637 34637 34637 34637 346 35 99135 99135 99135 99135 991 37 34637 34637 34637 34637 346Depreciation & amortisation 1 5041 5041 5041 5041 504 ----- 507507507507507 ----- ----- 1 7231 7231 7231 7231 723 2 0112 0112 0112 0112 011 1 7231 7231 7231 7231 723Other 285285285285285 ----- 140140140140140 ----- ----- 401401401401401 425425425425425 401401401401401

TTTTTotal operating expensesotal operating expensesotal operating expensesotal operating expensesotal operating expenses 50 51650 51650 51650 51650 516 ----- 21 77021 77021 77021 77021 770 ----- ----- 69 17669 17669 17669 17669 176 72 28672 28672 28672 28672 286 69 17669 17669 17669 17669 176

FFFFFull-time equivalent employeesull-time equivalent employeesull-time equivalent employeesull-time equivalent employeesull-time equivalent employees 2001–022001–022001–022001–022001–02 2000–01478478478478478 438

Major deparMajor deparMajor deparMajor deparMajor departmental revenues and expenses by output grouptmental revenues and expenses by output grouptmental revenues and expenses by output grouptmental revenues and expenses by output grouptmental revenues and expenses by output group

Major classes of administered revenues and expenses by outcomeMajor classes of administered revenues and expenses by outcomeMajor classes of administered revenues and expenses by outcomeMajor classes of administered revenues and expenses by outcomeMajor classes of administered revenues and expenses by outcome

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Structure of the CommissionDuring the reporting period the Commissioncomprised six full-time commissioners, reducingto four when the appointments of Rod Shogrenand Dr David Cousins ended on 29 April 2002and 14 June 2002 respectively.

The remaining four full-time commissionerswere: Chairman Professor Allan Fels,Commissioners Sitesh Bhojani, Ross Jones andJohn Martin.

Ms Jennifer McNeill was appointed asCommissioner on 22 July 2002.

Five part-time associate commissioners servedduring the report period. The appointments offour of them ended on 3 June 2002: TeresaHandicott, Warwick Wilkinson AM, Don Wattand Professor Douglas Williamson QC. YasminKing was re-appointed on 4 December 2001 until25 October 2004. Other re-appointments arecurrently being finalised.

The nine ex-officio members are: Paul Baxter,Professor David Flint AM, John Hall, Dr ThomasParry, Andrew Reeves, Alan Tregilgas, Tony Shaw,Dr John Tamblyn and Lew Owens.

Biographies and photographs of individualcommissioners, part-time commissioners and ex-officio commissioners can be found in appendix 5.

Social justiceSocial justice and equity themes are implicit inboth the Trade Practices Act and the PricesSurveillance Act and are strongly reflectedthroughout this annual report. In the TradePractices Act the themes are most obvious in theparts dealing directly with fair trading andconsumer protection—the basic rights of peoplein their everyday consumer transactions:

! Part IVA—which prohibits unconscionableconduct in both consumer and business-to-business transactions

! Part V—which is built on a general prohibitionof misleading and deceptive conduct,reinforced by a range of specific proscriptions

of such behaviour and includes provisionsdealing with product safety, informationstandards and statutory warranties

! Part VA—which imposes a liability ofmanufacturers for damages caused bydefective goods

! Part VB—which prohibits the exploitation ofconsumers or excessive profit-taking resultingfrom the implementation of the New TaxSystem.

Other documentsThe Commission has a very active publicationsprogram dealing with the specifics and rationale ofits work. Discussed in chapter 7 and appendix 7,this includes a regular journal of developmentsand issues, and a wide range of booklets,guidelines and discussion papers aimed atpromoting better understanding of the legislationfor which the Commission is responsible, itswork and procedures. Many of these publicationsand documents are available to the public at theCommission’s Internet websites—<http://www.accc.gov.au> and <http://gst.accc.gov.au>.

External scrutinyThe 2001–02 financial operations of theCommission were audited by the AuditorGeneral. The audit of the financial statementswas satisfactory and an unqualified audit reportwas issued.

The Commission appeared before the followingcommittees:

! the Senate Legislation Committee(Economics)

! the Standing Committee on Economics,Finance and Public Administration (Review ofAnnual Report)

! a public hearing on the Trade Practices Actbefore the Senate Legal and ConstitutionalStanding Committee

! the Environment, Communication,Information Technology and the ArtsLegislation Committee.

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Freedom of informationThe Commission received 35 freedom ofinformation requests during 2001–02. This is asignificant increase from 21 applications receivedin the previous year. The requests were for accessto a wide range of documents generally relatingto investigations and complaints involving theCommission. There were three requests carriedover from 2000–01.

In 16 cases access was granted in part. Accesswas granted in full in one case and refused intwo. Ten cases were not proceeded with and inrespect of one the Commission had no relevantdocuments. Eight requests had not been finalisedby the end of the year. It is Commission policy toprovide information wherever possible. However,it seeks to protect information provided to it inthe course of its investigation and inquiries, andtreats that information as confidential both toprotect the sources and to ensure the flow ofinformation vital to the Commission’s functions.

Two requests to have processing charges waivedwere granted. One was on the grounds of publicinterest and the other on financial hardship.

There were five requests for internal review andno applications were made to the AAT for reviewduring 2001–02.

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THE NEWTAX SYSTEM

Year in reviewDuring 2001–02, the third year of the New TaxSystem (NTS) transition period, theCommission’s primary focus was to ensurecontinuing compliance with the NTS-relatedprice exploitation provisions of the Act.Considerable resources were also devoted toensuring that businesses did not misrepresent theprice of goods and services using GST-exclusiveprice displays. The Commission continued toprovide information to both businesses andconsumers about the NTS, investigate complaintsand where necessary take appropriateenforcement action.

From early July 1999 the Commission hashandled more than 180 000 NTS-relatedinquiries (just under 5000 during 2001–02),including about 40 000 complaints (around 3500in 2001–02). Many were found not to bebreaches of the Trade Practices Act and manywere multiple complaints about the samebusiness. Since July 1999 the Commission hasinvestigated in detail about 6700 GST-relatedmatters. As a result numerous businesses tookcorrective action to remedy contraventionsrelated to the tax changes resulting in nearly$18 million being refunded for the benefit ofapproximately two million consumers.

The Commission’s roleThe law against price exploitation operated until30 June 2002 and reflected federal and stateparliaments’ desire to address the possibility ofsome businesses taking advantage of the taxchanges to charge unreasonably high prices. Priceexploitation carried penalties of up to$10 million per offence for corporations, and upto $500 000 per offence for individuals. Theprovisions also applied to advisers found to beknowingly concerned in, or aiding and abetting,contraventions of the law.

Under the law the Commission may issue anotice to a corporation or person it considers hascontravened the prohibition against priceexploitation. In any court proceedings forinjunction or penalty, a notice constituted primafacie evidence that the price charged wasunreasonably high, and could not be attributed tothe NTS changes, supplier’s costs, supply anddemand conditions or any other relevant matter.Once a price exploitation notice is served, it is upto the corporation or person to show that theydid not engage in price exploitation.

The Commission continues to have power topursue potential contravention of the priceexploitation provisions that have occurred duringthe transition period.

The Commission is required,under Part VB of the Act, toreport to the ministerwithin 28 days after the

Chapter 2

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end of each quarter about the operations of itsprice exploitation responsibilities in relation tothe NTS.

Promoting compliance

Communications strategy

The Commission continued to run a comprehensivecommunications strategy to promote compliancewith the law during the final year of the transitionperiod. The aim was to maintain awareness andunderstanding among consumers and businessesof their respective rights and obligations underthe legislation. It achieved this by providinginformation through printed publications, adedicated website (http://gst.accc.gov.au), andthe Infocentre (1300 302 502).

The Commission’s communications strategyinvolved releasing further explanatory materialsas any new issues emerged.

Advertising program and media releases

While the Commission’s GST related advertisingprogram was wound down, the Commissioncontinued to issue media releases aboutsignificant matters it was investigating. Duringthe year, it published 15 media releases related tothe NTS.

Releasing information through the mediapromoted compliance by example and illustratedthe consequences of price exploitation andmisleading or deceptive conduct with respect tothe NTS to a wide audience.

The key message was that the Commissionintended to prevent price exploitation and toensure that businesses passed on all cost savingsfrom the tax changes to their customers.

The number of GST-related calls to theInfocentre decreased substantially during thelatter half of 2001. However, the proportion ofcallers lodging complaints increased,demonstrating consumers’ general awareness andwillingness to identify businesses that may becontravening the Act.

Press articles

The Commission produced a press article in theSeptember quarter 2001 that summarised theprice effect of the NTS during its first year.

Publications

Commercial residential accommodation pricing report

The review of tax-related pricing changes bycaravan parks, mobile home parks and boardinghouses triggered a new publication during theSeptember quarter. A copy of the report wasmade available on <http://www.minfsr.treasury.gov.au>. The purpose of this review was toensure that operators did not increase their rates(prices) unreasonably as a result of the NTSchanges.

Consumer express

From July 2001 a monthly newsletter, Consumerexpress, replaced the former GST Bulletins. Thischange reflected the fact that most NTS-relatedissues had been addressed. Consumer express is abroader work than the GST Bulletin. It dealswith topical issues, including GST matters,identified from calls to the Infocentre, as well asfrom the Commission’s enforcement activities. Itis produced regularly and was initially distributedthrough the GST information network. Thisdistribution network, however, has since beenbroadened to reflect the issues Consumer expressaddresses.

Flyer for the retail sector

In response to continued complaints about thedisplay, quoting and advertising of prices bytradespeople, the Commission produced a flyerfor the small business trades sector to reinforcethe message that prices should include GST.Flyers were distributed through business andindustry groups. They identified the correct andincorrect ways prices should be displayed,quoted or advertised when they attract GST.Several organisations inserted the flyer into theirnewsletters or industry journal.

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Reports

In addition to publications containing generalinformation, the Commission published quarterlyreports for the minister on its operations underPart VB as required by s. 75AZ of the Act.

Financial Institution Duty education campaign

Financial institutions duty (FID) and stamp dutyon quoted marketable securities were abolishedon 1 July 2001 as part of the NTS changes. TheCommission ran a comprehensive educationcampaign to inform consumers and the affectedindustry sectors of the effect of these taxchanges.

GST information network

The GST information network was aCommission database network containing over1800 consumer and community groups, businessorganisations, industry associations, libraries andother agencies and groups.

Over 150 consumer and communityorganisations, representing around 1.9 millionpeople, received material through this network.Information for businesses was sent to more than900 business and industry organisations,representing just under two million people.Around 100 libraries and more than 100government and other agencies also received thisinformation. This material was also availablefrom the Commission’s GST website or bycalling the Infocentre.

During the September quarter, as the need forGST specific information diminished, networkmembers could opt to be included on a broaderdistribution network for more general tradepractices information.

ACCC Infocentre

From 1 May 2001 the GST Price Line becamepart of the ACCC Infocentre, which is the initialresponse centre for all inquiries and complaintsto the Commission on competition andconsumer issues throughout Australia. While theInfocentre is not a dedicated GST call line, staffcan answer inquiries about the Commission’spricing guidelines and handle requests for the

Commission’s GST publications. They alsoaccept and log complaints about possible priceexploitation and misleading or deceptive conductrelated to the NTS and refer callers to otheragencies where appropriate. Calls to this1300 302 502 service can be made from anywherein the country for the cost of a local call.

During the year around 5000 GST-relatedcomplaints and inquiries were logged into theCommission’s reporting system. Of these, 28 percent were inquiries and 72 per cent werecomplaints. The 10 industries most commonlyreferred to were:

INQUIRIES PERCENTAGE

Commercial property operators and developers 16.7

Real estate agents 10.2

Retailing (not elsewhere classified) 8.3

Business services (not elsewhere classified) 7.5

Central government administration 6.9

House construction 3.9

Residential property operators 2.1

Accommodation 1.8

Car retailing 1.7

Telecommunication services 1.3

COMPLAINTS PERCENTAGE

Real estate agents 8.6

Commercial property operators and developers 7.6

Business services (not elsewhere specified) 4.4

House construction 4.9

Telecommunication services 4.0

Retailing (not elsewhere classified) 3.8

Supermarket and grocery stores 3.0

Cafés and restaurants 2.4

Domestic appliance retailing 2.4

Car retailing 2.1

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Information strategy for those with specialdisadvantage

To address the needs of people who may besubject to a special disadvantage the Commissioncontinued providing information in an accessibleformat.

The Commission’s dedicated ATSI informationline (1300 303 143) now provides general tradepractices information to indigenous people andrecords their complaints, including thosespecifically GST-related.

A telephone interpreter service is available forpeople from non-English-speaking backgroundscalling the Infocentre.

GST website

The GST website at <http://gst.accc.gov.au>remained a key communication tool providingeasy access to relevant business and consumerpublications and answers to inquiries frequentlyreceived by the Commission. Reports on retailprice changes since the start of the NTS werealso available on the site.

During the year there were over one million hits,with more than 100 000 individual sessions. Themost popular areas on the site were ‘publications’and ‘media releases’ with the Price ExploitationGuidelines the most down-loaded document.

Information was available on the website forAboriginal and Torres Strait Islanders and wasalso available in 11 languages other than English:Arabic, Chinese, Greek, Italian, Spanish,Vietnamese, Croatian, Macedonian, Serbian,Russian and Turkish. Key GST-relatedpublications in Croatian, Macedonian, Russian,Serbian and Turkish remained on the website andwere available on request.

Price monitoringThe Commission continued to monitor pricesduring 2001–02. It drew on many sources ofinformation about price changes and pricingbehaviour. These included the consumer priceindex (CPI) and Australian Bureau of Statistics’wholesale price indexes, commercially providedprice information databases for specific productsat the wholesale and retail levels, large corporationswith public compliance commitments and theauthorities that regulate industries at the retaillevel such as electricity, gas and public transport.Complaints by consumers and businessesthrough the Infocentre also contributed to theCommission’s information on price changesassociated with the New Tax System.

This information helped identify where priceexploitation occurred.

The general survey

The Commission continued to collect andanalyse data from specially commissioned pricemonitoring surveys, particularly the monthlysupermarket survey. These surveys andsupplementary information did not show anyevidence of opportunistic pricing to increasemargins in association with the NTS during theyear.

Monthly supermarket survey

The Commission conducted monthly surveys ofsupermarket prices from January 2000, coveringmore than 300 supermarkets nationwide, with aproduct basket of over 100 commonly purchaseditems.

Comparisons, over time, were based on changesbetween prices averaged over two months. Thisreduced volatility from month to month resultingfrom changes in supermarkets’ price ‘specials’.From May–June 2000 to April–May 2002 theweighted average price increased by 10.3 percent. When prices of fruit and vegetables items,which have volatile supply and demandcharacteristics, were removed, the increase was8 per cent over the total period.

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Alcohol and tobacco product survey

The Commission conducted a survey into alcoholand tobacco products in the week commencing12 August 2001. This survey was timed to reflectany immediate product re-pricing as a result ofthe 1 August 2001 indexation of excise rates onalcohol and tobacco products.

The results from the survey (see table) indicatethat alcoholic products sold on licensed premisesincreased by around 10–12 per cent over theperiod May 2000 to August 2001. Price increasesfor beer sold on hotel premises were lower thanfor other alcoholic products, mainly reflecting thepassing on of the excise reduction on 4 April 2001.

However, price change varied more in ‘takeaway’alcoholic products, with spirits increasing by4.3 per cent, bottled wine by 5.4 per cent andheavy beer by 10.4 per cent.

Cigarette prices increased by 23.7 per cent overthe period May 2000 to August 2001. Thismainly reflects cost increases associated with theimplementation of the NTS and the effect of theJuly 2000, February 2001 and August 2001increases in excise under indexationarrangements that existed before the tax changes.

A lcoho l and tobacco product survey,Augus t 2001

PRODUCT AVERAGE PRICE CHANGE:

MAY 2000 TO AUGUST 2001

%

Heavy beer—hotel 10.4

Light beer—hotel 10.1

Basic spirits—hotel 12.1

Wine—hotel 11.3

Heavy beer 8.9

Light beer 8.6

General spirits 4.3

Cask wine 8.0

Bottled wine 5.4

Cigarettes 23.7

Consumer price index

While the methodology used by the ABS tomeasure CPI price changes is different from thatused by the Commission in its retail pricesurveys, movements in prices of products in theCPI ‘basket’ have been broadly consistent withthe Commission’s estimates of the effects of thetax changes on prices. In comparison with the6 per cent increase over the 2000–01 year, theCPI increased by only 2.8 per cent over the fourquarters ending June 2002.

General impact of the NTS on prices

The results of the Commission’s surveys sincethe September quarter 2000, together with CPIoutcomes, confirm that the impact on pricesoccurred mainly in the first quarter of 2000–01.This was consistent with the Commission’sestimates. No evidence of significant opportunisticpricing to increase margins was found.

Significant price increases normally occur in theMarch quarter for pharmaceutical products andeducation, both secondary and tertiary, and thispattern continued in the March 2002 quarter.Other sectors contributing substantially to theoverall increase in the four quarters were healthand housing, and domestic and internationalholiday travel.

The June 2001–June 2002 CPI result confirmsprevious assessments by the Commission that mostre-pricing associated with the NTS occurredduring the September quarter 2000.

EnforcementPrice exploitation remained a Commissionenforcement priority throughout the prescribedtransition period for the NTS (8 July 1999 to 30June 2002). The principle aim of theCommission’s enforcement activities is topromote compliance. During the year theCommission’s enforcement work concentratedon the following major areas:

! businesses misrepresenting the total price ofgoods or services (GST-exclusive price display)

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! increases in prices which reflect the fullimpact of the tax changes on the CPI wherethe GST also was previously imposed (CPI-based increases may need to be discounted forthe effect of the GST to comply with theCommission’s rule that businesses should notincrease their net dollar margin as a result ofNTS changes alone)

! charging of GST on contracts that did notprovide for the passing on of GST

! GST wrongly collected on GST-free suppliesby gift deductible entities

! property sale agreements that did not providefor the passing on of GST liability

! GST being charged on GST-free items

! businesses not passing on indirect tax benefits,such as the abolition of WST or the reductionin petrol excise, in full.

The Commission aimed to quickly resolve GST-related matters to minimise confusion andconsumer losses. Therefore when the conduct wasnot obviously deliberate or blatant the Commissionaccepted court enforceable undertakings, ratherthan taking direct court action. When businessesmade inadvertent mistakes and volunteered thisinformation the Commission took it into accountin determining any enforcement action and, ifappropriate, the remedies.

During the reporting period the Commissionplayed a major role in assisting charities and giftdeductible entities (GDEs) to refund GSTcollected on supplies subsequently deemed to beGST-free following private rulings by the ATO.

The Commission established guidelines for theseentities to adopt when managing the refundprocess. GDEs were required to contact allknown consumers to provide an explanation andrefund of the GST paid. When consumers couldnot be identified, GDEs had to advertise theavailability of refunds in suitable forums toidentify as many affected consumers as possible.Any unclaimed refunds, less refundadministration costs, were disbursed through areduction in the price of admission.

To date over $4.5 million in GST refunds hasbeen disbursed by the organisations concerned.

Since July 2000 the Commission has investigatedover 6700 GST-related matters, obtaining refunds

of nearly $18 million on behalf of approximatelytwo million consumers. Since 1 July 2000 theCommission has instituted court proceedings in10 GST-related matters and has accepted 54court enforceable undertakings. These matterswere reported in detail in the ACCC Journal andquarterly s. 75AZ reports. Summaries of majormatters for 2001–02 are outlined below.

Court cases and undertakings

Strasburger Enterprises (Properties) Pty Ltdtrading as Quix Food Stores

(s. 87B undertaking)

Quix operates 99 convenience stores aroundAustralia. Commission surveys in 2000revealed price changes in Quix Stores thatdid not appear to accurately reflect GSTprice increases. In September 2001 thecompany undertook to redress theCommission's concerns about overpricing bycommissioning an independent audit,reducing prices to refund the overcharge,placing corrective notices in store and innewspapers and implementing a tradepractices compliance program.

Marsh Pty Ltd(s. 87B undertaking)

In September 2001 one of Australia's largestinsurance brokers, Marsh Pty Ltd gaveenforceable undertakings to the Commissionthat it would refund customers over $18 000after asserting a right to collect GST oninsurance premiums when in fact no suchright existed. The policies related topremiums collected in 1999, covering aperiod of insurance running past 1 July 2000.

Marsh acknowledged that its conduct mayhave raised concerns under the priceexploitation and misleading or deceptiveconduct provisions of the Act and agreed toprovide court enforceable undertakings to theCommission. The Commission accepted thatMarsh had not intended any priceexploitation. The undertakings includedcompliance training for Marsh's staff,rescinding the claim for GST on premiums

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where customers have not made thepayment, and providing a full refund of GSTfor those customers who had made thepayment.

Mike Carney Motors Pty Ltd, trading as MikeCarney Toyota


In August 2001 the Commission acceptedundertakings by Mike Carney Motors: not toadvertise motor vehicle prices as beingexclusive of GST; not to make falserepresentations concerning the accessoriesavailable on vehicles for a particularadvertised price; and not to advertise an 'onthe road drive away' price where there areadditional compulsory costs. Mike CarneyMotors placed corrective advertisements inthe North Queensland Register and theQueensland Country Life and ensured that atleast one consumer was provided with amotor vehicle and accessories at theadvertised price. Further, the companycreated and implemented a trade practicescompliance program.

Commercial television networks

Following discussions with the Commission,all commercial television networks agreed toalter their price proposal schedules andconfirmation sheets to show GST-inclusiveprices. The Commission had receivedcomplaints from businesses alleging that thenetworks were displaying and quoting pricesfor television advertising time on a GST-exclusive basis. The Commission raised itsconcerns with the Federation of AustralianCommercial Television Stations and thenetworks that such conduct may breachPart V of the Act.

Metropolis Real Estate Pty Ltd

Proceedings commenced on 6 September2001 in the Federal Court (Canberra) allegingthat Metropolis misled and deceived a clientby quoting a flat fee of $5000 and then, aftersettlement, withholding an additional 10 percent from the vendor.

The court made orders, by consent, declaringthat Metropolis had engaged in false,misleading and deceptive conduct, restrainingrepresentations of GST-exclusive pricing,ordering a refund of $500 to the vendor,attendance of Metropolis' employees andagents at a trade practices seminar andcontributions to the Commission's legal costs.

Domaine Homes (NSW) Pty Limited

In November 2001 the Commissioncompleted its legal proceedings againstDomaine Homes (NSW) Pty Limited, itsmanaging director, Mr Robert Grant, and itscontracts manager, Mr Terry Sofos. TheCommission alleged that the parties hadmade misleading representations to newhomebuyers about the effect of the New TaxSystem on the construction of new homesand had acted unconscionably in theirdealings with some consumers.

In response Domaine undertook to refundapproximately $1.9 million in GSTcollections to 260 affected new homebuyers,plus interest at 7.25 per cent calculated fromthe date the GST was paid to Domaine bythose homebuyers. It did this before theFederal Court, without admitting liability.

Domaine also agreed to pay an additional$5000 to each of the seven customers onwhose behalf the Commission took therepresentative action to reimburse them forother potential losses; and $150 000 towardsthe Commission's legal costs.

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Flipstock Pty Ltd (trading as A Man's Toyshop)(s. 87B undertaking)

On 5 December 2001 the Commissionaccepted court enforceable undertakingsfrom Flipstock Pty Ltd (trading as A Man'sToyshop), a retailer and wholesaler ofhardware, that it would no longer displayGST-exclusive prices. Flipstock undertook todisplay/quote prices inclusive of GST bothin-store and at agricultural field days, placecorrective notices in-store advising customersthat prices are now GST inclusive, issueletters to A Man's Toyshop VIP ClubMembers advising them that all prices willnow be displayed/quoted inclusive of GST,ensure all future advertising states GST-inclusive pricing, remove GST-exclusivepricing displays from its website and conducttrade practices compliance training.

7-Eleven Stores Pty Ltd

In November 2001, 7-Eleven Stores Pty Ltd,as the franchisor of 265 7-Eleven conveniencestores in NSW, Victoria and Queensland,undertook to reduce the prices on 150 drygrocery items by an average of 5.6 per centand freeze the prices on another 600 drygrocery items. Both the price reductions andprice freeze remained in place until 30 June2002. 7-Eleven undertook this action to allayconcerns held by the Commission that thecompany's recommended retail prices forcertain goods from 1 July 2000 did not fullyreflect the abolition of wholesale sales tax inwholesale prices from some suppliers. On thebasis of those wholesale prices theCommission considered that 7-Eleven stores'retail prices were too high.

A Tavern in Mandurah, Western Australia

In November 2001 a Western Australianpublican agreed to offer refunds to itscustomers who were incorrectly chargedGST on credit card cash advances.

The Commission obtained a ruling from theAustralian Taxation Office which stated thata credit card cash advance transaction is not ataxable supply and therefore not subject toGST.

The Commission holds the view thatrepresenting GST as payable in circumstanceswhere it is not constitutes misleading ordeceptive conduct, and contravenes theconsumer protection provisions of the Act. Inresolving the matter with the Commissionthe tavern in Mandurah voluntarily agreed tostop the conduct, display a corrective noticein the tavern, and refund the incorrectlycharged GST to consumers who could showthey were charged GST on a credit card cashadvance transaction.

Commodore Homes (WA) Pty Ltd

Proceedings commenced in April 2001 in theFederal Court (Perth). On 12 February 2002the court found, by consent, thatCommodore Homes had misled new homebuyers about the time it would take to buildtheir new homes and the application of theGST to their home building contracts. TheCommission alleged that in the lead up to theintroduction of the GST, CommodoreHomes represented to potential homebuyersthat if they signed up with the company theywould have their homes built by 1 July 2000,and would therefore avoid having to pay anyGST. Delays in construction of the newhomes meant, however, that many were notcompleted by that date and CommodoreHomes then tried to recover the GSTcomponent from those homebuyers. Thecourt, by consent, imposed injunctions,required implementation of a trade practicescompliance program and payment of costs. Insettling the action with the Commission,Commodore Homes voluntarily refunded$882 124 to 264 new home buyers.

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Tangent Nominees Pty Ltd (trading as SummitHomes)


On 17 January 2002, in a court enforceableundertaking, Tangent Nominees Pty Ltd(trading as Summit Homes) agreed to refund$258 000 in GST payments to 111 homeowners.

It was alleged that Summit had charged anamount for GST above the allowance builtinto the original contract price. In raising thematter with Summit, the Commissionexpressed its concerns that this conduct mayhave been in breach of the misleading ordeceptive conduct provisions of the Act.Following a change in both ownership andmanagement, Summit Homes conducted aninternal audit that resulted in Summit Homeswriting to all affected customers andrefunding these customers a total of$258 000. As part of its court enforceableundertaking under s. 87B of the Act, SummitHomes also introduced a trade practicescompliance program.

ADT Security Pty Ltd

In January 2002 ADT Security Pty Ltdagreed to refund approximately $141 000 to2300 of its mainly residential customers afterthe Commission raised its concerns withADT about charging GST on long-term alarmmonitoring contracts. ADT agreed with theCommission that certain ADT 'Safewatch'monitoring contracts did not provide forADT to pass on GST liability incurred by itto its customers. ADT subsequentlyundertook to write to all affected customersrefunding any GST paid and apologising forthe mistake.

Capital Finance Australia Limited

Capital Finance Australia Limited agreedwith the Commission to refund 118consumers over $70 000 incorrectly collectedas GST on motor vehicle leases entered intobefore 2 December 1998. An AustralianTaxation Office ruling confirmed that CapitalFinance should not have levied GST underthe particular contracts. As a result CapitalFinance refunded or re-credited 118consumers the GST collected on leasepayments. The Commission agreed to aninformal administrative settlement to thismatter because the company cooperated withthe Commission's investigation andresponded quickly once it obtained theAustralian Taxation Office ruling.

Signature Security

In March 2001 the Commission institutedproceedings in the Federal Court (Sydney)alleging false, misleading or deceptiveadvertising and a failure to disclose the fullcost price by Signature Security Group PtyLtd in its promotion of security systems tothe public on a 'GST exclusive' basis. TheCommission also alleged breaches of anundertaking given pursuant to s. 87B of theAct in which Signature agreed to stopadvertising its prices on a GST-exclusivebasis. The matter was heard by the FederalCourt of Australia in April 2002, andjudgment reserved.

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Chapter 3

ACHIEV INGCOMPLIANCE

ContentsPrice fixing, market sharing, bid rigging,boycotts and other collusive behaviour 30

Misuse of substantial market power 34

Exclusive dealing 35

Resale price maintenance 35

Exercise of powers under section 155 36

Leniency and cooperation policies 36

Intervention guidelines 36

Intellectual property 36

E-commerce 37

The professions 38

Consumer protection 44

Insurance 44

Advertising and prices 45

Telecommunications 49

Country of origin 50

Food and beverages 52

Employment and education 53

Product safety 53

Unconscionable conduct 55

Undue harassment and coercionand debt collection 59

Business investment, leasing andfranchising and finance 60

Unsolicited goods and services 61

Pyramid/referral selling 62

Small business and ruraland regional programs 63

Aviation 64

Industry codes of conduct 64

Compliance programs 64

Cooperation with other government agencies 64

Infocentre 65

International overview 67

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IntroductionThis chapter outlines the Commission'scompliance and enforcement activities in2001–02. The Commission takes court action toenforce the Trade Practices Act and was involvedin around 110 matters in the courts this year.Proceedings were instituted in over 60 mattersand the Commission has been involved in severalmatters before the Full Federal Court and beforethe High Court.

The number of cases the Commission wasinvolved in increased significantly compared to2000–01. Like the previous year, complianceactivities were strongly focused on theCommission's role under the New Tax System(see chapter 2—New Tax System). However theCommission also continued its role in promotingcompetition and consumer protection in otherareas.

The Commission was party to a number of casesalleging collusive behaviour, misuse of marketpower and resale price maintenance. Itconcluded proceedings against cartels supplyingelectricity transformers, Colgate-Palmolive forresale price maintenance, NRMA Insurance formisleading conduct, and the Maritime Union ofAustralia for harassment and boycott activity. Inthe electricity transformers case, the courtimposed further penalties on members of thecartels, bringing total penalties to over$22 million.

The Commission also appeared as amicus curiae(friend of the court) in an intellectual propertyaction brought by Sony regarding chipping ofPlayStation game consoles, and received s. 87Bundertakings from Qantas and Virgin Blueregarding advertising of flight prices. In the Sonycase, the Federal Court established the right ofSony PlayStation owners to have their gamesconsoles 'chipped', allowing consumers to playimported and copied games. Sony wasunsuccessful in having the new anti-circumvention provisions of the Copyright Act1968 interpreted to outlaw the installation ofmodification chips that overcome region codingrestrictions.

Proceedings commenced by the Commissionincluded allegations against: Qantas for misuse ofmarket power; various milk wholesalers andpetrol retailers for price fixing; Wizard Mortgage,Mitre 10, Virgin Mobile and TotalCommunications for misleading priceadvertising; Pacific Access for misleading conductconcerning the Yellow Pages Connect service;Woolworths and Berri concerning the place oforigin of food items; Esanda, CommonwealthBank and Westfield for alleged unconscionableconduct; Internet Name Group,Com.Au.Register, Dataline and Free2aiRregarding Internet-related services; andnumerous respondents concerningunconscionable and misleading conduct inbusiness investment, leasing and franchising, andalso concerning misleading health claims.

A lot of the more significant litigation undertakenby the Commission during the year concerningalleged collusive behaviour and misuse of marketpower is subject to appeal to the High Court orFull Federal Court (the Boral, Safeway, Visy,Rural Press, Warner and Universal cases). TheCommission sought to intervene regardingspecific legal issues in private actions concerningalleged collusive behaviour (the South SydneyRugby League and Hoffmann-La Roche cases)and misuse of market power (the NorthernTerritory Power case). Appeals are alsooutstanding in Commission proceedings such asthose against Berbatis Holdings (unconscionableconduct), Dell Computers (price advertising),Daniels and Meerkin & Apel (s. 155 and legalprofessional privilege), IMB (exclusive dealing),Schneider Electric (electricity transformers casere quantum of penalty) and Top Snack Foods(recovery action).

The Commission has maintained its enforcementactivities in unconscionable conduct includingtowards small business with several casesinstituted in this area. On one matter, BerbatisHoldings, the Commission has appealed to theHigh Court. Many enforcement actions were alsocommenced to directly protect consumers with aparticular focus on price advertising and health-related claims.

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Price fixing, market sharing,bid rigging, boycotts andother collusive behaviour

Cases and undertakings

Electricity distribution transformers

Wilson Transformer Company Pty Ltd,Robert Wilson, Schneider Electric ( Australia)Pty Ltd, Russell Stocker, AW TyreeTransformers Pty Ltd and Raymond Boyceadmitted to market sharing and price fixingof distribution transformers during the 1990suntil 1999. On 3 May 2002 the FederalCourt (Melbourne) imposed injunctions andnearly $13.5 million in penalties on SchneiderElectric—$7 million, Russell Stocker (formerManaging Director)—$150 000, WilsonTransformer—$2.5 million, Robert Wilson(Managing Director)—$125 000, TyreeTransformers—$3.5 million and Ray Boyce(Managing Director)—$150 000. On 5 April2001 the court had ordered Alstom to pay a$1.5 million penalty. Schneider Electric hasappealed the quantum of penalty imposed onit. Proceedings against ABB Transmission andDistribution Ltd continue.

Electricity power transformers

Wilson Transformer admitted to marketsharing and price fixing of powertransformers during the 1980s and in 1993 to1995. On 3 May 2002 the Federal Court(Melbourne) imposed injunctions and penaltieson Wilson Transformer—$1.5 million, RobertWilson (Managing Director)—$100 000 andDavid Toogood (National BusinessDevelopment Manager of ABB)—$35 000.On 5 April 2001 the court had orderedAlstom to pay a $5.5 million penalty andSandy Elliott (Managing Director) a$150 000 penalty. Proceedings against ABBPower Transformers Pty Ltd (in liquidation)continue.

Bray v F. Hoffmann-La Roche Ltd & Ors

In October 2001 the Commission soughtleave of the Federal Court (Melbourne) tointervene in a private class action alleging pricefixing and market sharing in the global marketfor vitamins, by Australian and foreignproducers. The applicant obtained the court'sleave to serve the proceedings on the foreignrespondents. Some respondents applied to setaside extra-territorial service on grounds thatthe court lacked jurisdiction over them. TheCommission sought leave to intervene regardingthe interpretation and application of s. 5 ofthe Act that concerns the carrying on ofbusiness in Australia. On 13 March 2002 theFederal Court dismissed the foreignrespondents' motion. The court did not decidethe Commission's motion to intervene.

The Commission also commenced proceedingson 23 August 2001 in the Federal Court(Melbourne), alleging price fixing and marketsharing by foreign vitamin producers in theglobal market for human vitamin C. Therespondents are: F. Hoffmann-La Roche Ltd(Switzerland); Roche Vitamins Asia PacificPty Ltd (Singapore); BASF Aktiengesellschaft(Germany); BASF East Asia RegionalHeadquarters Ltd (Hong Kong); TakedaChemical Industries Ltd (Japan); and severalindividuals involved in the marketing ofvitamin C. The Commission had previouslytaken proceedings against Roche VitaminsAustralia Pty Ltd, BASF Australia Ltd andAventis Animal Nutrition Pty Ltd formerlyknown as Rhone-Poulenc Animal NutritionPty Ltd for price fixing and market sharing inanimal vitamins. In 2001 the Federal Court(Sydney) imposed penalties, recommendedby the parties, totalling $26 million.

Australian Medical Association (WesternAustralia) and Mayne Group Ltd (formerlyMayne Nickless Ltd) & Ors

Proceedings commenced on 21 July 2000 inthe Federal Court (Perth) alleging that AMA(WA), on behalf of visiting medical practitionersat Joondalup Health Campus, agreed withthe Mayne Group on the doctors' terms ofengagement. On 19 October 2001 the court

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found that AMA (WA), Paul ConstantineBoyatzis (Executive Director, AMA (WA))and David Evan Roberts (former president,AMA (WA)) had engaged in price fixing andprimary boycott conduct. On 12 December2001 the court ordered by consent, injunctions,that they pay penalties of $240 000, $10 000and $10 000 respectively, and that AMA (WA)implement a trade practices complianceprogram and pay $25 000 costs. The proceedingsagainst Mayne Group, Martin Day (formerGeneral Manager WA and Asia—Health Careof Australia) and Ian MacDonald (formerJoondalup Health Campus Chief Executive)are tentatively set for trial in March/April 2003.

Rural Press Limited & Ors

On 1 March 2001 the Federal Court(Adelaide), found that Rural Press and itssubsidiary, Bridge Printing Office, had misusedtheir substantial market power againstWaikerie Printing House (a smaller regionalnewspaper publisher), and that the threecompanies had agreed that Waikerie PrintingHouse would withdraw its paper The RiverNews from the Mannum area. On 7 August2001 the court imposed total penalties of$600 000 on Rural Press and Bridge PrintingOffice. On 16 July 2002 the Full FederalCourt found that the companies had made anagreement with the purpose or effect ofsubstantially lessening competition in theMurray Bridge market for regionalnewspapers, and confirmed the penaltiesimposed. The court found that Rural Pressand Bridge Printing had not misused marketpower, or entered into an arrangement withWaikerie Printing that contained anexclusionary provision. The Commissionsubsequently sought special leave to appeal tothe High Court.

Visy Paper Pty Ltd

On 10 August 2001 the Full Federal Courtfound that Visy had attempted to induceNorthern Pacific Paper into a market sharingagreement for recyclable waste papercollection. In May 2002 the High Courtgranted Visy Paper special leave to appeal thedecision. A hearing date is to be set.

Recruitment and Consulting ServicesAssociation Ltd

(case and s. 87B undertaking)

On 13 November 2001 the Federal Court(Brisbane) made orders, by consent, againstthe RCSA concerning its Code of Ethics andPractice Models which restricted members'dealings, maintained prices and provideddisciplinary provisions for non-compliance.The court restrained the RCSA fromrestricting its members supplying labour hireor employment services. The RCSAundertook to rescind the relevant provisions,withdraw disciplinary action, providecompensation to members subject todisciplinary proceedings in the last threeyears, and implement a trade practicescompliance program.

Maritime Union of Australia & Ors

On 21 November 2001 the Federal Court(Sydney) ordered the MUA to pay penaltiesand costs totalling $210 000 for engaging insecondary boycotts. The court also foundthat the MUA and some of its senior officialshad unduly harassed and coerced people toprevent or hinder, or attempt to prevent orhinder, vessels from sailing unless the shipowner or charterer agreed to use MUA labourto clean the vessels' holds. Injunctions weremade restraining the MUA and one seniorofficial from using undue harassment andcoercion in connection with the supply ofhold cleaning services. The MUA and threesenior officials also gave undertakings to thecourt not to engage in similar conduct inrelation to the s. 45DB contraventions. TheMUA was also ordered to implement a tradepractices compliance program and to publishto each of its officers, employees andmembers a notice advising of the court'sfindings and orders.

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Pauls Limited, Malanda Dairyfoods Ltd,Australian Cooperative Foods Ltd & Ors

Proceedings commenced on 15 August 2001in the Federal Court (Darwin) alleging a long-standing price fixing agreement in wholesalemilk products and unprocessed milk in theNorthern Territory. The Commission seeksdeclarations, injunctions, implementation ofcompliance programs, penalties and costs.The trial was set down to commence on12 August 2002.

Mark Leyden, Stephen Robson, Paul Khoo

Proceedings commenced on 16 April 2002 inthe Federal Court (Brisbane) against threeobstetricians providing private in-hospitalservices in Rockhampton, alleging that theyentered into agreements in December 2000and January 2001 to boycott 'no-gap' billingarrangements offered by private healthinsurance funds. The Commission alleges thatabout 200 consumers consequently paid upto $700 more than they would otherwisehave done. The Commission seeksdeclarations, injunctions, reimbursement ofthe expense incurred by patients in meetingthe gap between obstetricians' fees andrebates provided by health funds, informationnotices in local media, findings of fact andcosts. A hearing has been set down forNovember 2002.

Australian Safeway Stores Pty Ltd & Ors

On 21 December 2001 the Federal Court(Melbourne) found that the respondents hadnot contravened the Act. The Commissionhad alleged that Safeway had taken advantageof its market power in refusing to buypremium-branded bread from plant bakers ifthe baker had supplied generic or secondary-branded bread to independent retailers whosold the bread cheaply. The Commission alsoalleged that Safeway had made a price fixingand market sharing arrangement with GeorgeWeston Foods Ltd in the Preston area. Thecourt found that, while two employees hadbeen instructed to discuss prices, it was notsatisfied as to the identities of the senior staffwho made the arrangement. The Commission

appealed and the Full Federal Court hearingis set down from 10 February 2003.

Ithaca Ice Works Pty Limited, Queensland IceSupplies Pty Limited & Ors

On 26 July 2000 the Federal Court(Brisbane) ordered QIS pay $25 000 penalty,Kenneth John Smith (owner/operator, NorthCoast Ice) pay $15 000 penalty and $12 500costs, and Roderick Ian Matheson (owner/operator, Caboolture Ice Works) pay $7500penalty and $2500 costs, for price fixing inthe south-east Queensland ice industrybetween August 1993 and September 1996,and injuncted them from similar conduct.Brian Bradley (Director, QIS) and RoderickIan Matheson agreed to upgrade or implementtrade practices compliance programs. On4 December 2000 the court orderedJack Numan Berry (owner/operator, IpswichIce Supplies) pay $10 000 penalty and$10 000 costs, and ordered consentinjunctions restraining similar conduct. On2 May 2001 the court ordered Ithaca pay$100 000 penalty, Anthony John Mee(Manager, Ithaca) pay $7500 penalty andGregory Paul Mee (Manager, Ithaca) pay$7500 penalty, and pay the Commission'scosts. The Commission's application againstAnsonguard Pty Limited, Leo Grevis andGary John Grevis (Directors, Ansonguard)was dismissed, the Commission to pay thoserespondents' costs. On 13 June 2001 thecourt ordered, by consent, injunctionsrestraining Ithaca, Anthony Mee andGregory Mee from similar conduct. On7 December 2001 the Commission's appealagainst the penalties imposed on Ithaca andAnthony Mee was dismissed.

SIP Australia Pty Ltd & Ors

On 28 June 2002 the Federal Court (Sydney)found that SIP and Filippo Ippaso (Director)had made a market sharing and price fixingagreement with Baker Bros, a competingsupplier of compressors, and had attemptedto induce Baker Bros to enter into a marketsharing agreement in 1997–98. The penaltyhearing will take place on 28 August 2002.

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Pan Australian Industries (WA), Pink PantherPaints and Panel Beaters, Rob's Panel andPaint, & Pardoo Panel and Paint

On 11 December 2001 the Federal Court(Perth) found, by consent, that four Pilbara-based vehicle repairers colluded on prices toinsurance companies for repair work. TheCommission alleged that in mid-2000 therepairers discussed the prices they wouldcharge the insurers, and made a priceagreement from 1 September 2001. On25 August 2000 the repairers wrote to 18insurance companies about the agreedcharges. The court ordered, by consent,injunctions, implementation of tradepractices compliance programs and paymentof the Commission's costs.

DM Faulkner Pty Ltd, David Faulkner, RiversideMetal Industries Pty Ltd, Paul Clingan,Michael Neitner, Ferndale Recyclers Pty Ltd,Ronald Bagnall, Metals Recovery Pty Ltd,Keith Burnett, Ajax Sheet Metal Pty Ltd,Sidney Forrester, Peter Dunn, T&D Metals andDemolitions Pty Ltd, Anthony Franke, HendricusFranke t/a Coast Metal Recyclers, Allan Higgins& William Robinson

Proceedings commenced on 24 December2001 in the Federal Court (Sydney) allegingprice fixing and boycotts at scrap metalauctions in New South Wales. TheCommission seeks declarations, injunctionsand penalties. The next directions hearing isset down for 17 October 2002.

Leahy Petroleum Pty Ltd & Ors

Proceedings commenced on 21 May 2002 inthe Federal Court (Melbourne) against sevencompanies and seven individuals allegingpetrol price fixing by retailers in the Ballaratregion. The Commission alleges that therespondents colluded on the sizes and timesof price rises, and that agreements were putinto effect on 69 occasions between June1999 and December 2000. The Commissionseeks injunctions, declarations, findings offact, implementation of a trade practicescompliance program, penalties and costs.

News Limited & Ors v South Sydney DistrictRugby League Football Club Ltd & Ors

In July 2001 the Full Federal Court foundthat News and others had agreed to restrictthe number of teams in the 2000 NationalRugby League competition, thereby excludingSouth Sydney from participating. The HighCourt granted News special leave to appeal. On6 August 2002 the Commission was grantedleave to intervene in the proceedings and thematter was heard. Judgement was reserved.The Commission considered that the matterraised significant issues about the prohibitionon exclusionary provisions under the Act.

International Maritime Correspondence CollegePty Ltd trading as Labrador Children's Playschool

On 6 September 2001 the Federal Court(Brisbane) found that IMCC and its owneroperator Terry Balson had attempted to makea price agreement with six other Gold Coastchildcare centres. The court, by consent,imposed injunctions and ordered Terry Balsonto undertake trade practices compliancetraining.

The Hoyts Corporation Ltd and The GreaterUnion Organisation Pty Ltd.


Hoyts and GU co-located their cinemaoperations in the Brisbane CBD. On 19 July2001 they undertook not to share screens andto independently determine ticket prices andwhich films to exhibit.

Cash Services Australia Pty Ltd-Australian andNew Zealand Banking Group Limited,Commonwealth Bank of Australia & WestpacBank


These banks made an arrangement for theacquisition and management of transportationand cash processing activities. In doing so,they gave the Commission various undertakingson 28 August 2001, including concerningrestrictions on carriers, new members, newcustomers, exclusivity and dispute resolution.

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Taxis of Portland Pty Ltd(s. 87B undertaking)

On 15 October 2001 Taxis of Portlandundertook not to operate a roster system thatstopped taxi operators from working duringspecified times, or which allocated out-of-town work acquired directly by drivers on anext-in-line basis. Also, that owners, driversand lessees would be made aware that usingmobile phones to take bookings was notprohibited by the company's rules. Thecompany also undertook to implement atrade practices compliance program.

Misuse of substantial marketpower


Boral Ltd & Boral Masonry Ltd (formerly BoralBesser Masonry Ltd)

Proceedings commenced on 6 March 1998 inthe Federal Court (Melbourne) allegingpredatory pricing in the supply of concretemasonry products. On 22 September 1999the court found that the companies had notcontravened the Act. On 27 February 2001the Full Federal Court held that BoralMasonry Ltd had contravened the Act, anddismissed the Commission's appealconcerning Boral Ltd. On 14 December 2001the High Court granted special leave toappeal and the appeal was heard on 21 and22 May 2002, judgement reserved. TheCommission seeks declarations, injunctions,findings of fact, penalties and costs.

Warner Music Australia Pty Ltd & Ors/UniversalMusic Australia Pty Ltd & Ors

On 14 December 2001 the Federal Court(Sydney) found that Warner and Universal hadmisused their market power and engaged inexclusive dealing by threatening to and actuallywithdrawing trading benefits from CDretailers stocking parallel imports. The conductfollowed amendments to the Copyright Act

1968 allowing parallel importation of CDs. TheCommission's allegations of collusive conductwere dismissed. On 6 March 2002 the courtimposed injunctions and penalties of $450 000on each of Universal and Warner, penalties of$50 000 and $45 000 respectively on twoformer PolyGram executives (since taken overby Universal) and $45 000 each on twoWarner executives. The companies appealedthe decision and the Commission appealedthe quantum of penalties. The appeal is setdown for hearing by the Full Federal Courtfrom 25 November 2002.

Qantas Airways Limited

Proceedings commenced on 7 May 2002 inthe Federal Court (Sydney) alleging Qantasmisused its market power by substantiallyincreasing seat numbers, and matching andundercutting airfares, on the Brisbane–Adelaide route in response to Virgin BlueAirlines Pty Ltd's entry to the Australianaviation sector in December 2000. TheCommission seeks declarations, injunction,implementation or upgrade of a trade practicescompliance program, findings of fact, penaltyand costs. A directions hearing was held on12 June 2002 and a strike-out application isset down for hearing on 16 August 2002.

NT Power Generation Pty Ltd v Power andWater Authority Ors

In August 2001 the Commission sought tointervene in the appeal to the Full FederalCourt in this matter. The substantive issuesof the matter involve allegations of misuse ofmarket power. The Commission's involvementis limited to submissions concerning theapplication of the Act to governmentbusinesses and whether non-governmentbusinesses dealing with governments aresubject to the Act. Judgement reserved.

Australian Safeway Stores Pty Ltd & Ors—see page 32

Rural Press Limited & Ors—see page 31

Taxis of Portland Pty Ltd (s. 87B undertaking)—see page 34

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Exclusive dealing

IMB Group Pty Ltd, Logan Lions Ltd, RedbeakPty Ltd & Ors

Proceedings commenced on 20 September1993 in the Federal Court (Brisbane) allegingthat the respondents engaged in misleadingconduct, and were forcing the purchase ofLegal & General and National Mutual savingsplans to purchase shares in a proposed rugbyleague football club. On 5 April 2002 thecourt found that IMB and relevant individualshad engaged in misleading conduct on someof the allegations, and had not engaged inexclusive dealing. On 26 April 2002 theCommission appealed the judgement regardingexclusive dealing and the Full Federal Courtwill hear the matter from 18 November 2002.

Johnstone Shire Council, GiandomenicoHoldings Pty Ltd, Francesco Giandomenico andRemo Giandomenico.


On 7 August 2001 Johnstone Shire Counciland IQC Quarries undertook: to delete acondition in their lease agreement specifyingthat all contracts with the council requiringquarry products stipulate that the products bepurchased from ICQ Quarries; to register avariation of the lease with the Registrar ofTitles; and to implement a trade practicescompliance program. The council hasundertaken not to require tenders andcontracts that contractors must purchasequarry products from a specific supplierother than the council itself.

Warner Music Australia Pty Ltd & Ors/UniversalMusic Australia Pty Ltd & Ors—see page 34

Resale price maintenance

Colgate-Palmolive Pty Ltd(case and s. 87B undertaking)

On 15 May 2002 the Federal Court(Melbourne) found that in 1994 Colgate refusedto supply Tasmanian retailer ChickenfeedBargain Stores and its wholesaler with Colgatetoothpaste because Chickenfeed would notagree not to advertise the product below thenormal retail price in Woolworths' supermarkets.The court also found that in 1997 Colgaterequired Chickenfeed not to advertise Colgatetoothpaste, Palmolive detergents and Ajaxcleaners below Woolworths' normal price. Thecourt injuncted Colgate from engaging in similarconduct, imposed penalties of $500 000 andordered it to pay the Commission's costs.Colgate undertook to implement a tradepractices compliance program.

Leahy Petroleum Pty Ltd and Robin Palmer

Proceedings commenced on 21 May 2002 inthe Federal Court (Melbourne) against LeahyPetroleum and Robin Palmer (GeneralManager) concerning the termination of petrolsupplies to a Buangor service station owner.The Commission alleges that the owner wascontacted by Leahy Petroleum about a petrolprice rise and that, after he contacted theCommission, Leahy Petroleum ceased supplyto him. The Commission seeks declarations,injunctions, findings of fact, implementationof a trade practices compliance program,penalties and costs.

Archery Wizard Australia(s. 87B undertaking)

Around February 2001 Archery Wizard sent aletter and price list to five Australian archeryretailers inviting them to become Merlin Bowretailers. A subsequent letter stated: 'TheRecommended Retail, as per attached amendedpricing schedule is to be stringently adheredto'. Archery Wizard undertook not to engage inresale price maintenance, to write to its retailersadvising them that they can sell at prices oftheir choice, and to take all reasonable stepsto make itself aware of the Act.

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Exercise of powers undersection 155Section 155 empowers the Commission tocompulsorily acquire information.

The Daniels Corporation International Pty Ltd andMeerkin & Apel (a firm), Woolworths Limited,Coles Myer Ltd & Liquorland (Australia) Pty Ltd

Proceedings commenced on 12 September2000 in the Federal Court (Sydney) in theDaniels matter seeking declaration that theCommission's power regarding compulsoryacquisition of documents under s. 155 of theAct extends to documents the subject of legalprofessional privilege. On 18 December 2000the matter was referred to the Full FederalCourt, which on 16 March 2001 unanimouslyfound for the Commission. On 15 February2002 the High Court granted special leave toappeal. In October 2001 Woolworths, ColesMyer and Liquorland raised the same issuewith the High Court after receiving s. 155notices. The court injuncted the Commissionfrom proceeding with s. 155 notices issued tothose companies in relation to documents towhich legal professional privilege attaches. Allthe matters were heard on 18 June 2002,judgement reserved.

Leniency and cooperationpoliciesThe Commission's draft leniency policy in relationto cartel conduct was launched at its Competitionand Consumer Law Conference in July 2002. Thedraft policy has been disseminated for comment,particularly among professional advisers tobusiness. The policy aims to facilitate the detectionof, and to dismantle, cartels fostering secret collusivebehaviour such as price fixing, market sharingand bid rigging. The policy will complement theCommission's revised Cooperation in EnforcementGuidelines first published in 1998 that relate tonon-cartel civil contraventions of the Act.

The Commission's Competition and Consumer LawConference featured international speakers and

covered topical law enforcement issues includingcriminal sanctions for hard core cartel activity.

Intervention guidelinesThe Commission has developed Intervention inprivate proceedings guidelines, which werelaunched at the Commission's Competition andConsumer Law Conference in July 2002. TheCommission is increasingly interested inintervening, and appearing as a friend of the court(amicus curiae) in private proceedings raisingtrade practices and associated law enforcementissues, and is receiving more frequent requestsfrom private litigants to do so. In this way, theCommission can offer to assist the court inconsidering trade practices matters from a publicinterest perspective wider than the interests ofparties to actions.

Intellectual property

Kabushiki Kaisha Sony ComputerEntertainment v Stevens

In July 2001 the Commission sought leave tobe heard as a friend of the Federal Court (amicuscuriae) on the interpretation of section 116Aof the Copyright Act 1968. The proceedingsconcerned an individual involved in modifyingregion coding in PlayStation consoles. Thispractice, also called 'chipping', allows consumersto use imported games and legitimate backupcopies. Sony alleged that chipping contravenedanti-circumvention provisions of the CopyrightAct. The respondent was unrepresented.These are the first Australian proceedingsconcerning alleged circumvention ofcopyright protection. In September 2001 thecourt granted leave to the Commission to beheard as amicus curiae, and the matter washeard on 17–19 April 2002. On 26 July 2002the court found there had been nocontravention of the Copyright Act.

Warner Music Australia Pty Ltd & Ors/UniversalMusic Australia Pty Ltd & Ors—see page 34

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E-commerceElectronic communications are an integral part ofbusiness and the Commission's enforcementactivities routinely address matters involvingelectronic documents and Internet trading. InAugust 2001 the Commission established theElectronic Investigation Support Unit, which hascontributed to around 150 inquiries andinvestigations.

More accessible telecommunications facilitiesand growing acceptance of web-based marketinghave allowed practices like pyramid selling,referral selling, miracle cures, unsolicited andundelivered goods and services, and scams ingeneral to migrate to these networks. Get-rich-quick schemes and dubious health claims thrivein this environment. The borderless nature,relatively low cost and high speed of transactions,and instant payment and money transferfacilities, enhance returns for unscrupuloustraders around the globe.

The Commission is working to address thesecircumstances, again leading the annualinternational Internet Sweep Day to detect web-based misrepresentation. The fourth sweep dayinvolved 58 agencies from 19 countries andtargeted misleading health claims. In Australia,the Therapeutic Goods Administration, Treasury,NSW Health Care Complaints Commission,Victorian Health Services Commission, ACTCommunity & Health Services ComplaintsCommissioner, WA Office of Health Review, andall state and territory fair trading authoritiesparticipated. Around 10 000 sites were visited,and 77 Australian sites were flagged. Australianfair trading authorities have contacted thesetraders: around 20 sites appropriately modifiedtheir claims; 3 sites closed; and many traderssatisfied the Commission's concerns. TheCommission is continuing to investigate others.

The Commission liaises with the au DomainAdministration, and with Australian andinternational law enforcement agencies to share

appropriate information. It also participated inthe National Office for the InformationEconomy's examination of spam (unsolicitedbulk email), options for protecting Internet usersfrom problematic spam, and alternative disputeresolution. In January 2001 the Commissionpublished Consumer Alert and Fair.com to informconsumers about business domain nameregistration and renewal processes.

In October 2001 the Commission published itsE-commerce and competition issues under theTrade Practices Act discussion paper. TheCommission is inquiring into competition issuesin the e-commerce environment.

The Commission held its practising.tradeE-commerce Conference on 19–20 November2001, to increase consumer and businessawareness of trade practices issues in onlinetrading. The main issues raised concernedpotential regulatory responses to consumerconcerns about service levels, privacy, security;and access in B2B marketplaces.

In April 2002 the Commission made a submissionin response to the Treasury's discussion paperDispute Resolution in E-Commerce.

Cases

Internet Name Protection Pty Ltd trading asInternet Name Group

Proceedings commenced on 17 April 2002 inthe Federal Court (Melbourne) allegingnotices sent by ING and Mark Specktor(Director) were likely to mislead consumersthat ING was responsible for registeringInternet domain addresses, and that it haddealt with recipients previously. On 6 May2002 the court made interlocutory ordersrestraining ING from sending unsolicited'Renewal Advice Forms' and using the words'.bz means business'. On 24 May 2002 SashaSudakov (Director) and Craig Missell

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(Corporate Department Manager) wereadded to the action. A directions hearing isset for 13 December 2002.

Stephen Henry Wayt trading asCOM.AU.REGISTER

Proceedings commenced on 28 March 2001in the Federal Court (Brisbane) alleging thatStephen Wayt misled potential customers thatthe business was responsible for registeringInternet domain addresses, and that it haddealt with them previously. On 26 February2002, by consent, the court declared thatStephen Wayt had engaged in false, misleadingor deceptive conduct, required that he sendcorrective facsimiles and display a correctivenotice on the business website, and that heimplement a trade practices complianceprogram.

Dataline.net.au Pty Ltd & Ors—see page 57

Internet TV Australia Pty Ltd trading asFree2aiR and James Young—see page 58

The professionsIncreasingly, the Commission is focusing on howvarious members of professions behave and theimpact of that behaviour on consumers.

The Commission engaged extensively withrelevant organisations during the year, and madesubmissions to governments about professionsissues. Organisations the Commission liaised withincluded: the National Competition Council,various professions' boards and associations,Department of Health and Ageing and state andterritory health departments, Therapeutic GoodsAssociation, Australian Council of Professions,bar associations, law societies, various health andinsurance commissioners, natural health caregroups, the Australian Consumers Association,Private Health Insurance Ombudsman, Consumers'Health Forum, Private Health InsuranceAdministration Council, and hospital groups.

In 2001–02, claims about insurance coverage andother health-related goods and services haveattracted particular Commission attention.

One of the Commission's important roles is toeducate the professions about their responsibilitiesunder the Act. To this end the Commissionreleased the draft General Practitioners—a guideto the Trade Practices Act in March 2001.

The draft was released following the Commission'sparticipation in a workshop of peak industry andgovernment organisations convened by theAustralian Divisions of General Practice on12 February 2001. The first draft was released on6 March 2001 after consultation with all theworkshop participants and a revised draft wasreleased on 30 March 2001 following furtherconsultation. The Commission and Departmentof Health and Aged Care travelled throughoutAustralia workshopping the revised guide andmeeting with general practitioners andrepresentative groups. The guide will be finalisedafter final determination of the Royal AustralianCollege of General Practitioners authorisationapplication to the Commission, and completion ofthe federal government's Review of the impact ofPart IV of the Act on the recruitment andretention of medical practitioners in rural andregional Australia. The guide will be distributedto GPs, their practice managers and advisers andthe Commission also proposes to issue asummary and short pamphlet.

The Commission made submissions to thefederal government including:

Submission to Review of the impact of Part IVof the Act on the recruitment and retention ofmedical practitioners in rural and regionalAustralia: The federal government announcedthis review on 29 August 2001. The Commissionprovided submissions on 29 November 2001 and1 February 2002. The Review Committee is yetto report its findings. The Commission's keysubmissions are: there is a shortage of doctors inrural and regional communities due to reasonssuch as lifestyle, remuneration, lack of services,family issues, education for children, indemnityinsurance and leaving social networks, but noevidence that the Act impacts on rural doctors;genuine medical rosters do not contravene theAct because their purpose is to ensure supply of

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medical services (the opposite of a primary boycottprohibited by the Act); if doctors wish to engagein anti-competitive conduct that is of overridingpublic benefit, the Commission's rigorous andtransparent authorisation process is available toallow such conduct to take place; and exemptionfrom the Act for price fixing and boycotts bydoctors would be very detrimental to patients,rural communities, and competitive practitioners.

Submission to Departments of Treasury andHealth and Ageing on medical informedfinancial consent: The Commission participatedin the consultation process conducted by theDepartments of Health and Ageing and theTreasury during the second half of 2001, concerningtheir medical informed financial consentdiscussion paper, and has made a submission. TheCommission awaits the outcome with interest and,should the recommendations not bring aboutsignificant compliance among medical practitioners,the Commission would support a mandatory codeof conduct to secure informed financial consent.

Other submissions: The Commission has madenumerous submissions to other governmentagencies with responsibilities in the professionsarea, especially relating to deregulation ofprofessions under National Competition PolicyReform. These include submissions to:

! The Department of Health and Ageing:regulation of prostheses in the private healthsector; and regulation of private healthinsurance

! The Victorian Department of Human Services:regulation of medical practitioners and nurses

! The Victorian Medical Practitioners Board:Draft Advertising Guidelines

! The Queensland Government's NationalCompetition Policy Review: Regulation ofLegal Profession

! The Queensland Health Department:including dentistry profession restrictions;restrictions on use of title for cosmetic andplastic surgeons and physicians; terms used by

medical practitioners’ regulations; medicalradiation technologists’ regulations;chiropractors registration regulations;osteopaths registration regulations

! The Victorian Dental Practice Board SpecialistAdvisory Committee: proposed restrictionsfor the specialities in dentistry

! The New South Wales Dental TherapistsAssociation regarding proposed practicerestrictions on therapists.

The Commission's reports to the Senate included:

Senate reports on Anti-competitive and otherpractices by health funds and providers inrelation to private health insurance: On30 August 2001 the Commission tabled its 3rdreport for the periods 1 July 2000–31 December 2000 and 1 January 2001–30 June2001. Key issues in the report were: the role ofhealth funds in providing information on no-gapservices to consumers; the extent to whichconsumers are provided with meaningfulinformed financial consent; the deregulation ofthe prostheses market and the action undertakenby the Commission during the periods to protectconsumers' health interests.

On 25 June 2002 the Commission tabled its 4threport for the period 1 July 2001–31 December 2001. The key issues in the reportwere that: health funds may be misleadingpolicyholders about coverage; private and dayhospitals have generally failed to adopt theirvoluntary industry Code of Practice concerningcontract negotiations between health funds andhospitals; doctors have not obtained informedfinancial consent from patients; and health fundsand their agents should be aware they may beliable under the Act for misleading conduct.

Senate report on Tobacco industry: On24 September 2001 the Senate requested theCommission to report on the tobacco industry.The report was tabled on 30 April 2002 and on27 June 2002 the Senate requested the

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Commission to report further on matters includingits liaison with stakeholders and investigations.

The Commission liaises with the Department ofHealth and Ageing, and participated in adepartmental review of health warnings ontobacco products. Tobacco product labelling is amandatory standard under the Act. TheCommission is a member of the CommonwealthCross-Government Tobacco Liaison Meeting whichmeets several times a year to discuss advertising,labelling, health effects and the work of the WHOFramework Convention on Tobacco Control.

On 18 April 2002 the Treasurer asked theCommission to review, as specified inrecommendation 5(c) of the Final Report of theNational Competition Policy Review of Pharmacy,the relative financial and corporate differencesbetween friendly society dispensaries andpharmacist-owned community pharmacies, andwhether this adversely affects competition in thepharmacy industry. This report is to be providedto the Treasurer by October 2002.

Cases and undertakings under the ASIC Act

The following five matters involve proceedingsinstituted or undertakings given under theAustralian Securities and Investment CommissionAct 1989 (ASIC Act). Until March 2002 healthinsurance advertising was regulated through theASIC Act with delegated power to the ACCC.From March 2002 the Commission has assumeddirect responsibility for health insuranceadvertising.

NRMA Health Pty Ltd trading as SGIC Healthand SGIO Health, NRMA Insurance Ltd andSaatchi & Saatchi Australia Pty Ltd

Proceedings commenced on 5 November 2001in the Federal Court (Sydney) and on 3 July2002, the court made orders against NRMA,by consent, concerning advertisementsappearing in various newspapers inSeptember 2001 and its website. The printadvertisements depicted a woman nursing anew born baby and stated: 'free delivery …no matter how advanced your pregnancy is',and contained fine print disclaimers that fullcoverage for obstetric services was subject to

any excess or co-payment and service of a 12-month waiting period with NRMA or anotherhealth fund. The orders included declarationsthat NRMA Health breached the relevantprovisions of the ASIC Act, a requirementthat NRMA Health inform consumers of themisleading conduct, waiver of waiting periodsfor those who were misled and the availabilityof refunds for excesses and co-payments. TheCommission alleges that Saatchi & Saatchi,NRMA's advertising agency, was involved inthe contraventions and trial of the matter isset down for 18 September 2002.

Medical Benefit Funds of Australia Limited(MBF) and John Bevins Pty Ltd

Proceedings commenced on 8 February 2001in the Federal Court (Sydney), concerningprint and television advertisements containingpregnancy-related images. The Commissionalleges that fine print in the advertisements—that the 12-month waiting period for pregnancy-related services would not be waived—wasinadequate and unlikely to come to theattention of consumers. The Commission allegesthat John Bevins, MBF's advertising agent,was involved in the alleged contraventions. TheCommission seeks declarations, injunctions,publication and broadcast of correctiveadvertisements, waiver of the 12-monthwaiting period for pregnancy-related servicesfor women or families who transferred to orjoined MBF in the period 28 May 2000 to16 September 2000, review of trade practicescompliance programs and costs. The matterwas heard on 3 and 4 June 2002, judgementreserved.

Medibank Private

Proceedings commenced 26 October 2000 inthe Federal Court (Melbourne) regarding twoadvertising campaigns. The Commission allegesthat: from early March 2000 Medibankadvertised no rate increase in 2000 onPackagePlus products; that through its callcentre, newspaper advertising, website,brochures and mail to customers, Medibankfailed to properly disclose that rates wouldincrease on 1 July 2000. The Commissionalleges that a second campaign in major

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newspapers in August 2000 offered consumersswitching from other funds 'any waiting periodswaived' and 'get 30 days free if you change toMedibank Private'. The Commission allegesthat the advertisements failed to properlydisclose that only the 2-month general waitingperiod and the 6-month optical waitingperiod were waived, and that this was onlyindicated in fine print at the bottom of theadvertisements. The Commission is seekingorders including waiver of waiting periods,provision of 30 days free health insurance,and refunds or credits for PackagePluspurchasers. On 21 March 2002 the FederalCourt refused Medibank's application forcertain remedial orders sought by theCommission to be struck out. MedibankPrivate has appealed this decision to the FullFederal Court.

Western District Health Fund Ltd

Proceedings commenced on 23 January 2002in the Federal Court (Sydney) alleging thattelevision advertisements, stating 'all operationscovered' with 'no excesses or co-payments' andthat 'there's nothing hidden or complicated',were misleading, as were similar statementsin website advertising and brochures. TheCommission alleges that print stating thatcoverage was 'as per Government MedicareBenefits Schedule' and that no excesses or co-payments applied to 'hospital accommodationonly' was inadequate, and unlikely to come toconsumers' attention. The Commission seeksinjunctions, the publication of correctivetelevision and website advertising, refunds ofexcesses or co-payments, refund of 12-monthsmembership, reimbursement of hospital andmedical expenses for operations for a 12-month period, review of Westfund's tradepractices compliance program and costs. Trialis set for 17 and 18 October 2002.

HCF

In August 2001 HCF undertook to waivewaiting periods applicable to members whojoined HCF between 3 and 30 June 2001. AHCF television advertisement had stated:'Join HCF before June 30th and receiveinstant cover' and that the two and six-monthwaiting periods were waived. A visual fineprint statement read: 'the waiver does notapply to waiting periods of more than sixmonths, including those for pregnancy andrelated conditions. Pre-existing ailments andconditions are also excluded'. TheCommission considered the advertisementrepresented that, by joining HCF before30 June 2001, the public would be entitled tobenefits from the time of joining for allhospital, medical and ancillary servicesincluded in the cover.

Cases and undertakings under the TPA

Pacific Dunlop Ltd

Proceedings commenced 21 January 2000 inthe Federal Court (Melbourne), alleging thatpackaging of Ansell latex gloves did not warnthat latex could cause serious allergic reactionsin some people. The Commission seeksdeclaration, injunction and compensation fora consumer. Court ordered mediation tookplace on 10 October 2000 and 12 December2001. On 18 June 2001 the Commission wasgranted leave to amend its pleadings toinclude misleading or deceptive conduct.Proceedings are continuing.

David Zero Population Growth Hughes tradingas Crowded Planet

In March 2002 the Federal Court (Sydney)found that David Zero Population GrowthHughes engaged in misleading and deceptiveconduct and made false representations aboutthe supply of oral contraceptives through hisCrowded Planet website by not disclosingsignificant health risks associated with theuse of oral contraceptives by particularpeople and that, in Australia and the UnitedStates of America (where the server for thesite was based) it is illegal to buy or supply

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oral contraceptives without a prescription.The court made orders restraining the supplyof oral contraceptives in Australia withoutmaking specific disclosures, and supply topersons in the United States of America. Therespondent sought leave to appeal beyond thestatutory time for appeal but this was refused.

Purple Harmony Plates Pty Ltd, Neal ArthurLyster and Helen Therese Glover

Proceedings commenced on 23 May 2001 inthe Federal Court (Melbourne). The courtfound, on 6 August 2001, that PurpleHarmony Plates had published misleadinghealth claims on its website about pieces ofanodised aluminium plate. The court orderedinjunctions, corrective statements in writingto customers and on its website, and refunds.In September 2001 the Commissioncommenced contempt proceedings and, on9 April 2002 the court imposed a fine of$20 000 on Purple Harmony Plates and finesof $10 000 on each of Helen Therese Gloverand Neal Arthur Lyster (Directors) forcontempt.

Chaste Corporation Pty Ltd & TRIMit

Proceedings commenced on 26 November2001 in the Federal Court (Brisbane) allegingresale price maintenance, unconscionable,misleading and deceptive conduct, breach ofthe mandatory industry franchising code andfalse representations concerning its AreaManagement Agreements for a claimedweight-loss product TRIMit. The Commissionseeks injunctions, refunds for area managers,provision of disclosure documents,implementation of a trade practicescompliance program, costs and penalties forresale price maintenance conduct. Chasteundertook that: it will not enforce the allegedresale price maintenance provisions of theagreement and not enter into agreementswith this provision; not suspend or terminate,or threaten to suspend or terminate, areamanagers if they attempt to meet to discussChaste; and that Chaste will write to all areamanagers advising them of this. The matterhas been adjourned to a date to be fixed.

Danoz Direct Pty Ltd

Proceedings commenced on 3 May 2002 inthe Federal Court (Brisbane) concerning the'Abtronic'. The Commission alleges thatDanoz, Moshe Ozana (sole Director) andothers misrepresented the capabilities of thedevice, promoted on Channel 10's GoodMorning Australia and Bright Ideas programs,during 'infomercials' on Channels 10 and 7, ina Danoz product catalogue and on its website.The Commission seeks injunctions, includingabout claims about the Abtronic such as: it isa brilliant training and toning tool; can beused to work out and tone different musclegroups; provides a vigorous workout for theabdominal region, the 'love handles', arms,buttocks, thighs; can flatten your stomach'once and for all', you just sit, relax and watchyour 'abs' tighten; your 'love handles'disappear and your thighs and bottom firm upwith no sweating involved; and you can get theresults of up to 600 sit-ups in just 10 minuteswithout any effort. The matter is down fortrial for seven days from 28 October 2002.

Emerald Ocean Distributors Pty Ltd,Slendertone Health and Beauty Pty Ltd

Proceedings instituted on 19 July 2000 in theFederal Court (Perth) concerned allegedmisrepresentations about the health andcosmetic benefits of an electronic musclestimulation product. The court granted leaveto the respondents to join their parentcompany, Bio Medical Research Ltd locatedin Ireland, as a cross respondent. On 4 April2002 the court ordered that hearing of thecross claim would take place with trial of theaction. The trial commenced on 22–29 July2002 and is set down to continue on16–19 December 2002.

The Buyers Group Pty Ltd & Ors

Proceedings commenced 27 July 2001 in theFederal Court (Brisbane) concerning the'Feminique' muscle stimulation devicepromoted in infomercials on Channel 10'sGood Morning Australia and Bright Ideasprograms, Channel 7's Morning Shift, and thecompany's website. On 10 August 2001 the

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court, by consent, imposed interlocutoryinjunctions restraining The Buyers Group,Josephus Schoonenberg (sole Director) andemployees Marianne Schoonenberg andDavid Simons from representing that theFeminique or any other muscle stimulationproduct can: exercise, tone, firm or pull backinto shape any part of the user's body withouteffort by the user; burn up fat; flatten the user'sstomach without any effort by the user; resultin the user losing 3 kilograms in weight andreduce the user's waist measurements by 3centimetres in 4 weeks; and is ideal for peoplewho want to see effective and immediate results.

Advanced Medical Institute Pty Ltd

Proceedings commenced on 19 April 2002 inthe Federal Court (Sydney) alleging that AMIand Jacov Vaisman (Managing Director)engaged in false, misleading and deceptiveconduct concerning the promotion of claimedtreatments for male impotence and erectiledysfunction. The Commission is seekingvarious orders including declarations, injunctions,refunds, the publication of corrective printand electronic advertisements, and theimplementation of a trade practices complianceprogram. The matter has been listed forfurther directions on 11 October 2002.

Collagen Aesthetics Australia Pty Ltd

Proceedings commenced on 17 May 2002 inthe Federal Court (Adelaide) alleging falseand misleading representations in VogueAustralia, She and Marie Claire magazines,about collagen and hylaform products. TheCommission alleges that the advertisementsincorrectly stated that: because CollagenAesthetics' products are registered on theAustralian Register of Therapeutic Goods,they are safer to use than its competitor'sproducts which are merely listed; the collagenand hylaform products are safe; treatmentwith the collagen products is painless; thecollagen products are natural; and three typesof hylaform products are available to besupplied to the public. The Commissionseeks declarations, injunctions, correctiveadvertisements, implementation of a tradepractices compliance program and costs.

Australian Indoor Tanning Association Pty Ltd(s. 87B undertaking)

In early 2000 AITA distributed promotionalmaterial suggesting that solarium tanning hashealth benefits and carries no risks. On3 August 2001 the AITA undertook to ceasemaking the statements, and to distribute acorrective statement to its customers warningof the risks of solarium tanning.

Ergoline (Australia) Pty Limited(s. 87B undertaking)

In early 2000 Ergoline distributed brochuresconcerning sunbeds suggesting that solariumtanning has health benefits and carries no risks.In August 2001 Ergoline undertook to ceasemaking the statements and to publish correctivenotices to its customers, in newspapers and inpromotional material, warning of the risks ofsolarium tanning. The undertaking was givenin August 2001, and a variation to it acceptedby the Commission in October 2001.

Smaji Management Pty Ltd, trading as ITPIncome Tax Professionals


In July 2001 ITP published print andtelevision advertisements offering a 48-hourtax refund service without disclosing that theservice was a loan against the refund customersmight receive from the Australian TaxationOffice, and that an extra fee was payable. ITPundertook to qualify any further suchadvertisements, publish corrective televisionadvertisements, make refunds to those whopaid the fee but did not receive a refundwithin 48 hours, and to implement a tradepractices compliance program.

Eyelines Tasmania Pty Ltd(s. 87B undertaking)

Eyelines, an optical dispenser with eight storesin Tasmania, advertised on a Hobart radiostation in March 2002 that: 'Eyelines is theonly Tasmanian-owned and operated opticalprovider. It has 8 stores state wide' and'Eyelines is the only Tasmanian-owned and

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operated optical provider with 8 stores statewide'. Both claims were wrong. Eyelinesundertook to broadcast approved correctivenotices on radio and to instigate specifiedcompliance measures and training.

F. Hoffmann-La Roche Ltd & Ors—see page 30

Mark Leyden, Stephen Robson, Paul Khoo—see page 32

Australian Medical Association (WesternAustralia) and Mayne Group Ltd (formerlyMayne Nickless Ltd) & Ors—see page 30

Giraffe World Australia Pty Ltd—see page 62

Consumer protectionThe Commission has retained its traditional focuson protecting consumers in the areas of productsafety, scams and other misleading conduct.However, it also looks at other areas such as:expanded cooperation with other governmentagencies, health issues, fine print advertising,e-commerce, undue harassment and coercion,and the actions of professions, in order to protectconsumers from unscrupulous businesses.

Consumer initiatives

Consumer Consultative Committee: InNovember 2001 the Commission established itsConsumer Consultative Committee which meetsfour times per year to ensure better communicationbetween the Commission and peak nationalconsumer advocacy and research organisations.

Consumer express: In August 2001 the Commissioncommenced monthly publication of Consumerexpress to provide a snapshot of matters affectingconsumers, and 'how to' guides to help consumers

resolve concerns. The publication is available byelectronic subscription. As well as consumers andtheir representatives, subscribers include businesspeople, people in the media and lawyers.

InsuranceOn 7 June 2001 the Hon. Joe Hockey MP (thenMinister for Financial Services & Regulation)asked the Commission to report on changes ininsurance markets and insurance premiums. TheCommission presented its report to SenatorIan Campbell, Parliamentary Secretary to theTreasurer, on 12 March 2002.

After a ministerial forum on public liability on27 March 2002, Senator Campbell asked theCommission to update the report by July 2002,to take into account the full impact of the failureof HIH and the September 11 terrorist attacks inthe US on premiums, and to analyse thecompetitiveness of public liability and professionalindemnity sectors. The Commission is finalisingits report.


NRMA Health Pty Ltd trading as SGIC Healthand SGIO Health, NRMA Insurance Ltd andSaatchi & Saatchi Australia Pty Ltd—see page 40

Medical Benefit Funds of Australia Limited(MBF) and John Bevins Pty Ltd—see page 40

Medibank Private—see page 40

Western District Health Fund Ltd—see page 41

HCF—see page 41

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Advertising and pricesMisleading and deceptive advertising continuesto be the Commission's enforcement priority inthe protection of consumers, with the misuse offine print and deceptive pricing of special concern.

There appears to have been increasing problemsin advertising in the year 2001–02, with theCommission noting problems in the area of priceadvertising, use of fine print and adequatedisclosure in advertisements generally. TheCommission continues to examine advertisingconducted through infomercials and advertorials.


Qantas Airways Limited and Virgin Blue AirlinesPty Ltd—all inclusive flight prices


In May 2002 the Commission acceptedundertakings from both Qantas and VirginBlue that they would include additional taxes,levies and charges in their advertised flightprices, except where the purchaser would bedirectly liable to pay such costs (e.g. departuretaxes at some international airports). All-inclusive price advertising informs consumersabout the full direct cost of flights.

Travel industry—all-inclusive prices

In May 2002 the Commission informed thetravel industry that, following the undertakingsof Qantas and Virgin Blue, it anticipated thatany transition necessary to ensure all-inclusiveprice advertising would be completed by30 June 2002. The Commission is providingguidance to the travel industry in this regard,and is investigating price advertising that doesnot disclose full costs.

Info4pc.com Pty Ltd and James Rae (director)

Proceedings began on 23 January 2001 in theFederal Court (Adelaide) alleging misleadingor deceptive conduct, bait advertising andaccepting payment without intending to supplycomputers. The matter was transferred to theFederal Court (Perth) on 24 January 2001.The court has restrained Info4pc.com fromaccepting orders for the computers anddealing with its bank account.

On 31 July 2002 the Federal Court finedInfo4pc.com Pty Ltd and James Rae a total of$14 000 for contempt of court orders madein early 2001. The matter is continuing in theFederal Court.

Dell Computers

Proceedings were instituted in the FederalCourt (Sydney) in December 2001. On2 July 2002 the court found Dell had engagedin misleading conduct by failing to make itclear that customers had to pay a deliverycharge in addition to the purchase price ofcomputers, and ordered correctiveadvertising. The court found that thecompany had not made false or misleadingprice representations contravening ss. 53(e)and 53C of the Act. The Commission hasappealed these aspects of the case. A hearingdate has not yet been set.

Commercial & General Publication Pty Ltd &Anthony Robert Hassett

Prosecution began on 28 September 2001 inthe Federal Court (Hobart) by theCommonwealth Director of Public Prosecutions,following a Commission investigation. On22 July 2002 Commercial & GeneralPublications Pty Ltd (CGP) and its managingdirector, Anthony Robert Hassett, wereconvicted on charges of accepting paymentsfrom five Tasmanian small businesses for

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advertising in a proposed publication whenCGP and Mr Hassett were aware, at the timeof accepting payment, that CGP would beunable to supply the advertising. Separatecharges that CGP and Mr Hassett madepayment demands on eight small businessesfor unsolicited and unauthorised advertisingin CGP publications were not found to havebeen proved beyond reasonable doubt.Penalty submissions will be heard beforeJustice Heerey on a date in October 2002.

Chubb Security Australia Pty Ltd trading asVitalcall

In August 2001 the Federal Court ordered, byconsent, that Chubb Security Australia Pty Ltdpublish corrective radio and print advertising.Chubb had claimed that its Vitalcall personalresponse systems cost about $1 a day. However,an additional installation fee of between $80 to$279 was also payable, as well as a monitoringfee of $1.16 to $1.26 per day. The court alsoordered by consent an injunction and correctiveletters offering customers refunds.

Universal Sports Challenge Ltd and Mr MichaelKotowicz (Shark Challenge)

Proceedings commenced on 8 April 2002 inthe Federal Court (Sydney) allegingmisrepresentations that the Shark Challenge2000 Golfing Competition final would beheld overseas when it would in fact be held inQueensland. In May 2002 the court ordered,by consent, that USCL had contravened theAct, imposed injunctions and required that acorrective letter be send to affected consumers.USCL had previously refunded the entryfees. The proceedings against MichaelKotowicz continue. A second directionshearing is set down for 13 September 2002.

Quality Bakers Australia Limited

Proceedings commenced in May 2001 in theFederal Court (Canberra) concerning the'Help Buttercup to Help Our Babies'promotion from 17 March 2001 to 1 June2001, that 30 cents from the sale of eachadditional Buttercup product purchased wouldbe donated to helping babies in The Canberra

Hospital. Fine print on the bread labels statedthat the promotion was limited to productsales, excluding hot cross buns, above theaverage number of products sold in theCanberra Buttercup bakery area over the11-week period preceding the promotion. On21 December 2001 the court made orders,by consent, that Buttercup had contravenedthe Act, imposing an injunction for three years,and requiring review of its trade practicescompliance program. Buttercup made a$40 000 donation to The Canberra Hospital.

Orbit Homes Australia Pty Ltd

Proceedings commenced 7 September 2001in the Federal Court (Melbourne) concerninghome packages advertised March–May 2001in the Herald Sun newspaper, which allegedlyoffered features at no extra cost when theircost ($14 700–$18 600) was built into theprice. The court ordered, by consent, that thecompany had contravened the Act, injunctions,public disclosure notices in the press and onits website, implementation of a tradepractices compliance program, and costs.

Alex Salter Pty Ltd trading as Salters ofMoorooka

Proceedings commenced 15 March 2002 inthe Federal Court (Brisbane) in relation tothe advertised price of a vehicle at Salters ofMoorooka, which did not include additionaldealer costs including administration fees.The advertisement also failed to disclose thatthe vehicle was not registered. On 3 April2002, by consent, the court made declarations,injunctions, ordered implementation of atrade practices compliance program, and thatAlex Salter undergo trade practicescompliance training, and pay costs.

Fire Fighting Enterprises(case and s. 87B undertaking)

Proceedings commenced on 30 April 2002 inthe Federal Court (Brisbane) alleging thatbetween 1990 and 2001, FFE had notproperly inspected and maintained fireprotection systems, and did not have in placean adequate system to ascertain whether it

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was performed. FFE admitted the conduct.The court ordered, by consent, injunctionsfor three years. FFE undertook to write toaffected customers offering compensation,publish public notices in a newspaper to alertcustomers to potential missed services,conduct an internal review to identify thecauses of the contraventions, and to upgradeits trade practices compliance program.

McDonald's Australia Ltd

On 24 September 1999 the Commissioninstituted proceedings in the Federal Court(Sydney—later transferred to Brisbane) allegingunconscionable conduct against consumers,misleading or deceptive conduct and falserepresentations regarding the 1999 McDonald'sMcMatch & Win Monopoly competition. On9 March 2001 Justice Dowsett of the FederalCourt (Brisbane) found that the 34 claimantswho presented evidence in a privaterepresentative proceedings regarding the samecompetition had not made out their claim(Hurley v McDonald's Australia Limited).On 20 August 2001 Justice Dowsett, byconsent of the parties, dismissed theproceedings brought by the Commission.

Mitre 10 Australia Ltd

Proceedings commenced on 21 September2001 in the Federal Court (Melbourne)alleging that television, newspaper and radioadvertisements for Mitre 10's '15 per cent offstorewide' and '15 per cent off everything'sales on 15–17 June 2001, did not properlydisclose that a large range of goods was notreduced by 15 per cent. The Commissionseeks declarations, injunctions, publication ofcorrective notices on television and in thepress, findings of fact, implementation of atrade practices compliance program andcosts. The proceedings continue.

Allans Music Group Pty Ltd

Prosecution commenced on 30 April 2002 inthe Federal Court (Adelaide) by theCommonwealth Director of Public Prosecutions,following a Commission investigation. It isalleged that Allans Music made various

statements about the price of musicalinstruments and other equipment which wereadvertised in its Christmas 2000 catalogue. Itis further alleged that Allans Music had not sold18 of the items referred to at their 'was' pricesince January 2000 or at all during that yearand that, for this reason, these 18 representationswere false or misleading representationsconcerning price. Proceedings are continuing.

Architectural & Structural Adhesives

Proceedings commenced on 30 November2001 in the Federal Court (Sydney),concerning labelling of products as 'whollyAustralian owned' or 'Australian owned' whena substantial proportion of shares in thecompany had been held by a French companysince June 2000. On 14 December 2001 thecourt declared, by consent, ASA had engagedin misleading or deceptive conduct andordered, by consent, injunctions, correctiveadvertising and consumer refunds.

Wizard Mortgage Corporation Ltd

Proceedings commenced 7 February 2002 inthe Federal Court (Melbourne) alleging thataround June and July 2001 Wizard advertisedits Rate Breaker loan at 5.64 per cent interestwith features such as direct salary creditingand the ability to change monthly repaymentsto fortnightly or weekly repayments, whenthose features were only available with loansat higher interest rates. The Commission isseeking declarations, injunctions, correctivenotices, and costs. A directions hearing is setdown for 23 August 2002.

Furniture Direct Pty Ltd, Furnelect Pty Ltd &Monty Khoury (companies' director)

Proceedings commenced 21 December 2001in the Federal Court (Brisbane) alleging that aFurniture Direct 'Store Cost Plus $1'advertising campaign misrepresented theamount of price reductions. The Commissionseeks declarations, injunctions, refunds of30 per cent of the price paid by affectedconsumers, implementation of a tradepractices compliance program, and costs.Proceedings are continuing.

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Rod Turner Consulting Pty Ltd

Proceedings commenced on 3 July 2000 inthe Federal Court (Melbourne) alleging thatRod Turner falsely claimed to be a charteredaccountant, and misrepresented that GSTwas payable on residential rent and watersupply. The Commission seeks declarations,injunctions, apologies for consumers involved,findings of fact, implementation of a tradepractices compliance program and costs. Acase management conference was held on3 July 2002. The trial is set for 3 October 2002.

Custom Security Services Pty Ltd(s. 87B undertaking)

On 18 June 2002 Custom Security Servicesin Canberra undertook to offer refunds tocustomers who were charged for securitysystem upgrades made without priorconsultation. Customers only became awareof the upgrades when they received a bill.CSS then misinformed customers that theupgrades were required under an AustralianStandard, and that insurance claims mightotherwise be denied. CSS undertook to writeto affected customers offering refunds of the$99 upgrade fee and related telephone charges.

Hotelcheque Pty Limited(s. 87B undertaking)

In April 2001 the Commission received acomplaint that Hotelcheque Pty Limited hadoffered for sale a product consisting of a book ofhotel accommodation vouchers, each voucherentitling the purchaser to hotel accommodationfor two people at the rate of approximately$5 per person per night twin share.

The product was advertised in televisionadvertorials and a radio advertisement. TheCommission was concerned that theadvertisements failed to adequately informthe audience of the condition that thepurchaser and their companion must also buybreakfast and dinner at the hotel in order toqualify for the discounted room rate. Thisfurther amount would have been on average$50.50 per person per day for breakfast anddinner. In March 2002 the Commissionaccepted the undertakings provided by

Hotelcheque to cease the offending conduct,offer full refunds to all affected purchasers,publish a corrective advertisement, and forcompany management and staff to undertakea trade practices compliance program.

Aussie Breaks Pty Limited(s. 87B undertaking)

In April 2001 the Commission received acomplaint that Aussie Breaks Pty Limitedadvertised a book of hotel accommodationvouchers, for accommodation of $5 per personper night twin share. The advertisementfailed to adequately disclose that the purchasermust also buy breakfast and dinner at thehotel to qualify for the discounted room rate,on average $50.50 per person per day. InMarch 2002 Aussie Breaks undertook to ceasethe offending conduct, offer full refunds toall affected purchasers, and to undertake atrade practices compliance program.

Forrester Kurts Properties Ltd(s. 87B undertaking)

In July 2001 the Commission acceptedundertakings from Forrester Kurts whoacknowledged its representations regardingnegative gearing opportunities of real estate,and the availability of Qantas Frequent FlyerPoints for purchasers contravened ss. 52 and53(e) of the Trade Practices Act. Forrester Kurtsundertook to write to purchasers identified aslikely to have seen the advertisement, and forthose purchasers who claim to be misled bythe advertisement, offer to rescind theircontracts and refund all moneys paid. It alsoundertook to clarify future statementsregarding Frequent Flyer promotions andnegative gearing calculations, and to implementa trade practices compliance program.

A. Royale & Co (Aust) Pty Ltd(s. 87B undertaking)

A. Royale & Co. (Aust) Pty Ltd is one of theleading suppliers of belts in Australia. In August2000 A. Royale informed the Commissionthat the NZ Commerce Commission wasinvestigating its labelling of belts as leather

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though they contained less than 50 per centleather. A. Royale undertook to cease theconduct, publish corrective advertisements,offer refunds to all affected consumers andimplement a trade practices complianceprogram.

Carpet One Australasia Limited(s. 87B undertaking)

Carpet One made misrepresentations aboutsavings on floor coverings and did notadequately disclose that the 12 monthsinterest free was only available on selecteditems. On 12 October 2001 Carpet Oneundertook not to engage in similar misleadingadvertising, to publish a corrective notice andan article about two-price advertising, toimplement a trade practices complianceprogram and to hold a seminar for its members.

Health insurance undertaking and cases x 5—see page 40–41

Total Communications (Tas) Pty Ltd—see page 49

Virgin Mobile Australia Pty Ltd—see page 50

Oceana Commercial, NAPC, Greenwich andCommonwealth Bank of Australia—see page 58


Smaji Management Pty Ltd, trading as ITPIncome Tax Professionals—see page 43

GST cases—Domaine Homes (NSW) Pty Ltd,Strasburger Enterprises (Properties) Pty Ltdtrading as Quix Food Stores, Marsh Pty Ltd,Mike Carney Motors Pty Ltd, Metropolis RealEstate Pty Ltd, Flipstock Pty Ltd trading as AMan's Toyshop, Commodore Homes (WA) PtyLtd, Tangent Nominees Pty Ltd trading asSummit Homes, Signature Security—see chapter 2.

TelecommunicationsMisleading and deceptive conduct intelecommunications services was also an area ofCommission attention.

Cases

Telstra

In July 2001 the Commission obtained urgentinterim orders against Telstra in relation to itsconduct following the collapse of One.Tel.The Commission alleged that Telstra hadmisled former One.Tel customers about thetransfer of mobile services to Telstra, includingthat customers would be liable for earlytermination fees if they did not switch theirservice to Telstra before a certain date. InDecember 2001 the Federal Court in Melbournemade orders against Telstra, by consent, forthe partial repayment of minimum monthlyaccess fees and costs to about 3000 formerOne.Tel mobile phone customers.

Total Communications (Tas) Pty Ltd

Proceedings commenced on 7 December 2001in the Federal Court (Hobart) alleging thatTotal Communications published a misleadingnewspaper advertisement showing mobilephones priced at '$0' with an inconspicuoussmall print disclaimer '*conditions apply', withno conditions disclosed. On 12 December2001 the court declared, by consent, that thecompany had engaged in false, misleading ordeceptive conduct because essential conditionsof the associated airtime contract, such as theminimum monthly rental, the number ofmonths the contract must run, and the totalcost of the contract, were not set out in theadvertisement. The court ordered, by consent,a five-year injunction, publication of acorrective advertisement, and implementationof a trade practices compliance program which

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adopts the Australian TelecommunicationIndustry Forum consumer code.

Pacific Access Pty Ltd

Proceedings began on 14 December 2001 inthe Federal Court (Melbourne) alleging thatPacific Access misrepresented that the YellowPages Connect 12451 telephone service wouldprovide the best or closest match to searchcriteria specified by a consumer, whereasPriority Advertisers in the Yellow Pages arereferred to consumers calling Yellow PagesConnect ahead of non-Priority Advertisers,even when the latter is the closer or bettermatch to the search criteria. Consumers arecharged $1.21 per call to the service, and anadditional fee if they wish to be connected tothe advertiser offered. The Commission seeksdeclarations, injunctions, corrective advertising,refunds, implementation of a trade practicescompliance program and costs.

Virgin Mobile Australia Pty Ltd

Proceedings commenced on 3 May 2002 inthe Federal Court (Perth) alleging that VirginMobile's advertising for 'Dial High Club'packages failed to state the full cash price ofthe mobile phone packages and was likely tomislead consumers as to the minimum and/ortotal cost commitment of the package (over$1000 in one case) and about the conditionson the packages. The Commission seeksdeclarations, injunctions, corrective advertising,refunds, implementation of a trade practicescompliance program and costs.

Billbusters Pty Ltd & Miles Kendrick-Smith

On 23 November 1998 the Commissionobtained interim orders in the Federal Courtrestraining Billbusters Pty Ltd and its directorMiles Kendrick Smith from representing thatthe company performs audit services onaccounts or invoices of Telstra; using ordealing in any manner with money receivedfrom its customers for the purpose of payingTelstra accounts or invoices of Telstra; andrepresenting that the ACCC has the power toprevent Telstra from disconnecting telephonesof Telstra customers. The orders were

discharged on 8 November 1999. A directionshearing was held on 13 December 2001. Theproceedings are continuing.

Axxess Australia Pty Ltd, Benchmark Sales PtyLtd, Peter Edward Russell Slaney & StephenVincent McGovern—see page 56

Country of originIn 1998–99 the Department of Industry, Scienceand Resources funded the Commission to securecompliance with the Act regarding the correctstatement of the country of origin of goods. TheCommission convened and led working parties tovisit manufacturers and produce guides for the:

! textile, clothing and footwear industry(Textiles, clothing and footwear industries,Country of origin guidelines to the TradePractices Act, published December 2001)

! foods and beverages industry (publishedAugust 2002)

! electrical and whitegoods industry (preparingdraft report and guide)

! toy industry (site visits completed, preparingdraft report and guide)

! furniture and furnishings industry (visits beingorganised).

The Commission has completed a first round ofinserts into trade journals, and a second roundwill be done when all guides have beenpublished. The Commission has published aCountry of origin section on its website includingFrequently Asked Questions.


Woolworths Ltd

Proceedings commenced on 29 October 2001in the Federal Court (Sydney) alleging thatthe Woolworths 'Beefing up the Economy'advertisements published in regionalnewspapers in New South Wales were falseand misleading. The advertisements claimedthat all the beef sold in Woolworths regional

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supermarkets were sourced from cattlesuppliers in the north-west and New Englandregions and that the cattle were fed on locallyproduced grain. The matter was heard by theFederal Court on 13 June 2002 and judgmentwas handed down on 12 August 2002. Thecourt declared that Woolworths had madefalse or misleading representations about theplace of origin of cattle ultimately sold asbeef in some of its regional supermarkets, andthat it had engaged in misleading or deceptiveconduct concerning this beef and the grainused to feed the cattle.

GIA Pty Ltd trading as Tamar Knitting Mills &Eric Ian Thompson (former Managing Director)

Prosecution commenced on 2 September2001 in the Federal Court (Hobart) by theCommonwealth Director of PublicProsecutions, following a Commissioninvestigation. It is alleged that GIA removedthe original labelling from Chinese-made poloshirts, and added swing tags representing theshirts were 'Tasmanian' or 'Made in Tasmaniaby Tamar Knitting Mills' before offering themfor sale to the public. It is also alleged that thecompany furnished false information to theCommission in response to a statutory notice.Before the trial that was listed to commenceon 31 July 2002, Eric Ian Thompson entereda guilty plea to all charges. The company (inliquidation) has not entered a plea.

Entee Food & Beverage Distributors andWholesalers Pty Ltd


Proceedings commenced on 17 August 2001in the Federal Court (Darwin) concerningorange juice labelled: 'product of Australia','Australian Squeezed', 'Darwin squeezed','pure Australian fruit' and 'Locally squeezed'when, from January 2001 to June 2001, theproducts contained 15 per cent reconstitutedjuice from Brazil and contained juice preparedin Brisbane. The 'Darwin Squeezed OrangeJuice' did not list sugar as an ingredient oradditive. On 21 August 2001 the courtordered, by consent, declarations, injunctions,that Entee become a signatory to the Fruit

Juice Industry Code, and contribute to theCommission's costs. Entee undertook toimplement a trade practices training program.

Berri Ltd

Proceedings commenced on 13 August 2001in the Federal Court (Melbourne) allegingthat Farmland orange juice concentratelabelled 'Made in Australia from AustralianFruit Juice' contained imported juice. TheCommission alleges that the claim 'Madefrom a blend of quality Australian andImported fruit juices depending on seasonalavailability' and similar claims on variousFarmland, Just Juice and Sunburst fruit juicevarieties was misleading, because aninsufficient amount of available Australianjuice was used. On 17 December 2001 theCommission commenced further proceedingsalleging the labelling of several pineapple juiceproducts represented that the proportion ofimported and Australian juice in the productsdepended on seasonal availability. It is allegedthat the Australian pineapple juice is notsubject to seasonal availability. The proceedingshave been consolidated. The Commissionseeks declarations, injunctions, correctiveadvertisements and implementation of acorporate compliance program.

Pauls Victoria Limited

On 13 September 2001 the Federal Courtfound, by consent, that Pauls VictoriaLimited had supplied Coles SupermarketsAustralia Pty Ltd between February 1999 toMay 2001 with fruit drinks incorrectly labelledas 'Product of Australia' when they containedimported juice. As part of the consent ordersPauls was restrained from making falserepresentations regarding the country of originand composition of its fruit juice products,agreed to give consumers a discount and toimplement a corporate compliance program.

HPM Industries Pty Ltd(s. 87B undertaking)

HPM sells fluorescent tube DF40 starterunits which, between September 1998 andMarch 2000 and between mid-2001 and

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October 2001, were sold in packaging stating'Australian Made' with the image of a kangaroo,as well as stating: 'Made in India'. The productswere made in India. HPM undertook to ceasethe conduct, offer consumer refunds, publishcorrective advertising and undertake a tradepractices compliance program.

Australian Disc Brakes Pty Ltd and AmpcoAutomotive Pty Ltd


Ampco and Australian Disc Brakesmanufactured and distributed disc brake pads,in packaging that may have given the impressionthey were Australian made whereas somewere imported. The companies undertook tocease the conduct, send a corrective noticeand provide refunds to customers in the lastthree years and to implement a tradepractices compliance program.

Food and beveragesThe Commission works closely with peakindustry bodies and the Food Standards AustraliaNew Zealand (FSANZ formerly ANZFA) aboutfood labelling. It is negotiating a memorandum ofunderstanding with FSANZ to assist in managingfalse and misleading claims where there is anoverlap between the Joint Food Standards Codeand the Act. The Commission was a member ofthe External Advisory Group for ANZFAProposal P234—Nutritional content and otherrelated claims. It commented on Standard 1.5.2/A18—Food produced using gene technology.Mandatory labelling of genetically modified foodscommenced in December 2001, and theCommission then released a News for Businesspublication on advertising of Genetically modifiedorganisms and foods. The Commission alsoparticipated in the Commonwealth FoodRegulators Officials Group in the Department ofHealth and Ageing Food Secretariat.

Submissions: The Commission has madesubmissions to FSANZ on various food standardproposals.

Grocery pricing inquiry: This inquiry arises froman order of the Australian Senate on 8 February2001, to inquire into price discrimination bygrocery wholesalers. The Commission's reportwill be made in September 2002.


Cadbury Schweppes Pty Ltd

Proceedings commenced on 22 March 2002in the Federal Court (Melbourne) concerningCottee's Banana Mango Flavoured Cordial andApple Kiwi Flavoured Cordial Concentrate.The Commission alleges that, while therelevant fruits are depicted on the labelling,the products do not contain any of these fruits.The Commission seeks declarations,injunctions, corrective advertising andimplementation of a trade practices program.The matter is continuing.

Woolworths Ltd—see page 50

Entee Food & Beverage Distributors andWholesalers Pty Ltd—see page 51

Australian Safeway Stores Pty Ltd & Ors—see page 32

Pauls Limited, Malanda Dairyfoods Ltd,Australian Cooperative Foods Ltd & Ors—see page 32

Berri Ltd—see page 51

Pauls Victoria Limited—see page 51

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Employment and education


Crackerjack Productions and Network Ten

Proceedings commenced on 6 May 2002 inthe Federal Court (Sydney) alleging thatCrackerjack, with the knowledge of NetworkTen, placed advertisements offeringemployment as a 'Girl/Boy Friday' when infact the successful applicants were to be usedas subjects in a 'candid-camera' typetelevision show. The matter is set down fordirections on 23 August 2002.

inthebigcity.com Pty Ltd and APN NewspapersPty Ltd


Proceedings commenced on 9 April 2001 in theFederal Court (Brisbane) alleging misleadingconduct regarding a 1900 premium-rate phoneservice that promised job seekers employment,and removal and accommodation discounts. Theservice was mostly used by unemployed ruralyouth. The court ordered, by consent, againstinthebigcity.com Pty Ltd and its directors on3 August 2001, and APN Newspapers Pty Ltdand its Group Product Development Manageron 1 November 2001. These undertakingsprovided for refunds of $60 000 to 3000consumers, publishing of corrective noticesand the implementation of trade practicescompliance programs.

Black on White Pty Ltd, trading as theAustralian Early Childhood College—see page 59

Product safetyProduct safety and compliance with mandatoryproduct standards and bans under the Actremains a priority for the Commission.

The Commission concentrates on improvingindustry awareness of mandatory standards andbans, and surveying for compliance. It accepted

s. 87B undertakings and took proceedingsconcerning non-complying bicycles, toys,sunglasses, vehicle ramps and vehicle and trolleyjacks. The Commission is also interested incompetition issues that can arise from theformulation of, and adherence to, industrystandards generally.

Education, liaison and guidance: TheCommission provides guidance to industry on theinterpretation of mandatory standards under theAct (this year this included guidance onamendments to the bicycles and paper patternsstandards). It also participates in StandardsAustralia technical committees' reviewing anddevising of standards (this year concerningchildren's nightwear, sunglasses, car jacks,helmets for vehicle users, vehicle restraints forchildren, children's cots, folding cots, bunk beds,and highchairs).

In April 2002 Commission Chairman, ProfessorAllan Fels, delivered the keynote address to theinaugural Infant & Nursery Products Associationof Australia (INPAA) conference. The conferencefocused on product liability risk management,with reference to the Safe Baby Code initiatedby INPAA.

In February 2002 the Manager of the Commission'sProduct Safety Unit attended the 8th EuropeanConsumer Safety Association InternationalConference on Product Safety and theInternational Consumer Product Health & SafetyOrganisation annual workshop.

In September 2001 the Commission liaised withthe European Commission's Product and ServiceSafety Health & Consumer Directorate,concerning Prodsafe (OECD communicationssystem), Prosafe (an EC enforcement forum),the EC directive on product safety, and the needfor greater international communication. TheCommission also liaised with Local AuthoritiesCo-ordinators of Regulatory Services in theUnited Kingdom concerning enforcementcoordination among member states.

Fuel standards: The Commission has beenhelping industry to inform consumers aboutwhether the petrol they are purchasing containsadditives and any effects of those additives onvehicles. It has also been liaising withEnvironment Australia regarding a compliance

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regime in the mandatory national fuel standardson the addition of ethanol to fuel.

Amendments and new mandatory standardsand bans

Bicycle helmets: Both the standard and laws onthe wearing of helmets have significantly reducedcyclist injuries and deaths. A revised standard,effective 5 October 2001, requires compliancewith either: AS/NZS 2063/1996; or the 1995Snell Standard including the Child HelmetAddendum to Standards for Protective Headgear.AS/NZS 2063 amendments were made regardingtesting requirements.

Bunk beds: Standard effective 1 November2002, based AS/NZS 4220/1994. Some injuriesto children have been due to falls from top bunksor head entrapment gaps. The standard requiresguardrails for the sides and ends of the top bunk,specifies gap sizes to prevent entrapment andeliminated protrusions that create a hanging hazard.

Babywalkers: Standard based on the AmericanSociety for Testing and Materials standardF977-00, requiring a step-locking mechanism toprevent falling down stairways. Expected to takeeffect from 1 March 2003. Babywalkers havecaused more injuries than any other nurseryproduct, mostly due to falls of children less thanone year of age.

Tinted headlight covers: Temporary ban effectiveAugust 2001 preventing supply of covers that allowless than 85 per cent luminous transmittance.

Mini jelly cups: Possible 18-month ban regardingadding of konjac, a thickening agent that does notreadily dissolve in saliva and is a choking hazard.There are recorded deaths overseas and one inNew South Wales, and two known near deaths inQueensland and Victoria. Already banned inthree Australian states and the Northern Territory.

National survey programThe Commission conducts biannual marketsurveys, taking account of the relative hazard,distribution, complaint history and whether thestandard or ban is recent. This year's surveyscovered cots, disposable cigarette lighters,

flotation toys, pedal bicycles, tobacco labelling,child restraints in vehicles, cosmetics, exercisecycles, vehicle jacks, paper patterns, toys forchildren under three years of age, tinted headlightcovers, sun visors and elastic luggage straps.


Hyundai Automotive Distributors

Vehicle jacks: Proceedings commenced on23 October 2001 in the Federal Court(Sydney), and on 21 December 2001 thecourt found, by consent, that Hyundai hadsupplied vehicle jacks that did not complywith the standard, imposed an injunction andthe implementation of a trade practicescompliance program. About 185 000 jacks didnot carry the warning, safe use and operatinginstructions as required by the standard.Hyundai implemented a voluntary recall ofthe jacks and published recall notices inmajor newspapers.

Autobarn Pty Ltd, Northern Accessories Pty Ltdand Dictomax Pty Ltd

Car ramps: On 29 April 2002 the FederalCourt (Darwin) made orders by consentpreventing Autobarn and Northern Accessoriesfrom supplying non-compliant car ramps, andrequiring Autobarn to conduct additionalstaff training to supplement its existing tradepractices compliance program. On 17 May2002 the court made further orders byconsent against Dictomax Pty Ltd preventingit from supplying non-compliant car ramps.

Apollo Optical (Australia) Pty Ltd & MonzaImports Pty Ltd

Sunglasses: On 17 October 2001 the FederalCourt (Perth) ordered by consent, declarations,injunctions, refunds, publication of safetynotices, and costs against these importers ofSPY ISIS brand sunglasses. The court alsofound that Apollo had supplied non-complyingCAB55 002 fashion spectacles to retailers.

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Easybuy.com.au Pty Ltd, trading as Bikes Direct(s. 87B undertaking)

Pedal bicycles: In April 2002 Bikes Directundertook to recall non-complying bicycles,fix them, and implement a trade practicescompliance program. Some faults wereidentified during testing by Bikes Directalthough no major structural problems wereidentified. Bikes Direct also correctedstatements on its website about consumers'rights and warranties.

Tele Choice Pty Ltd(s. 87B undertaking)

Pedal bicycles: Tele Choice importedmountain bikes and in 2001 supplied themwith mobile phone purchases. The bicyclesdid not comply with labelling, seat-clampstrength, front hub retention and bellrequirements. Tele Choice advised that 2200bikes had been supplied between February–June 2001. The company advised that itstopped supplying the bikes in early June 2001after it became aware that they did notcomply with the mandatory standard. TeleChoice undertook to recall the bicycles, toimplement a trade practices complianceprogram and ensure that any bicycles suppliedin the future comply with the standard.

Apollo Bicycle Co Pty Ltd(s. 87B undertaking)

Bicycle helmets: On 11 July 2001 theCommission received court enforceableundertakings from Apollo following a surveyof bicycle helmets. Apollo was supplying'Free Agent' brand helmets and these did notcomply with the mandatory consumerproduct safety standard for bicycle helmets.The undertaking required Apollo to ceasesupply of the helmets as suitable for bicycleuse, undertake corrective advertising thatincluded a refund offer, and agreement to acompliance program. Apollo was alsorequired to have sales agents visit retailers tocheck helmets in stock to ensure labelling assuitable for bicycle use had been removed.

Freelaw Pty Ltd, trading as Super Toyworld(s. 87B undertaking)

Pedal bicycles: Non-compliant bicycles werelocated at Super Toyworld during aCommission survey in October 2001. SuperToyworld undertook to stop selling the bikes,publish newspaper advertisements offering tofix any sold, and to implement a tradepractices compliance program.

Golden Sun Pty Ltd(s. 87B undertaking)

Trolley jacks: In April 2002 Golden Sunsupplied jacks that did not carry the requiredwarnings and safe usage information, itconducted testing and recalled the jacks. Afterthe Commission raised its concerns thecompany ceased to further supply the jacksand recalled those it had supplied. Thecompany also undertook to train staff andimplement a trade practices complianceprogram.

Freedom Group Ltd(s. 87B undertaking)

Beanbags: Commission surveys resulted in therecall of various beanbags, covers and ottomanscontaining polystyrene beads. FreedomFurniture, and smaller suppliers, offered refunds.Freedom Furniture undertook to implement atrade practices compliance program.

Unconscionable conductThe Commission has maintained its high level ofenforcement activities in relation tounconscionable conduct with a number of newcases instituted. The Commission lost its appealto the Full Federal Court on one matter, SamtonHoldings Pty Ltd, and on another matter,Berbatis Holdings trading as Farrington Fayre, theCommission has been granted special leave toappeal to the High Court.

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CG Berbatis Holdings trading as FarringtonFayre Shopping Centre & Ors

Proceedings commenced on 6 April 1998 inthe Federal Court (Perth). The trial was heldfrom 31 January to 3 February 2000. On26 September 2000 the court found that theconduct of the landlords and theirrepresentatives towards a tenant wasunconscionable. The owners appealed and theCommission cross-appealed. The Full Courtheard the matter on 31 May 2001, and on27 June 2001 upheld the appeal anddismissed the Commission's cross-appeal. On29 August 2001 the Commission soughtspecial leave to appeal to the High Court,which was granted on 31 May 2002. Thematter will be heard on 21 October 2002.

Samton Holdings Pty Limited & Ors

On 26 February 1999 the Commissioncommenced proceedings against Samton, alandlord, and six individuals allegingunconscionable conduct towards a commercialtenant. On 26 November 2000 the matterwas dismissed. The Commission's appeal tothe Full Federal Court was dismissed on6 February 2002.

Axxess Australia Pty Ltd, Benchmark Sales PtyLtd, Peter Edward Russell Slaney & StephenVincent McGovern


Proceedings began on 25 May 2001 in theFederal Court (Melbourne) alleging transferof consumers' pre-selected telephone servicewithout their informed consent, followingdoor-to-door and telephone marketing. Thispractice is known as 'slamming'. On 13 March2002 the court ordered declarations andinjunctions restraining similar conduct.Axxess, Benchmark, Peter Slaney andStephen McGovern undertook to engage anindependent assessor approved by theCommission to review the companies' tradepractices compliance training, to adoptAustralian Telecommunication Industry

Forum consumer codes, to pay $60 000 to anACCC-managed public education campaignabout consumers’ rights regardingtelecommunication services, and to pay up to$20 000 costs.

Avanti Investments Pty Ltd andDr Giuseppe Barbaro

Proceedings commenced on 27 April 2001 inthe Federal Court (Adelaide) concerning watersupply under market garden leases from 1994to persons lacking formal education, Englishlanguage skills or commercial experience.Demands for payment of excess water usagetotalled more than $67 000. The court, byconsent, declared that Avanti had contravenedthe Act and granted injunctions restrainingAvanti from demanding payment for excesswater charges and requiring it to indemnifythe farmers for such charges until their leasesexpired. Avanti and its then director wereordered to pay the Commission's costs.

Suffolke Parke Pty Ltd andGregory John Bradshaw

Proceedings commenced on 18 September 2001in the Federal Court (Adelaide) concerningSuffolke Parke's (a master franchisee for TheCheesecake Shop) leasing of premises to afranchisee, alleging it refused to allow thefranchisee to sublet in reprisal for complaintsby franchisees concerning the franchisor'sconduct; and that when the franchisee soughtmediation under the mandatory FranchisingCode of Conduct, the franchisor refused toattend. The court, by consent, declared thatSuffolke Parke and Gregory John Bradshaw(director) had acted unconscionably and thatthe company had not complied with thefranchising code by refusing to attendmediation. The court ordered injunctions,payment of $10 000 compensation to thefranchisee, undertaking of a trade practicescompliance training program and payment ofthe Commission's costs. This dispute wasunrelated to The Cheesecake Shop nationalfranchise.

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Lux Pty Ltd

Proceedings began on 27 July 2001 in theFederal Court (Perth) alleging unconscionableconduct, and undue harassment and coerciontowards an intellectually impaired couple tosecure the sale of a Lux vacuum cleaner. Thetrial commenced on 22 April 2002 and is setdown to continue on 6–8 November 2002.

Esanda Finance Corporation Ltd & Ors

Proceedings commenced on 12 April 2001 inthe Federal Court (Perth) alleging the use ofphysical force, undue harassment and coercion,and unconscionable conduct relating to thepayment for goods and services by a consumer.The Commission also alleges some individualsengaged in harassment and coercion incontravention of s. 23 of the Fair Trading Act1987 (WA). The Commission seeksdeclarations, injunctions, corrective notices,compensation, undertaking of a tradepractices compliance program and costs.

Westfield Shopping Centre Management Co(Qld) Pty Ltd, Westfield Management Ltd,Westfield Design and Construction Pty Ltd & Ors

Proceedings commenced on 29 October 2001in the Federal Court (Brisbane) againstWestfield and two employees, one of WestfieldDesign and Construction Pty Ltd and the otherof Westfield Shopping Centre ManagementCo (Qld) Pty Ltd and/or WestfieldManagement Ltd alleging misleading anddeceptive conduct concerning initial leasenegotiations. The proceedings also allegeunconscionable conduct by Westfield concerningthe subsequent refusal to settle a disputeregarding the misleading and deceptive conductunless the tenant withdrew a complaint tothe Commission and stated they were satisfied,and unless the Commission undertook tocease its investigation. The Commission seeksdeclarations, findings of fact, injunctions,damages for the former tenants and costs.

Dataline.net.au Pty Ltd & Ors

Proceedings began on 21 December 2001 inthe Federal Court (Brisbane) allegingunconscionable, misleading and deceptiveconduct, false representations, undueharassment and resale price maintenance inthe supply of Internet-related services to smallbusinesses and consumers. On 25 January 2002the court ordered Dataline to permit theCommission to enter its premises to seize andremove personal computers. On 26 January2002 the court ordered, by consent, thatimages of the personal computers and copiesof servers at Dataline's premises be made anddelivered to the custody of the court. On8 February 2002 the court restrained Dataline,Australis and WPS from making debits toconsumers' credit cards without prior written,signed authorisation. The court ordered, byconsent, that Dataline and Australis not takeany steps towards trial in District Court actionsagainst business customers in Queensland andWestern Australia, until the conclusion of theCommission's proceedings. The Commissionseeks declarations, injunctions, findings offact, damages, refunds, implementation of atrade practices compliance program, costsand penalties. The next directions hearing isset down for 2 September 2002.

4WD Systems Pty Ltd and 4WD SystemsAustralia Pty Ltd

Proceedings commenced on 26 September2001 in the Federal Court (Adelaide) againstthe companies, Raleigh Julian Hobert andThomas David Hewitson (directors of bothcompanies) alleging: failure to deliver stockor to deliver within a reasonable time; supplyof low quality, damaged and unusable stockand failure to refund franchisees for same;misrepresentation regarding Difflocks supplied;that the franchisors competed with franchiseesin their franchised areas; non-compliance withthe mandatory franchising code by refusing tonegotiate and failing to provide franchiseagreements or disclosure documents; andunconscionable conduct. The Commissionseeks injunctions, refunds and compensationfor franchisees, implementation of a tradepractices compliance program and costs. A

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mediation took place on 24 May 2002 and adirections hearing was set for 14 August 2002.

Australian Industries Group Pty Ltd, trading asHalf Price Shutters

Proceedings commenced on 4 August 2000 inthe Federal Court (Perth) alleging that HalfPrice Shutters, Tony Gulloti (nationalmanager) and Robert Keirle (a former director)made false claims about the potentialprofitability of a franchise, did not provide adisclosure document contrary to the mandatoryfranchising code, and acted unconscionablytowards its franchisees when they complainedabout poor profitability. On 1 March 2002the court ordered, by consent, declarations,injunctions, compensation, implementationof a trade practices compliance program andcosts.

Internet TV Australia Pty Ltd trading asFree2aiR and James Young

Proceedings began on 17 May 2002 in theFederal Court (Brisbane) alleging thatFree2aiR and James Young (sole director)misrepresented that free Internet access timewas included in Internet access services, andthat there were no ongoing fees other than acharge for any downloads above a specifiedamount each month. The Commission allegesa quarterly administration fee was not disclosedand that some customers received demandsfor payment and threats of disconnection. Itis alleged that Free2aiR engaged inunconscionable conduct and undue harassmentand coercion in its dealings with customers.It is further alleged James Young was involvedin the alleged conduct. The Commission seeksdeclarations, injunctions, refunds, establishmentof a trade practices compliance program andcosts.

Oceana Commercial, NAPC, Greenwich andCommonwealth Bank of Australia

Proceedings commenced on 14 November2001 in the Federal Court (Brisbane) allegingtwo-tier marketing of investment propertieson the Gold Coast. Two-tier marketing is the

practice of having two price tiers for real estate,one for locals who know local values and onefor people from another area who do not. Theproceedings also allege the involvement of twolawyers who allegedly failed to advise theirclients of the marketing fees and inflated prices.Further, it is alleged that the CommonwealthBank engaged in unconscionable conduct byproceeding to provide a loan despite having reasonto believe that its customers had been misled.A directions hearing was held on 8 February2002. The trial is set down for three weeksfrom 7 October 2002. The Commission isseeking declarations and injunctions.

Arnold's Ribs and Pizzas

Proceedings commenced on 12 March 2002in the Federal Court (Sydney) allegingmisleading and unconscionable conduct inpromotion of a fast food franchise. It isalleged that Arnold's misrepresented thelikely levels of sales and profits, targetedpeople with little or no business experience,failed to ensure franchisees understoodimportant terms of the franchise contract andimposed conditions that were not reasonablynecessary for the protection of Arnold'slegitimate interests. The matter is set downfor further directions on 26 September 2002.

Daewoo Australia Pty Ltd, Daewoo HeavyIndustries and Machinery Limited & Eui HwanKang

Proceedings commenced on 17 December 2001in the Federal Court (Sydney) alleging Daewooengaged in misleading and unconscionableconduct concerning the 1998 appointment ofa Queensland dealer in excavators and wheelloaders. On 26 June 2002 Justice Wilcoxmade an order for substituted service of theoriginating notice of these proceedings againstDaewoo Heavy Industries and MachineryLimited in Korea, on Daewoo HeavyIndustries Australia Pty Ltd (a subsidiary ofDaewoo Heavy Industries and MachineryLimited in Korea). The Commission seeksdeclarations, findings of fact, injunctions,compliance programs and costs. A directionshearing is set down for 4 September 2002.

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Kwik Fix International Pty Ltd & Ors

Proceedings commenced on 24 April 2002 inthe Federal Court (Brisbane) against KwikFix, David Bruckshaw (director) and KerryBruckshaw (former director) allegingunconscionable and misleading conduct andnon-compliance with the mandatoryfranchising code, concerning a mobile vehiclerepair franchise. The Commission seeksdeclarations, injunctions, findings that thefranchise agreement and related loan agreementare of no effect, a refund of money paid by afranchisee with interest, implementation of atrade practices compliance program and costs.Proceedings are continuing.

Black on White Pty Ltd, trading as theAustralian Early Childhood College

Proceedings commenced on 1 August 1997 inthe Federal Court (Brisbane). On 4 April2001 the court found that the company hadengaged in misleading, deceptive andunconscionable conduct towards studentsenrolled in its child care and related trainingcourses offered during 1997. The conductrelated to enrolment cancellation, a HECS-like deferred payment scheme, representationsthat the courses were accredited and that thecollege qualified for the use of trade marks orlogos relating to accreditation. For some, theliability of tuition fees was more than $9000,and students and some parents were sued forunpaid fees. The court also found thatMr James Poteri, the Manager, was knowinglyconcerned in misleading and unconscionableconduct and that Nicholas Poteri was knowinglyconcerned in the company's accreditationmisrepresentations. On 22 November 2001,after representative action taken by theCommission, the court ordered that JamesPoteri compensate a number of individuals.On 12 June 2002 the court ordered thatJames Poteri and Nicholas Poteri compensatea number of individuals in relation to theaccreditation representations.

Solutions Software International Pty Ltd & Ors

Proceedings commenced in the Federal Court(Brisbane) on 29 June 2001 against Solutions

Software (formerly known as Acepark PtyLtd and Offtrack Investments Pty Ltd),related companies, Robert James Price(former director), William Greig Millar(former director) and Ronald James Curtin(former sales manager of Offtrack)concerning the capabilities of horse-racebetting software sold in Australia and NewZealand. On 21 September 2001 the court,by consent, restrained the respondents frommaking similar representations, including thatthe betting system has an average strike rateof more than 58 per cent in selecting successfulplace bets. The Commission alleges thatunfair and high pressure sales tactics wereused to induce some consumers to purchasethe program, for example that the programshould be purchased immediately to avoidimminent price rises. The Commission seeksdeclarations, injunctions, refunds, correctiveadvertising and costs. The matter is set downfor trial on 2 September 2002.

Chaste Corporation Pty Ltd & TRIMit—see page 42

Undue harassment andcoercion and debt collection

Cases

Waterman Collections Pty Ltd

Proceedings commenced on 22 March 2002 inthe Federal Court (Adelaide) alleging misleadingand deceptive conduct when attempting torecover debts on behalf of an insurancecompany, by claiming in letters to over 850persons involved in accidents that $3171 wasowing. This sum bore no relationship to theamounts actually owed. On 18 April 2002 thecourt, by consent, declared Waterman hadengaged in misleading and deceptive conductand restrained Waterman from making similarrepresentations without a reasonable basis fordoing so. Waterman was ordered to review andupgrade its current trade practices complianceprogram and pay the Commission's costs.

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Maritime Union of Australia & Ors—see page 31

Esanda Finance Corporation Ltd & Ors—see page 57

Dataline.net.au Pty Ltd & Ors—see page 57


Lux Pty Ltd—see page 57

Business investment, leasingand franchising and finance

Cases

Hartwich Pty Ltd, John Moon (Director), WayneBaker (Director) and Back to Basics WorldwideEducation Aids Systems Pty Ltd

Prosecution commenced on 17 May 2000 inthe Federal Court (Adelaide) by theCommonwealth Director of PublicProsecutions, following a Commissioninvestigation. It was alleged that claims aboutprofitability and feasibility of a businessselling educational aids to schoolchildren andtheir parents were false or misleading. Thebusiness, costing up to $65 000, wasadvertised in newspapers in several states andat least seven distributors were recruited.John Moon and Wayne Baker pleaded guiltyand, on 19 March 2002, the court convictedall respondents, injuncted them, and orderedfines and compensation totalling $720 000.Back to Basics was fined $180 000, Hartwich$40 000, John Moon $10 000 and Wayne Baker$10 000; compensation orders $486 000. Thecourt ordered payment of the Commission'scosts.

Top Snack Foods Pty Ltd

The Commission had successfully securedaccess as a creditor to $400 000 awarded asdamages to franchisees of Top Snack FoodLimited. In this matter, the Supreme Courtfound that the deed of the KN Trustsindemnified the former trustee (NickKritharas Holdings Pty Ltd) except in thecase of fraud. As the Federal Court had madea specific finding that there was no case offraud, the right of indemnity of NickKritharas Holdings Pty Ltd extended to thedamages awarded in the Federal Court. TheNSW Court of Appeal dismissed an appealthat had sought to deny the Commissionaccess to the funds. Special leave to appealthe decision to the High Court of Australia isbeing sought.

Michigan Group Pty Ltd & Ors

Proceedings began on 6 October 2000 in theFederal Court (Brisbane) alleging that, fromearly 1998, the promoters of commercialorange-juicing machines incorrectly promisedthat the business would take very little time tooperate, the machines would be installed innominated stores very quickly and would makesignificant profits. The Commission seeksdeclarations and injunctions. The matter washeard in December 2001 and April 2002,judgment reserved.

Will Writers Guild Pty Ltd and Sidney James Murray

Prosecution commenced on 26 September2001 in the Federal Court (Hobart) by theCommonwealth Director of PublicProsecutions, following a Commissioninvestigation. It was alleged that Will Writersand its director Sidney James Murray misledfranchisees about the risk involved in carryingon the business of writing wills for reward(state and territory laws require that suchactivity may only be carried out by legalpractitioners). On 15 July 2002 the courtcommenced hearing the trial, withsubmissions to be presented in August 2002.The Commission has civil proceedingspending against Will Writers and SidneyJames Murray (see below).

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Will Writers Guild Pty Ltd and Sidney James Murray(civil proceedings)

On 27 March 2001 the Commission institutedcivil proceedings in the Federal Court (Hobart)alleging that Will Writers and its director,Sidney James Murray, misled and failed toprovide to prospective franchiseesappropriate disclosure documents as requiredby the mandatory Franchising Code of Conduct.The Commission is seeking declarations andorders for injunctions and damages for lossessuffered by franchisees. These proceedingshave been stayed pending completion ofcriminal proceedings against Will Writers andSidney James Murray filed by theCommission on 26 September 2001. TheDPP is prosecuting Will Writers and SidneyJames Murray (see above).

Multigroup Distribution Services Pty Ltd

Proceedings commenced on 11 July 2001 inthe Federal Court (Brisbane) alleging that,from January 1999 to September 1999,Multigroup misled Wayne Parker (a directorof Parker Freight Express Pty Ltd) about theprovision of a freight transport contract thatwould be provided to Parker Freight Expressin North Queensland. The Commission seeksdeclarations, injunctions, findings of fact,damages for Parker Freight Express and costs.

CG Berbatis Holdings trading as FarringtonFayre Shopping Centre & Ors—see page 56

Samton Holdings Pty Limited & ors—see page 56

IMB Group Pty Ltd—see page 35

Avanti Investments Pty Ltd and Dr GiuseppeBarbaro—see page 56

Suffolke Parke Pty Ltd and Gregory JohnBradshaw—see page 56

Arnold's Ribs and Pizzas—see page 58

Westfield Shopping Centre Management Co (Qld)Pty Ltd, Westfield Management Ltd, WestfieldDesign and Construction Pty Ltd & Ors—see page 57

Australian Industries Group Pty Ltd, trading asHalf Price Shutters—see page 58

4WD Systems Pty Ltd and/or 4WD SystemsAustralia Pty Ltd—see page 57

Oceana Commercial, NAPC, Greenwich andCommonwealth Bank of Australia—see page 58

Chaste Corporation Pty Ltd & TRIMit—see page 42

Kwik Fix International Pty Ltd & Ors—see page 59

Daewoo Australia Pty Ltd, Daewoo Heavy Industriesand Machinery Limited & Eui Hwan Kang—see page 58

Solutions Software International Pty Ltd & Ors—see page 59

Unsolicited goods and services


IT&T AG

Proceedings commenced on 28 March 2002 inthe Federal Court (Perth) alleging that, fromMay 2001 until about March 2002, IT&T AGmailed unsolicited documents fromSwitzerland to Australian business about theIT&T International Fax Directory, availableon the Internet and on CD-ROM from IT&TAG, and demanding payment for entries. TheCommission seeks declarations, injunctions,corrective notices, refunds, implementation ofa trade practices compliance program and costs.

Custom Security Services Pty Ltd—see page 48

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Pyramid/referral selling

Cases

ACCC v Guardian Finance & InsuranceConsultants Pty Ltd

The Commission instituted proceedings on5 April 2001 in the Federal Court (Brisbane)alleging that Guardian Finance & InsuranceConsultants Pty Ltd promoted a home loanscheme that amounted to an illegal pyramidselling scheme or referral selling scheme. TheCommission also alleged that its sole director,Mr Peter Martin St James, was knowinglyconcerned in the conduct. On 12 April 2001the court granted interlocutory injunctionsrestraining the promotion of the scheme. On11 June 2002 the court declared that thescheme breached the pyramid and referralselling scheme provisions of the Act andordered Guardian Finance & InsuranceConsultants Pty Ltd and Mr St James toprovide refunds to the people who participatedin the scheme. The orders also includedinjunctions to restrain similar conduct, theimplementation of a trade practices complianceprogram and payment of the Commissioncosts of $40 000. The orders were made withthe consent of Guardian Finance & InsuranceConsultants Pty Ltd and Mr St James.

World Netsafe Pty Ltd and Terence Butler

On 8 December 2000 the Federal Court(Brisbane) made extensive orders regardingthe ATTM Card pyramid and referral sellingscheme, including for global refunds. TheCommission alleged the refunds were notmade and on 1 November 2001 commencedcontempt proceedings against World Netsafeand Terence Butler (sole director). Thematter was heard in April and May 2002,judgment reserved. Orders made earlier inthe contempt proceedings remain in place:Mr Butler is unable to leave Australia withoutthe Commission's written consent, and hispassports remain with the Registrar of theFederal Court. Many of the members of theWorld Netsafe scheme were members of theGreenstar scheme referred to below.

Greenstar Cooperative Ltd

Proceedings commenced on 5 June 2001 inthe Federal Court (Perth) alleging pyramidand referral selling of earthworms, an organicfertiliser product, and a transaction card, andalleged misleading and false representationsregarding the transaction card. On 14 June2001 the court imposed interlocutoryinjunctions, and on 31 July 2001 made anorder freezing the assets of Greenstar andKevin Smith (director). The trial was held on24–28 June 2002, judgment reserved. Manyof the members of the Greenstar schemewere members of the World Netsafe schemereferred to above.

SkyBiz.Com Inc.

Proceedings commenced on 17 September2001 in the Federal Court (Perth) allegingmisrepresentations about the profitability andrisk, and referral and pyramid selling, of ahome-based business scheme by US companySkyBiz. The Commission alleges that schemeparticipants paid SkyBiz US$100 for awebsite and that SkyBiz claimed participantscould then earn a substantial income forintroducing new members. The courtdocuments were served through the UScourt-appointed receiver for SkyBiz. Adirections hearing is set for 2 August 2002.

Giraffe World Australia Pty Ltd

Proceedings commenced on 6 May 1998 inthe Federal Court (Sydney). On 23 April1999 Giraffe undertook to the court not torepresent that the 'negative ion' mat itmarketed produced negative ions, relievedhealth ailments or promoted health. On29 June 1999 the court found that GiraffeWorld had breached that undertaking. On26 August 1999 the court found that GiraffeWorld (in liquidation) had engaged inmisleading or deceptive conduct and promoteda referral and pyramid selling scheme. Thecourt found that Akihiko Misuma, founderand director of Giraffe World, and Robin Han,its president and chief executive officer untilNovember 1998, were knowingly concerned in,and a party to, Giraffe World's contraventions.

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In November 1999 the Commissioncommenced a representative action under theAct on behalf of those persons who suffered aloss as a result of the conduct of Giraffe Worldand its representatives. In June 2002 the actionwas dismissed, though the order of dismissalis not to be entered except on the applicationof the Commission. The liquidator hascommenced a recovery action against thedirectors of Giraffe World in the New SouthWales Supreme Court.

Small business and rural andregional programsThe Commission's Small Business Programentered its fourth year of providing specialisedinformation and guidance for small businessabout the Act and alternative dispute resolution.

In October 2001 the Commissioner for SmallBusiness, John Martin, delivered his annualreport to the Franchise Council of Australiaconference. The Commission continued as anofficial observer at the Franchising Policy Counciland continued liaising with its Small BusinessAdvisory Group. The group is comprised ofbusiness and professional representatives whomeet biannually to discuss trade practicesmatters affecting small business.

Rural and Regional Outreach Program

On 19 March 2002 the Chairman of theCommission, Professor Allan Fels, and theMinister for Regional Services, Territories &Local Government, the Hon. Wilson Tuckey,launched the Commission's Rural and RegionalOutreach Program in Bendigo, Victoria. Theprogram aims to improve communicationbetween the Commission and people in rural andregional Australia, promoting understanding ofthe Act.

The Commission has appointed RegionalOutreach Officers (or ROOs) in each of itsoffices to implement the Rural and RegionalOutreach Program, and complement its SmallBusiness Program in maintaining and developing acontact network.

The network consists of over 300 supportorganisations including state, territory and localgovernment agencies, area consultativecommittees, business enterprise centres andchambers of commerce.

In 2001–02 the ROOs' fieldwork includedparticipating in: Farmfest (Toowoomba17–21 June 2002), Agfest (Launceston 2–4 May2002), Business Opportunities Expo (Sydney19–21 April 2002), Agfair (Broken Hill 3–4 April2002), Woolarama (Wagin 8–9 March 2002),Expo (Alice Springs 8–10 March 2002), LocalGovernment Conference (Canberra25–28 November 2001), Business World Expo(Sydney 1–4 November 2001), Field Day(Orange 15 October 2001) and Franchising &Business Opportunities Expo (Melbourne5–7 October 2001).

The Commission continued its biannualCompeting Fairly Forum satellite broadcasts torural and regional communities. The forumprovides an opportunity to communicate withthe Chairman of the Commission, Commissionersand other experts in related fields. The forum on2 October 2001 on advertising and selling, wasreceived in 90 locations. The forum of 21 May2002 on how to avoid trade practices problems inbusiness was received in over 110 locations.

Small business publications

Publications targeting small business included:

! revised existing publications including the Bestand Fairest Compliance Manual (July 2002),Small Business and the Trade Practices Act(February 2002), The Franchisees Guide(November 2001) and Franchising Code ofConduct Compliance Manual (October 2001)

! a third edition of Retail Flash in December2001, with the Australian Retailers Association

! the ACCC Briefing newsletters and abrochure series concerning compliance forsmall business in retailing, primary produceand service industries.

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Rural Doctors Review

On 29 August 2001 the Federal Governmentannounced a review of the impact of Part IV ofthe Act on the recruitment and retention ofmedical practitioners in rural and regionalAustralia, chaired by Mr Warwick Wilkinson. TheCommission has made two submissions to thereview—see page 38.

Enforcement action

The Commission took extensive enforcementaction of particular benefit to small business,including action concerning unconscionableconduct, landlord and tenant relationships, andfranchising arrangements.

AviationIn November 2001 the Commission commenceda study into the desirability of developing anAirline Industry Competition Guideline. TheCommission conducted research both here andoverseas and consulted widely with industry,inviting submissions from over 50 parties.Divergent views were expressed concerningwhether there was any anti-competitive conductin the Australian industry and the merits of aguideline. In May 2002 the Commission notifiedinterested parties that it had decided to defer itsdecision on the desirability of developing aguideline until the results of certain internationaland domestic litigation were known.

The Commission also began an inquiry (in June2000) into frequent flyer programs, to securefairer and more transparent programs. Afterextensive work the Commission is consideringhow best to proceed.


Qantas Airways Limited and Virgin Blue AirlinesPty Ltd—see page 45

Qantas Airways Limited—see page 34

Industry codes of conductFranchising Code of Conduct: This is the onlymandatory code under the Act. It was amendedon 1 October 2001 to allow a short-formdisclosure document for some franchises anddisclosure by electronic means. The Commissionliaises with the Federal Office of Small Businessconcerning the code. Most franchising disputesare addressed by informal, alternative disputeresolution or mediation under the code.

Voluntary codes of conduct: In 2001–02 theCommission liaised with the Department ofTreasury and other interested parties concerningreview of the Film Exhibition and DistributionCode, the Fruit Juice Industry Code, theJewellery and Timepieces Industry Code, andthe working party developing a Vehicle HireIndustry Code.

Compliance programsThe Commission encourages implementation oftrade practices compliance programs and liaiseswith compliance professionals including theAssociation of Compliance Professionals ofAustralia. It publishes relevant information,requires implementation and review ofcompliance programs in s. 87B undertakings, andseeks relevant orders in court proceedings. TheCommission provides general guidance, andreviews audit reports as a result of Commissionenforcement action, concerning such programs.

Cooperation with othergovernment agenciesThe Commission continued to work closely withother agencies responsible for competition andconsumer protection—exchanging information,developing complementary policies, andcoordinating activities.

In Australia these agencies include: the NationalCompetition Council, the Privacy Commissioner,

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Treasury, Attorney-General's Department,Director of Public Prosecutions, AustralianSecurities and Investments Commission,Australian Prudential Regulation Authority,Australian Federal Police, Australian CustomsService, Department of Health and Ageing,Therapeutic Goods Administration, Office of theEmployment Advocate, and state and territoryfair trading agencies.

The Commission also participated in forumssuch as the Ministerial Council on ConsumerAffairs, Standing Committee of Officials ofConsumer Affairs, Fair Trading OperationsAdvisory Committee and Consumer ProductsAdvisory Committee, and engaged in mutualstaff secondment with other authorities. TheCommission is assisting the Royal Commissioninto the Building and Construction Industry.

Internationally the Commission participates incompetition working groups of the OECD,APEC and WTO, and is a member of theInternational Marketing Supervisory Network(IMSN). Australia, through the Commission,assumed the presidency of the IMSN in May2002. The Commission works very closely withits international counterparts to cooperate inenforcement, including the US Department ofJustice, US Federal Trade Commission, UKOffice of Fair Trading, Canadian CompetitionBureau and New Zealand Commerce

Commission. It participated in the annualInternational Cartel Workshop, engaged inmutual secondment of enforcement staff, andprovided briefings to visiting personnel fromcompetition and consumer agencies in othercountries.

The Commission accesses Consumer PlanetSentinel (protected complaints database ofNorth American law enforcement agencies andconsumer groups) and Econsumer (publicinternational complaints database) to help decidewhat its education and enforcement prioritiesshould be. It also participates in the MinisterialCouncil for Consumer Affairs' working groupsdeveloping a complaint data-sharing platform forAustralia and New Zealand.

InfocentreDuring 2001–02 the Infocentre handled a total of87 441 customer contacts. Of these, 75 108contacts were made by telephone and 12 333 byemail. A total of 57 120 complaints and inquirieswere relevant to the Commission and theremainder were passed on to other organisations.

The following chart indicates the geographiclocation of complaints.

Figure 3.1 Complaints/inquiries 2001–02

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Top ten conducts where the matter may breach provisions of the TPAThe following table indicates the top 10 conducts where the matter may breach provisions of theTrade Practices Act for 2001–02.

Conduct Number of Percentage ofcomplaints overall complaints

Part V s. 52 misleading or deceptive conduct 11106 25%

Part V-2 s. 69–74 retail warranties 2805 6%

Part V s. 53(e) misrepresentation price 1881 4%

Part VB GST 1756 4%

Part IV s. 46 misuse of market power 830 2%

Part V s. 53(c) misrepresentation performance 808 2%

Part IV s. 45 agreements lessening competition 713 2%

Part IV s. 47 exclusive dealing 688 1%

Part V s. 53(g) misrepresentation warranties, rights 639 1%

Part V s. 58 accepting payment no supply 616 1%

Complaints for top ten industries for the period 2001–02These are the top ten industries about which complaints were received by the Commission in 2001–02.

Figure 3.2 Top ten industries for 2001–02

Table 3.1 Top ten conducts where the matter may breach provisions of the TPA for 2001–02

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Small businessDuring the period 1 July 2001 to 30 June 2002,8864 complaints or inquiries (16 per cent oftotal) were made by small business, 9008complaints or inquiries (16 per cent) were aboutsmall business traders and 1279 (2 per cent)were about franchise matters. The followingtable indicates the business information for eachstate.

Table 3.2 Small business complaints and inquiries

Complaints and inquiries NSW VIC QLD WA SA ACT TAS NT

Small business (trader) 2469 2095 1918 1099 653 323 224 166

Small business (complainant) 2597 1934 2015 1027 612 204 265 188

Franchisee 403 250 308 138 107 28 17 23

International overviewThe Commission's international activities aretargeted at helping other countries achieveeffective competition and consumer protectionregimes. It aims to foster a culture ofcompetition in the interests of developing morecompetitive and fair overseas markets, whileimproving access to those markets for Australianexporters.

The breadth and importance of this work isincreasing as the Commission is more often facedwith competition and consumer protection issueswith an international dimension.

International cooperation

Formal cooperation agreements! On 21 March 2002 Australia entered into an

administrative arrangement with the EuropeanCommission to facilitate information sharing onconsumer policy and protection, recognisingthe mutual benefits of strengthened cooperation.

! On 16 May 2002 the Commission enteredinto a memorandum of understanding withthe Commerce Commission of the Fiji Islandsto promote cooperation and coordination ofenforcement, training and technical assistanceactivities in consumer protection andcompetition issues.

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Negotiations with many other competition andconsumer protection agencies around the worldare currently under way. These negotiations willincrease the Commission's network of formalcooperation arrangements to facilitateinformation exchange, cooperation and assistancein enforcement matters, and to help providetechnical assistance to emerging economies.

Cooperation in enforcement mattersThe Commission is increasingly cooperating withits international counterpart agencies oncompetition, consumer protection and regulatorymatters to facilitate the effective enforcement oflaws both in Australia and overseas. In anenvironment where illegal conduct is increasinglyoccurring across borders, the Commission placesgreat importance on establishing and using itsinternational networks to achieve successfulresults for consumers in Australia and overseas.

Matters involving enforcement cooperation overthe past year have included merger and cartelcases, health issues and lottery and marketingscams.

International forums

OECD

Competition

The OECD Competition Committee and theJoint Group on Trade and Competition meetthree times a year in Paris. A priority over thepast year has been hard-core cartels, consideringthe use of sanctions, leniency policies and otherinvestigative tools, and cooperation betweencompetition authorities to combat global cartels.In 2001 the OECD also created the GlobalForum on Competition (GFC) as part of itsoutreach activities to include governmentofficials from non-member countries in OECDdiscussions.

During 2001–02 roundtable discussions werealso held in relation to loyalty programs,transnational mergers, merger assessment inemerging markets, and cost of access services intelecommunications.

Consumer protection

The OECD Committee on Consumer Policymeets twice yearly in Paris to discuss emergingissues and ongoing work in consumer protection.Work during 2001–02 assessed the impact andimplementation of the Guidelines for ConsumerProtection in the Context of Electronic Commerce,consensus building on core consumer protectionprovisions, for example looking at commonapproaches between member countries todefining a deceptive or misleading practice, anddispute resolution in cross-border transactions.

APEC

Competition

The Commission continued its activeparticipation in the Asia-Pacific EconomicCooperation (APEC) Group on CompetitionPolicy and Deregulation. Meetings in 2002 havetaken place under the presidency of Mexico.Work within this group continues to focus onregulatory reform in APEC economies, technicalassistance and development programs, andcapacity building and institutional developmentin the region.

E-commerce

The Commission is continuing to contribute tothe APEC E-Commerce Steering Group(ECSG) which is looking at several consumerprotection issues. It has started to draft thePrinciples on consumer protection in the onlineenvironment which aims to establish a consumerprotection framework across the Asia-Pacificregion, allowing consumers to transact onlinebetween economies with greater confidence.

WTO

The Commission continues to take a keeninterest in developments in the WTO WorkingGroup on the Interaction between Trade andCompetition Policy. At the WTO MinisterialMeeting in Doha in November 2001 it wasagreed that negotiations on competition policywill take place after the Fifth Session of theMinisterial Conference in 2003 on the basis of adecision to be taken, by explicit consensus, atthat session on modalities of negotiations. Untilthen, the Working Group will focus on:

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! core principles, including transparency, non-discrimination and procedural fairness, andprovisions on hard-core cartels

! modalities for voluntary cooperation

! support for progressive reinforcement ofcompetition institutions in developingcountries through capacity building.

ICN

Australia is a member of the Interim SteeringGroup for the International CompetitionNetwork (ICN) which was launched in October2001. The ICN is a project-oriented, consensus-based, informal network of antitrust agenciesfrom developed and developing countries. It isexamining enforcement and policy issues ofcommon interest and formulating proposals forprocedural and substantive convergence. Thefocus is on improving worldwide cooperation andon enhancing convergence.

IMSN

The International Marketing SupervisoryNetwork (IMSN) is a network of consumerprotection agencies from over 30 countries. TheIMSN meets twice yearly to:

! further international cooperation throughinformation sharing and joint investigations

! analyse latest developments in cross-borderenforcement actions

! explore non-enforcement alternatives forgaining redress for consumers.

Switzerland held the presidency for 2001–02 andhosted meetings in Berne (September 2001) andMontreux (March 2002). Australia (the ACCC)has been appointed president of the IMSN for2002–03, and will host two meetings during thattime. The IMSN is considering issues such asbest practice examples of consumer protectionand enforcement in member agencies, andworking groups on effective cross-borderenforcement, eConsumer.gov and Internet

Sweep Days (coordinated by the Commission).A new 'observer status' introduced in early 2001has been used by two countries (Latvia andEstonia) as a means of participation before adecision is made regarding full membership.

Technical assistance

The Commission has been involved in manytechnical assistance activities in the past year,where it makes available its resources andexpertise in competition, consumer protectionand utility regulation to countries with lessdeveloped regimes. One example was theCommission's involvement in a competitionpolicy event organised by the OECD inconjunction with South Africa, in Pretoria inJune 2002. The conference on promotingcompetition in telecommunications and seaportswas for staff of the South African CompetitionCommission and other officials of the SADC(Southern Africa Development Community)countries. The Commission was represented byMr Richard York, Director, Regulatory,Telecommunications Group.

The Commission also hosts visits to Australia byour international counterparts. During 2001–02government officials from the followingeconomies visited Australia: Belgium, Canada,the People's Republic of China, Egypt, EastTimor, Fiji, France, Germany, Ghana, HongKong, India, Indonesia, Japan, Kenya, Korea,Malaysia, New Zealand, Papua New Guinea, thePhilippines, Singapore, South Africa, the UnitedKingdom, and the United States of America.

Over the past year the Commission has hadofficers from the South African CompetitionCommission attend its investigations trainingcourse in Canberra. This training is part of theCommission's program of support to helpdevelop an effective competition regime in SouthAfrica. An officer from the Hong KongConsumer Council also attended a course inMelbourne.

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In July 2001 the Commission took part in anAPEC workshop in Hanoi which considered thedevelopment of a competition regime inVietnam. The Commission was represented byMr Hank Spier, its former CEO and now aconsultant to the Commission.

In April 2002 the Commission participated at anUNCTAD Regional Seminar on CompetitionPolicy and Multilateral Negotiations. Theseminar, focusing on the outcomes of the WTODoha round, was held in Hong Kong. MsElizabeth Davidson, Director, International Unit,represented the Commission.

The Philippines

With funding assistance from AusAID, theCommission undertook an extensive consultancyproject to help develop a consumer movement inthe Philippines. The project included:development of a website and database; workplacements in Australia to learn how theconsumer movement operates here; preparationof position papers on issues of concern forFilipino consumers; conducting press campaignson consumer issues; and holding regionalconferences for consumer groups throughout thePhilippines.

An important result of the project was thedrafting of competition legislation for thePhilippines. Amendments to the existingConsumer Act were also drafted to allowconsumers to take action at a local court level forpossible contravention of the Consumer Act. Theproject was completed in September 2001.

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MERGERS

Why is the Commissionconcerned with mergers?Mergers are integral to all properly functioningmarket economies. As the mechanism throughwhich the market for corporate control operates,mergers help optimise management performancewith under-performing managers and firms beingsupplanted by more vigorous ones. The threat oftakeover is an important discipline on businessleaders here and abroad.

Mergers may have other positive consequencesfor firms and for the economy as a whole, such asachieving scale efficiencies, cheaper access tocapital and operating synergies. Not all mergers,however, are beneficial in net terms.

Some mergers, on balance, can harm otherbusinesses and the wider community, forexample, when the merged firm sets prices abovecompetitive levels or otherwise distortscompetitive market outcomes. It is thesemergers with which s. 50 of the Trade PracticesAct is concerned.

Mergers law is designed to preserve competitiveindustry structures for the benefit of consumersand the economy. Section 50 of the Act prohibitsmergers and acquisitions which would have theeffect, or likely effect, of substantially lesseningcompetition in a substantial market for goods orservices. Joint ventures are analysed within thesame framework as, in most cases, the effect

they have on the market is similar to that arisingfrom a merger.

This aspect of the Act has no impact on mergerswhich do not substantially lessen competition.Most mergers raise no competition issues at all.However, those that would have anti-competitiveeffects by changing market structures in a waylikely to reduce substantially the incentive forfirms to compete, or raise those to collude, areprohibited by s. 50.

Mergers analysis is an important part of theCommission’s work. The test applied rests onrecognition of the link between market structureand resulting market power, and the need to beable to respond to potential threats from theexercise of market power. Section 50 preventsaccumulation of market power, which could leadto anti-competitive unilateral or coordinated firmconduct.

Chapter 4

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Year in review

Key statisticsIn 2001–02 the Commission finalised 237mergers, asset sales and joint ventures. Of theseit objected to nine because they were likely tosubstantially lessen competition, and four ofthese proceeded following enforceableundertakings being provided under s. 87B of theAct. One matter, API/Sigma, has beenresubmitted as an authorisation under s. 88. Oneother matter was withdrawn before decisionafter the Commission expressed concerns.

Figure 4.1 highlights the small percentage ofmerger matters objected to by the Commission.

It shows that the number of matters where asubstantial lessening of competition would, orwas likely to, occur in the Commission’s view,has been stable at around 4 to 5 per cent forseveral years. Figure 4.1 also shows an easing inthe number of merger matters considered in2001–02, consistent with trends in the widermarketplace.

Figure 4.2 shows merger matters considered in2001–02 by industry. Transport and healthindustry transactions formed a larger proportionof mergers considered than in the previous yearwhile the proportion of communications, mining/foresting and finance/banking matters remainedbroadly stable.

Figure 4.1 Mergers not opposed, opposed and resolved with the ACCC

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Figure 4.2 Percentage of mergers by industry

International liaison

Contact between competition agenciesinternationally has increased in recent yearsbecause of major mergers and acquisitions amongtransnational firms. Discussions continue abouthow to increase competition policy effectivenessin the era of globalisation. Linkages betweenAustralian and US, European and Asiancompetition policy agencies are growingparticularly quickly. Australia, through theCommission, is making constructivecontributions to the growing internationaldialogue in this area.

One avenue through which this is occurring is therecently established International CompetitionNetwork (ICN), a global forum through whichindividual national competition agencies areliaising on common issues.

The ICN’s Merger Review Working Groupaddresses the challenges of merger review in amulti-jurisdictional context. The group, in whichthe Commission is a leading contributor, is

developing best practice recommendations on:

! procedures, including timing, for reviewingmulti-jurisdictional mergers

! analytical frameworks for merger review

! investigative techniques for conductingeffective merger review.

The Commission has a long-term commitment toenhanced international competition policyeffectiveness, and achieving this, includingthrough the ICN, will remain a priority.

Mergers staff regularly communicate withcolleagues from other agencies when asked toassess the implications of international mergersand acquisitions. These discussions often relateto technical aspects of the analysis, includingsuch factors as the appropriate market definition,barriers to entry and emerging market dynamics.

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Outlook and priority areasBased on analysis from the business press, theCommission expects merger activity to stabilisearound current levels this year. The high tideexperienced in 2000–01 on the back of buoyantequities markets, ebbed in 2001–02 in line withcooling markets and a more subdued outlook,particularly in light of the September 11 attacksin the US. Business commentators havesuggested that activity in 2002–03 is likely tocontinue at the current pace as mergers and assetsales proceed, spurred by the somewhat tighterconditions, particularly internationally.

Merger activity among US corporates adverselyaffected by the recent substantial equity marketdeclines could well increase. This is likely totrigger more matters coming before theCommission concerning the merger implicationsof such firms’ Australian arms.

Further domestic consolidation in several alreadyconcentrated industries is likely to continue,including the utilities sector. Pressures arisingfrom cross-ownership and convergence issueswill continue to influence the dynamics of severalimportant industry sectors. Areas of priority forthe Commission are likely to be financialservices, telecommunications and broadcasting,transport, energy and the health sector.

Restructuring and consolidation of agribusiness isset to continue, and may intensify as the fullconsequences of drought conditions in Australiaemerge and further pressure for rationalisationarises in the context of global market dynamics.

Section 87B undertakingsConcern over merger matters where theCommission believes a substantial lessening ofcompetition will, or is likely to, occur may beresolved through enforceable undertakings unders. 87B of the Act. Section 87B undertakingsprovide scope for the merger parties to offer theCommission measures to address anti-competitive detriment. Structural undertakings,which address and solve underlying marketimpediments to effective competition, are thepreferred route.

Major merger matters assessed

Compaq and Hewlett-Packard

The Commission did not oppose the mergerbetween Compaq Computer Corporation andthe Hewlett Packard Company, which was alsocleared by the Federal Trade Commission in theUS, the European Commission and the NZCommerce Commission.

Although the Commission’s concentrationthreshold for the exercise of unilateral marketpower was crossed in relation to servers andprinters, the acquisition was unlikely to result ina substantial lessening of competition. Themarkets in which the two firms operate arecharacterised by high imports, strong globalcompetition, technological innovation/convergence and customers exercisingcountervailing power.

Acquirer Target Date accepted

SPC Limited Ardmona Foods Limited 28 November 2001

AES Environmental Pty Ltd Clyde Apac Division of the Downer Group Limited 7 February 2002

Manildra Starches Pty Limited Certain assets of Weston Bioproducts and the 21 February 2002and Shoalhaven Starches Pty Limited Narrandera Flour Mill from George Weston Foods Ltd

Monsanto Australia Limited Appointment of Nufarm Australia Limited as Monsanto’s 2 May 2002exclusive distributor for Monsanto’s Roundup range ofglyphosate-based herbicides for agricultural uses

Table 4.1. Section 87B undertakings relating to mergers and acquisitions accepted by the ACCC in 2001–02

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Clyde Apac and AES Environmental

AES Environmental Pty Ltd’s proposedacquisition of Clyde Apac, a division of DownerGroup Ltd, was found likely to result in asubstantial lessening of competition in themarket for laminar flow products. There was ahigh level of concern in the market that themerged entity would be able to significantly andsustainably increase prices post-acquisition.

Undertakings by the parties were offered andaccepted by the Commission in February 2002.

SPC and Ardmona Foods

The proposed merger of SPC Ltd and ArdmonaFoods Ltd, manufacturers of processed fruits,was found by the Commission to be unlikely toresult in a substantial lessening of competition inseveral markets because of the level of importsand the countervailing power of supermarkets. Itwas also found unlikely that the merged firmcould significantly and sustainably raise prices.

A substantial lessening of competition wasconsidered likely, however, in the national marketfor the supply of deciduous canning fruit. This wasresolved through undertakings made by SPC andArdmona to the Commission in November 2001.

API and Sigma

The proposed merger between AustralianPharmaceutical Industries Ltd (API) and SigmaCompany Ltd was considered likely tosubstantially lessen competition in thepharmaceutical wholesaling market. The proposalwould have resulted in a reduction of full-linepharmaceutical wholesalers from three to two.The Commission determined that together theparties would account for approximately60–70 per cent of products wholesaled to retailpharmacies.

The Commission was concerned that thereduction may result in a reduction in servicelevels to pharmacies and, consequently, toconsumers. It was also concerned that the level ofrebates that retail pharmacies receive, currently acompetitive factor in the industry dynamic,would be reduced.

The Commission determined that there werehigh barriers to entry and when linked with thefact that retail pharmacies requiring a full rangeof products need to use the full-line wholesaler’sservices and the loss of an effective competitor,the proposal would likely lead to a substantiallessening of competition.

The parties subsequently chose to seekauthorisation for the merger on public benefitgrounds. The authorisation process is continuing.

Manildra and Weston Bioproducts, NarranderaFlour Mill

The Commission considered Manildra Groupsproposed acquisition of Weston Bioproducts andthe Narrandera Flour Mill from George WestonFoods, in the context of very high marketconcentration that would result in the supply ofgluten, starch and starch sugars to Australiancustomers. High barriers to entry in thesemarkets and limited import competition werealso evident.

The Commission decided a substantial lesseningof competition was likely. Undertakings wereoffered by the parties and accepted by theCommission in February 2002.

IPMG and PMP

Inquiries into IPMG Pty Ltd’s proposedacquisition of a controlling interest in PMP Ltdfocused on the heat-set web printing market. Highbarriers to entry in heat-set web printing, otherthan potentially in relation to niche markets, werecentral in the Commission’s decision to opposethe acquisition. Other competitive constraintssuch as customers with countervailing power,were not evident; nor did it seem commerciallyfeasible for larger customers, such as publishersand retailers, to underwrite substantial new entryinto the heat-set market.

Transfield Galvanising and IndustrialGalvanisers

Industrial Galvanizers Corporation Pty Ltd’sproposed takeover of Transfield Galvanising, adivision of Transfield Pty Ltd, was found likely toresult in a substantial lessening of competition in

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the south-east Queensland galvanising servicesmarket. IGC and Transfield are the two largestproviders of galvanising services in Australia, andmarket inquiries indicated it was likely that themerged firm would be able to significantly andsustainably raise prices if the acquisition proceeded.

Significant regulatory barriers to new entry,notably the environmental approvals requiredand the fact that only IGC and Transfield havelarge enough facilities to service several keycustomers, were relevant.

Foxtel and Optus

The Commission assessed proposedarrangements between Foxtel and Optusregarding pay television and found that in theirpresent form they were likely to substantiallylessen competition in several markets. The fourprincipal areas of concern identified were:

! content acquisition

! likely dominance of the Foxtel distributionnetwork

! supply of pay television services to households

! provision of channels to third parties wishingto supply pay television to customers.

Discussions between the Commission and theparties about possible undertakings are continuing.

Suncorp-Metway and general insurancebusiness of GIO

The Commission assessed Suncorp-MetwayLtd’s proposed purchase of the general insurancebusiness of GIO Australia and concluded that theacquisition would allow Suncorp to competemore effectively in markets for general insurancethan it could previously. While serious concernswere raised by a number of market participants,Suncorp was seen as a new entrant in a numberof GIO’s existing markets and the existence ofsizeable national competitors such as NRMA andAllianz would be likely to constrain any possibleanti-competitive activity.

The Commission was asked by a number ofparticipants to consider the effect on the motorvehicle and CTP (compulsory third party) marketsin Queensland, based on arguments as to the

significant barriers raised by state-based brandloyalty. The Commission determined that theregulatory arrangements in Queensland alignedwith the price sensitive nature of the marketwould likely act as a constraint on price rises orservice quality deterioration.

Warner Chappell Music and Music Sales

Warner Chappell Music Australia and MusicSales approached the Commission concerning aproposed joint venture for distribution of theirrespective print music publications in Australia.The Commission found a substantial lessening ofcompetition was likely.

Parties would be likely to have market powerthrough the joint venture by:

! raising prices to retailers and consumers

! leveraging market power in pop print musicinto the market for educational print music.

Because of Copyright Act restrictions on theparallel import of print music, the joint venturepartners were also in a position to restrict thesupply of pop print music into Australia.

Nufarm Australia Limited and MonsantoAustralia Limited—herbicide distributionlicence arrangements

On 2 May 2002 the Commission accepted courtenforceable undertakings from Nufarm AustraliaLimited and Monsanto Australia Limitedaddressing the Commission’s competitionconcerns regarding the proposed appointment ofNufarm as Monsanto’s exclusive distributor forMonsanto’s Roundup range of glyphosate-basedherbicides.

While actual and potential imports had provideda competitive constraint on the supply ofglyphosate, the Commission was concerned thatuncertainty about a review or appeal of theMinister for Customs’ decision not to impose adumping duty on glyphosate imported from thePeople’s Republic of China, and the ability ofMonsanto and/or Nufarm to pursue newdumping actions against imported glyphosate,significantly undermined the credibility of thatconstraint.

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Monsanto and Nufarm’s undertakings preventthem from making an application for a review ofthe Minister for Customs’ decision in February2002 to not impose a dumping duty onglyphosate imported from China. Further, for thenext three years Nufarm and Monsanto mustobtain an opinion from an independent adviser,who is to be approved by the Commission,regarding the prospect of success of anyproposed glyphosate anti-dumping applicationbefore lodging such an application.

Nufarm has also undertaken not to supplyRoundup or other glyphosate products oncondition that its customers not acquireglyphosate from Nufarm’s competitors.Monsanto has undertaken not to ‘bundle’ itsRoundup herbicide with the supply of itsRoundup Ready crop seeds, nor supply itsRoundup Ready crop seeds on condition that itscustomers not acquire glyphosate fromMonsanto’s competitors.

Coates Limited acquisition of Wreckair

The Commission did not oppose the acquisitionof Wreckair by Coates. Both companies operatedin the general equipment hire businesses as wellas specialist hire businesses. The Commissionfound that a number of competitor firms in allstates and territories would be able to act toconstrain the merged entity. Market inquiriesidentified that a number of Coates’ competitorswere principal suppliers to the majorinfrastructure and earthworks segment whileDIY customers generally have a range of choices,including locally based equipment hire firms.

The Commission also determined that thecapacity to expand both geographically andacross segments is likely to exercise an effectivecompetitive constraint on Coates.

National Rail Corporation and Freightcorp

The Commission assessed the consortia biddingfor the joint National Rail/Freightcorp assets.The Commission came to the view that none ofthe proposed bidders were likely to lead to asubstantial lessening of competition should theywin the tender.

The Commission’s decision was based in part onan examination of the likely constraints themerged entity would face. In the north-southgeneral freight corridor, for example, it wasdetermined that road transportation acted as aconstraint on the behaviour of rail companies andattempts to exploit rail bottlenecks in thatcorridor would likely see at least some railcustomers switch to road transport. Given theneed for any rail operator to maximisethroughput on its system, any threat of switchingwould likely affect the overall revenue position ofthe operator.

Bulk freight is also increasingly contestablebecause of the state-based access regimes overthe interstate track in New South Wales,Victoria, South Australia and Western Australia.The Commission also came to the view that theeventual acquirer of the operations would befaced with a further constraint by the typicallylarge scale bulk customers, many of whom hadtheir own terminal facilities.

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ASSESSING THEPUBLIC BENEFIT

Chapter 5

The adjudication roleThe welfare of Australians may be enhanced insome cases by anti-competitive conduct, but onlyif the public benefits of the conduct outweigh itscosts.

The adjudication process essentially involvesweighing the public benefits and detrimentsresulting from certain anti-competitive practicesand, if there is a net public benefit from theconduct, the Commission may grant statutoryimmunity from legal proceedings under the Act.The adjudication role is therefore an essentialelement in achieving the Commission’s aim toimprove market processes.

The two ways in which the Commission cangrant such statutory immunity are through anapplication for authorisation or notification ofexclusive dealing. The Adjudication Branch ofthe Commission is responsible for processing andexamining authorisation applications (exceptthose relating to electricity and gas distributionand marketing which are dealt with by theCommission’s Regulatory Affairs Division), andnotifications of exclusive dealing. The branch alsoassesses the rules for the use of certificationtrade marks under the Trade Marks Act. TheCommission aims to:

! assess applications and notifications in atimely and informed manner

! provide a high level of quality in analysis

! ensure decision making is undertaken in atransparent and consultative manner.

AuthorisationAuthorisation provides protection from courtaction by the Commission or any other party forpotential breaches of the competitive conductprovisions of the Act. The Commission can onlygrant authorisation if it is satisfied that there is anet public benefit from the relevant conduct, andonly after it has conducted public consultationand assessment.

The Commission cannot compel parties to seekauthorisation but it does have a statutoryobligation to rule on the applications it receives.The Commission has the power to revoke orreview an authorisation if it believes that it wasoriginally granted on the basis of false ormisleading information, contains conditions thathave not been complied with, or there has been amaterial change of circumstances since theauthorisation was granted.

NotificationsThe notification process applies only to exclusivedealing conduct, but gives similar protection asan authorisation. However, it is procedurallydifferent. Immunity takes effect from the timewhen the notification is lodged (or soon after inthe case of third line forcing). The Commissionhas the power to revoke this immunity if itconsiders the public detrimentsflowing from the notifiedconduct are not outweighedby the public benefits.

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Certification trade marksThe Commission is also responsible for assessingthe rules for the use of certification trade marks(CTMs) under the Trade Marks Act. In assessingCTMs, the Commission must be satisfied that:

! the owner or approved certifiers arecompetent to certify that the goods orservices in question meet the requiredstandard

! the rules governing the use of the CTM:

(i) would not be to the detriment of thepublic

(ii) are satisfactory having regard to theprinciples relating to: restrictive tradepractices in Part IV of the Act;unconscionable conduct in Part IVA; andunfair practices and product safetyinformation in Part V.

Table 5.1 Authorisation applications, notifications and considerations 2001–02

Authorisation applications subject to Commission consideration 2001–02

Opening New Applications Applications Balance atbalance applications withdrawn decided end of year

Authorisation applications 28 (83) 18 (36) 1 (1) 19 (51) 26 (67*)

Minor variation applications 6 (6) 3 (3) - 9 (9) 0

Revoke and substituteauthorisation applications 5 (5) 1 (1) - - 6 (6)

Total 39 (94) 22 (40) 1 (1) 28 (60) 32 (73)

Figures in brackets indicate total applications including electricity and gas matters.

* Total figure includes 30 applications relating to electricity distribution and marketing arrangements and 11 applications relating to gas distribution andmarketing arrangements.

Notifications subject to Commission consideration 2001–02

Opening balance New applications Under review at Withdrawn Decided Balancestart of year

63 307 1 1 281 89

Australian Competition Tribunal applications for review 2001–02

Opening balance New applications Withdrawn Decided Balance

0 3(a) 2(b) 1(c) 0

(a) Marven Poultry ADJR appeal not included in this figure.

(b) Application for review of Agsafe determination withdrawn on 11 July 2002.Application for review of Sydney Recycling determinations withdrawn in August 2002.

(c) Application for review of Australian Dairy Farmers determination resulted in a consent agreement between the applicant for authorisation (ADFF), theapplicant for review (National Foods) and the Commission, being agreed to by the Tribunal on 27 August 2002.

Certification trade marks consideration 2001–02

Opening balance New applications Withdrawn Decided Balance

45 19 - 20 44

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The year in reviewDuring 2001–02 the Commission received36 new applications for authorisation and307 notifications for exclusive dealing. TheCommission made 51 determinations, three ofwhich were subject to applications for review bythe Australian Competition Tribunal.

The Commission has continued to receive andconsider applications relating to distribution andmarketing arrangements in the electricityindustry, particularly those relating to thenational electricity market. The Commission hasalso received and considered several applicationsregarding gas distribution and marketingarrangements. These are discussed in chapter 6.Excluding gas and electricity matters, theCommission received 18 new authorisationapplications, three applications for minorvariations of authorisations, and one applicationfor revocation and substitution of authorisationpreviously granted.

The Commission’s adjudication workloadcontinues to reflect changes resulting fromindustry deregulation and the impact ofcompetition policy reform on areas once beyondthe reach of the Act. Many authorisations beingconsidered by the Commission are complex andraise challenging public benefit and detrimentissues. The main adjudication issues that emergedduring 2001–02 resulted from authorisationapplications and are outlined below. A discussionof some of the major authorisations issued by theCommission is at the end of this chapter.

Rural and regional

As in previous years, many businesses operatingin rural and regional Australia have takenadvantage of the authorisation process to helpthem make the transition from a regulated to amore competitive environment. In particular, theCommission has considered applications relatingto collective bargaining arrangements betweenprimary producers and their processors.

For example, the Commission has assessed twoapplications for authorisation of collectivebargaining arrangements in the Australian dairyindustry. These applications were made following

the full deregulation of the dairy industry in July2000. In late 2001 the Commission decided toauthorise Premium Milk Supply Pty Ltd (onbehalf of a number of dairy cooperatives) tocollectively bargain farm gate prices and milkstandards with Pauls Limited in Queensland. Thesecond application in the Australian dairy industrywas lodged by the Australian Dairy FarmersFederation (ADFF). The ADFF soughtauthorisation of collective negotiations betweengroups of dairy farmers and their processors inAustralia more generally. The Commissionproposed to authorise these collectivenegotiations to take place subject to variousconditions intended to safeguard competition inthe industry. However, National Foods Limitedsought to have some aspects of the Commission’sdetermination reviewed and the AustralianCompetition Tribunal subsequently issued adetermination with the consent of theCommission, National Foods and the ADFF—seediscussion below.

During the year the Commission also grantedauthorisation to eight small to medium-sizedhospitals located throughout Sydney and regionalNSW for conduct set out in an inter hospitalagreement (IHA). Authorisation was also grantedto an agricultural and veterinary chemical (agvetchemical) industry self-regulation complianceprogram overseen by Agsafe Limited.

The Commission is also considering someapplications for authorisation of collectivenegotiations between chicken growers and theprocessors to whom they supply in NSW and SA.A challenge by the Victorian Farmers’ Federation(Chicken Meat Group) to a decision by theCommission allowing collective negotiations totake place in this industry in Victoria was dismissedon 27 August 2002 by the Federal Court.

Federal Court review—Marven Poultry Pty Ltd

On 29 June 2001 the Commission grantedauthorisation to allow collective negotiationsbetween Victorian chicken growers and theirindividual processors in light of proposedindustry deregulation. The authorisation allowsgrowers contracted to each processor tonegotiate collectively and enter into standardgrowing contracts with their processor in line

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with minimum standards and conditions outlinedin a proposed code of conduct.

On 23 July 2001 the president of the VictorianFarmers Federation Chicken Meat Group lodgedan application for order of review of theCommission’s decision on the grounds of denial ofnatural justice and improper use of Commissionpowers. The matter was heard before JusticeWeinberg in the Federal Court in Melbourne on4 March 2002. The court dismissed the appealon 27 August 2002 and the authorisation grantedby the Commission remains in force.

The professionsAs the Commission focuses more on anti-competitive conduct in the professions, thenumber of applications for authorisation hasincreased from professional or occupationalassociations, particularly in the health sector.Some of those authorisation applications include:

Australian Institute of Mining and Metallurgists

The Commission issued a draft determination on13 March 2002 for an application from theAustralian Institute of Mining and Metallurgists torevoke two authorisations—A234 and A90517—and grant a replacement authorisation coveringvarious Institute codes and guidelines. TheCommission proposed to revoke and grant areplacement authorisation with conditions. It hasdeferred further consideration of the applicationuntil the end of the year at the Institute’s requestwhile the Institute reviews its code of ethics.

Royal Australasian College of Surgeons

On 24 November 2000 the Royal AustralasianCollege of Surgeons (RACS) applied forauthorisation of its processes in:

! selecting, training and examining surgicaltrainees in each of the nine specialities inwhich it conducts training

! accrediting hospital posts as being suitable fortraining surgeons

! assessing the qualifications of overseas-trainedpractitioners.

RACS lodged a supporting submission on30 March 2001. The Commission has grantedinterim authorisation to RACS allowing it toengage in the arrangements for whichauthorisation is sought while the Commissionconsults on and considers the merits of thearrangements.

Royal Australian College of GeneralPractitioners

The Royal Australian College of GeneralPractitioners (RACGP) lodged an application forauthorisation on 31 August 2001 in relation tofee setting by general practitioners within thesame practice. It lodged a supporting submissionand amended application on 18 January 2002.Specifically, the RACGP is seeking authorisationto allow GPs to agree on fees if they work withina general practice structured as:

! a partnership where at least one of thepartners is a body corporate

! an associateship where the GPs are co-locatedand share an interest in a service entityresponsible for managing and/or maintaining acommon reception, common fee collection,common bank account, common tradingname, common medical records (i.e. sharepatients) and common accreditation.

The RACGP is also seeking authorisation for GPsworking in general practices within the abovecategories which employ GPs as contractors oron a freelance locum basis.

The Commission issued a draft determination on20 June 2002 proposing to grant authorisationsubject to conditions for four years. At that time,interim authorisation previously granted by theCommission to the conduct for whichauthorisation was sought was extended until afinal determination is released. A pre-decisionconference has also been held, at the request of anumber of interested parties.

Health Purchasing Victoria

On 3 December 2001 Health Purchasing Victoria(HPV) sought authorisation on behalf of severalpublic and one private health service inmetropolitan Melbourne and Geelong. Inparticular, HPV sought authorisation for the

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calling and awarding of tenders by it for theexclusive acquisition of temporary agency nursingstaff from nursing agencies by these health services.HPV amended the terms of the proposed tenderon 16 January and 9 April 2002. The latteramendments significantly changed the potentialimpact of the tender process. On 27 June 2002the Commission issued a draft determinationproposing to grant authorisation. A pre-decisionconference was held in August 2002.

AviationIn consultation with the International AirTransport Association (IATA), the Commissionhas begun a review of authorisations granted16 years ago covering IATA’s activities. As part ofthis process IATA lodged an application in May2001 seeking revocation of an authorisationdealing with IATA’s Passenger Agency Programand the issue of a substitute authorisation. TheIATA program is based on resolutions passed byIATA’s airline members relating to arrangementsbetween airlines and travel agents in Australia.

On 13 May 2002 the Commission issued a draftdetermination proposing to authorise theprogram subject to several conditions. TheCommission recognised that most internationalair travel is sold in Australia through travel agentsand an effective travel agent industry in Australiais therefore important in achieving competitionbetween international airlines. Conditionsproposed by the Commission addressed aspectsof the program that could affect the financialposition of agents at a time when the travel andaviation industries are under significant pressure.A pre-decision conference was called by IATAand the Australian Federation of Travel Agents inresponse to the Commission’s draftdetermination. The Commission expects tocommence work on the review of IATA’s otheractivities including passenger services, passengertariff coordination and air cargo in late 2002.

On 11 April 2002 Air New Zealand soughtauthorisation on behalf of airline members of theStar Alliance to jointly offer fares and otherincentives to corporate customers and conventiondelegates and organisers. The Commission iscurrently considering this application followingpublic consultation.

Banking and financial marketsDuring the year the Commission finalised itsassessment of several authorisation applicationsfor the Sydney Futures Exchange’s clearingarrangements and the clearing arrangements forthe Australian Stock Exchange’s derivativesmarket.

On 20 May 2002 the Commission received anapplication for authorisation lodged by theAustralian Bankers’ Association (ABA) on behalfof 10 member banks. The ABA is seekingauthorisation for an arrangement in which eachapplicant will offer a basic bank account with thefollowing minimum features:

! no account keeping fees

! no minimum account balance required toopen an account

! no minimum monthly balance requirements

! unlimited number of deposits provided free ofcharge each month

! up to six non-deposit transactions provided freeof charge each month (including up to three‘over the counter’ withdrawals each month).

Member banks will agree to make a basic bankaccount available to at least the holders ofCommonwealth Government health concessioncards, but each member bank is otherwise free todetermine the eligibility criteria of theirindividual account.

On 4 June 2002 the Commission wrote tointerested parties seeking submissions in relationto the ABA’s application for authorisation. TheCommission is currently assessing thisapplication for authorisation.

Australian Competition Tribunal

Australian Dairy Farmers’ Federation (ADFF)

On 12 March 2002 the Commission issued afinal determination granting authorisation to theADFF to allow groups of dairy farmers tocollectively negotiate pricing and supplyarrangements with dairy processing companies.The authorisation, granted until 1 July 2005, wassubject to various conditions.

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The Commission considered that the conditionalauthorisation of collective bargaining by dairyfarmers would result in the following publicbenefits:

! a likely increase in competition in the supplyof raw milk by allowing dairy farmers to takeadvantage of additional market opportunitiesfor their milk

! an increase in the confidence of individual dairyfarmers in dealing commercially with processorswhich may increase the input dairy farmershave into supply contracts, reducing thelikelihood of harsh or unfair contractual terms

! facilitating the transition to a deregulatedmarket

! to the extent that the ability to collectivelynegotiate would stop the exit of efficientfarmers from the dairy industry, the ruralcommunities that rely on dairying wouldbenefit through the maintenance ofemployment and commercial activity.

On 2 April 2002 National Foods Limited, a majordairy processing company, applied to theAustralian Competition Tribunal to review someof the conditions the Commission imposed in thedetermination. Following a hearing before theTribunal in August 2002 a position consented toby National Foods, ADFF and the Commissionwas agreed to by the Tribunal. Groups of dairyfarmers with a ‘shared community interest’ areauthorised to form collective bargaining groupsthrough which they may collectively negotiateterms of supply, including pricing, with a dairycompany that each member of the group wishesto supply.

Sydney recycling

On 6 June 2002 the Commission grantedauthorisation to Resource NSW, which appliedon behalf of 11 Sydney councils, to collectivelynegotiate with recycling facility operators.

The councils are: Botany Bay City Council,Canterbury City Council, Hurstville CityCouncil, Kogarah Municipal Council,Marrickville Council, Randwick City Council,Rockdale City Council, South Sydney CityCouncil, Sutherland Shire Council, WaverleyCouncil and Woollahra Municipal Council.

On the same day the Commission also grantedauthorisation to the following Sydney councils:Ashfield Council, Auburn Council, BurwoodCouncil, City of Sydney, Canada Bay Council,Leichhardt Municipal Council and StrathfieldMunicipal Council.

The applications relate to dry recyclable material(DRM) which includes paper, glass, plastic,aluminium and steel cans, and liquid paperboard(e.g. milk cartons). Councils collect DRM fromhouseholds. Many councils then supply theirDRM to a materials recycling facility (MRF) forsorting, which then sells it to downstreamprocessors. Councils pay a fee to MRFs forreceiving their DRM.

Under each application, each group of councilshas immunity to collectively negotiate a contractwith MRF operators to sort and dispose of theirDRM.

The Commission decided that both applicationswould result in a small public benefit. Thesebenefits mainly arise from improved efficiency,such as reduced transport costs, and fromimproved environmental outcomes. TheCommission considered that minimal publicdetriment would result from the two collectivetenders.

On 27 June 2002 Waste Services CorporationNew South Wales filed applications to revieweach authorisation with the AustralianCompetition Tribunal. This appeal was withdrawnin August 2002.

Agsafe Limited

On 22 May 2002 the Commission grantedauthorisation for five years to a self-regulationcompliance program for the agricultural andveterinary chemical (agvet chemical) industry,overseen by Agsafe Limited.

Authorisation was granted to Agsafe’s industryaccreditation scheme requiring persons andpremises involved in the transport, handling andstorage of agvet chemicals to be accredited andto comply with a code of conduct. Theauthorisation also means Agsafe can apply tradingsanctions to premises that fail to meetaccreditation standards.

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The Commission also authorised two changes tothe existing scheme (which has been operatingunder authorisation for more than 10 years).First, it authorised a change in the definition ofagricultural and veterinary chemicals that need tobe accredited, and second, it authorised a changein the obligatory threshold, which determines ifpremises need accreditation.

The Commission considered that thearrangements may result in some lessening ofcompetition but that the anti-competitivedetriments as a result of the scheme werelimited. In particular, the Commission believedthat appropriate safeguards exist to ensure thatAgsafe’s powers to impose trading sanctions arenot used to the detriment of competition in themarket. The Commission also considered thatpublic benefits would flow from thearrangements—to users and the communitygenerally—from the safe use of agvet chemicalsand Australia-wide uniformity in the storage ofagvet chemicals.

On 12 June 2002 the Veterinary Manufacturersand Distribution Association (VMDA) appliedfor review of the Commission’s decision to theAustralian Competition Tribunal but withdrewits appeal on 11 July 2002.

Major authorisations andnotifications finalised during2001–02

Inter hospital agreement involving the AlwynRehabilitation Hospital, Wolper Jewish Hospital,Hornsby Day Surgery Centre, LonguevillePrivate Hospital, Poplar Private Hospital, MayoPrivate Hospital, Calvary Private HospitalWagga Wagga and Hunter Valley Private Hospital

On 24 December 1999 several independentprivate hospitals in NSW applied for authorisationfor conduct set out in a proposed inter hospitalagreement (IHA). The IHA will provide, amongother things, for joint negotiations of hospitalpurchaser provider agreements with health fundsand the Department of Veterans Affairs. It willalso allow the applicants to share informationabout fees and non-fee services through acommon agent.

The Commission believed that many publicbenefits were likely to result from the proposedconduct, especially in terms of likely efficiencygains resulting from access to an improvedcontracting and negotiating process.

The Commission also took into account that fewof the hospitals compete with each other andtheir relatively small size. It also considered thepossibility that the reimbursement paid to eachof the hospitals would not be the same, eventhough a common agent represents them innegotiations, and that the IHA will not allowcollective action through a group boycott.

Subject to one condition the Commissionconcluded that the public benefits likely to resultfrom the proposed conduct would outweigh anydetriment to the public. The Commissiontherefore granted authorisation for three years.

The Australian Pensioners League of WesternAustralia

On 10 January 2001 the Australian PensionersLeague of Western Australia (APL) applied forauthorisation for an agreement between the APL,

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Western Australian Funeral Directors Association(WAFDA) and certain non-WAFDA funeraldirectors to supply fixed-price discount pre-paidfunerals to members of the APL.

The APL funeral fund is a funeral pre-paymentscheme for aged, invalid and widowed pensionersin Western Australia, as well as certainsuperannuants. It gives the elderly the benefit ofplanning a burial or cremation, at a substantiallyreduced cost to the funeral fund member.

The fixed rate offered by the funeral fund isnegotiated annually on behalf of its memberswith the WAFDA, and with individual non-WAFDA members who choose to participate inthe scheme.

The Commission considered that thearrangements were likely to result in a lowerprice to fund members than could be negotiatedotherwise and that there was a public benefit inproviding funeral directors services to anunderprivileged section of the community at aprice much lower than the market price. TheCommission concluded that the public benefitslikely to result from the proposed arrangementsoutweighed any anti-competitive detriment thatmay arise. The Commission granted conditionalauthorisation for five years.

Clearing arrangements for the Sydney FuturesExchange and the Australian Stock Exchange’soptions market

On 14 November 2001 the Commission authorisedclearing arrangements for the Sydney FuturesExchange and the Australian Stock Exchange’soptions market. The authorised arrangementsinvolve the third line forcing of clearing services.The ASX requires that trading participants on itsoptions market acquire clearing services eitherdirectly or indirectly from the Options ClearingHouse Pty Ltd (OCH), a wholly ownedsubsidiary of ASX. The SFE requires that tradingparticipants on the SFE’s markets clear all trades

through the SFE Clearing Corporation Pty Ltd.

The Commission has previously authorised thesearrangements.

The regulatory environment for providingclearing house services to financial markets waschanged significantly by the passage of theFinancial Services Reform Act 2001. The reformscontained in the FSR Act are intended toincrease competition by lowering barriers toentry and by encouraging new participants tooperate competing markets and clearing andsettlement facilities. In particular, these reformswill permit (but not require) more than oneclearing and settlement facility to handletransactions executed on the one financialproduct market.

In this context, the Commission noted theconsensus between regulators at a roundtablemeeting on 20 September 2001 at which theCommonwealth Treasury, the Reserve Bank ofAustralia and the Australian Securities andInvestments Commission (ASIC) agreed thatbarriers to competition between clearing housesshould be removed in line with the policyobjectives of the FSR Act. However, ASIC didexpress the view that a decision to allow morethan one clearing house to service the onefinancial market should not be taken until afterany problems with the transition to the newregulatory regime have been ironed out. In responseto ASIC’s concerns, Treasury and the ReserveBank noted that this issue could be addressedthrough the licensing provisions of the FSR Act.

However, in light of the regulatory changes in theFSR Act, the Commission considered that it wasnot appropriate to authorise the current clearingarrangements for an extended period of time,given the conduct is not consistent with thepolicy objectives of the FSR Act.

The Commission decided, therefore, to grantauthorisation for 12 months on the basis that thisprovides for a reasonable transition period.

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The Commission also granted authorisation forfive years for the membership criteria,disciplinary provisions and financial requirementscontained in the SFE Clearing Corporation’s by-laws. This was done on the basis that there aresignificant public benefits associated with havingmeasures in place which ensure clearingparticipants maintain a high standard of conductat all times.

Premium Milk Ltd

On 12 December 2001 the Commissionauthorised Premium Milk Supply Pty Ltd tocollectively bargain farm-gate prices and milkstandards with Pauls Limited on behalf ofparticipating south-east Queensland dairy farmers.

Under the proposal, a milk managementcommittee consisting of three Premiumrepresentatives and three from Pauls willfacilitate collective negotiations. Neither Paulsnor member producers are bound to buy or sellat any particular price established by thecommittee. Member producers may enter intoindividual supply arrangements with Pauls, or anyother processor, by first giving Premium sixmonths’ notice.

The Commission considered there were benefitsto the public as a result of the efficiency gainsfrom transaction costs savings. The authorisationwould also smooth the transition from aregulated to a deregulated market by providingfarmers with an opportunity to develop skills andexperience to successfully operate in acommercial environment.

The Commission concluded that the nature ofthe proposed arrangements as well as a numberof structural features in the market were likely tolimit the anti-competitive effects.

The Commission authorised the arrangementsuntil 1 July 2005.

Franklins Limited

On 12 December 2001 the Commission grantedauthorisation to Franklins to make agreementswith Action Supermarkets Limited andInterfrank Holdings Pty Ltd (Pick ‘n Pay). Underthe agreements, each of the parties proposed tooffer certain promoted products at no more thanthe agreed discounted prices.

At the time, Franklins was engaging in a managedselldown of its supermarkets to numerouscompanies, including Action and Pick ‘n Pay.

The Commission considered that the anti-competitive effect of the agreements was limitedas they applied only to promotional pricing,specified only minimum discounts, and allowedthe parties to engage in other promotionalactivities if desired. The Commission also notedthe strong competition in the supermarketindustry. It identified several public benefits thatwould outweigh any anti-competitive detrimentresulting from the conduct.

Authorisation was also granted for Franklins’proposal to sell its stores on condition thatpurchasers offer the products at no more thanthe promoted prices for the period in which thepurchasers sell Franklins brand products (for amaximum of 30 days).

The Commission granted authorisation until thelast Franklins store was sold or closed, or until1 April 2002.

Real Estate Institute of Western Australia

On 21 December 2001 the Commission grantedauthorisation to the Real Estate Institute ofWestern Australia (REIWA) for its articles, codesof practice, multiple listing service (MLS) by-lawsand certain standard agreements for five yearssubject to several conditions.

REIWA is an industry association for real estateagents in Western Australia. Its articles address,among other things, matters relating tomembership, disputes involving members andappeals. The codes of practice addressrelationships between agents and vendors/lessees, other agents and purchasers/lessees. TheMLS by-laws address elements of conjunctional

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agreements and members’ obligations in relationto MLS arrangements. REIWA also applied forauthorisation of 10 standard exclusive sales andmanaging agency agreements it has developed forits members to use.

REIWA applied for authorisation following legalproceedings launched in 1998 by theCommission against REIWA alleging breaches ofs. 45 of the Act. These proceedings culminated inJustice French of the Federal Court issuingorders by consent. In response, REIWA reviewedits rules and applied for authorisation.

The Commission considered that public benefitsflowed from the fact that members must adhereto professional standards of behaviour and obtainprofessional indemnity insurance; from theoperation of REIWA’s dispute resolution processesand MLS; and from its standard contractdocumentation. However, it considered thatsome restrictions in REIWA’s articles, codes etc.were inappropriate, including certain standardcontract terms. Also, REIWA’s reportingarrangements were not sufficiently transparentand its appeals process was not independentenough. The Commission granted authorisationon condition that the articles, codes etc. areamended to remedy these and other concerns.Many of the amendments were proposed byREIWA in response to concerns raised by theCommission in its draft determination.

St Vincent’s Private Hospital, MaterMisericordiae Hospital, Trustees of the Sistersof Charity of Australia and Sisters of CharityHealthcare Australia Ltd

On 14 December 2000 the Mater MisericordiaeHospital Limited, St Vincent’s Private Hospital,Trustees of the Sisters of Charity Australia andSisters of Charity Healthcare Australia Ltd (theapplicants) applied for authorisation of variouscollaborative arrangements following theacquisition of the Mater Hospital, North Sydney.

The applications for authorisation arose from alegal technicality concerning that acquisition—that is, the relevant entities within the hospitalgroup after acquisition would not all be relatedbodies corporate. As a result, the hospital group

is not entitled to a related bodies corporateexemption under s. 45(8) of the Act.

The Commission considered that there would beminimal anti-competitive detriment flowing fromany coordinated conduct between St Vincent’sand the Mater Hospital.

The Commission was satisfied that there werelikely benefits to the public in improvedefficiency resulting from the economies of scale,improved utilisation of infrastructure andsynergies across the hospital campuses.

The Commission granted authorisation for aslong as the applicants are directly or indirectlyowned and controlled by the Congregation of theSisters of Charity.

Hallas Trading Company Pty Ltd and HallasFranchising Co Pty Ltd

Hallas Trading Company Pty Ltd and HallasFranchising Co Pty Ltd lodged four exclusivedealing notifications involving full line and thirdline forcing conduct on 15 April 2002. Thesesuperseded earlier notifications lodged for similarconduct on 14 September 2001.

The conduct notified by Hallas Trading andHallas Franchising required salon owners to selland use only Ella Baché skin care and sun careproducts and treatments in their salons. Inaddition, salon owners could only sell nominatedproducts and treatments not covered by the EllaBaché range.

The Commission decided to allow thenotifications to stand. It considered that the fullline forcing conduct would be unlikely tosubstantially lessen competition in any relevantmarket given that of the approximate 6600beauty salons in Australia only about 300 use EllaBaché products. Ella Baché products also accountfor only a small percentage of the total sales ofeach relevant skin care product and there is asubstantial range of competing products.

The Commission considered that the benefitsfrom the supply of a more consistent anduniform service to consumers would outweighthe detriment (if any) in requiring salons to sellonly a limited range of supplementary products.

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REGULATORYACTIV IT IES

Chapter 6

ContentsElectricity 91

Gas 103

Telecommunications 111

Aviation 122

Rail 126

Waterfront and shipping 128

Post 129

Petrol monitoring 130

Utility Regulators’ Forum 132

Government response to therecommendations of theIntellectual Property andCompetition Review Committee 133

International forums 134

OverviewThe Commission promotes competitive conductin network industries and, if competition is notpossible, seeks to restrain monopoly pricing andother abuses of market power. The principalbarrier to competition in these industries and thesource of their market power is their reliance onfacilities with natural monopoly characteristics.These are the essential infrastructure facilitiessuch as telecommunications networks, electricityand gas transmission, interstate rail networks andairports.

The Commission is responsible for the economicregulation of services provided by some of thesefacilities. Under Parts IIIA and XIC of the TradePractices Act, and associated codes, theCommission regulates third party access to someessential facilities. This enables access seekers,such as telecommunications carriers andelectricity generators and retailers, to gain accessto the network services. Efficient regulation ofthese bottleneck facilities is necessary topromote competition in upstream and/ordownstream markets.

The Commission also administers Part XIB ofthe Trade Practices Act, which deals with anti-competitive conduct in the telecommunicationsindustry. It also assesses price notifications ofdeclared services, and monitorscosts, prices and profits, underthe Prices Surveillance Act,and administers the PostalCorporation Act.

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Major decisionsThis year the Commission released several majordecisions in the industries for which it hasregulatory responsibility. A series of changes to theNational Electricity Code were assessed, coveringareas such as ancillary services arrangements, fullretail competition, aspects of Tasmanian NEMentry, the participation of market network serviceproviders in the NEM, and network planning anddevelopment. The Commission also released itsrevenue cap decision for the Queenslandelectricity transmission network.

In gas, final decisions for the Moomba toAdelaide pipeline system, Ballera to Mt Isa andRoma to Brisbane pipelines were released. TheCommission also released final approvals for theWallumbilla to Rockhampton and Ballera toWallumbilla pipelines.

In rail the access undertaking submitted by theAustralian Rail Track Corporation was accepted.Covering access to interstate rail track, this is thefirst rail access undertaking accepted by theCommission.

In airports the Commission released its VirginBlue access determination, deciding not to applyaccess regulation to the domestic expressterminal at Melbourne airport.

The Commission also considered Adsteam’sharbour towage price notification, objecting to itsproposal to increase prices for harbour towageservices at Australia’s six main container ports.

The Commission completed its report to theTreasurer into fuel price variability in December2001.

In telecommunications the Commission releaseda range of draft, final and revised pricing papers,informing the telecommunications markets ofthe Commission’s thinking on likely indicativeprices and the methodologies and principles thatit uses in making price decisions.

During the year 19 arbitrations were resolved—the Commission issued two final determinations,16 matters were withdrawn and in one matterthe Commission’s jurisdiction was notestablished.

Other major developmentsThroughout the year the Commission continueddeveloping efficient regulation in networkindustries. It released the Post-tax revenue modeland handbook in October 2001, which explainshow the Commission applies the model in itsregulation of various utilities. In June 2002 theCommission released the Draft greenfieldsguideline for natural gas transmission pipelines.This is a guide to the access regulation frameworkand contains options for new natural gastransmission pipeline developments in Australia.Several telecommunications pricing papers werealso released during the year. They informed themarket of the Commission’s thinking on likelyindicative prices and the methodologies andprinciples that it uses in making price decisions.

Work commenced during the year on settingrevenue caps for the Victorian and SouthAustralian electricity transmission networks. TheCommission assumes regulatory responsibilityfor these transmission networks from 1 January2003. Work also began on assessing the proposedincrease in the price of assorted postal services,including the price of the basic postage stamp.

ReviewsMuch of the framework governing theCommission’s regulatory work has recently beenreviewed, or is currently being reviewed. TheProductivity Commission has reviewed thePrices Surveillance Act, Part IIIA of the TradePractices Act, the telecommunications-specificcompetition regulation (including Parts XIB andXIC of the Act) and the airport price oversightarrangements. The Council of AustralianGovernments (COAG) has also established areview of future directions in the electricity andgas markets. As the declaration of the harbourtowage service expires in September 2002, theProductivity Commission is reviewing the pricesoversight arrangements.

While the Commission is largely responsible fortelecommunications, airports, postal services andliner shipping conferences, the states andterritories retain important roles in electricity,

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gas, rail and waterfront regulation. Therefore, itis essential that the regulatory approaches by theCommission and state and territory regulatorsare consistent. The Utility Regulators Forum, acommittee of all Commonwealth, state andterritory regulatory agencies, was established todo just that and met several times during theyear.

The Commission also participates in internationalregulatory policy forums of the OECD and IEAand monitors overseas developments inregulatory policy.

Reforming Australia’s Energy Markets: ACCCsubmission to the Energy Market ReviewLast year COAG initiated an independent reviewof Australia’s energy markets—the EnergyMarket Review. The terms of reference are wideranging, covering both gas and electricity. TheCommission prepared a submission for thereview, arguing that the energy reform processinitiated by COAG in the 1990s is now stallingand that fundamental changes are required tocapture the full potential of the NEM.

The reforms introduced by COAG are deliveringbenefits with a trend to more efficient electricitypricing, improved service standards andsubstantial new investment. However, electricitymarkets are not as competitive as they could beand in some circumstances generators continueto have significant market power.

The submission proposes various reforms tomake the electricity market operate moreeffectively. They are:

! new entry and/or further structural reforms

! completion of the move to full retailcontestability and the roll out of interval basedmeters

! further investment in transmission betweenthe states (and supporting intra-statetransmission).

These reforms are expected to increasecompetition between generators, both withinstates by increasing the number of competinggenerators, and between states through increasedinterconnection. The reforms will also facilitatedemand-side participation (where users can

respond to peak prices and other price signals).

The Commission made the following keyobservations about the Australian gas industry:

! There is a continuing role for regulation ofnon-contestable gas transmission pipelines toprovide the necessary framework for anAustralia-wide and integrated gas network.

! The Commission’s role is to help develop themarket by ensuring fair and open access tothese pipelines.

! For regulated assets, the Commission seeks tobalance the interests of service providers andusers by providing a framework that willencourage efficient investment and providelong-term benefits to the economy.

! Reform of the upstream sector can beaddressed by promoting new upstreamentrants, further pipeline interconnections andthe expiry of existing contractualarrangements.

The submission is available on the Commission’swebsite.

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Electricity

Significant events during 2001–02

During the year the Commission’s regulatorywork in the electricity sector increased.Additional resources, as part of the increasedfunding which the Commission receivedcommencing in 2001–02, resulted in animprovement in the electricity group’s outputs.

Much of the work during the reporting periodconcerned finalising a backlog of code changesand commencing assessments for new codechange proposals. Details of this work aredescribed on page 94. Work began on theassessment of revenue determinations for thetransmission businesses of SPI Powernet,Electranet SA and VENcorp. Work was alsoundertaken for inclusion in the preparation of asubmission to the COAG’s Review of EnergyMarkets Directions.

Key work undertaken during 2001–02 included:

! finalisation of the network and distributiveresources code changes that introducedsignificant realignment of network planningresponsibilities and their regulatory oversight

! authorisation of the code changes introducinga spot market for ancillary services

! commencement of work on the Principles forthe Regulation of Transmission Revenues

! commencement of work on the developmentof service standards and incentive mechanismsfor transmission networks to better rewardnetworks and make them more accountablefor network performance

! commencement of the regulatory resets forthe transmission businesses of SPI Powernet,(Victoria), VENcorp (Victoria) and Electranet(South Australia)

! assessment of revenue pass-through events forElectranet under the South AustralianElectricity Pricing Order, SPI Powernet under

the Victorian Tariff Order and the revenuedetermination for Powerlink Queensland

! development of a discounting guideline forprudent transmission price discounts and thesubsequent assessment of several proposals

! submission to the Review of Energy MarketDirections

! code changes dealing with dispute resolution,extension of technical derogations

! holding a forum on market power andrebidding in the national electricity market.

Review of the performance of the nationalelectricity marketDuring 2001–02 debate continued about theoperation of the electricity market. Concernswere raised about the performance of the marketregarding the perceived high level of pricevolatility in the spot market associated with theintroduction of the ancillary services market.Expected high prices over summer 2001–02 didnot materialise, perhaps due to mild weather andchanges in the contract positions of marketparticipants. However, in May 2002 there was amarked increase in pool price volatility, resultingin an overall increase in the average price for thefinancial year. The following graphs indicateaverage spot market prices both over the financialyear and since the commencement of the marketin December 1998.

The graph for the financial year shows that priceswere generally stable leading up to May 2002.Mild summer weather coupled with improvedplant availability and the contracting positions ofmarket participants militated against a recurrenceof the pricing levels experienced in the summerof 2000–01. However since May, there has beena substantial increase in pool prices.

The Commission is closely watching theperformance of the market to determine whetherefficient outcomes are being achieved and theextent to which market power is being exercised.


92

Figure 6.1 Weekly moving VWA price 30-minute resolution July 01–June 02

Source: National Code Administrator July 2002


93

Figure 6.2 28-day moving VWA price daily resolution since market start

Source: National Electricity Code Administrator July 2002

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As discussed elsewhere, the Commission believesthat the electricity market is at a crossroad in itsdevelopment. For further gains to be made theremust be greater demand side participation.Consideration is needed for more efficientpricing of the use of the existing transmissionsystem and to guide its future augmentation.

Authorisations

Amendments to the National Electricity Code

The Commission received a number of applicationsfor authorisation from the National ElectricityCode Administrator (NECA) proposingamendments to the National Electricity Code.

Ancillary services

On 23 August 2000 NECA lodged applicationsfor authorisation to enable the introduction ofnew ancillary services arrangements in the NEM.The proposed arrangements introduce a market-based system for procuring ancillary services, andwhere possible, introduce a ‘causer pays’ regimefor cost allocation among market participants.

The draft determination was released on 2 April2001 and the Commission held a pre-determination conference in May beforereleasing the final determination approving theproposed code changes on 11 July 2001.

Full retail competition

On 11 August 2000 NECA applied to theCommission for authorisation of amendments tothe code. These changes facilitated theintroduction of full retail competition (FRC),and amended the procedures for registering codeparticipants. NECA amended that application on17 August 2000 to rectify typographical errors.

The FRC code changes introduced transitionalarrangements for metering to recognise theexisting domestic metering infrastructure. Thechanges also require jurisdictions to appoint ametrology coordinator responsible for developingprocedures to help convert metering data into aformat suitable for use in the current wholesalemarket settlements system.

The Commission granted conditional interimauthorisation to the proposed arrangements on20 September 2000. In response to concernsregarding the conditions, the Commissionrevoked and regranted the interim authorisationon 27 October 2000. The Commission releasedits draft determination on 11 April 2001 and apre-determination conference was held inCanberra on 29 May 2001. The Commissionthen released its final determination on 1 August2001 granting conditional authorisation to theproposed code changes.

Victorian FRC derogations

On 19 March 2001 the Commission receivedapplications from NECA, on behalf of theVictorian Government, for authorisation ofamendments to the derogations contained inchapter 9 of the code. The proposed derogationsrelate to the metering arrangements of chapter 7of the code.

The Victorian Government applied to amend thederogations contained in chapter 9, inconjunction with the introduction of full retailcompetition in Victoria.

The Commission released its draft determinationon 4 July 2001, and granted conditional interimauthorisation to the derogations that related totheir end date.

At a pre-determination conference held on20 July 2001, the Commission considered theissues raised by interested parties beforereleasing its final determination on 8 August2001 granting conditional authorisation to theproposed code changes.

Inter-regional TUOS, treatment of losses, PASA, demand-side participation, end user advocacy and pricing underextreme conditions

On 8 December 2000 the Commission receivedapplications from NECA to authorise a packageof code changes that included:

! extending the current moratorium on inter-regional transfer of transmission use of system(TUOS)

! minor changes to the treatment of losses

! improvements to PASA (projected assessmentof systems adequacy) regarding the availability

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of network and generator availabilityinformation

! making demand-side bidding more attractiveto customers by removing perceived barriersto their participation

! clarifying pricing under extreme conditions

! changes in establishing an advocacy panel andthe funding of end user advocacy.

The Commission released a draft determinationon the proposed changes on 6 June 2001 and apre-determination conference was held withinterested parties on 19 July 2001, mainly todiscuss the code changes relating to end useradvocacy. It released its final determination on19 September 2001 granting conditionalauthorisation.

Network pricing and market network service providers

On 21 September 2001 the Commissionreleased its determination on NECA’s applicationfor authorisation of proposed changes to the codecovering network pricing and market networkservice providers.

The changes aimed to accommodate theintroduction of a new pricing methodology forthe use of the transmission network and for theentry of market network service providers(MNSPs) to the NEM, by allowing the MNSPsto earn their revenue from participating in thewholesale spot market rather than levyingnetwork charges. The code changes set out safeharbour provisions that allow a market networkservice to be automatically approved if it meetsspecified criteria. This allows MNSPs to operatein the NEM without price regulation. TheCommission authorised NECA’s proposals.

Queensland technical derogations

On 24 October 2000 the Commission receivedapplications from NECA to authoriseamendments to the code to extend the end datesof eight derogations to 31 December 2002. Thederogations originally terminated on the date ofthe commissioning of the Queensland–NewSouth Wales interconnector (QNI). Theproposed changes also clarified the definitions inthe Queensland derogations.

NECA asked the Commission to consider theseapplications as soon as possible, to ensure thatQNI could meet Queensland’s increased energydemands over the 2000–01 summer period.

On 6 December 2000 the Commission grantedconditional interim authorisation to theapplications. The Commission released its draftdetermination on 12 September 2001 andgranted conditional authorisation to the codechanges on 3 October 2001. The conditionensured that NEMMCO would determinesecurity risks to systems outside Queensland inthe period after QNI was commissioned.

Averaging loss factors in distribution networks

On 20 March 2001 NECA applied to theCommission to authorise changes to the code toallow distribution network service providers toassign smaller contestable customers to non-physical transmission connection points using anaveraged transmission loss factor. The proposalwill replace the existing obligation on distributionnetworks to assign all such customers to physicalconnection points.

The Commission released its draft determinationoutlining its analysis and views on the proposedchanges on 6 June 2001 and a pre-determinationconference with interested parties was held on19 July 2001.

The Commission released the final determinationon 3 October 2001 providing conditionalauthorisation to the code changes.

Tasmanian NEM entry

The Tasmanian Government has developed anenergy reform framework covering two majorinfrastructure projects and market reforms. Anundersea electricity cable (Basslink) and a naturalgas pipeline will link Tasmania to the mainland.Tasmania is anticipated to join the NEM in 2003,with a subsequent phased introduction of retailcontestability for all electricity consumers. TheCommission has been involved in severalprocesses to facilitate Tasmania’s energy reformframework.

As part of these arrangements, Hydro Tasmaniahas entered into an agreement with Basslink PtyLtd regarding the operation of the Basslink

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interconnector. After discussions with theCommission, the two parties advised theCommission that they would not be applying forauthorisation of that agreement.

On 13 September 2000 the Commissionreceived an application from NECA to authoriseamendments to the code to facilitate the Inter-Regional Planning Committee’s (IRPC)consideration of the technical network issuesassociated with the Basslink interconnector. TheCommission released a draft determination onthis matter on 6 December 2000 and, in theabsence of a request for a pre-determinationconference, released its final determination on24 January 2001.

On 22 November 2000 the Commission receivedan application to authorise a vesting contractbetween Hydro Tasmania and Aurora Energy forthe non-contestable load and derogations to thecode. Following the release of draftdeterminations the Commission held a pre-determination conference with interested partieson 6 September 2001, issuing the finaldetermination on 14 November 2001, whichapproved the code changes conditional on anumber of amendments.

New South Wales derogations

On 5 October 2001 the Commission receivedapplications from NECA to authorise amendmentsto the New South Wales derogations in the code.The amendments relate to the meteringarrangements of chapter 7 of the code.

For the full benefits of full retail competition tobe realised, it is important to operate in anenvironment that allows customers to choosetheir retailer. The Commission also considersthat allowing LNSPs to have temporaryexclusivity in meter provision would simplify theprocess for customers who choose to switchretailers, and would minimise disruption to themetering data systems.

The Commission released its draft determinationon 12 December 2001, granting interimauthorisation to facilitate the transition to fullretail competition due to begin in January 2002.No pre-determination conference was called andon 23 January 2002 the Commission released its

final determination. The implication of thisdecision is that all metering services, includingmeter ownership and installation, meter reading,and metering data agency will becomecontestable at the end of the derogation, unlessthe jurisdictional review determines otherwisefor meter ownership.

Prudential arrangements: security deposits

On 22 October 2001 the Commission receivedapplications from NECA to authoriseamendments to the code affecting how marketparticipants can respond to the code’s prudentialrequirements.

To satisfy the prudential arrangements, marketparticipants previously had to seek credit support,in the form of a bank guarantee, from an entitythat satisfies the code’s acceptable credit criteria.

The code changes formalise the existence of asecurity deposit fund for prudential requirements,and allow market participants to call on cashdeposits rather than costly bank guarantees ifthey need extra funds to meet their prudentialrequirements. The code changes also spell outthe rights and responsibilities of NEMMCO andmarket participants under the changes.

On 2 January 2002 the Commission released itsdraft determination of the proposedarrangements. No pre-determination conferencewas called and on 6 February 2002 it released itsfinal determination approving the proposedarrangements.

Network and distributed resources

On 20 December 2000 the Commission receivedapplications from NECA to authorise thenetwork and distributed resources code changesconcerning network planning and development.

The changes proposed that transmission networkservice providers (TNSPs) be allocated greaterresponsibility for justifying and bringing forwardnew network investments and that the inter/intraregional investment distinction be replaced witha large/small network asset distinction. Thechanges also proposed improvements to thetransparency and information disclosurerequirements relating to TNSP’s investmentprograms and that TNSPs must consider non-

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network investments as an alternative toregulated network solutions.

On 20 August 2001 the Commission issued itsdraft determination. A pre-determinationconference was held on 13 September 2001 andon 13 February 2002 the Commission decided togrant authorisation, conditional on amendmentsbeing made to the proposed code changes.Overall the Commission considers that thechanges are an improvement on the existingnetwork planning and approval arrangements asthey provide a clearer, more streamlinedassessment framework within which newinvestment is able to occur.

Code dispute resolution arrangements

On 26 July 2001 the Commission receivedapplications from NECA to authorise changes tothe code’s dispute resolution arrangements.

Under the code NECA is obliged to review thesearrangements to assess how effective the oldcode provisions were.

The changes include clarifying the marketparticipants’ role, rights and responsibilities wheninvolved in a dispute, time limits to ensuredisputes are resolved quickly and a way ofresolving disputes that involve more than twomarket participants.

The Commission issued its draft determination on5 December 2001, holding a pre-determinationconference on 17 January 2002 and releasing afinal determination on 13 March 2002.

In its final determination the Commissiongranted authorisation on condition that thetransition into the new dispute resolutionarrangements is improved.

Full retail competition—Mark II

On 10 December 2001 the Commission receivedapplications from NECA to authorise codechanges to facilitate the introduction of full retailcompetition (FRC). The changes relate toNEMMCO’s powers to determine a ‘declared’project and the market fees required to covercosts associated with that project. In addition,the supplementary code changes relate to theprocesses for collection and transfer of data to

facilitate FRC. The amendments also allow forthe deferral until 1 July 2003 of the recovery ofmarket fees relating to the introduction of FRC.

In the supporting submission, NECA sought aninterim authorisation of the proposed changesbefore 13 January 2002 to allow a smoothtransition to FRC in New South Wales andVictoria. The Commission granted conditionalinterim authorisation to the proposed codechanges on 19 December 2001. On 3 April 2002the Commission released its draft determination,and its final determination approving theproposed changes subject to one minor change on8 May 2002.

Review of technical standards: interim extension of existingderogations

On 15 February 2002 NECA applied forauthorisation to extend certain existing technicalderogations to the code—existing chapter 8derogations for South Australia, New SouthWales and Victoria. In the cases of SouthAustralia and Victoria, it also proposesamendments to extend their coverage.

Extending the derogations would allow amanaged transition to NECA’s new technicalstandards, proposed in its applications forauthorisation of technical code changes lodgedwith the Commission on 3 June 2002.

The Commission released a draft determinationon 10 May 2002 and its final determination on5 June 2002, granting authorisation to theproposed code changes. The authorisationexpires on the earlier of 31 December 2004, or12 months after the revised technical standardsare gazetted.

Other code changes currently being considered

Rebidding

On 13 September 2001 the Commissionreceived applications from NECA to authorisecode changes to the rebidding rules that wouldenable NECA to work with NEMMCO and themarket to address issues such as inefficienciescontributing to short-term price spikes andgenerators’ bids and rebids.

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The changes proposed by NECA will addressbehaviour that is detrimental to market outcomes.The changes respond to concerns of marketpower being exercised in the national electricitymarket (NEM) to influence higher prices.

In the draft determination, released on 3 July2002, the Commission accepted NECA’sproposal that bids and rebids must be made ingood faith. However, the Commission did notaccept NECA’s proposal of ‘reverse onus ofproof ’ for conduct prejudicial to the market. TheCommission believed the following suggestionswould deliver beneficial outcomes whileminimising the legal uncertainty of interpretation:

! NECA to consider drafting a specific codechange to prohibit economic withholdingwhere it is used to deliberately tighten supplyand raise prices

! NECA to consider specific restrictions onbidding of ramp rates if the ability to exercisemarket power through ramp rates remains aconcern

! NECA to consider compulsory butconfidential disclosure of contract volume andprice information for all generators

! NECA to consider delaying the release ofaggregate bidding information, currentlyreleased one day after dispatch, to a period ofseveral weeks or months

! NECA to contribute to the Market ReviewForum as a mechanism for NEM participantsto contribute to debate on topical issues.

The South Australian Minister for Energy, theHon. Patrick Conlon, called the pre-determinationconference in Melbourne on 13 August 2002.Submissions close on 20 September 2002.

Review of directions in the NEM

On 18 February 2002 the Commission receivedapplications from NECA to authorise code changesconcerning the review of directions in the NEM.

The power to direct is part of the safety netarrangements in the market, which NEMMCOmay use if one of the normal market mechanismsdoes not function adequately. The currentprovisions of the code allow for directions toensure reliability, security and safety of thepower system as separate categories of direction.

In accordance with the code, NECA andNEMMCO jointly review directions in the NEMand the code changes implement the conclusionsand recommendations of the joint review report.

The Commission received three submissionsrelating to the code changes and anticipatesreleasing the draft determination in August 2002.

RIEMNS stage 1

On 27 March 2002 the Commission receivedapplications from NECA to authorise codechanges arising from NECA’s stage 1 review ofintegrating the energy market and networkservices (RIEMNS).

NECA requested interim authorisation for thosechanges relating to the extension of thesettlement residue auction and the developmentof methodology for forward-looking loss factors.

The Commission received six submissionsrelating to the code changes.

On 5 June 2002 the Commission grantedconditional interim authorisation to theextension of the settlement residue auctionarrangements until 31 December 2003, and theprovisions requiring NEMMCO to develop amethodology for the calculation of forwardlooking loss factors. The Commission is in theprocess of completing the draft determination.

Review of technical standards

On 3 June 2002 the Commission receivedapplications from NECA to authoriseamendments to the code relating to theimplementation of the recommendations ofNECA’s review of technical standards in the NEM.

The code changes are aimed at implementing thetechnical requirements to facilitate access to thepower system while maintaining its security andintegrity.

The Commission called for submissionsaddressing the proposed technical standards codechanges on 26 July 2002.

The closing date for submissions was 23 August,and the Commission will consider the issuesraised by interested parties in submissions as partof the draft determination.

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The draft determination is expected to bereleased in December 2002.

Variations to the NEM access code

On 10 May 2002 the Commission received arequest from NECA to vary the approved NEMaccess code in accordance with s. 44ZZAA(6) ofthe Trade Practices Act. The variations soughtincluded all provisions of the authorised code notsubject to the Commission’s approval of theNEM access code granted on 20 January 1999(including chapter 3 for the first time).

Each of the proposed changes has been thesubject of industry and public consultation by theCommission through the code change process.Among the changes that will be included in theNEM access code are ‘implementation of VOLL,capacity mechanisms and removal of zero pricefloor’, ‘ancillary services’, ‘full retailcompetition’, ‘network pricing and marketnetwork service providers’ and ‘network anddistributed resources’.

The Commission expects to release a draftdecision in September.

Regulatory work

Murraylink access undertaking

On 6 February 2002 the Commission received anaccess undertaking from Murraylink TransmissionCompany Pty Ltd (MTC), under Part IIIA of theTPA. MTC is a market network service provider(MNSP) that proposes to provide access to theMurraylink interconnector, which will be anunregulated link connecting the Victorian andSouth Australian electricity grids.

The Commission is currently considering theundertaking against the statutory criteria set outin s. 44ZZA (3) of the TPA.

The Commission received submissions fromTransGrid and the New South Wales Treasury, aswell as the applicant’s response to thesubmissions and a presentation.

The Commission will take these into account inconsidering MTC’s access undertaking, andanticipates releasing a draft decision in August 2002.

Basslink access undertaking

On 25 May 2001 the Commission received anaccess undertaking from Basslink submittedunder Part IIIA of the TPA and the code.Basslink is an MNSP that proposes to build andprovide access to the unregulated transmissioncables that will connect the Tasmanian andVictorian electricity regions.

Basslink undertakes to make its networksavailable to code participants and at pricesproperly determined. While the code includes aspecific undertaking for MNSPs (schedule 5.9),this is a recent amendment not yet included inthe NEM industry access code that has beenaccepted by the Commission. Therefore theCommission will assess the undertaking inaccordance with s. 44ZZA of the TPA.

At the time the undertaking was submitted, theCommission was also assessing the TasmanianGovernment’s authorisation application for avesting contract and code changes to facilitateTasmania entering the NEM and becoming amember jurisdiction. The Commission thought itwas prudent to resolve issues in the Tasmanianauthorisation process first so that the frameworkin which Basslink would operate would be setbefore its undertaking was assessed. Accordingly,it was decided that the Commission delayassessing Basslink’s undertaking until aftermaking a final determination on Tasmania’s NEMentry. The Commission expects to release adecision in September 2002.

Regulation of Queensland transmission networks

Under the code, the Commission began regulationof the Queensland transmission networkoperated by Powerlink from 1 January 2002.

On 14 February 2001 the Commission receivedPowerlink’s application outlining its proposedrevenue cap. To help consider Powerlink’sapplication, the Commission engagedPB Associates to review and analyse theassumptions, methodology and findings of a 1999valuation of Powerlink’s asset base and analysedand commented on Powerlink’s proposed capitalexpenditure (capex), operating expenditure(opex) and service standards.

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In July 2001 the Commission released its draftdecision, which draws on Powerlink’s application,PB Associates’ reports, submissions frominterested parties and other information.

The Commission’s final decision was released on1 November 2001.

The revenue cap was based on:

! an asset base of $2277 million

! a post-tax nominal return of equity of11.85 per cent

! an X-factor of –6.67 per cent.

Based on these elements of the building block,the Commission derived a smoothed revenueallowance, which increases from $318.50 millionin 2001–02 to $347.14 million, to$378.35 million by the next year, then$412.37 million, $449.45 million and$489.86 million by 2006–07. The increase inrevenues is largely attributable to Powerlink’sextensive proposed capex program.

The Commission recognised the consequentialimpacts of the 11 September US tragedy on thebond rates and the flow-on effects on the WACCcalculations, noting that the Commission’scurrent approach would place them at aconsiderable disadvantage than if the decisionhad been made before 11 September. Given theuncertainty, the Commission adopted a 40-daymoving average ending on 11 September.

Regulation of South Australian transmission network

On 1 January 2001 the Commission beganregulation of the South Australian transmissionnetwork, ElectraNet SA.

The revenue cap and transmission network pricesfor ElectraNet are outlined in the SouthAustralian Electricity Pricing Order (EPO). TheEPO was established before the privatisation ofthe electricity assets and therefore, until1 January 2003, the Commission’s role is limitedto administering transmission-related functionsunder the EPO. The Commission will notbecome responsible for setting ElectraNet’srevenue cap until 1 January 2003.

On 9 January 2002 ElectraNet applied to passthrough discounts relating to its regulatedtransmission charges for 1 January 2002 to

30 June 2002 ($0.9 million). The Commissionapproved this application.

The Commission is currently consideringElectraNet’s application to pass throughdiscounts relating to its regulated transmissioncharges for 1 July 2002 to 31 December 2002($7.1 million).

ElectraNet also submitted an application on3 May 2001 to the Commission relating to itstransmission charge applying from 1 July 2001 to30 June 2002. This tariff statement breeched there-balancing requirements of the EPO andElectraNet was forced to re-submit its annualtariff statement on 6 June 2002. TheCommission approved the new charges asoutlined in chapter 6.5 of the EPO.

On 1 January 2003 the Commission will beginfull regulation of the South Australiantransmission network. As required under thecode, the Commission is currently conducting areview to determine the appropriate revenue capfor non-contestable transmission networkservices provided by ElectraNet for a period of5 ½ years from 1 January 2003 to 30 June 2008.

On 16 April 2002 ElectraNet lodged anapplication with the Commission outlining itsproposed revenue cap, to be applied to the non-contestable elements of its transmission network.The Commission engaged Meritec to analyse andcomment on ElectraNet’s opening asset base, theproposed capex and the proposed opex.

The Commission anticipates releasing its draftdecision late August 2002 and the final inNovember 2002.

Regulation of Victorian transmission network

On 1 January 2001 the Commission beganregulating the Victorian transmission network,SPI PowerNet and the Victorian Energy NetworkCorporation (VENCorp). The transmissionarrangements are unique to Victoria in thatPowerNet is the owner of the transmissionassets, while VENCorp is responsible for theplanning and augmentation of the transmissionnetwork.

The methodologies for determining the revenuesand customer charges for PowerNet and

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VENCorp are outlined in the Victorian TariffOrder (VTO). Until 1 January 2003 theCommission’s role is limited to administeringtransmission-related functions under the VTO.The Commission will not become responsible forsetting PowerNet and VENCorp’s revenuerequirements under the national electricity codeuntil 1 January 2003.

PowerNet submitted an application on 3 May2002 for maximum allowable revenue of$129.9 million for the six months from 1 July to31 December 2002. This represents a decrease of4.2 per cent from the previous year on a pro-ratabasis.

VENCorp submitted an application on 21 May2002 for a revenue requirement of$258.54 million, representing an increase of about16 per cent on the previous year (the Commissioncan make a decision for the 12-month period1 July 2002 to 30 June 2003 because of theparticular interaction of the VTO and the coderegarding VENCorp). The Commission approvedboth applications.

On 1 January 2003 the Commission will begin fullregulation of the Victorian transmission network,bearing in mind the special arrangements underthe code regarding VENCorp. The code outlinesthe general principles and objectives for thetransmission revenue regulatory regime to beapplied by the Commission.

On 11 April 2002 PowerNet lodged anapplication with the Commission outlining itsproposed revenue cap for the period 1 January2003 to 31 March 2008. The revenue cap is to beapplied to the non-contestable elements of itstransmission network. To assist in itsconsiderations of PowerNet’s application, theCommission engaged PB Associates to analyseand comment on PowerNet’s opening asset base,proposed capex and proposed opex.

VENCorp lodged its revenue cap applicationwith the Commission on 12 April 2002. Again,the Commission engaged PB Associates to analyseand comment on VENCorp’s proposed opex.

The Commission anticipates releasing its draftdecisions in early August 2002 and the finalrevenue cap decisions in October 2002.

Regulation of the Tasmanian transmission network

As part of its regulatory responsibilities, theCommission is responsible for determining themaximum allowable revenue of transmissionbusinesses participating in the national electricitymarket. The Commission is now preparing forthe commencement of regulation of theTasmanian transmission business, Transend.

Tasmania is not currently part of the NEM, butwill join once the Basslink interconnectorbetween Victoria and Tasmania is commissioned.Commission staff are closely consulting withstaff of the transmission business, the Office ofthe Tasmanian Energy Regulator (OTTER), andthe Tasmanian Department of Treasury. TheCommission is expected to begin the revenuecap process in the last quarter of 2002.

Draft regulatory principles

The Commission released its draft regulatoryprinciples in May 1999. Since then there havebeen several developments in the approach to theregulation of network industries. Given the timesince the release of the draft, the Commissionproposes to finalise the regulatory principles bythe second half of 2002.

Guidelines for the negotiation of discounted transmissioncharges

Clause 6.5.8 of the National Electricity Coderefers to Commission guidelines for thenegotiation of discounted transmission charges.The code permits a TNSP to recover the amountof a discount to a transmission customer’sgeneral and/or common service charges fromother transmission customers provided it issatisfied that it can demonstrate that thediscount complies with the guidelines. At thesubsequent revenue reset, the Commission may‘claw back’ the recovered revenue if it decidesthe discount did not meet the guidelines.

On 10 October 2001 the Commission releasedits draft Guidelines for the negotiation ofdiscounts on transmission charges and soughtsubmissions from interested parties. In light ofthe submissions received, a fourth guideline wasadded to deal with pre-existing discountarrangements and the wording of Guideline 1was refined. A further clarification of the

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procedures for assessing discount recoveryapplications from TNSPs was made. Under thecode, such applications must be formallyconsidered at a TNSP’s revenue determination.However, there is also provision for a TNSP toapply for a letter of guidance from theCommission at the time the discount is beingnegotiated.

On 3 May 2002 the Commission released itsfinal Guidelines for the negotiation of discountedtransmission charges. These now constitute thosereferred to in the code.

The Commission intends to monitor theapplication of the guidelines and may revise themat some later date following due consultationwith all relevant stakeholders.

Statement of principles for the regulation of transmissionrevenues—information requirements guidelines

On 1 July 1999, in accordance with itsresponsibilities under the code, the Commissionbegan regulating the transmission revenues in thenational electricity market.

Clauses 6.2.5 (a) and (c) of the code requiretransmission network owners to submit to theCommission certified annual financial statements(in a form to be determined by theCommission), and any other information theCommission reasonably requires to perform itsregulatory functions. Chapter 6 of the code alsoenvisages that the Commission will develop a setof guidelines outlining how it will exercise itspower to regulate transmission revenues.

On 27 May 1999, in accordance with thisprovision of the code, the Commission releasedits draft Statement of principles for the regulationof transmission revenues. The draft regulatoryprinciples included the Commission’s initialviews on the information disclosurerequirements.

Following the release of the draft principles, theCommission received submissions frominterested parties outlining their concerns withthe proposed information requirements. Thesematters were taken into consideration in thedevelopment of the draft informationrequirement guidelines, which were released on9 May 2001.

The Commission received several submissionsregarding the draft information requirementguidelines and consulted widely with thetransmission network service providers, beforereleasing its final decision on 5 June 2002.

As envisaged under the code, the Commissionhas developed the guidelines to limit the abilityof the transmission network service providers(TNSPs) to extend their monopoly powers fromthe network business to the contestable parts ofthe industry. In particular, the Commission iskeen to ensure that regulated activities do notcross-subsidise contestable activities.

The Commission has balanced its regulatoryresponsibilities with the costs of compliance.Information provided by the regulated TNSP willform the basis of the Commission’s revenue capdecisions. The Commission will also use itsinformation gathering powers to annually monitorthe TNSP’s compliance with its revenue cap.

Ring-fencing guidelines

On 15 August 2002 the Commission released itsTransmission ring-fencing guidelines. Under thecode, all TNSPs are required to comply with theguidelines. The guidelines, which separate theaccounting and functional aspects of prescribedservices from those of other services provided byTNSPs, take effect from 1 November 2002. Indefining these guidelines, the Commission isreinforcing the effectiveness of regulation bylimiting the ability of the TNSPs to extend theirmonopoly powers into the contestable parts ofthe industry.

In developing these guidelines the Commissiontook into account comments by interestedparties and recommendations by various stateregulators. Most of the interested partiessupported the development of ring-fencingguidelines along the lines of the national gasaccess code.

The Commission has used the ring-fencingprovisions of the gas code as a model for theNEM. It also selected a set of arrangements thatgive the Commission the flexibility to waiveelements of the ring-fencing arrangements, wherecosts of compliance outweighed benefits. Ring-fencing guidelines ensure that TNSPs’ decisions

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and actions in competitive activities (such asretail supply) are based on access prices that arepublished and verifiable.

Proposals for national guidelines on service standards andnetwork performance

The Commission has begun its review intotransmission service standards, which will linkthe level or quality of service that a transmissionnetwork provides to its revenue. TheCommission engaged Sinclair Knight Merz(SKM) in December 2001 to provide a detailedrecommendation.

After extensive consultation, SKM will deliver itsfinal recommendation in August 2002. TheCommission will then call for submissions onparts of SKM’s recommendation before releasingits draft decision. The Commission expects torelease a final decision by November 2002.

Review of the regulatory test—issues paper

In June 2001 the Commission and NECAreleased a joint statement announcing theirdecision to review the current framework foressential new investment in the NEM. Theynoted that the existing arrangements for theplanning and approval of regulated networkinvestment have been widely criticised andrecognised that there is a need to streamline thearrangements.

The Commission stated that it would review theregulatory test, a test that all transmissionnetwork investment must satisfy if it is to receiveregulated status, to ensure that it does not resultin a complex and lengthy process that delaysregulated investment. As a result, theCommission released an issues paper on 10 May2002 highlighting issues that had been raisedwith the operation of the regulatory test.

The Commission expects to release a draftdiscussion paper in early October.

GasOver the past year the Commission has assessednine access arrangements under the NationalThird Party Access Code for Natural GasPipeline Systems (the code)—of these, two finalapprovals were issued for the Wallumbilla toGladstone via Rockhampton and the Ballera toWallumbilla pipelines. The Commission releasedfinal decisions for the Moomba to Adelaide,Ballera to Mount Isa and Wallumbilla to Brisbaneproposed access arrangements and is consideringthe proposed access arrangements for theMoomba to Sydney and the Amadeus Basin toDarwin pipelines, with draft decisions beingreleased in 2000 and 2001 respectively. Twoapplications to revise the access arrangementswere received for the Victorian PrincipalTransmission System that were initially approvedby the Commission in 1998.

The Australian Competition Tribunal isresponsible for hearing appeals against decisionsmade by the Commission as the gas transmissionregulator. At the tribunal in 2002, theCommission successfully defended its right toinclude trigger mechanisms, which are defined asspecific major events that would trigger an earlyreview, within an access arrangement. Triggermechanisms are normally inserted into accessarrangements that are longer than the standardduration of five years.

The Commission is continuing to consider minorproposed rule changes to the Victorian marketsystem operation rules and is also assessing anapplication for the re-authorisation of these rules.

In the past year the Commission has released theDraft greenfields guideline for natural gastransmission pipelines to help interested partiesunderstand their rights when proposing to buildnew pipelines. The Commission has also releasedits Post-tax revenue model and associatedhandbook which outlines the Commission’sapproach to determining regulated utility accessprices.

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Access arrangements

Moomba to Adelaide pipeline system:Epic Energy

The Commission released its final decision forEpic Energy South Australia Pty Limited’sproposed access arrangement for the Moomba toAdelaide pipeline system on 12 September 2001.The access arrangement describes the terms andconditions on which Epic proposes to maketransportation services available until31 December 2006.

The final decision provided for a reduction intariffs of 10 per cent and establishing a benchmarkpost-tax return on equity of 12.6 per cent. It alsoamends non-tariff aspects of the proposed accessarrangement to provide a fair balance of theinterests of users and the service provider.

In response to the Commission’s final decisionEpic was granted an extension of time to lodge arevised access arrangement which was receivedon 22 January 2002. Extra material supportingEpic’s access arrangement was eventuallysubmitted on 26 March and 2 July 2002 andrelated to self-insurance and the Commission’sinterpretation and application of the gas code.

The Commission intends to release its finalapproval shortly. The final approval is anassessment of Epic’s revised access arrangementto determine whether it complies with theCommission’s final decision.

Moomba to Sydney pipeline system:East Australian Pipeline Limited

On 5 June 2001 East Australian Pipeline Limited(EAPL) applied to the National CompetitionCouncil (NCC) to revoke coverage of certainsections of the Moomba to Sydney pipeline(MSP), specifically the Moomba to Sydneymainline and the Canberra lateral. This followsthe Australian Competition Tribunal’s decision of4 May 2001 that the Eastern Gas pipeline(owned by Duke Energy International) is not tobe a ‘covered pipeline’, that is a pipeline subjectto regulation under the gas code.

In December 2001 the NCC made its draftrecommendation to the responsible minister that

the MSP (including the Moomba to Sydneymainline and the Canberra lateral) remaincovered by the gas code. In accordance with theprovisions of the gas code, the NCC extendedthe date of release of its final recommendation to29 July 2002.

In its draft recommendation the NCC relied onmaterial contained in the Commission’s draftdecision on EAPL’s proposed access arrangementin which the Commission proposed tariffssignificantly less than EAPL’s current tariffs. TheNCC concluded that this was evidence thatEAPL was earning monopoly rents which in turnwas distorting investment in upstream anddownstream markets.

On 14 June 2001 EAPL requested that theCommission postpone releasing its final decisionon the MSP pending resolution of its applicationto revoke gas code coverage that was lodged withthe NCC. The Commission agreed, subject to areview in six months’ time. After considering afurther request for an extension in January 2002,the Commission decided to proceed with issuinga final decision. Given the reliance that the NCCplaced on the Commission’s draft decision, theCommission considered it was in the publicinterest to restart the assessment process.Subsequently, the Australian Pipeline Trust(APT) lodged a revised access arrangement dated30 April 2002 on behalf of EAPL.

The Commission called for public submissionson the revised access arrangement in June 2002.After considering APT’s revised accessarrangement for the MSP and any submissionsreceived from interested parties, theCommission will issue a final decision.

Amadeus Basin to Darwin pipeline: NT Gas

On 2 May 2001 the Commission issued a draftdecision on the proposed access arrangementsubmitted by NT Gas Pty Ltd for the AmadeusBasin to Darwin pipeline (ABDP). The AustralianPipeline Trust holds a 96 per cent share in NTGas, which is the operator of the ABDP.

The Commission’s draft decision established arevenue stream with a post-tax return on equityof 12 per cent over the next five years. NT Gascould achieve a return on equity of over 12 percent via lower than forecast operations and

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maintenance costs and through the sale of non-reference services.

The Commission granted the NT Governmentand the Power and Water Authority a three-monthextension (to 7 September 2001) to lodge a jointsubmission on the draft decision. Since receivingthe submission, the Commission has been assessingthe proposed access arrangement and anticipatesthe release of the final decision in 2002.

Queensland gas pipelines

As reported last year the National CompetitionCouncil (NCC) asked the Commission to advisewhether the Queensland gas pipeline accessregime, as it applies to four derogated pipelines,is consistent with the code. Specifically, theNCC asked the Commission to assess therelevant tender processes against thoseestablished in the code. If they were inconsistent,the Commission was then asked to determinewhether the reference tariffs in the respectiveaccess principles were consistent with the pricingprinciples set out in section 8 of the code.

The Commission found that the tenderingprocess conducted by the QueenslandGovernment to determine access principles forthe Wallumbilla to Gladstone via Rockhampton,Ballera to Mt Isa and Ballera to Wallumbillapipelines were inconsistent with the code.

The Commission then estimated the return onequity (RoE) for the derogated pipelines. For theBallera to Wallumbilla and Ballera to Mt Isapipelines the RoEs were estimated to fall within areasonable range. In the case of the Wallumbillato Gladstone via Rockhampton pipeline, theestimated RoE was at the high end of areasonable range. Finally, for the Wallumbilla toBrisbane pipeline the estimated RoE was higherthan could reasonably be expected and may beinconsistent with the code.

The Commission also expressed concern at thelack of provision of access arrangementinformation and the significant length of mostaccess arrangement periods.

In February 2001 the NCC made itsrecommendation to the Commonwealth ministerregarding the certification application of theregime as an ‘effective’ regime. The NCC

subsequently withdrew its recommendation afterbeing notified by the minister that new materialhad been received from the QueenslandGovernment and the owners of the pipelines.After considering the new material, the NCCmade a draft recommendation to the minister(released in February 2002) that the regime isnot an effective access regime. The NCC calledfor submissions on the draft recommendation by7 June 2002. The NCC is considering thesubmissions it received and is yet to make itsfinal recommendation to the minister.

In 2001–02 the Commission assessed proposedaccess arrangements for the four Queensland gastransmission pipelines. The QueenslandGovernment derogated some elements from thecode as it would have applied to the pipelines.For example, the derogation provides forreference tariffs to be set by the QueenslandMinister for Mines and Energy. As a result, mostof the typically contentious aspects of the accessarrangements were not open to Commissionconsideration for any of the four pipelines.

Wallumbilla to Gladstone via Rockhamptonpipeline: Duke Energy International

The Commission released its final decision onthe Duke Energy International proposed accessarrangement for the Wallumbilla to Gladstone viaRockhampton pipeline, also known as theQueensland gas pipeline (QGP), on 1 August2001. As this pipeline is subject to theQueensland Government derogation, theCommission did not have the power to reviewreference tariffs or reference tariff policy issues.

One contentious aspect of this final decision wasthe inclusion of a review trigger. Duke argued thatthe review date was established in the derogationand that the Commission could not require anearlier review. The Commission was concernedthat, given that the first review might not occuruntil the year 2016, the proposed accessarrangement did not allow for review of the non-tariff elements of the access arrangement if amajor change in the Queensland gas industrywere to occur. The final decision required anamendment that Duke submit a list of specificmajor events that would trigger a review of thenon-tariff elements under section 3.17 of the code.

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The Commission issued and approved its ownaccess arrangement for the QGP on1 November 2001 after Duke failed to amend itsaccess arrangement as set out in theCommission’s final decision. Specifically, Dukefailed to include a review trigger mechanism.

Duke appealed the Commission’s final decisionto the Australian Competition Tribunal assertingthat the Commission did not have the authorityto include a trigger mechanism. On 10 May 2002the tribunal dismissed Duke’s appeal and heldthat the Commission retained the authority toinclude a trigger mechanism and review the non-tariff elements of the access arrangement beforethe derogated review date if the triggermechanism was activated.

Ballera to Wallumbilla pipeline: Epic Energy

During this year the Commission considered theproposed access arrangement lodged by EpicEnergy (Queensland) for the Ballera toWallumbilla pipeline, also known as the south-west Queensland pipeline. The QueenslandGovernment determined the reference tariffs forthis pipeline and set the review date at 30 June2016. Consequently, the Queensland derogationsspecifically precluded the Commission fromreviewing the tariff elements of the proposedaccess arrangement.

The Commission released its final approval forthe Ballera to Wallumbilla pipeline on 4 June2002 after Epic failed to submit a revised accessarrangement to the Commission required in itsfinal decision. Epic did not appeal theCommission’s final decision to the tribunal.

The Commission’s final approval shortened theminimum term for a gas transportation contractfrom five years to two to ensure consistency withthe length of haulage contracts offered by otherpipelines. It also included a trigger mechanismthat will be activated if a specified event such asthe interconnection of the Ballera to Wallumbillapipeline with another pipeline should occur.

Ballera to Mt Isa Pipeline: Carpentaria GasPipeline Joint Venture

The proposed access arrangement for the Ballerato Mount Isa pipeline, which is also known as theCarpentaria gas pipeline (CGP) and is owned bythe Carpentaria Gas Pipeline Joint Venture(CGPJV), was considered by the Commissionduring this year. The Commission was precludedby Queensland legislation from assessing thereference tariff elements of the proposed accessarrangement. Additionally, the QueenslandGovernment has determined the reference tariffand set the review date at 1 May 2023.

The Commission released its draft decision on15 August 2001 and its final decision on16 January 2002. The final decision rejected theproposed access arrangement submitted by theCGPJV and required several changes. Theseincluded removing the scope for amendments toaccess terms and conditions without theCommission’s approval and allowing prospectivethird party users to supply commerciallyconfidential information to an independentperson rather than the CGPJV. The Commissionalso required the inclusion of a review trigger forthe access arrangement should prescribedcircumstances occur. Final approval is expectedto be issued during 2002.

Wallumbilla to Brisbane pipeline: AustralianPipeline Trust

A draft decision for the Wallumbilla to Brisbanepipeline (also known as the Roma to Brisbanepipeline) was issued on 15 August 2001. Thisdecision required amendments to the proposedaccess arrangement to more effectively balancethe interests of the service provider and existingand potential third parties. As with the otherQueensland pipelines, reference tariffs for thispipeline have been determined by theQueensland Government and a specified reviewdate has been set at 29 July 2006.

The final decision was released on 16 January2002 and required revisions to the non-tariffaspects of the proposed access arrangement. TheCommission’s amendments sought to ensure theaccess arrangements consistency with theQueensland legislation that granted tariff

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derogations and removed the potential for theservice provider to amend the terms andconditions of the access arrangement without theapproval of the Commission. The final decisionalso required that all expansions to the pipelinebe considered as part of the ‘covered pipeline’unless the Commission agrees otherwise. Finalapproval is expected to be issued in 2002.

Victorian Principal Transmission SystemReview: GasNet and Victoria Energy NetworksCorporation (VENCorp)

Background

On 16 December 1998 the Commission gavefinal approval for access arrangements forVictoria’s principal transmission system (PTS),the western transmission system (both submittedby Transmission Pipelines Australia Pty Ltd andTransmission Pipelines (Assets) Pty Ltd, but nowowned by GasNet) and VENCorp for the PTS.VENCorp remains the independent systemoperator of the PTS. The initial accessarrangement periods for GasNet and VENCorpare due to finish at the end of 2002.

GasNet and VENcorp access arrangementrevisions

On 28 March 2002 GasNet and VENCorplodged proposed revisions to their existing accessarrangements. The Commission released anissues paper on the proposed accessarrangements on 19 April 2002 with submissionssought by 13 May 2002. The Commissionidentified key issues for comment includingGasNet’s proposal to increase the initial capitalbase value by $35.8 million and the proposed realincrease in tariff prices of over 10 per cent duringthe access arrangement period. As part of itsproposed revisions, GasNet also sought toinclude the cost of the south-west pipeline underthe code’s economic feasibility test and mergeaccess arrangements for the PTS and the WTS.

In relation to VENCorp’s proposed revisions toits access arrangement, key issues included theproposed real tariff reductions for metering andcommodity charges and the introduction of five-yearly rather than an annual budget approvalprocess for registration and commodity tariffs.

Sixteen submissions were received in response tothe issues paper. The Commission is consideringthese and intends to release draft andsubsequently final decisions for both the GasNetand VENCorp access arrangements shortly.

Riverland and Mildura pipelines: Envestra

Envestra Limited submitted proposed accessarrangements for the Riverland and Mildurapipelines on 22 November 1999. A 1997competitive tender for the Mildura pipelineestablished a rate of return and a price path todeliver an appropriate internal rate of return overa 30-year period. In April 1999 the Commissionaccepted that the tender process was carried outaccording to the gas code, binding theCommission to accept the outcome. Elements ofthe access arrangement that were not addressedby the tender were included in the proposedaccess arrangement for assessment by theCommission. The Commission released an issuepaper on the proposed access arrangements forboth pipelines in February 2000, but nosubmissions were received.

In May 2001 the NCC received applications forrevocation of coverage for the Riverlands andMildura gas pipelines. The NCC conducted apublic consultation process as required under thegas code to determine if coverage of the twopipelines should be revoked. The NCC forwardedits final recommendation to the relevantresponsible ministers on 20 August 2001. Theydecided to revoke coverage for the Riverlandspipeline on 12 September 2001 and the Mildurapipeline on 17 September 2001. Revocationbecame effective on 30 September 2001.Consequently, these pipelines are no longerregulated under the gas code and the matterbefore the Commission is closed.

Victorian market and system operations rules

Authorisation: Victorian MSOR

On 19 August 1998 the Commission grantedauthorisation until 1 January 2003 to thoseaspects of the Victorian market and systemoperations rules (MSOR) that it consideredcould potentially breach the TPA.

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On 17 May 2002 VENCorp lodged an applicationto the Commission for the renewal of itsauthorisation and requested that it take effectfrom 1 January 2003, for ten years, until31 December 2012. In response to this applicationthe Commission released an issues paper on7 June 2002 and sought comment by early July.

Among the issues under consideration are thelength of the proposed authorisation and thepublic benefits and detriments of the MSOR.The Commission intends to release a draftdetermination in September 2002 and interestedparties will then be given a further opportunity tomake submissions in relation to the draftdetermination.

Authorisation: Victorian MSOR—minorvariation

On 20 June 2002 VENCorp applied unders. 91A of the Act for minor variation to existingauthorisations in respect of the MSOR. It relatesto proposed amendments to the MSOR. Theproposed rule changes are designed to establish aclear mechanism and process under whichVENCorp may recover its costs incurred in theimplementation and operation of full retailcontestability (FRC) in the Victorian gas market,which is due to begin on 1 October 2002.

VenCorp annual statement

Under the Victorian Gas Industry Tariff Order,VENCorp must seek Commission approval of anannual statement that sets out its total annualcosts and market fees for the forthcomingfinancial year. The Commission approved theannual statement for 2002–03 on 22 May 2002.

Ring fencingRing fencing helps introduce effective competitioninto markets traditionally supplied by integratedmonopolies. It involves putting structures in placeto prevent flows of information and personnelwithin an integrated utility and between relatedbusinesses. While the objective of effective ringfencing is to limit the potential for anti-competitivebehaviour, the code does allow flexibility—incertain circumstances the regulator may waive orincrease a service provider’s obligations.

NT GasOn 10 December 2001 NT Gas submitted anapplication to waive ring-fencing obligations thatprohibit a service provider’s (NT Gas) marketingand other staff from working for a relatedbusiness (NT Gas Distribution Pty Ltd). Apublic consultation process conducted by theCommission determined that interested partieswere not opposed to the waiver.

On 13 March 2002 the Commission released itsfinal decision to approve NT Gas’ application. Itwas approved because the cost of NT Gascomplying with the ring-fencing obligationswould outweigh the public benefits from thecompany doing so. In reaching its decision theCommission noted that certain developments inthe Northern Territory gas industry may changethe outcome of such an assessment in the future.If so, under the Gas Pipeline Access Law thewaiver can be rescinded should the Commissionno longer be satisfied that the grounds on whichthe waiver was granted are met.

South-west Queensland producersIn early March 2002 Santos, Origin Energy andDelhi Petroleum, collectively known as theSouth-west Queensland producers (SWQP),applied for the waiver of certain ring-fencingobligations. The SWQPs are also part owners ofthe Ballera to Mount Isa pipeline and as serviceproviders they sought a waiver to allow marketingstaff in their related business of gas production tocontinue to work for their gas transmission business.

The SWQP also sought a waiver to enable themto continue to operate their related businesses ofgas production. Compliance with the ring-fencingprovisions of the code would have required thedivesture of SWQP’s pipeline interests in south-west Queensland.

On 26 April 2002 the Commission released itsdraft decision proposing not to waive certainaspects of the applications. On 1 May 2002 theSWQP withdrew that part of their applicationsthat related to the sharing of marketing (andother staff) between the gas transmission businessand the gas production interest. Therefore theCommission was no longer required to assess thisaspect of the initial applications.

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On 30 May 2002 the Commission released itsfinal decision granting a waiver to the SWQP tocontinue to operate their related businesses ofproducing natural gas. The waiver was grantedonce the Commission was satisfied that theproducers had set up adequate internalprocedures to prevent the transfer of commercialinformation between the related businessinterests. The Commission will continue tomonitor the new arrangements through SWQP’sannual reporting requirements under the gas code.

Ring-fencing compliance reportsUnder section four of the code, the Commissionis responsible for monitoring compliance withring-fencing obligations and starting enforcementaction if provisions are breached. The codeobliges service providers to report to theCommission at reasonable intervals as required.The year ending 30 June 2001 was the first ofthe annual reports required by the Commission.

The 2001 compliance reports did not providemuch detail on the measures taken to ensurecompliance but because the reportingrequirement was new the Commission decidedthat the responses were adequate. The tablebelow summarises the responses.

The Commission has developed a pro formacompliance report, requiring board sign-off, to beused as the basis for future reports by serviceproviders. This should minimise the regulatoryburden and increase transparency andaccountability of the process. The next ring-fencing reports are due by 31 July 2002.

Gas pipeline competitive tender processes

On 30 August 2001 the Loddon Murray GasSupply Group (LMGSG) comprising the SwanHill Rural City, Gannawarra Shire and theLoddon Shire councils submitted a proposal tothe Commission to conduct a tender under thecode to supply natural gas to the Loddon Murrayarea in north-west Victoria. The tender woulddetermine the tariff-related aspects of thepipeline’s initial access arrangement, and allowthe successful bidder to construct both atransmission and distribution pipeline to theregion.

On 1 November 2001 the Commission approvedthe proposed tender procedures and rules thatwould be used to select the preferred supplier ofthe transmission aspects of the project. At thesame time, the Victorian Office of the RegulatorGeneral (now the Essential ServicesCommission) also approved the equivalent forthe distribution components of the tender. TheLMGSG then conducted the tender and biddingclosed on the 15 March 2002.

On 9 April 2002 LMGSG advised theCommission that no formal bids had beenreceived. Despite this, several companiesexpressed an interest in the project and LMGSGindicated its intention to approach those partiesfor further discussion.

Service provider Pipeline Compliance with ring-fencing obligations

Australian Pipeline Trust Moomba to Sydney pipeline CompliantCentral West pipeline Compliant

GPU GasNet principal transmission system andwestern transmission system pipelines Compliant

VenCorp principal transmission system Compliant

Duke Energy Queensland gas pipeline Compliant

Epic Energy Moomba to Adelaide pipeline system Compliant

Table 6.1 Service provider compliance with ring-fencing obligations

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Publications

Draft greenfields guideline

On 25 June 2002 theCommission released itsDraft greenfields guideline fornatural gas transmissionpipelines (the Greenfieldsguide). The Greenfields guide provides anoverview of the access regulatory framework andoptions available for new natural gas transmissionpipelines. During its preparation, theCommission consulted with all sections of thegas industry and sought many expert views.1

The Greenfields guide addresses perceptions ofregulatory uncertainty about how the regulatoryframework applies and the Commission’sapproach to greenfields projects. It will also helpservice providers evaluate the likely regulatoryoutcome of potential projects and provide ideason the different regulatory options available for agreenfields pipeline.

The Commission will hold a public consultativeforum before finalising the Greenfields guide.

Post-tax revenue handbook

The Commission released its Post-tax revenuemodel (PTRM) on 25 October 2001, and itsassociated handbook. The PTRM handbook setsout the process that the Commission uses whendetermining revenue requirements as part of itsregulatory decisions for utilities. The release ofthe PTRM allows service providers and interestedparties to better understand how regulatory

decisions are made andprovides greater insights intofuture decisions. A copy ofthe handbook is availablefrom the Commission’swebsite.

Liaison activity

Retail contestability

Full retail contestability (FRC) for residential andsmall business consumers was introduced in NewSouth Wales on 1 January 2002 and it is intendedto be introduced in Victoria later this year. Asthey approach their own FRC implementationdates, other jurisdictions are taking a greatinterest in NSW and Victoria’s approaches.

During the past year the Commission has liaisedwith the Department of Natural Resources andEnvironment as part of Victoria’s move towardFRC. The Commission continues to monitor theprogress of other jurisdictions as they removebarriers to competition.

All jurisdictions have developed slightly differentcontestability and FRC timetables; however, thetable below outlines the general evolution of FRC.

Because it has a market carriage system of operation,Victoria’s implementation will differ from otherstates that have a contract carriage system.

NSW has established an industry-driven bodycalled the Gas Market Company to administerthe FRC market rules. In contrast, Victoria isplanning to establish a Victorian Gas Retail RulesCommittee composed of gas industryparticipants and stakeholders to providerecommendations to the VENCorp Board.

Regarding national consistency, each jurisdictionis trying to meet their contestability timetablecommitments; some local variations may arisebetween jurisdictions in elements of the FRCarrangements. It is important that jurisdictionsmaintain consistency so that a national energymarket can evolve.

Natural Gas Pipelines Advisory Committee(NGPAC)

CoAG established the NGPAC on 7 November1997 to administer the gas code. Membershipincludes an independent chair andrepresentatives of the Commonwealth, statesand territories, together with industry andregulator representatives, including theCommission. Meetings are held every quarter.

1 Macquarie Bank Limited, Kevin Davis (Chair ofFinance, University of Melbourne) and John Handley,(Senior Lecturer, University of Melbourne) andNational Economic Research Associates (NERA).

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The code may be amended by agreementbetween the relevant ministers after arecommendation from NGPAC.

Changes to the code came into effect during theyear to explicitly allow for incentive mechanismsto apply across regulatory periods and make itclear that costs incurred by distributionbusinesses associated with generic marketingactivities could be recognised.

On 20 March 2002 NGPAC agreed to a publicconsultation process for a code change thatwould allow one access arrangement to apply totwo covered pipelines. NGPAC is currentlyconsidering the proposal.

TelecommunicationsDuring the year the Commission receivedapproximately 210 complaints that raised issuesunder Part XIB of the Trade Practices Act. Ofthese, 13 progressed to substantive investigation,five were ongoing at the end of the financial yearand the remainder did not require action underPart XIB.

The Commission also enforced the consumerprotection provisions of the Act as they apply tothe telecommunications industry.

During the year the Commission released variousdraft, final and revised pricing papers, informingthe telecommunications markets of both themethodologies and principles that theCommission uses in making price decisions andlikely indicative prices.

By the end of 2001–02 the Commission had twocurrent arbitrations, both relating to analoguesubscription broadcasting—interim determinationshad been issued for both. During the year19 arbitrations were resolved—the Commissionissued two final determinations, 16 matters werewithdrawn and in one matter the Commission’sjurisdiction was not established.

Telecommunications competitivesafeguards—Part XIB

The Commission is responsible for administeringan industry specific regime established by PartXIB of the Act, which empowers theCommission to deal with anti-competitiveconduct in telecommunications markets andobtain information to help monitor competitionin the industry.

NSW QLD S A VIC WA

> 500 TJ Aug. 1996 — — Oct. 1999 Jan. 1997

>100 TJ July 1997 Dec. 2000 April 1998 March 2000 Jan. 2000

>10 TJ July 1998 — July 1999 Sept. 2000 (1)

Original FRC(2) July 1999 — July 2001 Sept. 2001 July 2002

Revised FRC 1 Jan. 2002(3) 1 Jan. 2003(4) 2003(5) 1 Oct. 2002(6) 1 Jul. 2002(7)

Source:

(1) WA: > 1TJ on 1 January 2002

(2) Source: Natural Gas Pipelines Access Agreement 1997, Annexure H.

(3) www.energy.nsw.gov.au

(4) www.energy.qld.gov.au

(5) www.energy.sa.gov.au

(6) www.dnre.vic.gov.au

(7) www.energy.wa.gov.au (legal contestability only, mechanisms tosupport residential FRC yet to be implemented)

Table 6.2 The introduction of contestability and full retail contestability across jurisdictions

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Tariff filings

Under Part XIB the Commission can obtaininformation on charges, terms and conditions fortelecommunications services from carriers andcarriage service providers.

The Commission’s tariff powers can be dividedinto two distinct parts:

! general tariff filing directions (Division 4 ofPart XIB)

! Telstra-specific tariff filing (Division 5 ofPart XIB).

Tariff filing directions under Division 4

Section 151BK allows the Commission to issue atariff filing direction for specified carriageservices, ancillary goods and services, if it issatisfied the carrier or carriage service providerhad a substantial degree of market power in atelecommunications market. Under such adirection the Commission can obtain information:

! about charges for the supply of the goods orservices, including any discounts, allowances,rebates, commission or similar benefits

! about intentions, to be provided at least sevendays before it imposes a new charge, varies acharge or ceases imposing a charge.

In 2001–02 the Commission did not find itnecessary to use the powers defined underDivision 4.

Tariff filing by Telstra under Division 5

Division 5 of Part XIB requires Telstra to fileinformation for all of its basic carriage services(BCS) with the Commission. While a strictinterpretation would necessitate Telstra providingcomplete detail of all offerings (standard andnon-standard and all variations) both theCommission and Telstra consider that this wouldbe administratively burdensome. Accordingly, astreamlined process was developed that meetsthe objectives of Division 5, but only requiresTelstra to file BCS and charging information thathas been identified as relevant to help theCommission detect potential anti-competitivebehaviour.

This regime, in place since June 1998, requiresTelstra to provide weekly reports about changesto the standard form of agreement offerings. The

Commission also receives monthly summaries ofmajor non-standard tariff offerings.

During 2001–02 Telstra complied with therequirements to provide tariff filing informationto the Commission.

Record keeping rules

Under s. 151BU of the Trade Practices Act, theCommission has the power to make recordkeeping rules (RKRs) and to require somecarriers and carriage service providers to complywith them. The rules may specify what recordsare kept, how reports are prepared and whenthey are to be provided to the Commission.

The most prominent example of RKRs is theTelecommunications Industry RegulatoryAccounting Framework (RAF) which wasreleased in May 2001, replacing the Chart ofAccounts and Cost Allocation Manual. Theprimary objective of the RAF is to provide foraccounting separation for major verticallyintegrated carriers—requiring them to reportseparately on the retail and wholesale businesses.

Every six months the carriers that report underthe RAF (Telstra, Optus, Vodafone, AAPT andPrimus) give the Commission information onrevenues, costs, capital and usage across a broadrange of services and across the retail, internalwholesale and external wholesale businesses.

As well as the RAF, other RKRs are in operation.For example, Telstra has an ongoing commitmentto provide a weekly report on the conditioning ofthe network to provide unconditioned local loopservice (ULLS) and the number of exchangesthat are activated for asymmetric digitalsubscriber line services.

In December 2001 a new RKR was issuedrequiring Telstra to report on the commercialagreements it has with access seekers for thelocal carriage service and the ULLS.

The Commission released a discussion paper onthe public disclosure of information collectedunder the RKRs in January 2002. This included,but was not limited to, the disclosure of datacollected under the RAF. The Act provides fordisclosure of information by the Commission

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when it considers that disclosure will promotecompetition or the operation of Parts XIB orXIC—with consideration of the legitimatecommercial interests of disclosing firms. Thediscussion paper provided some preliminaryviews on the broad principles of disclosure to befollowed, and on the specific types ofinformation that might be disclosed. TheCommission will consider the views expressed insubmissions and finalise disclosure arrangementsin the 2002–03 reporting period.

Major investigations raising competitionissues

During the year the Commission receivedapproximately 210 complaints that raised issuesunder Part XIB of the Act. Of these, 13 progressedto substantive investigation, five were ongoing atthe end of the financial year and the remainderdid not raise issues requiring action under Part XIB.

ADSL competition notice

In September 2001 the Commission issued aCompetition Notice regarding Telstra’s conductover the pricing and architecture of its wholesaleADSL (asymmetric digital subscriber line)service. The notice was due to come into effectin late November 2001 but the Commissiondelayed this process to allow Telstra time toamend its conduct.

In March 2002 the Commission determined thatalthough Telstra had reduced the wholesale pricefor ADSL services by up to 25 per cent, it hadnot adequately addressed the architecture issuesoutlined in the notice. Hence, the competitionnotice came into effect.

The notice was revoked in May 2002 after Telstramade changes to the architecture of its offeringto wholesale customers.

PSTN data terminating access

In mid-2001 the Commission began a Part XIBinvestigation into PSTN (public switched telephonenetwork) data terminating access. This issue hadpreviously arisen as an access price dispute underPart XIC—Telstra notified disputes regarding thecosts of terminating data calls on other carriers

networks. During the course of the arbitrationTelstra chose to withdraw from the arbitrationprocess, as it assessed that it was under no legalobligation to seek access on another carrier’snetwork, only to provide access. In effect, Telstrawas refusing to hand over non-voice calls to thenetworks operated by its competitors.

The Commission subsequently receivedcomplaints from numerous network ownersalleging that unless Telstra agreed to pass callsfrom Telstra retail customers to Internet serviceproviders (ISPs) connected to the complainants’networks, then these non-dominant networkowners would be unable to compete for ISPbusiness. Following extensive discussionsbetween the parties and the Commission,commercial agreements were struck and thevarious complaints withdrawn. The Commissionwill continue to monitor these interconnectionarrangements closely.

Axxess Australia Pty Ltd and Benchmark Sales

In May 2001, following complaints fromconsumers that they had been transferred toother telecommunications networks withouttheir consent (known as slamming), theCommission instituted proceedings against door-to-door sales agent Axxess Australia Pty Ltd. TheCommission alleged that Axxess and itsemployees had engaged in unconscionableconduct, misleading and deceptive conduct andhad made false and misleading representations.Telemarketing sales company Benchmark SalesPty Ltd was joined to the proceeding inNovember 2001.

In March 2002 the Federal Court found thatAxxess and Benchmark Sales breached the TradePractices Act when trying to obtain customersfor telephone companies and in many instancesthe conduct complained of resulted in slamming.The court ordered that Axxess and BenchmarkSales contribute $60 000 to a fund established bythe Commission to raise awareness of consumerrights when obtaining phone services and issuedinjunctions restraining Benchmark and Axxessfrom engaging in a range of misleading anddeceptive conduct. The Commission hadpreviously obtained orders against Primus andOne.Tel, two of Axxess’s former customers, in

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relation to slamming.

The Commission also accepted undertakingsfrom the directors of each companyacknowledging that they had breached the Act.They agreed to an independent review of theircompany’s trade practices complianceprocedures; adopt a number oftelecommunication industry codes of practice;and to pay the Commission’s costs.

Access to mobile retail outlets

In mid-2001 the Commission began receivingcomplaints from mobile carriers alleging thatthey were having difficulty securing large retailoutlets as sales agents for mobile phone productsand services. Around this time the Commissionalso received allegations from mobile phonedealers of anti-competitive conduct on the partof certain mobile phone carriers in terminatingagency arrangements.

During the course of the Commission’sinvestigations, the retail mobile marketunderwent significant restructuring—the result,among other things, of the introduction ofmobile number portability and a move away fromfixed-term contracts. Furthermore, a number ofthe larger mobile dealerships moved away fromexclusive sales relationships to multi-serviceprovider arrangements that allowed them toretail services for more than one mobile phonecarrier. Consequently the Commission decidedto suspend its investigation pending furthermonitoring and analysis of the effect of themarket restructure, which is ongoing.

Transfer of One.Tel customers

In June 2001 the Commission became aware thatTelstra was making incorrect representations tocustomers of the now defunct One.Tel regardingthe transfer of its mobile services to Telstra. Thisincluded representations that customers wouldbe liable for early termination fees if they did notmove their service to Telstra before 9 June 2001.Following Telstra’s failure to respond to theCommission’s requests to cease this conduct, theCommission instituted proceedings on 5 July2001 against Telstra in the Federal Court formisleading and deceptive conduct and false and

misleading representations in breach of the TradePractices Act.

On 6 July 2001 the Federal Court granted aninterim injunction to the effect that Telstra makeno further representations to One.Tel NextGeneration customers that if they transferredtheir business to Telstra’s competitors, or failedto transfer to Telstra, or failed to transfer toTelstra by a specified date, they may be liable topay termination fees to One.Tel.

In December 2001 the Federal Court issuedconsent orders declaring that Telstra hadbreached the Act. The court issued injunctionsaffirming the interim injunctions. Telstra wasordered to develop and implement, for a periodof two years, a compliance program for Part V ofthe Act for all staff of its retail mobile telephonebusiness. Telstra was also required to partiallyrepay the minimum monthly access fees forsome customers and ordered to pay theCommission’s agreed legal costs.

Inquiry into Telstra’s charges for local numberportability (LNP)

From September 2001 several carriers, carriageservice providers and business consumers lodgedcomplaints with the Commission alleging Telstrawas imposing excessive charges for providingcomplex LNP. The porting of complexnumbers—typically business applicationsinvolving blocks of numbers or a smaller range ofnumbers—requires project management andmany manual steps that add substantial costs tothe process. The complainants claimed thesecharges acted as a disincentive for Telstra’scustomers to change carriers and therebyinhibited competition. They also claimed thatTelstra’s charges breached the Commission’spricing principles for LNP.

Preliminary investigations indicated there weregrounds for concern. The Commission raised thematter with Telstra in October 2001. In May2002, following lengthy negotiations, Telstraagreed to reduce its complex LNP charges byalmost 50 per cent (effective from July 2002)bringing them into line with those levied by othercarriers and carriage service providers.

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Telecommunications access—Part XICPart XIC of the Act establishes atelecommunications-specific regime for facilitatingaccess to the networks of competing carriers. Itis based on the general access provisions found inPart IIIA of the Act, but with certain refinementsto take into account the specific characteristicsof telecommunications networks. It provides theCommission with the power to: declare services;enforce standard access obligations; grantexemptions and variations to declarations; acceptor reject an access undertaking from an accessprovider; and, if negotiations between parties fail,arbitrate access disputes.

Declaration of services

There is no general right of access totelecommunications services—the Commissionmust first declare the relevant service. Asoutlined in Division 2, before declaring a service,the Commission must conduct a public inquiry(under Part 25 of the Telecommunications Act1997) and be satisfied that declaration is in thelong-term interests of end-users (LTIE), asdefined in the Act.

Line sharing declaration inquiry

In September 2001 the Commission announcedan inquiry into whether line sharing servicesshould be declared. Line sharing refers to asituation where two separate carriers provideseparate services over a single metallic pair (orline). Traditionally, only a relatively small part ofthe useable spectrum of the line has been used toprovide voice services. However, with thedevelopment of xDSL (variations of digitalsubscriber line technology), the remaining part ofthe spectrum can now be used for a variety ofbroadband services, enabling a combination oflow and high-speed services to be provided on asingle line at the same time.

The Commission released a discussion paper inOctober 2001 and received 11 submissions frominterested parties. It also conducted marketinquiries.

In April 2002 the Commission issued a draftdecision indicating it considered, at that stage,

that declaration of a LSS would be in the long-term interests of end-users.

Subsequent to releasing the draft decision, theCommission received five submissions frominterested parties and conducted a range of marketinquiries. The Commission released a finaldecision to declare the service on 30 August 2002.

Access to cable networks

In 1998 Television and Radio BroadcastingServices (TARBS) requested access to TelstraMultimedia’s broadband cable televisionnetwork, pursuant to the Commission’sdeclaration of broadcasting services (includingpay TV). Telstra and Foxtel objected on thegrounds that the initial service declaration wasinvalid because:

! the Commission incorrectly specified morethan one service or the Commission specifieda service that ‘did not exist’ on 13 September1996

! imposing an obligation on Telstra would depriveFoxtel of a protected contractual right.

The Commission announced on 30 August 1999that, partly because of these doubts, it haddecided to declare an analogue subscriptiontelevision broadcast carriage service over cablelinks. It also decided not to declare a technology-neutral broadcast carriage service. However, theCommission stated that it was monitoringdevelopments in digital services, includingbroadcasting, to see whether declaration wasappropriate in the future.

TARBS and Seven Cable Pty Ltd made accessrequests relying on both the 1997 deemedservice and the 1999 declared service. Telstra andFoxtel used similar arguments to those made toTARBS to deny access to the cable.

In September 1999 TARBS sought Commissionarbitration for access to this service followingTelstra’s refusal to permit it, citing its protectedcontractual right with Foxtel. In October 1999Seven Cable Pty Ltd sought a declaration fromthe Federal Court that Foxtel and Telstra did nothave a protected contractual right. Foxtel soughtdeclarations that both the 1997 and 1999services were invalid.

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The Federal Court rejected claims by Telstra andFoxtel that they had a protected contractual rightpreventing anyone else accessing the Telstranetwork, and also upheld the validity of theCommission’s pay TV declarations. Bothdecisions were appealed and the Full Courtdecided that the 1999 service declaration wasvalid and neither Foxtel nor Telstra had aprotected contractual right. A special leaveapplication by Telstra to the High Court wasrefused on 10 August 2001.

Variation of declarations

Under s. 152AO of the Act the Commission hasthe power to vary or revoke declarations. As withdeclaring a service, this must be preceeded by apublic inquiry (under Part 25 of theTelecommunications Act) unless the variation isof a minor nature.

Variation to make the GSM service declarationtechnology-neutral

In September 2001 the Commission commenceda public inquiry into whether the domestic GSM(global system for mobile) originating andterminating access service declaration (the GSMdeclaration) should be varied to become mobiletechnology-neutral with respect to technologiescurrently deployed or in use in Australia.

The domestic GSM services are wholesale inputsused by carriers and service providers to supplymobile and fixed-to-mobile retail services to end-users. They were deemed to be declared unders. 39 of the Telecommunications (Transitional andConsequential Amendments) Act 1997.

The Commission initiated this inquiry followingits decision that a form of retail benchmarking isthe most appropriate pricing methodology forthe domestic GSM terminating access service. Inreaching this view, the Commission noted thatmany of the issues relevant to the GSMterminating service may equally apply to othermobile technologies that are currently deployedor in use in Australia, such as CDMA (code-division multiple access). These mobile services,despite being considered close substitutes forGSM services, were not currently regulated.

The Commission understands that as GSM andCDMA are the principal mobile technologiescurrently deployed and in use, the proposedvariation would result in service declarations thatonly encompass GSM and CDMA services.

The Commission released its final report inMarch 2002. Considering the submissionsreceived, the Commission’s view was thatvarying the GSM service declarations to includeother mobile technologies currently deployed orin use would be in the long-term interests of end-users. In particular, competition in the fixed-to-mobile services market will likely be improvedunder the variation. There will be less opportunityfor integrated mobile carriers to price in an anti-competitive manner and benefits for end-usersmaking fixed-to-mobile calls (lower prices). Thevariation would also ensure competitiveneutrality in the mobile services market.

Exemption from declaration

Section 152AT of the Act provides that a carrieror service provider may apply to the Commissionfor a written order exempting it from any or allof the standard access obligations that apply to adeclared service. If the Commission believes thatan order for an individual exemption is likely tohave a material effect on the interests of aperson, it must publish the applications andinvite submissions on whether the applicationsshould be accepted.

Local carriage service exemption applications

In June 2000 Telstra applied to the Commissionfor an exemption from its obligations to supplythe local carriage service (LCS) to itscompetitors in the CBD areas of Melbourne,Sydney, Brisbane, Adelaide and Perth. Theapplication noted that it was to be one of severaldesigned to phase out Telstra’s standard accessobligations for the LCS over a 12-month period.

Telstra lodged a second application in November2000 for an exemption from its obligation tosupply the local carriage service to itscompetitors in the CBD areas of Hobart,Canberra and Darwin, metropolitan areas of allcapital cities, and three regional centres,Newcastle, Wollongong and Geelong, but has not

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pursued this application.

The Commission decided to considerconcurrently class exemptions (under s. 152AS)in the areas covered by both of Telstra’sapplications and sought public comment.

The Commission issued a draft decision inSeptember 2001, indicating that it intended togrant a class exemption to Telstra and othercarriers and carriage service providers in the areasspecified in Telstra’s first exemption application,to take effect one year after issuing any finaldecision. The one year delay was specified toprovide access seekers with time to alter theirbusiness plans to accommodate the exemption.

Submissions from interested parties werereceived on this draft decision and theCommission made its final decision in July 2002.This was to grant Telstra an individual exemption(under s. 152AT) to take effect on 17 July 2003and subject to the provision of marketinformation to the Commission for a period oftwo years from this date. The final decision alsoprovided a class exemption (under s. 152AS) forall carriers and carriage service providers otherthan Telstra in the same areas as Telstra’sindividual exemption. This took effect on31 July 2002 and is not subject to any conditions.

Transmission monitoring

The Commission committed itself to implementan expanded monitoring program in 2001–02 aspart of its decision in May 2001 to remove allintercapital transmission capacity services fromaccess regulation. Under the monitoringprogram, all operators must provide revenue,pricing and capacity utilisation information everysix months. Two reports, covering the six monthsending 30 June 2001 and 31 December 2001,have been provided to date. The Commission willconsider public disclosure of transmission data in2002–03, in consultation with the operators.

Enforcement of standard access obligations

Telecommunications carriers or providers mustgive access to declared telecommunicationsservices as requested by a service provider. Theaccess provider must also take reasonable steps to

ensure the technical and operational quality of theservice, including fault handling services that areof similar quality to those that it provides to itself.

Investigation into Telstra’s provisioning andfault management processes

In August and September 2001 the Commissionreceived several complaints allegingdiscriminatory behaviour by Telstra towardsother service providers regarding provisioningpractices between Telstra’s wholesale and retailnetwork operations, and possible non-complianceby Telstra with its standard access obligations(SAOs) in providing fault detection, handling andrectification services to other service providers.Following an investigation, the Commissionconcluded that there was no substantive evidenceof discriminatory behaviour by Telstra in how itdelivered these services to other serviceproviders, although it found that the process forsome complex provisioning orders could beimproved and made more transparent.

Regarding Telstra’s fault management system, theCommission concluded that there was cause tobelieve that many customers of other serviceproviders were not receiving the same standardof service as Telstra’s own retail customers,which could be interpreted as a breach of theSAOs. This was based on the apparent longertime taken to service wholesale customers’ end-users compared to Telstra’s servicing of its retailcustomers.

Negotiations were then initiated with Telstra inJune 2002 to implement monitoring programsfocusing on the outcomes of Telstra’smanagement of complex provisioning orders andfault rectification processes. The Commission isalso closely monitoring the implementation ofTelstra’s new faults management system (due tobegin operation in 2003) to ensure wholesalecustomers receive equivalent service with Telstraretail customers. The Commission will beexploring the options with Telstra to improveoutcomes in its faults and provisioning processesby developing an industry-led education andtraining program to better inform serviceproviders of Telstra’s relevant systems.

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Arbitrations

By the end of 2001–02 the Commission had twocurrent arbitrations, both relating to analoguesubscription broadcasting. Interimdeterminations have been issued for both. Duringthe year 19 arbitrations were resolved—theCommission issued 2 final determinations, 16matters were withdrawn and in one matter theCommission’s jurisdiction was not established.

Most of the arbitrations before the Commissionduring the past year were withdrawn by theaccess seeker over a 4-month period—15 wereresolved between August and December 2001and one in April 2002. The relevant parties haveentered into commercial arrangements regardingthe terms and conditions of access to the relevantservices.

It is difficult to anticipate the level of accessdisputes likely to be notified to the Commissionin the future. Many of the access disputes beforethe Commission were resolved between theparties after protracted submissions and rulingsby the Commission that significantly narrowedthe issues of disputation. In some casessettlement was achieved after the Commissionhad issued a draft determination. TheCommission has consistently warned about theregulatory distortions that are raised as aconsequence of full re-arbitration by theAustralian Competition Tribunal. TheCommission considers it likely that smallercarriers resolved ongoing arbitrations to gainregulatory certainty and eliminate the possibilityof costly appeals.

The Commission’s experience as a consequenceof arbitrating a substantial number of accessdisputes is that information asymmetriescontinue to pervade telecommunicationsmarkets. The Commission has undertakensignificant pricing work on a range of declaredservices in these access disputes. To give guidanceto the market and encourage the commercialresolution of future disputes the Commissionreleased indicative pricing for the ULLS and theLCS in March and April 2002 respectively.

Withdrawal of PSTN access pricedeterminations appeal

Under s. 152DO of the Act, parties to an accessdispute can seek review of final determinationsissued by the Commission to the AustralianCompetition Tribunal. Such a review is assessed onthe merits and is a full re-arbitration of the matter.

In October 2000 Telstra lodged applications withthe tribunal to review the Commission’sdeterminations (issued in September andNovember 2000) on disputes between Telstrawith AAPT and Primus regarding PSTNoriginating and terminating access. Thesedeterminations set a price for the service for the1999–00 and 2000–01 financial years.

The Commission was involved in substantialwork on the case during financial year 2001–02.For example, there were nine directions andother preliminary hearings and submissions ofdetailed contentions and responses by theparties, including some 81 witness statements.Much of this information was new and had notpreviously been presented to the Commission forconsideration.2

Telstra withdrew the case in April 2002,approximately one month before the formal hearingwas due to begin, after the last of the disputingparties, AAPT, signed an agreement with Telstra.Earlier, Telstra had settled with each of the otherparties individually: Optus (which had beengranted leave to join the case in January 2001) inOctober 2001 and Primus in February 2002.

The tribunal review process put theCommission’s approach under scrutiny, includingits cost modelling methodology and application,for determining the price of PSTN access. TheCommission considers its approach would havebeen endorsed by the tribunal had the casecontinued to a conclusion.

2 As a result of amendments to Part XIC of the Act inJune 2001 parties are now restricted from placing freshevidence before the Tribunal or changing thesubmissions that they made to the Commission in itsconsideration of the matter.

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Current arbitrations

Access seeker Access provider Service/s Date notified Interim decisions

TARBS Telstra Broadcasting Access Service 23 September 1999 24 April 2001

C7 Telstra, Foxtel & Broadcasting Access Service 31 August 1999 & 5 April 2001related providers 1 September 2000

Access seeker Access provider Service Date resolved

One.Tel Telstra Unconditioned local loop 10 August 2001—withdrawn

WorldxChange Telstra Domestic GSM terminating access 7 September 2001—jurisdiction not established

Dingo Blue Telstra Local carriage service 4 October 2001—withdrawn

Primus Telstra Local carriage service 5 October 2001—withdrawn

Optus Telstra Local carriage service 5 October 2001—withdrawn

AAPT Telstra Domestic GSM terminating access 5 October 2001—withdrawn

Optus Telstra PSTN originating and terminating access 5 October 2001—withdrawn

Optus Telstra Freephone and local number portability 5 October 2001—withdrawn

Optus Telstra Local number portability 5 October 2001—withdrawn

Telstra Primus Domestic PSTN terminating access— 21 November 2001—for data calls to ISPs final determination

Telstra PowerTel Domestic PSTN terminating access 13 November 2001——for data calls to ISPs final determination

People Telecom Telstra Local carriage service 12 November 2001—withdrawn

MCT Telstra Local carriage service 12 November 2001—withdrawn

WorldxChange Telstra Local carriage service 12 November 2001—withdrawn

AAPT Vodafone Domestic GSM originating and 14 November 2001terminating access —withdrawn

Primus Telstra Unconditioned local loop 23 November 2001—withdrawn

AAPT Telstra Unconditioned local loop 28 November 2001—withdrawn

CWO & XYZed P/L Telstra Unconditioned local loop 3 December 2001—withdrawn

Telstra AAPT Domestic PSTN terminating access— 11 April 2002—for data calls to ISPs withdrawn

Total matters finalised in 2001–02 = 19

Matters finalised in 2001–02

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Responsibilities under other legislationThe Commission has a number of monitoringand reporting responsibilities under acts otherthan the Trade Practice Act.

Telstra’s retail price control arrangements

Price control arrangements with Telstra were firstintroduced in 1989. Since then the governmenthas conducted periodic reviews, the most recentchanges scheduled for introduction in July 2002.Under the arrangements, the Commission isresponsible for assessing the accuracy andcompleteness of Telstra’s annual audited pricecontrol report.

For the 2000–01 financial year, a broad range oftelecommunications services, including connections,local call, line rental, mobile, domestic andinternational leased lines, STD and IDD serviceswere subject to the price control arrangements.In addition, the price control arrangementsincluded a 22 cent price cap on local calls; a CPI–0 per cent price cap on a basket of local calls andline rentals (with a similar cap for connections);and a requirement for local call charges to bebroadly the same for both metropolitan and non-metropolitan consumers. There were also furthersub-caps relating to ‘low-spend’ consumers.

The Commission was satisfied that Telstra hadcomplied with the price control requirements for2000–01 for both the overall CPI–5.5 per centprice cap and the individual CPI–0 per cent andCPI–1 per cent price caps on the sub-baskets.Telstra has also complied with the metropolitan/non-metropolitan pricing parity requirement forresidential and business customers.

Other activitiesA large number of arbitrations were withdrawnthis year as the Commission was preparing to issuefinal determinations. Thus, while the Commissionhad developed its thinking about pricing forvarious services, the last minute withdrawal ofthe arbitrations meant that the Commissioncould not publish final determinations. To helpreduce information asymmetries, and to providegreater regulatory certainty, the Commissionreleased a range of indicative prices and pricingmethodologies during the year.

Pricing principles and indicative prices

The Commission released a range of draft, finaland revised pricing papers, informing thetelecommunications markets of theCommission’s thinking on likely indicative pricesand the methodologies and principles that it usesin making price decisions. Some of the key issuesare discussed below.

GSM/CDMA draft pricing principles

With the variation of the GSM declaration, theTrade Practices Act required the Commission todetermine appropriate pricing principles as soonas possible after the Commission varied thedeclared service. In June 2002 the Commissionreleased its draft pricing principles for GSM andCDMA termination services for public comment.These are the principles the Commission willgenerally apply if it has to arbitrate a dispute overthe terms and conditions of these servicesbetween the service providers involved.

The Commission expects to finalise its GSM andCDMA pricing principles by the end of August2002.

Mobile telephony pricing principles

In July 2001 following a public inquiry, theCommission released its final PricingMethodology for the GSM Termination Servicereport. The report concluded that certaincharacteristics of the GSM terminating servicerequire regulation, and that the preferredapproach is retail benchmarking, which linkstermination access prices to retail pricemovements reflecting the competitive elementsof the retail mobile services market.

The three GSM mobile carriers, Telstra, SingtelOptus and Vodafone, will be required to reportevery six months on retail price movements. Foradministrative efficiency, the retail benchmarkingdata will be submitted in conjunction with eachcarrier’s financial reporting obligations under theRAF.

After the release of the report, the threeremaining GSM access disputes were withdrawn.The Commission held additional consultationwith the industry to provide further guidance on

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implementing the retail benchmarking approachin access disputes and to monitor retail andwholesale price movements.

Methodology for determining revenue-weighted price movements

Under Telstra Carrier Charges—Price ControlArrangements, Notification and DisallowanceDetermination No.1 of 2001 (the determination),price movements must be calculated according toa methodology the Commission establishes inconsultation with Telstra.

In the course of evaluation of Telstra’s pricecompliance report 2000–01, the Commissionraised various concerns with Telstra, especiallythe methodology for calculating pricemovements, the yield approach and theinterpretation of the term end of the financialyear in section 9 of the determination. However,considering the time constraint, it was agreedthat the compliance report for 2000–01 shouldproceed with the existing methodology, whilethat for 2001–02 should be reviewed.

The Commission also raised concerns about thestandard of reporting and advice in theindependent auditor’s assessment of Telstra’sprice compliance report. These were also to bereviewed by the Commission.

The Commission’s review of the methodologyfor Telstra’s 2001–02 compliance report was toensure consistency and transparency for futurecompliance purposes. The revision particularlyfocused on the method used to measure pricemovements; method for revenue weightings forprice movements; definition of cumulativeapproach for measuring price and CPI movements;and the methodology to measure pricemovement for product packaging and bundling.The Commission also introduced new methodsto measure changes in net yield and a newmeasure for the GST effect on local call prices.

The new methodology requires that, in general,the price movement calculation will be based onactual data. In circumstances where actual data isnot available, the calculations may be based onsample surveys. However, the size and structureof the sample must represent demand patternsand conform to the statistical principles.

The new methodology also requires that theCommission appoint an independent auditor inconsultation with Telstra. Costs incurred will beborne by Telstra.

The Commission approved the new methodologyin May 2002 that will be applied to the 2001–02price compliance report.

PC InquiryThe Commission made submissions togovernment responding to the findings of theProductivity Commission’s telecommunicationsinquiry. The government announced its responseto the report in April 2002. The Commissioncontinues to liaise with the government onimplementing the response.

ADRDuring the year the Commission has beenrefining and testing an ADR (alternative disputeresolution) process. The process, developed byconsultants Phillips Fox, has now been adoptedby the Commission and has been used inprogressing the pay TV dispute. It involves acase-management approach to disputes, usingmediation, experts in conflict resolution, andarbitration.

Australian Communications Industry Forum(ACIF)

During 2001–02 Commission staff participatedas observers on several code committeesorganised by the ACIF, the industry body fortelecommunications companies.

ACIF committees comprise representatives ofthe telecommunications industry, consumergroups and government regulators (such as theACCC, the ACA and the TelecommunicationsIndustry Ombudsman). Several codes arecurrently being developed within the ACIF tocover issues such as:

! ordering, provisioning and customer transferprocesses for ULLS

! rights of use of numbers

! mobile number portability (revision)

! local number portability (revision)

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! pre-selection (revision)

! customer and network fault management(revision).

The Commission’s involvement in ACIFcommittees includes consumer protection issues,as well as operational and network issues.

The ACIF’s Code Administration andCompliance Scheme will continue to monitorcompliance by industry participants who aresignatories to these codes. If codes are registeredwith the ACA, it can take enforcement action forfailure to comply.

Mobile number portability (MNP)

Commission staff contributed to meetings toreview the MNP industry code. As a result ofexperiences gained after the implementation ofMNP in September 2001, the ACIF decided thatit was necessary to review the industry code onMNP, IT specifications and operations manual. Adraft of the revised industry code is due to bereleased for public comment by the end of July2002 and the code is to be finalised bySeptember 2002. ACIF intends to submit thecode for registration by the ACA, thus making itenforceable.

Local number portability (LNP)

Commission staff participated in meetingsconvened by the ACIF to review its industrycode on LNP, including the IT specifications andoperations manual. The revised industry codesets out the procedures that carriers and carriageservice providers must follow to support thevarious requirements associated with portingtelephone numbers. A draft of the revisedindustry code will be released for publiccomment by the end of July 2002 and therevised LNP code and associated documentsshould be completed by September 2002. ACIFintends to submit the code for registration by theACA, thus making it enforceable.

Aviation

Air transport

Until October 2001 the Commission wasresponsible for the economic regulation ofSydney airport and 11 privatised airports:Adelaide, Alice Springs, Brisbane, Canberra,Coolangatta, Darwin, Hobart, Launceston,Melbourne, Perth and Townsville. These airportswere previously declared under the PricesSurveillance Act 1983 (PS Act) and, except forSydney airport, were subject to CPI–X price caps.

In October however, following the ProductivityCommission’s draft recommendation togovernment, the declaration applying toAdelaide, Alice Springs, Canberra, Coolangatta,Darwin, Hobart, Launceston and Townsvilleairports was revoked. This means the airports areno longer required to notify the Commission ofproposed increases in charges for aeronauticalservices. For these airports, the Commission’srole from that time has been limited tomonitoring the prices, costs and profits related toaeronautical and aeronautical-related services atAdelaide, Canberra and Darwin airports.

Prices surveillance for Sydney, Melbourne,Brisbane and Perth airports remained in placeover the full year to 30 June 2002.

Over the past year, the Commission’s focus inadministering the airport arrangements has been to:

! provide input into the ProductivityCommission’s inquiry into price regulation ofairport services

! assess Virgin Blue’s request for an accessdetermination over the Domestic ExpressTerminal at Melbourne airport

! assess proposals for new or increased chargesto fund new investment, securityrequirements, and a one-off increase allowableunder the price cap to core-regulated airportsfollowing the collapse of Ansett

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! assess price cap compliance and monitorquality of service.

The Commission is also responsible for assessingproposals by Airservices Australia to increasecharges for terminal and en route navigationservices and rescue and fire fighting services.

Changes in airport regulation—theProductivity Commission’s inquiry into priceregulation of airportsIn May 2002 the federal government released theProductivity Commission’s inquiry report onprice regulation of airport services,recommending that Sydney, Melbourne,Brisbane, Perth, Adelaide, Canberra and Darwinairports be subject to price monitoring for fiveyears. The government decided to adopt therecommendations, which take effect from 1 July2002. An independent review will be carried outtowards the end of the five-year period to assessthe need for future airport price regulation.

The Commission broadly agreed with theProductivity Commission’s findings on themarket power of airports. The ProductivityCommission provided two options for dealingwith this market power, the first being pricesmonitoring and the second being stricterregulation in the form of price caps. Thegovernment subsequently adopted the pricesmonitoring approach.

From 1 July 2002 the Commission’s mainresponsibilities are:

! monitoring of prices for aeronautical andaeronautical-related services at Sydney,Melbourne, Brisbane, Perth, Adelaide,Canberra and Darwin airports

! monitoring service quality at these airports

! collecting and publishing information on theairports’ financial performance.

Virgin Blue access determinationBecause it is a core-regulated airport, airportservices at Melbourne airport are declaredservices under the access provisions of the TradePractices Act. Access regulation gives businessesthe right to negotiate to use certain facilities. It

also gives the Commission the power to arbitrateif the parties cannot agree on terms andconditions.

In March 2001 Virgin Blue Airlines Pty Ltd askedthe Commission to determine that certaindomestic terminal services at Melbourne airportare airport services under s. 192 of the AirportsAct.

After much consultation and the release of adraft determination in October 2001, theCommission made its final determination inFebruary 2002, deciding not to apply accessregulation to the Domestic Express Terminal atMelbourne airport because airlines were alreadyprotected by other arrangements. In particular,the terminal was already subject to price controlunder the Prices Surveillance Act. Thesestatutory price controls limit Melbourne airport’sability to exercise its market power over theterminal. In August 2000 the Commission hadapproved a price of $1.65 per passenger for useof the new terminal.

The Commission also noted that Virgin Blue wasalready using the terminal under a commerciallynegotiated agreement that applies until 2007. Byasking the Commission for formal right to usethe terminal, this would enable Virgin Blue toseek Commission arbitration if Melbourneairport did not agree to lower its price. Indeciding not to apply the access regulation to theterminal, the Commission was mindful that ithad already determined a fair price for the use ofthe terminal and that Melbourne airport had notdenied Virgin Blue access to the terminal.

Sydney airport—apron charges

In January 2002 Sydney Airports CorporationLimited (SACL) sought approval to levy a chargefor apron parking during curfew hours by certainfreighter aircraft.

SACL proposed a charge of $38.50 (GST-inclusive) per 15-minute period for freighteraircraft operating during curfew hours and whichuse the designated aprons for operationalpurposes. SACL sought approval to retrospectivelyapply the charge from 1 October 2001.

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After wide consultation the Commission decidednot to object to SACL’s proposal, although it didnot agree to it being retrospective. TheCommission had some concerns, however, thatthis charge could allow Sydney airport togenerate revenues in excess of its costs.

Regulatory reports

Each year the Commission releases regulatoryreports for Sydney airport and 11 privatisedairports: Adelaide, Alice Springs, Brisbane,Canberra, Coolangatta, Darwin, Hobart,Launceston, Melbourne, Perth and Townsville.The reports provide information on quality ofservice, financial accounts, price cap complianceand prices, costs and profits of monitoredaeronautically related services.

The Commission released the 2000–01 reportfor Sydney airport in November 2001, followedby regulatory reports for Phase I airports in earlyFebruary 2002 and Phase II airports in April 2002.

Price cap compliance

The compliance results for 2000–01 were asfollows.

! Brisbane airport over-recovered for the pastthree years, and had a carry forward over-recovery of over $2 million as at 30 June2001. This largely related to taxi fee revenue.

! Melbourne airport marginally over-recoveredin 1999–00 and 2000–01 and had a carryforward over-recovery of over $100 000 as at30 June 2001.

! Perth airport lowered its charges to meet itsCPI–X for the year, but still had an over-recovery from previous years, and thereforefailed to comply with the cap. It had a carryforward over-recovery of just under $1 millionat 30 June 2001—largely taxi fee revenue.

While the declaration providing for pricessurveillance at Phase II airports was revoked inOctober 2001, price caps were in place over theyear 2000–01 and compliance for these airportswas reported.

With the exception of Adelaide and Launcestonairports, all Phase II airports had an under-recovery balance at 30 June 2001. In these cases,

the over-recoveries arose when reductions incharges arising from savings under the New TaxSystem (NTS) were excluded from thecalculation of compliance.

Quality of service

Under the Airports Act 1996, the Commissionmonitors airport quality of service, collectinginformation from airport operators, AustralianCustoms Service and Airservices Australia. Theinformation includes data from customerperception surveys. The Commission alsoconducts airline surveys.

Over the year, the quality of service for the threePhase I and Sydney airports was generally ratedas satisfactory. Brisbane airport again achievedhigh quality of service ratings from airlineoperators and passengers. Perth and Sydneyairports achieved generally satisfactory resultsalthough some facilities and services at Perthairport continue to have low ratings. Melbourneairport received improved ratings compared tothe previous year.

The results indicated that of the Phase IIairports, users at Alice Springs, Canberra, Darwinand Launceston airports were reasonablysatisfied. Users were moderately satisfied atAdelaide, Coolangatta and Hobart airports andquite satisfied at Townsville.

Financial accounts

The regulatory reports show that the three PhaseI airports reported positive earnings before thededuction of interest and taxation. The resultsare an improvement on the previous year’sresults across all three airports, although oncetaxation and interest were taken into account,losses were recorded. Sydney airport recorded aprofit in 2000–01, although less than the yearbefore, because of higher borrowing costs andincome tax.

All Phase II airports reported positive earningsbefore interest and taxation, but once theseitems were deducted, losses were recorded.

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Prices monitoring outcomes

The PS Act requires the Commission to monitorprices, costs and profits of aeronautical-relatedservices such as aircraft refuelling, car parks andairline check-in services.

For Phase I and Phase II airports, as well asSydney airport, revenues tended to be well inexcess of costs, although it is important to notethat the costs did not include amortisation ofintangible assets or interest.

Necessary new investment

The price cap arrangements include provisions topass on the costs of necessary new investment.They allow airport operators to increase chargesto fund new investment provided they have theCommission’s approval.

In assessing new investment proposals, theCommission must consider criteria such as usersupport for the proposals and the relationshipbetween the proposed price increases and thecosts of the new investments. In 2001–02 theCommission assessed two new investmentproposals.

Melbourne airport

Melbourne airport notified the Commission inOctober 2001 of its intention to increase generaland international landing fees to fund projectsincluding land acquisition for future runwaycapacity, and aerobridge safety. The Commissiondid not object to an increase in the internationalterminal charge to $0.18 per tonne MTOW(GST-inclusive) and the general landing charge to$0.03 (GST-inclusive). Following a final review,Melbourne airport advised the Commission thatbecause of the reduced capital requirement and arevision of the aeronautical tonnage forecasts, theincrease would only be $0.16 on the internationalterminal charge.

Brisbane airport

On 26 November 2001 Brisbane airportpresented the Commission with a proposal torevise aeronautical charges for two newinvestment projects—a ground facilities projectundertaken in 1998, as well as a small project

relating to the domestic terminal building taxiqueuing area. Brisbane airport also proposed anadditional increase in landing charges of $0.10 tocompensate for past under-recoveries under theprice cap but withdrew the proposal afterdiscussions with the Commission.

Brisbane airport proposed that the followingcumulative amounts (GST-exclusive) beapproved as a pass through of the price cap:

! $0.21 for the general landing charge

! $1.16 for the international terminal charge

! $20.10 for the domestic terminal charge.

The Commission did not object to the pass-through amounts for the international anddomestic terminal charges, but only agreed to$0.19 for the landing charge.

One-off increases to aeronautical chargesfollowing the collapse of Ansett

Following the collapse of Ansett Airlines, theCommonwealth Government decided to allowregulated airports, including Melbourne, Perthand Brisbane airports, a once only price increasefor aeronautical charges, based on starting pointprices (1 January 1997).

The increases were for the following amounts:

! 6.7% of starting point prices for Brisbaneairport

! 6.2% of starting point prices for Melbourneairport

! 7.2% of starting point prices for Perth airport.

The Commission did not object to any of theseone-off increases.

Security charges

The price caps allow direct costs of providingcompulsory airport security such as passengerscreening, baggage screening and counterterrorist security to be passed on.

During 2001–02 the Commission assessed sixsuch proposals, four of which were in response tothe federal government’s direction to applyadditional security measures following the eventsof September 11 (see below). Of the two

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remaining notifications, one related to checkedbaggage and passenger screening charges at Perthairport, and the other to the counter terroristcharge at Melbourne airport.

Additional security measures

Following the events of September 11 theDepartment of Transport and Regional Servicesdirected all core-regulated airports as well asSydney airport to apply additional security measures.The Commission was advised that thesemeasures were over and above those in placeduring the normal course of airport operations.Perth, Melbourne, Sydney and Brisbane airportssubsequently lodged notifications for new orincreased charges to recover the costs of thesemeasures. The Commission did not object to anyof these proposals.

Airservices AustraliaOn 13 May 2002 Airservices Australia submitteda proposal to change the pricing of its terminalnavigation, en route navigation and rescue andfire fighting services because of a sharp downturnin aviation activity since September 2001. Afterobtaining comments and considering the issues,the Commission decided that there was somejustification for an increase in charges but thatthere was not sufficient evidence, in the form oflong-term traffic forecasts, to justify an increasebeyond the financial year ending 30 June 2003.However, it was possible that a permanentincrease in en route charges may be justifiedbecause Airservices Australia had specificallyidentified a previous reduction in that charge astemporary.

The Commission invited Airservices andinterested parties to respond by 1 July andanticipated making a final decision in late July.

Rail

Australian Rail Track Corporation

The Commission accepted its first rail trackaccess undertaking on 1 May 2002 in accordancewith Part IIIA of the Trade Practices Act, lodgedby the Australian Rail Track Corporation (ARTC).

ARTC is a public company owned by theCommonwealth of Australia, set up in 1998 tomanage the infrastructure and access to thestandard gauge rail network connecting themainland capital cities between Brisbane andPerth. The part of the network subject to theundertaking links Kalgoorlie in Western Australia;Adelaide, Wolseley and Crystal Brook in SouthAustralia; Broken Hill in New South Wales; andMelbourne and Wodonga in Victoria.

The access undertaking sets out a framework forhow negotiations should be conducted betweenARTC and train service operators who wish toobtain access to the network. ARTC’s objectivesincluded stimulating customer confidence andmarket growth in the rail industry. Equity andtransparency are key elements in the undertakingfor determining access, prices and terms andconditions of agreements. Specifically, theundertaking covers the process of negotiation foraccess, pricing principles, quality of service andperformance indicators and issues relating tomanagement of the network. It also includes anindicative access agreement that forms a basis foran agreement between ARTC and an operator.

The Commission’s decision to accept theundertaking followed extensive publicconsultation, negotiations with ARTC, revisionsto the proposal and assessment on the basis ofthe statutory criteria set out in subsection44ZZA(3). The Commission released an issuespaper, conducted two public forums, released adraft decision and considered two rounds ofsubmissions from interested parties.

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The criteria in subsection 44ZZA(3) oblige theCommission to ensure that the undertaking,among other things, strikes an appropriatebalance between the interests of theinfrastructure owner and access seekers and thepublic interest. The Commission formulatedsome principles to help assess three broad issues:

! pricing for access to ARTC’s rail track thatfocuses on efficient outcomes

! processes for gaining access includingnegotiation and dispute resolution provisionsthat provide for timely, commerciallynegotiated outcomes

! providing clear conditions that allowenforceability of the undertaking.

It is the first time this process was followed andresulted in ARTC adopting some significantchanges to its original proposal.

The Commission also recognised that ARTC’sinterstate rail network has many characteristicscommon to natural monopolies: investment inspecialised assets which is, to a large extent,irreversible; correspondingly high sunk fixedcosts leading to economies of scale; and networkeffects.3 Some of ARTC’s customers havesignificant sunk investments in infrastructure,which could potentially provide ARTC withleverage in commercial negotiations.

There may, however, be some limits to ARTCbeing able to take advantage of any consequentmarket power when the nature of the markets inwhich its customers operate is considered. Mostof ARTC’s revenues are earned from theinterstate transport of freight in markets that aresubject to a substantial degree of competitionfrom non-rail sectors, mainly road and sea.Similarly, prices set by ARTC result in revenuessignificantly below that necessary for an adequatelong-term economic rate of return. These factors,together with the fact that ARTC is not verticallyintegrated, provide an incentive to drive greaterproductivity from the asset and ensure that the

physical asset is maintained to increase rail’srelative competitiveness.

Several provisions in the undertaking also act asconstraints to the misuse of market power. Theseinclude ARTC’s intention to commit to ongoingreductions in real prices charged to users andlimit price discrimination. It depends on liftingthe amount of traffic on the network and ongreater operating and cost efficiency to ensurefuture profitability.

However, constraints on ARTC’s non-priceconduct may be less effective. Some clauses in anearlier version of the undertaking, particularlythose dealing with negotiation processes, capacitymanagement, network extensions and capacityadditions, gave ARTC broad scope in its dealingswith access seekers. The Commission consideredthat these clauses did not satisfy the legislativecriteria in Part IIIA and made recommendationson them.

Subsequently ARTC amended certain provisionsto impose more stringent obligations on itselfand/or greater safeguards for access seekers. Theundertaking thus achieves a more appropriatebalance between the interests of theinfrastructure owner and access seekers andreflects the Commission’s consultativeassessment process.

The undertaking is an important step towardsimproving interstate rail access for trainoperators and, with the Commission’s detailedanalysis, can be used as a guide for further accessundertakings covering other parts of theinterstate rail network. The final decision is nowavailable from the Commission’s website.

3 A network effect occurs when users of aninfrastructure service benefit from other users decidingto use that infrastructure. In ARTC’s case this mayinclude, for example, the ability to connect with otherusers, the availability of complementary products orreduced network access costs.

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Waterfront and shipping

Container stevedore monitoring

On 20 January 1999 the Federal Treasurerdirected the Commission under s. 27A of thePrices Surveillance Act 1983 to monitor prices,costs and profits of container stevedoringoperators in the ports of Adelaide, Brisbane,Burnie, Fremantle, Melbourne and Sydney. Theaim is to inform the community about theprogress of some aspects of waterfront reform atthe major container terminals, as well as theabsorption of the stevedoring levy.

The Commission released its third containerstevedoring monitoring report in October 2001.It examined trends in prices, costs and profits ofthe three major stevedoring companies, P&OPorts Pty Ltd, Patrick Stevedores Operations PtyLtd, and CSX World Terminals Pty Ltd for thetwo half year periods—July to December 2000and January to June 2001. The average industrywide cost per TEU for the six months July toDecember 2000 was $140, which increased to$149 for the second six months to June 2000.Average unit revenue also increased from $172per TEU in the six months to December 2000 to$174 in the first six months of 2001.

The Commission monitoring has also highlightedmajor productivity improvements in thecontainer stevedoring industry. In terms of long-run trends, industry wide average revenue(prices) and average costs are much lower than in1995 when the previous stevedoring monitoringprogram by the Prices Surveillance Authority(PSA) ended.

It appears the stevedore levy was not passed onas higher charges but seems to have been offsetagainst other cost reductions made by P&O Portsand Patrick.

The next monitoring report is due in October 2002.

Part XAustralia’s approach to regulation of linershipping services is similar to that adopted inmany other developed countries. Under Part Xof the Trade Practices Act shipping companiesand their exporting and importing customers cannegotiate the terms and conditions for providingliner shipping services. Essentially, Part X givesconcessions to providers of liner shipping servicesto behave in ways that would not otherwise bepermissible under the TPA—that is, to enter intocooperative arrangements in providing shippingservices to Australian importers and exporters.

The Commission’s role under Part X is limited toinvestigating specific agreements beforerecommending to the minister whether or notthere may be grounds for deregistering theagreement and subjecting the lines to theprovisions of the TPA.

Until recently, the Commission could onlyinvestigate an agreement following a requestfrom either the minister or a complaint fromshippers. However amendments in 2000 toPart X mean the Commission can initiateinvestigations. It has started an informalmonitoring program to develop an awareness offactors that are likely to contribute to increasedrate rises for sea cargo freight either in the formof rises in blue water freight rates or in generaltariff levels.

Harbour towageUnder the PS Act, the Commission regulatesprice setting by harbour towage operators in the‘declared’ ports of Sydney (Port Botany and PortJackson), Melbourne, Brisbane, Adelaide,Fremantle and Newcastle. With recent trends ofindustry rationalisation, the declaration nowapplies solely to the towage subsidiary companiesof Adsteam Marine.

The Commission can object to, but cannotprevent price increases of declared services, and

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in February 2002 made a decision to object underthe PS Act to price rises sought by Adsteam forharbour towage services. Despite theCommission’s decision Adsteam subsequentlyimplemented all its proposed increases.

The Commission also has a responsibility toassess whether a declared company may be usingits monopoly position set monopoly prices.

On this occasion, the Commission decided thatthe price increases proposed by Adsteam, whichranged between 11 per cent (in Brisbane) and27 per cent (in Port Jackson), would havegenerated excessive rates of return.

On 20 February 2002 the federal governmentannounced that the Productivity Commission(PC) would undertake an inquiry into theeconomic regulation of harbour towage andrelated services.

The Commission considers that this inquiry istimely. The declaration needs to be reviewed in apublic and transparent manner before it expiresin September 2002. The harbour towage industrystructure and performance also needs to bethoroughly investigated.

The Commission argued to the PC that theregulation of prices set by towage operators inthe seven declared ports should continue on thegrounds that the Australian towage market is anatural monopoly, with single providers in alldeclared ports (until the recent entry ofAustralian Maritime Services into the Port ofMelbourne). There is very little scope for inter-port competition, weak contestability, and littleopportunity for users to substitute away fromtowage usage.

There is little evidence to suggest that the singletowage operator, Adsteam Marine, which operatesin 32 ports around Australia, is subject to anycompetitive discipline on pricing—either fromexisting competitors or from potential entrants.

This is a market therefore where the incumbentwields considerable power.

Because of this, the Commission submitted tothe PC that if there is a demonstrated case foreconomic regulation of towage, then the regulatorshould be able to effectively implement decisions.

The PC finalised its report on the economicregulation of harbour towage and related servicesand it is now being considered by thegovernment.

PostThe Commission assesses price notificationsrelating to proposed increases in charges forpostal services ‘reserved’ to Australia Post.

Over the past year, the Commission has:

! assessed Australia Post’s proposal to removethe AdPost discount

! begun assessing Australia Post’s proposal toincrease the price of the basic stamp as well asassorted other reserved services.

AdPost

In December 2001 Australia Post lodged anotification with the Commission proposing tophase out the current content-based AdPostdiscount for all customers except charities.

This is not the first such proposal. In March 1999Australia Post proposed reducing Ad Postdiscounts from 26.5 to 21 per cent. The reduceddiscount was introduced in April 2000.

The current notification proposes to phase outthe AdPost discount in two stages:

! a 10 per cent increase in AdPost prices from1 July 2002

! terminating the AdPost service in 1 January2003, resulting in a further 9 per cent priceincrease as customers migrate to theequivalent barcode pre-sort service.

The Commission made no objection to theproposed price changes.

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Proposal to increase the price of the stampand assorted reserved servicesIn April 2002 Australia Post advised theCommission of its intention to lodge a pricingnotification under s. 22 of the Prices SurveillanceAct to increase the price of various postalservices, including the basic postage stamp, pre-sorted mail, greeting cards and large letters, fromJanuary 2003. Australia Post also proposes tointroduce a new bulk mail category, ‘Clean Mail’,priced at a discount to the basic postage rate.

Australia Post argues that the profitability ofproviding letter services is declining and willcontinue to decrease because of falling volumeand fewer opportunities for improving efficiency.

The Commission released an issues paper on10 May 2002, requesting submissions by mid-June and ran public forums across the country inlate June.

The Commission expects to release a decision inthe second half of 2002.

Petrol monitoring

Outline of price monitoring program

Following the deregulation of petrol and dieselprices on 1 August 1998 the Commission’s mainrole was to monitor petrol prices in the capitalcities and a number of country towns. TheCommission examined retail prices anddetermined notional retail margins by comparingthem with an indicator of import parity prices.The Commission also monitored the city–country retail price differential and the wholesalelist and terminal gate prices of the oil majors.

In 2000–01 the Commission’s price monitoringprogram was expanded to more effectively assess

prices under the New Tax System. Average retailprices for unleaded petrol, diesel and auto LPGfrom around 150 country towns across all statesand territories were collected weekly, as well asin the five largest capital cities and Darwin,Canberra and Hobart. Monitoring in 2001–02continued on the same basis.

With the end of the New Tax System transitionperiod on 30 June 2002, the Commission will bescaling back its country price monitoring toaround 100 towns.

Monitoring outcome

The Commission’s monitoring of unleaded petrolprices from July 2001 to June 2002 showed thataverage retail prices in metropolitan and countryareas were quite volatile. Movements in theinternational product price (the spot price forSingapore Mogas 95 unleaded) and theAustralian/US dollar exchange rate principallydrove this volatility.

International product prices showed largefluctuations during the year. However, the averageprice in 2001–02 ($US25. 7 per barrel) was$US6.7 per barrel lower than the average price in2000–01 ($US32.4 per barrel). Between July 2001and June 2002 the monthly average Australian/US dollar exchange rate rose by about six cents.

Consistent with these movements in internationalproduct prices and the exchange rate, the averagemonthly five capital cities unleaded petrol priceremained stable in July and August and rosesharply in September—to the year’s monthlyhigh of 89.1 cents per litre (cpl). It declined inthe following months to the year’s monthly lowin January 2002 of 78.5 cpl. The price increasedsubstantially over the next three months andthen declined marginally. These movements inprice are shown in figure 6.3. The average pricein 2001–02 (83.4 cpl) was 7.3 cpl lower than theaverage price in 2000–01 (90.8 cpl).

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The average price in the country townsmonitored by the Commission remained fairlystable for the first half of 2001–02, before fallingsharply in February and increasing in March.There was a steady increase in the last threemonths of the year. In general, country prices donot respond as quickly to changes in internationalprices as metropolitan areas because of lowervolume turnover rates.

The average differential in 2001–02 betweenaverage retail petrol prices in the five majormetropolitan cities and country areas was 6.7 cpl.This was 0.5 cpl lower than in the previous year(7.2 cpl). However, the monthly differentialfluctuated from a high of 9.9 cpl in July 2001 toa low of 3.6 cpl in March 2002.

In 2001–02 the Commission received over 2395inquiries and complaints relating to fuel pricingissues (including the Fuel Sales Grant Scheme).They were examined and follow-up action takenwhere appropriate.

Inquiry into reducing fuel price variability

In early March 2001 the federal governmentasked the Commission ‘to examine the feasibilityof placing limitations on petrol and diesel retail

price fluctuations throughout Australia’. Adiscussion paper was released in June 2001 andthe final report was provided to the Treasurer inDecember 2001. The report was publiclyreleased on 14 May 2002.

The report noted that volatility in retail petrolprices is generally confined to the majormetropolitan cities and some rural towns onmajor highways. The price cycles in these areasare fairly regular and frequent. Diesel prices donot exhibit similar price cycles.

Some consumers are concerned about price cyclesand others take advantage of them by buying petrolat the bottom of the cycle when prices are lower.The report concluded that overall consumersbenefit from price cycles for two reasons:

! In general, consumers are better off withvariable prices than they are with a fixed(simple average) price, because they have theopportunity to buy at the low point of theprice cycle.

! Data obtained by the Commission indicatesthat on average, around 60 per cent of the totalvolume of petrol sold over the petrol pricecycle is sold below the average price of theprice cycle and around 40 per cent is sold above.

Figure 6.3 Average monthly unleaded petrol prices— five major capital cities—July 2001 to June 2002

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While consumers as a whole may benefit fromprice cycles, there are individual consumers whodo not. Some may be price sensitive and it maybe possible to help them change their buyingbehaviour by raising their awareness of price cycles.

The Commission examined options for limitingpetrol price cycles, including terminal gatepricing (TGP) with a number of conditions,limiting price changes to only once in 24 hours,limiting price increases to a certain amount eachday, and price regulation at the retail andwholesale levels. The Commission concludedthat they would have either no effect on pricecycles or, if they did, they could lead to higheraverage retail prices.

The Commission’s report had fiverecommendations:

! There should be a consumer awarenessinitiative to raise consumers’ understanding ofprice cycles and help them time theirpurchases so that they buy petrol when pricesare relatively low.

! The government should consider holdingdiscussions with all industry participants tofurther reform the petroleum industry.

! The current TGP arrangements in WesternAustralia and Victoria should be monitoredclosely before a final conclusion is made aboutTGP.

! Other options to limit price cycles should notbe implemented.

! The fuel pricing arrangements in WesternAustralia should continue to be monitoredclosely.

The government agreed to all of theserecommendations and asked the Commission to:

! collect and make available the information itconsiders helpful to consumers

! continue monitoring and report back to thegovernment by the end of 2002 on the TGParrangements of Victoria and WesternAustralia and the fuel pricing arrangements inWestern Australia.

Utility Regulators’ ForumThe Commission, in conjunction with otherstate-based regulators, established the UtilityRegulators’ Forum—a committee of regulatoryagencies—to promote information sharing andconsistent approaches to the development ofregulation. Industry and user representatives areable to attend and address the forum.

During the year the forum released a discussionpaper on National regulatory reporting forelectricity distribution and retailing business,which was published in March 2002. Copies areavailable from the Commission’s Melbourneoffice or on the ACCC web page.

The forum also started a working group onpromoting best practice regulation. It includesthe ACCC, Independent Pricing and RegulatoryTribunal and the Essential Services Commissionand is undertaking work on comparing buildingblocks and index-based approaches to regulation.A paper is expected during the year.

Several meetings have been held over the past12 months and regular issues of the newsletter,Network, have been published. Network is postedon the Commission’s Internet website and isdistributed to industry and the general public.

The member agencies of the forum are:

The Australian Competition and ConsumerCommission (ACCC)

NSW Independent Pricing and RegulatoryTribunal (IPART)

Victorian Essential Services Commission (ESC)

Tasmanian Government Prices OversightCommission (GPOC)

Office of the Tasmanian Electricity Regulator(OTTER)

Queensland Competition Authority (QCA)

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WA Office of Gas Regulation (OffGAR)

Office of Water Regulation—WA

SA Independent Pricing and Access Regulator(SAIPAR)

SA Independent Industry Regulator (SAIIR)

ACT Independent Competition and RegulatoryCommission (ICRC)

Northern Territory Utilities Commission(NTUC)

National Competition Council (NCC)

Government response to theIntellectual Property andCompetition ReviewCommitteeIn June 1999 the federal government establishedthe Intellectual Property and CompetitionReview Committee to review the competitionaspects of intellectual property legislation.

The committee issued its final report inSeptember 2000, and made a series ofrecommendations to change Australia’sintellectual property laws and the Trade PracticesAct, improving the balance between those lawsand competition policy.

The government announced its response to thefinal report in August 2001.

Two areas of the government’s decision are ofparticular interest and relevance to theCommission—first, the decision to amends. 51(3) of the Trade Practices Act, and second,the decision to give the Commission a role in theactivities of copyright collecting societies.

Section 51(3) of the Trade Practices ActSection 51(3) of the Act exempts certainlicences and assignments relating to patents,copyrights, trade marks or designs fromprohibition under ss. 45 (agreements that

substantially lessen competition), 47 (exclusivedealing) and 50 (mergers that substantially lessencompetition).

The government decided to amend s. 51(3) sothat intellectual property licensing would besubject to Part IV, but a contravention of theper se prohibitions of ss. 45, 45A and 47 or s. 4Dwould instead be subject to a substantiallessening of competition test.

This decision will expose intellectual propertylicensing and assignment to Part IV of the TradePractices Act to a greater extent than is currentlythe case.

To reduce business uncertainty about how theCommission will enforce Part IV in relation tointellectual property licensing, the governmenthas decided that the Commission would issueguidelines.

The guidelines would define:

! when intellectual property licensing andassignment conditions might be exemptedunder s. 51(3)

! when intellectual property licences andassignments might breach Part IV

! when conduct that is likely to breach the Actmight be authorised.

The government expects the Commission toconsult with interested parties in preparing theseintellectual property guidelines.

Copyright collecting societies

Copyright collecting societies are anadministratively efficient way for copyrightowners to enforce their intellectual propertyrights and to collect and distribute copyrightlicence fees. However, as monopolies, theirexistence gives rise to potential competitionconcerns including the potential abuse of marketpower to extract high licence fees from users.

The Committee recommended that the existingpowers of the Copyright Tribunal to reviewoutput arrangements of declared collectingsocieties be extended to cover those of voluntarycollecting societies not administered under astatutory licence.

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The government accepted this recommendationand outlined the involvement of theCommission.

The Commission will be required by statute toissue guidelines on which matters it considers tobe relevant in determining reasonableremuneration for copyright holders innegotiations between societies and users ofcopyright material.

The main purpose of the guidelines would be tofacilitate licence negotiations and minimiserecourse to the Copyright Tribunal for adetermination. If negotiations failed and one orother party applied to the tribunal for adetermination, recourse to the tribunal wouldnot be restricted in any way. The Commission’sguidelines would be advisory, not determinative.

The Copyright Act will be amended so that theCopyright Tribunal has the discretion to takeaccount of the guidelines and to admit theCommission as a party to tribunal proceedings.

International forumsThe Commission is increasingly cooperating withits international counterpart agencies oncompetition, consumer protection and regulatorymatters to effectively enforce laws in Australiaand overseas (see also chapter 3, p. 68).

APECThe Commission also continued its support ofthe joint APEC/OECD Cooperative Initiative onRegulatory Reform, implemented in 2001, whichcontributes to deepening the dialogue andtechnical assistance between regulatory agenciesof economies inside and outside APEC.Mr Michael Cosgrave, General Manager of theCommission’s Telecommunications Group,participated in a workshop in Beijing inSeptember 2001. This work, in the form of aseries of workshops and seminars, will continueinto 2003.

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CORPORATEGOVERNANCE

AND MANAGEMENT

TTTTTo maintain high levelso maintain high levelso maintain high levelso maintain high levelso maintain high levels

of managementof managementof managementof managementof management

efficiency and cost-efficiency and cost-efficiency and cost-efficiency and cost-efficiency and cost-

effective resourceeffective resourceeffective resourceeffective resourceeffective resource

utilisation at bothutilisation at bothutilisation at bothutilisation at bothutilisation at both

national and regionalnational and regionalnational and regionalnational and regionalnational and regional

office levels.office levels.office levels.office levels.office levels.

Chapter 7

IntroductionThe Commission’s management is centrallycoordinated through its Corporate ManagementBranch. The branch comprises units for HumanResource Management and Corporate Projects;Finance and Services; IT Contract and ServicesUnit; Information Services; Publishing Unit;Corporate Services Melbourne; and Library.

Functional details of the Commission (astatement required under s. 8 of the Freedom ofInformation Act 1982) are set out in appendixfour. The organisation chart as at 30 June 2002 isin the Overview of the ACCC at the beginning ofthis report (p. 9).

Major matters undertaken during 2001–02included:

! a new agreement made with staff and certifiedby the Australian Industrial RelationsCommission

! a graduate intake of 26, representing about5 per cent of total staff.

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Corporate governance

Decision-making structureThe Commission held 56 formal meetings during2001–02. Most were held in the national office inCanberra but it is the Commission’s policy tomeet in other capitals when this is compatiblewith other commitments or offers opportunitiesfor local contact.

During 2001–02 the Commission considered 434formal papers dealing with matters underinvestigation, litigation, mergers, access matters,adjudication decisions, submissions to inquiries,and compliance and education strategies. It alsoconsidered many informal submissions.

CommitteesThe Commission has six subject matter and twofunction committees to streamline decisionmaking (see appendix 6).

Telecommunications

The Telecommunications Committee oversees theCommission’s functions in telecommunications,including matters arising under Parts XIB andXIC and authorisations. It coordinates with theEnforcement Committee on issuing competitionnotices. Committee decisions are referred to thefull Commission for formal decision. Thecommittee meets as required and comprises theChairperson and Commissioners Jones and Martin.Relevant ex-officio associate commissioners areincluded. This committee sits as a division of theCommission from time to time.

Mergers

The Mergers Committee meets weekly andconsiders most merger matters, reporting itsdecisions to the Commission. Major matters arereferred to the full Commission for furtherconsideration. The committee comprises theChairperson and Commissioner Jones, the ChiefExecutive Officer, Brian Cassidy, ExecutiveGeneral Manager (Compliance Division), DavidSmith and General Manager (Mergers & AssetSales), Mark Pearson.

Enforcement

The Enforcement Committee meets weekly tooversee the enforcement program. Itsrecommendations are referred to theCommission for formal decision. It comprisesCommissioners Bhojani, Jones, Martin andMcNeill.

Energy

The Energy Committee is responsible for theCommission’s functions in the electricity and gassectors. The committee meets as required andcomprises the Chairperson, CommissionerMartin, and relevant ex-officio associatecommissioners.

Transport

The Transport Panel meets as necessary tooversee transport issues. It comprisesCommissioners Jones and Martin.

GST

During the year the GST Committee met asnecessary to oversee the Commission’s GST role.It comprised the Chairperson, full-timecommissioners and Associate CommissionerKing. This committee ceased on 30 June 2002,when the Commission’s role in the New TaxSystem ceased.

Corporate governance

The two function committees are CorporateGovernance and Internal Audit.

The Corporate Governance Committee meetsmonthly and comprises the Chairperson, full-time commissioners, the Chief Executive Officerand senior staff.

Internal Audit Committee

The Internal Audit Committee consists of theChief Executive Officer (Chairperson), GeneralManager (Corporate Management) and twoother management representatives appointed fora two-year term. The Director (Finance Section)is Secretary to the Committee.

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The committee’s purpose, duties andresponsibilities are set out in its terms ofreference.

The Internal Audit Committee’s responsibilitiesinclude the monitoring of the Commission’sexposure to fraud and risks in general. TheCommission has developed its Risk ManagementPolicy and Framework, and participated inComCover’s Benchmarking Risk ManagementProgram—Round 2.

The Commission has prepared and implementedfraud control plans, and has in place appropriatefraud prevention, detection, and investigation,reporting and data collection procedures andprocesses that meet the specific needs of theCommission and are in compliance with theCommonwealth Fraud Control Guidelines.

Service charterThe Commission continues to review andaugment its systems to improve its servicedelivery. It is accessible to the public fromanywhere in Australia via a 1300 telephonenumber and the Internet.

The Commission received 16 compliments and8 complaints from the public on its standard ofservice during the year.

Conflict of interestPublic confidence in the Commission and itsemployees’ integrity is vital. It is important thatthe Commission is, and is seen to be, impartialand unbiased in its work. Each staff member isasked to complete a conflict of interest self-assessment at least annually. The self-assessmentmodule is designed to ensure accountability,while maintaining privacy for each staff member.

Senior managementconferenceIn April 2002 the Commission held a conferencefor senior management in Tasmania. It wasattended by commissioners, senior executiveservice staff, regional directors, other staff andguest speakers.

The conference focused on the practical,strategic and management issues facing theorganisation, in particular the corporate plan andpriorities, and the planning and budgeting cycle.

Financial managementFunding of $83.4 million was provided in the2001–02 budget. This included funding for:

! tax reform price monitoring

! airport regulation

! additional functions and powers under theTelecommunications Legislation AmendmentAct 1999

! a litigation reserve fund.

Tax reform price monitoringThe Commission received $13.421 million toundertake price collections and to ensurecompliance. With it the Commission designedand delivered a communication and informationstrategy, monitored retail prices, responded toconsumer and business inquiries through atelephone hotline, and took enforcement action.The Commission’s role with respect to the NewTax System ceased on 30 June 2002.

Legal costsThe Commission received an additional$10 million in 2001–02 towards a litigationreserve fund, set up to enable the Commission tomeet unusual litigation costs. This fund willincrease by $1 million per year, with interestearned accruing, until it reaches a cap of$20 million.

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Airport regulationThe Commission received $0.9 million toimprove airport access arrangements, to assesscompliance with airport price caps including passthrough of necessary new investment, and tomonitor prices of aeronautical-related services atairports.

OtherFunding of $5.6 million for activities intelecommunications, gas and small business thatwould have lapsed at the end of the previousfinancial year was renewed.

Additional funding of $15.8 million a yearstarting in 2001–02 was provided to enable theCommission to maintain its current workload,and to meet emerging priorities such as e-commerce and rural and regional issues.

Revenue

During the year the Commission collected thefollowing revenue:

! miscellaneous consolidated revenue (fines andcosts, authorisations and notification fees)—$7.1 million

! section 31 receipts (miscellaneous income)—$1.1 million.

People management

Staffing levels

The Commission’s budgeted staffing level for2001–02 was 509 (up from 437 in 2000–01),including six full-time holders of public office(Commission members). In addition there are 12associate members; eight of these are ex-officio,being economic regulators from otherCommonwealth or state and territory bodies.The total full-time equivalent employmentduring the year was 478.2 people (up from 438.1in 2000–01). The total number of staff employed(including part-time employees, employeesabsent on leave and secondments) at 30 June 2002

was 540 (482 on 30 June 2001). See p. 143 forstaffing overview.

The increase in the average staffing levels arosefrom increased activity in rural and regionalAustralia, the professions, telecommunicationsand growth of the ACCC Infocentre.

Of the 540 employees employed at 30 June2002, 29 staff were engaged to work on aspectsof the Commission’s GST function (down from43 as at 30 June 2001).

Training and developmentThe Commission’s learning and developmentstrategy focuses on a combination of on-the-joblearning opportunities, access to information, andformal training programs. During 2001–02 theonline environment was used more extensively asa delivery medium. In this year an onlineorientation program for new staff was developed,and desktop delivery of recorded informationsessions was trialed for the first time.

Training and development expenditure in 2001–02totalled $999 460 comprising salaries of staff ondevelopment activities ($351 538), salaries of thelearning and development unit employees($170 299), course and conference fees andstudy assistance ($455 541) and incidentals($22 082). This represents a commitment of3 per cent of the annual payroll to staffdevelopment.

In addition to this recorded expenditure, on-the-job training is a major feature of theCommission’s learning program. Regular videoconference seminars and various regional andnational office seminar sessions on contemporaryissues ensured sharing of knowledge among alllevels of staff.

The following table shows the number of placesat training courses or seminars for each categoryin the last two financial years.

Three investigation courses were run during theyear—two in Canberra and one in Melbourne—with a total of 55 people attending. Participantsincluded staff from the Hong Kong ConsumerCouncil and the South African CompetitionCommission.

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International staff development programs

Staff exchange programs! Mr Konrad Chmielewski, a Director in the

Commission’s Small Business Unit inMelbourne, continued on an exchange withthe Canadian Competition Bureaucommenced in November 2000.

! Ms Ainslee Wilton from the Commission’sGas Group commenced an exchange with theUK Office of Electricity and Gas Markets(OFGEM) on 29 April 2002 for a period ofthree months. In return Mr Giles Stevensfrom OFGEM worked in the Commission’sCanberra and Sydney offices.

! Mr David Snowden from the Commission’sCompliance Strategies Branch in Canberracommenced a six-month exchange with theNew Zealand Commerce Commission on14 January 2002.

! Mr John Bardenhagen from the Commission’sTasmania office commenced a six-monthplacement with the Taiwan Fair TradeCommission (TFTC) in Taipei on 11 March2002. In return Mr Jishyan Hwu from theTFTC began work in the Commission’sSydney office on 24 June 2002.

International Internship Program

In January 2002 the Commission commencedthe third year of its International InternshipProgram. This year’s program involves twointerns, the first from the Zambian Competition

Units of training

Type 2000–01 2001–02

Economic education 106 150

Law education 161 153

IT skills 114 68

Operational skills 466 635

Management development 48 44

Personal development 45 19

SES development 25 5

Table 7.1 Training provided in 2000–01 and 2001–02

The Commission believes there is significantvalue in staff increasing their professional skillsand academic learning. Employees are eligible forstudy assistance in the form of study leave andpartial reimbursement of tuition fees forapproved courses of study. During the year 36staff members participated in the studyassistance scheme, mainly for postgraduatestudies in economics, law and business.

Graduate programThe Commission recruited 26 graduates and twointernational interns at the beginning of 2002,placing them throughout the organisation.Graduates complete an intensive one-weekorientation program, followed by on-the-jobtraining, formal courses, counselling and guidanceby supervisors, and work experience. Graduatesundertake three rotations during the 10-monthprogram.

The recruitment and selection of graduates ismanaged entirely by the Commission. TheCommission received about 450 applications forthe graduate positions. The quality ofapplications, as with other years, was very high.Strategies for the marketing of the graduateprogram, and the recruitment and selection ofgraduates, are in place to ensure that the highquality of graduates invited to join the program ismaintained.

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Commission and the second from the Industryand Trade Competition Commission inZimbabwe. The program is a strategic part of theCommission’s broader technical assistance andcapacity building regime.

The goals of the internship program are:

! to contribute to the development ofcompetition, consumer protection and utilityregulation policies and initiativesinternationally, by providing interested,suitably qualified overseas people with theopportunity to spend one year working at theCommission, a recognised world leadingcompetition and consumer protection agency

! to enhance the Commission’s links with itsinternational counterpart agencies

! to enable participants to develop knowledge oflegislation relevant to the functioning of theCommission, an understanding ofcompetition, consumer protection, pricing andutility regulation issues, an awareness of thepolitical, commercial and social environmentsand the management framework in which theCommission operates

! for those people to positively contribute tothe operation of the Commission bycompleting work placements in three separateoperational units of the organisation.

Staff secondmentsMr Osmond Borthwick of the Commission’sSydney office worked with the New ZealandCommerce Commission until October 2001.

Mr Shane Adams, of the Commission’s Sydneyoffice, returned to Australia in August 2001following a 12-month secondment with the UKOffice of Telecommunications (OFTEL) inLondon.

Mr Ron Cameron, a director in the Commission’sTelecommunications Unit, continued to workwith the Hong Kong Consumer Council as theirChief Trade Practices Officer.

Mr David Hatfield, a director in theCommission’s Gas Unit, began a 12-monthsecondment to the Review of Energy MarketsSecretariat in December 2001.

Mr Paul Hutchison, a director in theCommission’s Mergers and Asset Sales Branch,commenced a 12-month secondment to theDepartment of Prime Minister and Cabinet inAugust 2001.

Workplace relations

The Commission made a new certifiedagreement offer to staff in December 2001which was not accepted at vote. After furtherconsultation, the Commission made anotheroffer to staff in May 2002. Of the 84 per cent ofstaff who participated in the ballot, 95 per centof staff voted in favour of the agreement. TheACCC Certified Agreement 2002–03 wascertified by the Australian Industrial RelationsCommission on 4 June 2002.

The new agreement provides a 10 per cent payincrease over 18 months, and undertakes toreview classification structures, the special salarylevel scheme, the management of unsatisfactoryperformance processes, and excess staff retentionperiods, and to meet corporate reportingrequirements. The agreement provides forflexible remuneration for exceptionalperformance, specialist employees or whererecruitment and retention are affected by marketfactors.

The Commission’s formal employee consultativebody is the Workplace Relations ConsultativeCommittee (WRCC) with four staffrepresentatives (elected by staff), two unionrepresentatives and management representatives.The new agreement increases the number of staffrepresentatives to six. The WRCC meetsquarterly and is an important forum for thedevelopment of the next workplace agreement.

During the year Australian WorkplaceAgreements (AWAs) were offered to SESemployees and to nine non-SES employees.Twenty-seven AWAs were approved by theEmployment Advocate during the year.

Occupational health and safetyThe Commission has a new occupational healthand safety agreement and policy in place. Healthand safety representatives were elected for alldesignated workgroups in accordance with the

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OHS Agreement and first aid officers wereselected and trained in all regions in accordancewith the Commission’s 2001 first aid policy.

During the year professionally qualified assessorspresented information sessions on safe workpractices and conducted ergonomic assessmentsfor most employees. The Commission also madeinfluenza vaccinations available to employees inall regions. Exercise classes and massages arebeing provided in some offices on a fee-for-service basis.

Following on from a pilot Wellness Program inPerth, a Wellness Survey was conductedthroughout the Commission and a programdeveloped on the basis of the results. Theprogram will include health and fitnessassessments, stress management, back care andother health information sessions by medicalprofessionals.

Fifteen incidents were reported in 2001–02.None of these were required to be reported toComcare under section 68 of the OHS Act 1991.Injury notification is actively encouraged throughregular notices in the Commission newsletter.

The success of the Commission’s occupationalhealth and safety program is reflected insignificant improvements in the compensationstatistics for the Commission. The Comcarepremium for 2002–03 is set at 0.49 per cent oftotal salaries; this compares favourably with the1.13 per cent for all agencies combined.

Employee Assistance Program

The Commission has a national self-referralassistance program for staff and their families aswell as providing mediation and assistance tomanagers. During 2001 there were 73consultations provided to 20 staff and four familymembers.

Commonwealth Disability Strategy

The Commonwealth Disability Strategyrecognises that the Commonwealth has animpact on the lives of people with disabilitiesthrough its many programs, services andfacilities. The strategy is about making sure thatCommonwealth departments remove barriers

that stop people with disabilities having access tothese policies, programs and services. Through itsDisability Action Plan the Commission hasidentified that it has three core business roles ofregulator, purchaser and employer and hasformulated actions to address its responsibilitiesin relation to people with disabilities in theseroles.

The Commission Internet site complies withmost priority one requirements of the WWWConsortium Web Accessibility Initiative. The siteis being redeveloped with the objective ofmeeting all priority one requirements. All newinitiatives and activities affecting the public arewidely publicised through both electronic andprint media.

As an employer the Commission ensures thatemployees with disabilities have the necessaryadaptive technology to carry out their work andthat all managers and supervisors are aware of theprinciples and practices of reasonableadjustment.

All policies and contracts are being reviewed toensure that they are in keeping with theprinciples of the Disability Discrimination Act1992.

Workplace diversity

In 2002 the Commission drafted a revisedWorkplace Diversity Plan which is currentlybeing consulted with employees.

The Commission has equity and diversity officersthroughout the organisation who distributeinformation and offer support to staff. Theequity and diversity coordinator publishesarticles in ACCCess on a regular basis.

A program was developed on workplaceharassment and the law. This will be deliveredthrough the video conferencing system toregional offices. A CD-ROM version of theprogram is also planned.

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Date APS equiv. Total NESB PWD Women A&TSIclassification

30 June 2000 APS 1 & 2 52 5 1 34 110.0% 1.0% 0.2% 6.6% 0.2%

30 June 2001 APS 1 & 2 53 11 1 35 110.2% 2.1% 0.2% 6.8% 0.2%

30 June 2002 APS 1 & 2 55 5 2 41 110.6% 1.0% 0.4% 7.9% 0.2%

30 June 2000 APS 3 & 4 156 34 4 94 130.1% 6.6% 0.8% 18.1% 0.2%

30 June 2001 APS 3 & 4 106 14 3 68 120.5% 2.7% 0.6% 13.1% 0.2%

30 June 2002 APS 3 & 4 107 14 1 80 020.7% 2.7% 0.2% 15.4%

30 June 2000 APS 5 & 6 145 15 82 028.0% 2.9% 15.8%

30 June 2001 APS 5 & 6 148 16 2 82 028.6% 3.1% 0.4% 15.8%

30 June 2002 APS 5 & 6 185 25 5 94 135.7% 4.8% 1.0% 18.1% 0.2%

30 June 2000 SAPS 1 & 2 142 13 2 41 027.4% 2.5% 0.4% 7.9%

30 June 2001 SAPS 1 & 2 153 17 4 47 229.5% 3.3% 0.8% 9.1% 0.4%

30 June 2002 SAPS 1 & 2 171 22 5 61 033.0% 4.2% 1.0% 11.8%

30 June 2000 SES & POH 23 2 5 04.4% 0.4% 1.0%

30 June 2001 SES & POH 22 1 0 5 04.2% 0.2% 1.0%

30 June 2002 SES & POH 22 4 0 5 04.2% 0.8% 1.0%

30 June 2000 Total 518 69 7 256 213.3% 1.4% 49.4% 0.4%

30 June 2001 Total 482 59 10 237 411.4% 1.9% 45.8% 0.8%

30 June 2002 Total 540 70 13 281 213.5% 2.5% 54.2% 0.4%

NESB: Non-English-speaking background. PWD: People with a disability. A&TSI: Aboriginal and Torres Strait Islanders.

APS: Australian Public Servant. EL: Executive Level. SES: Senior Executive Service. POH: Public Office holder

Note: As the target groups are not mutually exclusive there may be some double counting. The statistics cover only those employees who nominatethemselves to be counted in each group.

Table 7.2 Comparative representation of target groups within the classification level


143

Classification ACT NSW VIC QLD WA SA TAS TVL TAM NT Total TotalM F M F M F M F M F M F M F M F M F M F M F All

Public Service Act staff

GAPS 5 5 2 2 3 3 1 1 1 2 11 14 25

APS 1 2 1 1 1 0 5 5

APS 2 2 10 5 1 3 2 1 1 3 22 25

APS 3 1 13 4 5 1 1 1 3 1 28 29

APS 4 14 31 3 3 3 6 2 7 2 3 2 1 1 26 52 78

APS 5 17 19 7 1 7 11 1 4 1 2 1 2 3 1 2 1 37 43 80

APS 6 17 20 3 8 19 12 2 3 4 3 4 2 3 1 1 3 54 51 105

SAPS 1 17 15 5 4 20 12 3 4 2 2 1 1 1 1 50 38 88

SAPS 2 30 18 6 2 20 3 1 1 1 1 60 23 83

SES Band 1 6 3 1 2 1 1 9 5 14

SES Band 2 2 1 3 0 3

SES Band 3 1 1 0 1

Total Public Service Act staff 536

Non-Public Service Act staff

Chairman 1 1 0 1

Deputy Chairman 0 0 0

Commissioner 3 3 0 3

Total Non-Public Service Act staff 4

Total M/F 116 136 26 31 76 57 10 22 10 12 9 8 7 1 2 5 1 2 2 7 259 281 540

Total 252 57 133 32 22 17 8 7 3 9 540

Table 7.3 Total staff by gender, classification and location as at 30 June 2002


144

ACT NSW VIC QLD WA SA TAS TAM TVL NT Total

Male 4 1 1 1 7

Female 22 11 5 2 2 2 1 1 46

Total 26 12 6 2 3 2 0 1 0 1 53

Part-time staff as at 30 June 2002

ACT NSW VIC QLD WA SA TAS TAM TVL NT Total

Male 17 5 1 23

Female 22 4 3 2 2 1 2 1 37

Total 39 4 8 2 3 0 0 1 2 1 60

Temporary staff as at 30 June 2002

Band Gender Total ACT NSW VIC QLD Gains/Losses Comments

1 Male 9 6 2 1

Female 5 3 1 1

2 Male 3 2 1

Female 0

3 Male 1 1

Female 0

Total 18 12 1 4 1

SES staff by gender, location and band as at 30 June 2002

Non-Public Service Act Staff - total by gender, classification and location as at 30 June 2002Chairperson Deputy Chairpeson Commissioner Total M/F Total by region

ACT Male 1 3 4 4

Female

VIC Male 0

Female

Total 1 0 3 4 4

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Legal services

The Legal GroupThe Legal Group is the Commission’s in-houselegal team. It provides legal and legal policy adviceand coordinates Commission legal resourcesgenerally. The group consists of three substantiveunits plus the General Manager and the GeneralCounsel. Apart from elements of the RegulatoryAffairs Legal Unit, who are based in Melbourne,most Legal Group staff are based in Canberra.

! The Regulatory Affairs Legal Unit providesadvice on legal issues arising under Parts IIIA,X, XIB and XIC of the Trade Practices Act,the Prices Surveillance Act and a number ofother enactments and codes (state andfederal) which, in aggregate, represent theCommission’s regulatory functions.

! The Advisings and Policy Unit provides legaladvice on all non-regulatory matters under theTPA (principally of an enforcement nature) aswell as general legal advice. It also has overallresponsibility for administrative law issuesincluding FOI and the provision of assistancein relation to legal policy issues.

! The Litigation Unit manages and provides legaladvice on litigation matters, primarily in theenforcement area—and particularly where newor complex issues are involved. The unit iscomprised of lawyers and paralegals on retainerfrom the Australian Government Solicitor.

The General Counsel provides specialist legaladvice on complex legal issues and takes a criticalrole in the strategic oversight of major litigationinvolving the Commission.

The General Manager, Legal Group, is responsiblefor managing the Legal Group and theCommission’s arrangements with its legal panelfirms.

Although the Legal Group is organised into threeprimary units with defined roles, any particularmatter may require the involvement of legal stafffrom the other units.

A panel of legal firms conduct litigation on behalfof the Commission. The following firms arecurrently appointed to the ACCC Legal Panel—Corrs Chambers Westgarth, Phillips Fox,

Deacons, Slater & Gordon, Norman Waterhouseand the Australian Government Solicitor. Thefirms are operating under deeds of standing offerfor a period of three years which expires on20 September 2004.

Information andcommunications technologyand service

Infrastructure services

The Commission is a member of Group 5, whichcontracted its information technology andtelecommunications services to Advantra Pty Ltdfor a five-year period commencing 1 July 1999.Advantra has changed its name to TelstraEnterprise Services, and the Commission hasbeen notified that it will be integrated into Telstra.

During the year, 197 PCs were replaced;agreement was reached on a new StandardOperating Environment (SOE) which will includeWindows XP and Office XP. The implementationis expected to occur in Year four of the contract.

With almost no changes to the IT infrastructuresince the commencement of IT outsourcing, theCommission decided to upgrade the Canberraand Melbourne LAN services and sought thereplacement of all of the Novell file servers andMicrosoft email exchange servers in all of itsoffices because this equipment is beyond itseffective life. Implementation is expected tooccur early in Year four of the contract. The costof these replacements and upgrade programs is tobe $450 000.

With two years remaining in the Group 5contract, the Commission has begun to considerthe means by which IT services might bedelivered to the Commission in the future.

Business applicationsThe Commission is increasingly reliant on keybusiness applications to support its core activitiesand corporate support functions. Substantial

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work was undertaken to enhance MARS to reflectchanges in the operation of the InformationCentre. PRISM was also modified to reflect thechanges to the operations of the business units.

The following work was also undertaken:

! upgrading of FMIS Finance1 and migrating theclient from Windows 98 to Windows NT toenhance stability and performance

! upgrading of HRMS Aurion including web-based access to all staff to maintain their owndetails and process leave applications online

! upgrading RM TRIM and migrating thisapplication to the consolidated serverenvironment at TES to enhance performance

! installing PINNACLE to facilitate effectiveasset management

! modifying the Intranet Web Search Engine—Verity—to interrogate the corporate databasesas well as the Intranet data store

! developing and implementing a consolidatedautomated mailing and email system referredto as GEMS which is available to all staff.

Videoconference equipmentAll the Commission’s offices except Tamworthhave videoconference systems. Canberra,Melbourne and Sydney have multiple systems.Videoconferencing has become an importantcommunication tool in the Commission.

Information management andservices

Redevelopment of the Internet and IntranetThe functional specification and contract werecompleted in January 2002. The Request forTender was advertised in March 2002. The tenderswere evaluated and negotiations with a preferredsupplier were commenced. As of 30 June 2002the final agreed contract was ready for signing.

The new website will be launched in January2003. While the Internet will be completed bythis time, additional functionality will be added

to the Intranet as the various work groups definenew databases and work flow procedures.

Considerable focus has been given to the Internetto improve its useability and accessibility to thepublic. The site will comply with all legislativerequirements defined by the variousCommonwealth agencies and is designed toensure that the public, professionals and remoteusers will be able to quickly access the requiredinformation.

Records management

The Records Management Unit underwent areview of structure and staffing levels during theyear to better reflect the growing role of theteam. Records Management increasingly involvesthe use of the electronic medium and softwaretools to manage them. The devolution ofresponsibility of managing records to all staff hasresulted in the Records Management staff takingon a quality assurance, monitoring and trainingrole as part of their responsibilities.

A training program aims to extend the use of thissystem to all staff. The TRIM technology meansstaff can take personal responsibility for, andcontribute towards, managing Commission records.

In line with a National Archives directive, a teamwas formed to undertake DIRKS. This projecthas resulted in a review of all the functions andresponsibilities carried out by the Commissionfor records management purposes, and will resultin a new functional thesaurus and disposalauthority. This project is due for completion inDecember 2002.

Public registersThe Commission is required to create andmaintain several public registers under the TradePractices Act 1974 and the Prices SurveillanceAct 1983.

The Commission also maintains voluntary publicregisters because it believes the information theycontain should be available to the public. Themost recent voluntary register was created as aresult of a delegation under the ASIC Act 1989—the s. 93AA enforceable undertakings register.

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Currently the Commission maintains over 20statutory and voluntary public registers, andthrough them the Commission’s decision makingis transparent and accountable.

Public register information is published on theCommission’s Internet site at <http://www.accc.gov.au>. This site now containsindexes of all the public registers, and in somecases electronic images of the relevantdocuments. This information is placed on thewebsite and on hard-copy file at the same time.

Library

The library provides a research and informationservice to all Commission staff. The service ismanaged from the national office library inCanberra. There is also a library in theMelbourne office, and a small collection of printmaterials in the Sydney office.

The library intranet site includes links to relevantwebsites and information about library services.In accordance with the Commission providinguser-friendly online data access, the library homepage has become the principal gateway toexternal information, particularly free and paidaccess websites, of use to Commission staff.Library staff update the site daily.

A review of library function was undertaken toassess the performance and to improve theeffectiveness of the library service. The servicesand delivery of information is rapidly changing inthe electronic age and our library is seen as a keyplayer in the knowledge management role of theorganisation. The report from the review will beconsidered by the Corporate GovernanceCommittee.

PublicationsThe Commission’s publications—produced inprint, electronic and audio visual form—provideguidance to business and the community,disseminate information to them, and informthem about the Commission’s functions andobjectives.

The Commission’s in-house publishing unitproduces an extensive range of publications

related to the Commission’s work and functions.They include technical reports, parliamentaryreports and papers, guides to legislation,consumer leaflets and magazines, product safetybrochures, small business booklets and videos.

The distribution of the Commission’s regularpublications, ACCC Journal and ACCC update,continues to expand. The Journal, available bysubscription, is distributed to about 800business, professional and consumerorganisations. It is published bi-monthly andoutlines all matters resolved either in the courtsor between the Commission and companies orindividuals concerned. It is also now available onCD-ROM. ACCC update’s circulation is nowclose to 10 000 copies. It is largely an issues-based publication, with recent editions coveringconsumer issues including the impact of marketreform on the consumer, and small businessissues. It is available without charge, and isdistributed to industry and businessorganisations, consumer groups, educationalinstitutions, businesses and individuals.

A full list of publications published this year is atappendix 6. The highlights of the year’spublishing program include:

! a series of brochures on how business cancomply with the Trade Practices Act

! a report on reducing fuel price variability

! a video explaining people’s rights andobligations regarding advertising and selling,called Straight Talking

! videos of the October 2001 and May 2002Competing Fairly Forums

! a coordinated range of promotional materialand information for events such as InternetSweep Day and the law enforcementconference

! a published leniency policy for cooperationand a draft leniency policy for cartel behaviour

! a service charter for stores serving remote andindigenous communities.

The Commission also updated and reprintedvarious guides, including the Franchisees guideand the Advertising and selling guide. It alsopublished its detailed submission to the Reviewinto the Trade Practices Act.

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Consultancy services,competitive tendering andcontracting

Consultancy servicesThe Commission uses consultants whenspecialist expertise is required for a particulartask and not available within the Commission.The Commission uses:

! for most consultancy contracts in excess of$100 000—selective tendering

! for most consultancy contracts below$100 000—direct engagement of recognisedor pre-eminent experts, consultants known tohave the requisite skills, or those that theCommission has successfully used before.

The Commission engaged 91 consultants duringthe year with a value of $3.9 million.

The main categories for which consultants wereengaged were:

! price collections (GST price monitoring role)

! GST public awareness campaign

! price exploitation hotline

! information technology

! regulatory matters

! enforcement work.

A list of consultants paid more than $100 000during the year is on the Commission’s website.

Advertising and market research—Commonwealth Electoral Act 1918The following are amounts of money paid (valueof contracts) to creative advertising agencies,direct mail, media advertising and marketresearch organisations.

Organisation $

Aboriginal Coordinating Council:Information for Rural and Regional 308

Advertiser Newspapers Limited:Information for Small Business 777

Brainwaves Information Services:Information for Small Business 2,133

Hastings Business Enterprise Centre:Information for Small Business 611

Lismore Business Enterprise Centre:Information for Small Business 718

Mida Gold Coast Monitoring:Information for Small Business 145

Niche Media:Information for Small Business 5,555

PSMPC: Gazette subscription 10,622

Seek Communications Ltd:Employment advertising 5,346

Sertec: Information for Small Business 388

Tamworth & District BusinessEnterprise Centre Ltd 1,075

Newsnet.Com: Media releases 101,469

Starcom: Employment advertising 245,504

Office accommodation

The Commission maintains 10 offices: in eachstate and territory capital, Tamworth andTownsville.

During the year the Commission extended itsoffice space in Melbourne, and undertookrefurbishments in its Canberra office toaccommodate expansions and restructures.

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F INANCIALSTATEMENTS

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AUSTRALIAN COMPETITION AND CONSUMER COMMISSIONSTATEMENT OF FINANCIAL PERFORMANCEfor the year ended 30 June 2002

20022002200220022002 20012001200120012001 Note Note Note Note Note $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

RRRRRevenues from ordinarevenues from ordinarevenues from ordinarevenues from ordinarevenues from ordinary activitiesy activitiesy activitiesy activitiesy activitiesRevenues from Government 3(a) 83 46083 46083 46083 46083 460 75 687Sales of goods and services 3(b) 390390390390390 1 045Interest 3(c) 730730730730730 237

Total revenues from ordinary activities 84 58084 58084 58084 58084 580 76 969

Expenses from ordinarExpenses from ordinarExpenses from ordinarExpenses from ordinarExpenses from ordinary activitiesy activitiesy activitiesy activitiesy activities(excluding borrowing cost expense)(excluding borrowing cost expense)(excluding borrowing cost expense)(excluding borrowing cost expense)(excluding borrowing cost expense)

Employees 4(a) 33 85933 85933 85933 85933 859 29 706Suppliers 4(b) 35 99135 99135 99135 99135 991 37 346Depreciation and amortisation 4(c) 2 0112 0112 0112 0112 011 1 723Net loss on sale of assets 4(d) 284284284284284 271Write-off of assets 4(e) 3131313131 9

Total expenses from ordinary activities(excluding borrowing cost expense) 72 17672 17672 17672 17672 176 69 055

Borrowing costs expense 4(f) 110110110110110 121

Net operating surplus (deficit) from ordinarNet operating surplus (deficit) from ordinarNet operating surplus (deficit) from ordinarNet operating surplus (deficit) from ordinarNet operating surplus (deficit) from ordinary activitiesy activitiesy activitiesy activitiesy activities 12 29412 29412 29412 29412 294 7 793

Net surplus (deficit)Net surplus (deficit)Net surplus (deficit)Net surplus (deficit)Net surplus (deficit) 12 29412 29412 29412 29412 294 7 793

Net surplus (deficit) attributable to the CommonwealthNet surplus (deficit) attributable to the CommonwealthNet surplus (deficit) attributable to the CommonwealthNet surplus (deficit) attributable to the CommonwealthNet surplus (deficit) attributable to the Commonwealth 12 29412 29412 29412 29412 294 7 793

Net credit (debit) to asset revaluation reserve 6(d) 284284284284284 -

TTTTTotal revenues, expenses and valuation adjustments attributableotal revenues, expenses and valuation adjustments attributableotal revenues, expenses and valuation adjustments attributableotal revenues, expenses and valuation adjustments attributableotal revenues, expenses and valuation adjustments attributableto the Commonwealth and recognised directly in equityto the Commonwealth and recognised directly in equityto the Commonwealth and recognised directly in equityto the Commonwealth and recognised directly in equityto the Commonwealth and recognised directly in equity 284284284284284 -

TTTTTotal changes in equity other than those resultingotal changes in equity other than those resultingotal changes in equity other than those resultingotal changes in equity other than those resultingotal changes in equity other than those resultingfrom transactions with owners as ownersfrom transactions with owners as ownersfrom transactions with owners as ownersfrom transactions with owners as ownersfrom transactions with owners as owners 12 57812 57812 57812 57812 578 7 793

The above statement should be read in conjunction with the accompanying notes.

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AUSTRALIAN COMPETITION AND CONSUMER COMMISSIONSTATEMENT OF FINANCIAL POSITIONas at 30 June 2002

20022002200220022002 20012001200120012001NoteNoteNoteNoteNote $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

ASSETSASSETSASSETSASSETSASSETS

FFFFFinancial assetsinancial assetsinancial assetsinancial assetsinancial assetsCash 5(a) 16 37816 37816 37816 37816 378 1 400Receivables 5(b) 989989989989989 1 093

Total financial assets 17 36717 36717 36717 36717 367 2 493

Non financial assetsNon financial assetsNon financial assetsNon financial assetsNon financial assetsLand & buildings 6 (a) 2 4622 4622 4622 4622 462 1 911Infrastructure, plant and equipment 6(b) 1 7431 7431 7431 7431 743 2 131Intangibles 6(c) 787787787787787 840Inventories 6(e) 103103103103103 94Other 6(f) 1 3351 3351 3351 3351 335 2 239

Total non financial assets 6 4306 4306 4306 4306 430 7 215

TTTTTotal assetsotal assetsotal assetsotal assetsotal assets 23 79723 79723 79723 79723 797 9 708

LIABILITIESLIABILITIESLIABILITIESLIABILITIESLIABILITIES

Interest bearing liabilitiesInterest bearing liabilitiesInterest bearing liabilitiesInterest bearing liabilitiesInterest bearing liabilitiesLeases 7 995995995995995 1 471

Total interest bearing liabilities 995995995995995 1 471

PPPPProvisionsrovisionsrovisionsrovisionsrovisionsEmployees 8 9 7039 7039 7039 7039 703 8 609

Total provisions 9 7039 7039 7039 7039 703 8 609

PayablesLoans 1.8 & 9(a) ----- 3 019Suppliers 9(b) 6 5106 5106 5106 5106 510 5 660Other 9(c) 593593593593593 550

Total payables 7 1037 1037 1037 1037 103 9 229

TTTTTotal liabilitiesotal liabilitiesotal liabilitiesotal liabilitiesotal liabilities 17 80117 80117 80117 80117 801 19 309

NET ASSETSNET ASSETSNET ASSETSNET ASSETSNET ASSETS 5 9965 9965 9965 9965 996 (9 601)

EQUITYEQUITYEQUITYEQUITYEQUITY

PPPPParent entity interestarent entity interestarent entity interestarent entity interestarent entity interestContributed equity 3 1003 1003 1003 1003 100 81Reserves 1 0521 0521 0521 0521 052 768Retained surpluses or accumulated deficits 1 8441 8441 8441 8441 844 (10 450)

TTTTTotal parent entity interestotal parent entity interestotal parent entity interestotal parent entity interestotal parent entity interest 5 9965 9965 9965 9965 996 (9 601)

TTTTTotal equityotal equityotal equityotal equityotal equity 10(a) 5 9965 9965 9965 9965 996 (9 601)

Current assetsCurrent assetsCurrent assetsCurrent assetsCurrent assets 18 70018 70018 70018 70018 700 3 880

Non current assetsNon current assetsNon current assetsNon current assetsNon current assets 5 0975 0975 0975 0975 097 5 828

Current liabilitiesCurrent liabilitiesCurrent liabilitiesCurrent liabilitiesCurrent liabilities 12 54512 54512 54512 54512 545 14 650

Non current liabilitiesNon current liabilitiesNon current liabilitiesNon current liabilitiesNon current liabilities 5 2565 2565 2565 2565 256 4 659


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AUSTRALIAN COMPETITION AND CONSUMER COMMISSIONSTATEMENT OF CASH FLOWSfor the year ended 30 June 2002

20022002200220022002 20012001200120012001NoteNoteNoteNoteNote $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

OPERAOPERAOPERAOPERAOPERATING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIES

Cash receivedCash receivedCash receivedCash receivedCash receivedSales of goods and services Government 2323232323 - Non-government 956956956956956 767Appropriations 83 40083 40083 40083 40083 400 75 627Interest received 724724724724724 232GST refunds 3 9333 9333 9333 9333 933 3 042

Total cash received 89 03689 03689 03689 03689 036 79 668

Cash usedCash usedCash usedCash usedCash usedEmployees 32 76532 76532 76532 76532 765 29 293Suppliers 38 83438 83438 83438 83438 834 49 192Borrowing costs 109109109109109 121

Total cash used 71 70871 70871 70871 70871 708 78 606

Net cash from (used by) operating activitiesNet cash from (used by) operating activitiesNet cash from (used by) operating activitiesNet cash from (used by) operating activitiesNet cash from (used by) operating activities 11(a) 17 32817 32817 32817 32817 328 1 062

INVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIES

Cash receivedCash receivedCash receivedCash receivedCash receivedProceeds from sales of property, plant and equipment 99999 10

Total cash received 99999 10

Cash usedCash usedCash usedCash usedCash usedPurchase of property, plant and equipment 1 7941 7941 7941 7941 794 1 135Purchase of intangibles 8888888888 208

Total cash used 1 8821 8821 8821 8821 882 1 343

Net cash from (used by) investing activitiesNet cash from (used by) investing activitiesNet cash from (used by) investing activitiesNet cash from (used by) investing activitiesNet cash from (used by) investing activities (1 873)(1 873)(1 873)(1 873)(1 873) (1 333)

FINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIES

Cash receivedCash receivedCash receivedCash receivedCash receivedAppropriations-contributed equity ----- -

Total cash received ----- -

Cash usedCash usedCash usedCash usedCash usedRepayment of debt ----- -Lease payments 477477477477477 530

Total cash used 477477477477477 530

Net cash from (used by) financing activitiesNet cash from (used by) financing activitiesNet cash from (used by) financing activitiesNet cash from (used by) financing activitiesNet cash from (used by) financing activities (477)(477)(477)(477)(477) (530)

Net increase (decrease) in cash heldNet increase (decrease) in cash heldNet increase (decrease) in cash heldNet increase (decrease) in cash heldNet increase (decrease) in cash held 14 97814 97814 97814 97814 978 (801)

Cash at the beginning of the reporting period 1 4001 4001 4001 4001 400 2 201

Cash at the end of the reporCash at the end of the reporCash at the end of the reporCash at the end of the reporCash at the end of the reporting periodting periodting periodting periodting period 5(a) 16 37816 37816 37816 37816 378 1 400


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AUSTRALIAN COMPETITION AND CONSUMER COMMISSIONSCHEDULE OF COMMITMENTSas at 30 June 2002


BBBBBY TYPEY TYPEY TYPEY TYPEY TYPE

OTHER COMMITMENTSOperating leases1 16 12716 12716 12716 12716 127 19 392Contract for IT services2 2 3782 3782 3782 3782 378 4 362Other commitments3 708708708708708 365

Total other commitments 19 21319 21319 21319 21319 213 24 119

COMMITMENTS RECEIVABLE 1 7081 7081 7081 7081 708 2 164

Net commitmentsNet commitmentsNet commitmentsNet commitmentsNet commitments 17 50517 50517 50517 50517 505 21 955

BBBBBY MAY MAY MAY MAY MATURITYTURITYTURITYTURITYTURITY

All net commitmentsAll net commitmentsAll net commitmentsAll net commitmentsAll net commitmentsOne year or less 4 8794 8794 8794 8794 879 5 174From one to five years 10 26510 26510 26510 26510 265 12 738Over five years 2 3612 3612 3612 3612 361 4 043


Operating lease commitmentsOperating lease commitmentsOperating lease commitmentsOperating lease commitmentsOperating lease commitmentsOne year or less 3 0993 0993 0993 0993 099 3 103From one to five years 9 2399 2399 2399 2399 239 10 511Over five years 2 3612 3612 3612 3612 361 4 044


NB: All commitments are GST-inclusive where relevant.

1 Operating leases included are effectively non-cancellable and comprise:• leases for office accommodation• motor vehicle leases.

2 A contract for services and future finance lease commitments for IT equipment.

3 Other commitments included are for contracts entered into for various services to be performed over the next 12 months.

The above schedule should be read in conjunction with the accompanying notes.

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AUSTRALIAN COMPETITION AND CONSUMER COMMISSIONSCHEDULE OF CONTINGENCIESas at 30 June 2002


CONTINGENT LCONTINGENT LCONTINGENT LCONTINGENT LCONTINGENT LOSSESOSSESOSSESOSSESOSSESClaims for damages/costs 1 3 2433 2433 2433 2433 243 1 420

TTTTTotal contingent lossesotal contingent lossesotal contingent lossesotal contingent lossesotal contingent losses 3 2433 2433 2433 2433 243 1 420

CONTINGENT GAINSCONTINGENT GAINSCONTINGENT GAINSCONTINGENT GAINSCONTINGENT GAINSClaims for damages/costs ––––– –

Net contingenciesNet contingenciesNet contingenciesNet contingenciesNet contingencies (3 243)(3 243)(3 243)(3 243)(3 243) (1 420)

Remote contingencies are disclosed in note 12.1 The amount represents an estimate of the Commission’s liability based on precedent cases. The Commission is defending the claims.

AUSTRALIAN COMPETITION AND CONSUMER COMMISSIONSCHEDULE OF UNQUANTIFIABLE CONTINGENCIES

As at reporting date the Commission has 8 matters before the Federal Court alleging breaches of the Trade Practices Act. In the event ofunfavourable judgment by the court, the Commission stands to lose by way of penalties or costs awarded. It is not possible to determine theamounts in relation to these matters.

The above schedule should be read in conjunction with the accompanying notes.

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2002

NoteNoteNoteNoteNote DescriptionDescriptionDescriptionDescriptionDescription

1 Summary of Significant Accounting Policies2 Events Occurring after Balance Date3 Operating Revenues4 Operating Expenses5 Financial Assets6 Non Financial Assets7 Interest Bearing Liabilities8 Provisions9 Payables10 Equity11 Cash Flow Reconciliation12 Remote Contingencies13 Executive Remuneration14 Remuneration of Auditors15 Average Staffing Levels16 Acts of Grace Payments, Waivers and Defective Administration Scheme17 Financial Instruments18 Administered Items19 Appropriations20 Special Public Monies21 Reporting Outcomes

Note 1 Summary of Significant Accounting Policies

1.1 Objectives of the Commission

The objectives of the Commission are to:

! prevent anti-competitive conduct with the aim of promoting economic efficiency and enhanced social welfareincluding an improved choice for consumers in price, quality and service

! provide appropriate safeguards for consumers in their dealings with producers and sellers by fostering adherenceto fair trading practices in well informed markets

! promote competitive pricing wherever possible and restrain price rises in markets where competition is less thaneffective.

The Commission’s outcome is to enhance social and economic welfare of the Australian community by fosteringcompetitive, efficient, fair and informed Australian markets.

Commission activities contributing toward these outcomes are classified as either departmental or administered.Departmental activities involve the use of assets, liabilities, revenues and expenses controlled or incurred by theCommission in its own right. Administered activities involve the management or oversight by the Commission onbehalf of the Government of items controlled or incurred by the Government.

The Commission’s output is separated into output groups as follows:

Output Group 1Output Group 1Output Group 1Output Group 1Output Group 1

Proper administration and enforcement of the Trade Practices Act 1974, the Prices Surveillance Act 1983 andrelated laws.

Output Group 2Output Group 2Output Group 2Output Group 2Output Group 2

Performance of actions that promote competition and fair trading and enable well functioning markets.

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1.2 Basis of accounting

The financial statements are required by section 49 of the Financial Management and Accountability Act 1997 andare a general purpose financial report.

The statements have been prepared in accordance with:

! Finance Minister’s Orders (being the Financial Management and Accountability (Financial Statements2001–2002) Orders)

! Australian Accounting Standards and Accounting Interpretations issued by the Australian Accounting StandardsBoard

! other authoritative pronouncements of the Board

! the Consensus Views of the Urgent Issues Group.

The statements have been prepared having regard to:

! Statements of Accounting concepts

! the Explanatory Notes to Schedule 1, and Finance Briefs issued by the Department of Finance and Administration.

The Commission’s Statements of Financial Performance and Financial Position have been prepared on an accrualbasis and are in accordance with the historical cost convention, except for certain assets which, as noted, are atvaluation. Except where stated, no allowance is made for the effect of changing prices on the results or the financialposition.

Assets and liabilities are recognised in the Commission’s Statement of Financial Position when and only when it isprobable that future economic benefits will flow and the amounts of the assets or liabilities can be reliablymeasured. Assets and liabilities arising under agreements equally proportionately unperformed are however notrecognised unless required by an Accounting Standard.

Revenues and expenses are recognised in the Commission’s Statement of Financial Performance when and onlywhen the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

The continued existence of the Commission in its present form, and with its present outcome and outputs, isdependent on Government policy and on continuing appropriations by Parliament for the Commission’sadministration, outcome and outputs.

The Commission is part of the legal entity that is the Commonwealth Government, which is ultimately responsiblefor all the Commission’s debts.

Administered revenues, expenses, assets and liabilities and cash flows reported in Note 18 are accounted for on thesame basis and using the same policies as for Agency items, except where otherwise stated at Note 1.20.

1.3 Changes in accounting policy

The accounting policies used in the preparation of these financial statements are consistent with those used in2000–01, except in respect of:

! Output Appropriations (refer to Note 1.4)

! Presentation and disclosure of administered items (refer to Note 1.20)

1.4 Revenue

The revenues described in this Note are revenues relating to the core operating activities of the Commission.

(a)(a)(a)(a)(a) RRRRRevenues from Government—Agency Appropriationsevenues from Government—Agency Appropriationsevenues from Government—Agency Appropriationsevenues from Government—Agency Appropriationsevenues from Government—Agency Appropriations

The full amount of the appropriation for departmental outputs for the year (less any savings offered up at AdditionalEstimates and not subsequently released) is recognised as revenue. This is a change in accounting policy caused bythe introduction of a new requirement to this effect in the Finance Minister’s Orders. (In 2000–01, the outputappropriations were recognised as revenue to the extent the appropriations had been drawn down from the OfficialPublic Account).

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The change in the accounting policy had no effect in 2001–02 as the full appropriation for 2000–01 had beendrawn down in that year.

The appropriation for the 2001–02 year includes an amount of $10,000,000 which is for the creation of aLitigation Reserve Fund. These funds are to be kept separate together with any interest earned and will be utilised inthe event of extraordinary litigation losses being awarded against the Commission.

(b)(b)(b)(b)(b) RRRRResources Resources Resources Resources Resources Received Feceived Feceived Feceived Feceived Free of Chargeree of Chargeree of Chargeree of Chargeree of Charge

Services received free of charge are recognised as revenue when and only when a fair value can be reliablydetermined and the services would have been purchased if they had not been donated. Use of those resources isrecognised as an expense.

(c)(c)(c)(c)(c) Other revenueOther revenueOther revenueOther revenueOther revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a pro rata basis taking into account the interest rates applicable to the financialassets.

Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

The Commission’s revenue from the rendering of a service is recognised by reference to the stage of completion ofcontracts or other agreements to provide services to Commonwealth bodies. The stage of completion is determinedaccording to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

1.5 Transaction by the Government as Owner

Appropriations designated as Capital—equity injections are recognised directly in equity to the extent drawn down asat the reporting date.

1.6 Employee entitlements

(a)(a)(a)(a)(a) LLLLLeaveeaveeaveeaveeave

The liability for employee entitlements includes provision for annual leave and long service leave. No provision hasbeen made for sick leave, as all sick leave is non-vesting and the average sick leave taken in future years byemployees of the Commission is estimated to be less than the annual entitlement for sick leave.

The liability for annual leave reflects the value of total annual leave entitlements of all employees at 30 June 2002and is recognised at the nominal amount.

The non current portion of the provision for long service leave is recognised and measured at the present value ofthe estimated future cash flows to be made in respect of all employees as at 30 June 2002. In determining thepresent value of the liability, the Commission has taken into account attrition rates and pay increases throughpromotion and inflation.

Employee leave entitlements are paid out upon transfer of an employee to another Federal Government Agency.

(b)(b)(b)(b)(b) Superannuation paymentsSuperannuation paymentsSuperannuation paymentsSuperannuation paymentsSuperannuation payments

Staff of the Commission contribute to the Commonwealth Superannuation Scheme and the Public SectorSuperannuation Scheme. Employer contributions in relation to these schemes amounting to $3,072,190 in2001–02 ($2,625,577 in 2000–01) have been expended in these financial statements.

No liability for superannuation is recognised as at 30 June as the employer contributions fully extinguish theaccruing liability which is assumed by the Commonwealth.

Employer Superannuation Productivity Benefit contributions totalled $641,763 in 2001–02 ($549,564 in 2000–01).

1.7 Leases

A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially allthe risks and benefits incidental to ownership of leased non-current assets and operating leases under which thelessor effectively retains substantially all such risks and benefits.

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Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value ofminimum lease payments at the inception of the lease and a liability recognised for the same amount. Leased assetsare amortised over the period of the lease. Lease payments are allocated between the principal component and theinterest expense.

Operating lease payments are expensed on a basis which is representative of the pattern of benefits derived from theleased assets. The net present value of future net outlays in respect of surplus space under non-cancellable leaseagreements is expensed in the period in which the space becomes surplus.

The Commission entered into a sale and lease back of certain IT assets on 1 July 1999. The carrying amount ofthese assets was written down to fair value at that date and the consequent loss on sale is being amortised over theperiod of the lease.

Lease incentives taking the form of ‘free’ leasehold improvements and rent holidays are recognised as liabilities.These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability.Lease liabilities are amortised using a straight-line method over the term of the lease.

1.8 Loans

The Commission and the Department of Finance and Administration have undertaken a funding review, and as aresult, the Department of Finance and Administration has converted the loan from the Government of $3,019,000to capital effective 1 July 2001.

1.9 Borrowing costs

All borrowing costs are expensed as incurred except to the extent that they are directly attributable to qualifyingassets in which case they are capitalised. The amount capitalised in a reporting period does not exceed the amountof costs incurred in that period.

The Commission did not have any qualifying assets for which funds were borrowed during the 2001–02 financialyear.

1.10 Cash

Cash means notes and coins held and any deposits held at call with a bank or financial institution.

1.11 Financial instruments

Accounting policies for financial instruments are stated at Note 17.

1.12 Acquisition of assets

Assets are recorded at cost of acquisition. The cost of acquisition includes the fair value of assets transferred inexchange and liabilities undertaken.

1.13 Property, infrastructure, plant and equipment

Asset recognition thresholdAsset recognition thresholdAsset recognition thresholdAsset recognition thresholdAsset recognition threshold

Purchases of infrastructure, plant and equipment are recognised initially at cost in the Statement of FinancialPosition, except for purchases costing less than $1,000, which are expensed in the year of acquisition (other thanwhere they form part of a group of similar items which are significant in total).

RRRRRevaluationsevaluationsevaluationsevaluationsevaluations

Infrastructure, plant and equipment are revalued progressively in accordance with the ‘deprival’ method of valuationin successive 3-year cycles, so that no asset has a value greater than three years old.

Leasehold improvements were revalued as at 30 June 2002 at depreciated replacement cost.

Plant and equipment (P&E) assets were revalued as at 30 June 2002 at deprival value.

Intangibles (softwares) have not been revalued.

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In accordance with the deprival methodology, land is measured at its current market buying price. Property otherthan land, plant and equipment are measured at their depreciated replacement cost. Where assets are held whichwould not be replaced or are surplus to requirements, measurement is at net realisable value. At 30 June 2002, theCommission had no assets in this situation.

All valuations are independent.

RRRRRecoverable amount testecoverable amount testecoverable amount testecoverable amount testecoverable amount test

Schedule 1 requires the application of the recoverable amount test to departmental non-current assets in accordancewith AAS 10 Recoverable Amount of Non Current Assets. The carrying amounts of these non-current assets havebeen reviewed to determine whether they are in excess of their recoverable amounts. In assessing recoverableamounts, the relevant cash flows have been discounted to their present value.

Depreciation and amorDepreciation and amorDepreciation and amorDepreciation and amorDepreciation and amortisationtisationtisationtisationtisation

Depreciable infrastructure, plant and equipment assets are written off to their estimated residual values over theirestimated useful lives to the Commission using, in all cases, the straight line method of depreciation. Leaseholdimprovements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvementsor the unexpired period of the lease.

Depreciation/amortisation rates (useful lives) and methods are reviewed at each balance date and necessaryadjustments are recognised in the current, or current and future reporting periods, as appropriate. Residual valuesare re-estimated for a change in prices only when assets are revalued.

Depreciation and amortisation rates applying to each class of depreciable asset are based on the following useful lives:

Asset Class 2002 2001Total useful life Total useful life

Fitout lesser of the term of the lease or 10 years lesser of the term of the lease or 10 years

Furniture and fittings 10 years 10 years

Office equipment 5 years 5 years

Computer hardware 3 years 3 years

Computer software 3 to 7 years 3 to 7 years

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 4c.

1.14 Inventories

Inventories (publications) held for resale are valued at the lower of cost or net realisable value.

Inventories not held for resale are valued at cost, unless they are no longer required, in which case they are valuedat net realisable value.

1.15 Taxation

The Commission is exempt from all forms of taxation except fringe benefits tax and the goods and services tax.

Revenues and expenses are recognised net of the amount GST, except where the amount of GST incurred is notrecoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost ofacquisition of the asset or as part of an item of expense. Receivables and payables in the Statement of FinancialPosition are shown inclusive of GST.

1.16 Foreign currency

Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction.Foreign currency receivables and payables are translated at the exchange rates current as at balance date.Associated currency gains and losses are not material.

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1.17 Insurance

The Commission has insured for risks through the Government’s insurable risk managed fund, called “Comcover”.Worker’s compensation is insured through Comcare Australia.

1.18 Comparative figures

Comparative figures have been adjusted to conform to changes in presentation in these financial statements whererequired.

1.19 Rounding

Amounts have been rounded to the nearest $1000 except in relation to the following:

! act of grace payments and waivers

! remuneration of executives

! remuneration of auditors

! appropriations.

1.20 Reporting of administered activities

Administered revenues, expenses, assets, liabilities and cash flows are presented in the Notes to these financialstatements. In 2000–01, summary information was provided in schedules following the primary Agencystatements. Either presentation is permitted by AAS 29 Financial Reporting by Government Departments.

Accounting policies for administered items are as stated in note 1.2 above.

These financial statements do not report the receipt of administered appropriations from the Official Public Account(OPA) as administered revenues, nor are transfers of administered receipts to the OPA reported as administeredexpenses. This change in 2001–02 acknowledges that the administered activities of agencies are performed onbehalf of the Commonwealth Government and it is not appropriate to identify resources transferred betweenadministered activities of different agencies as revenues and expenses of the administered entity. Generally,therefore, the notes to these financial statements do not report any transactions or balances that are internal to theadministered entity. One exception is the disclosure of administered cash flows, since cash transferred between theOPA and the Australian Competition and Consumer Commission’s administered bank account is necessary for thecompleteness of the cash flow disclosures.

Accounting policies which are relevant to administered activities only of the Australian Competition and ConsumerCommission are disclosed below.

(a)(a)(a)(a)(a) RRRRRevenueevenueevenueevenueevenue

All administered revenues are revenues relating to the core operating activities performed by the Commission onbehalf of the Commonwealth.

Fines and costs are applied by the courts or by agreement between the Commission and the Defendant, and arerecognised when awarded by the courts, or when agreement has been executed.

Court costs awarded against the Commission are recorded as a departmental expense.

Authorisation and Notification Fees and other revenue are applied when required under the relevant legislation, andare recognised upon payment.

Note 2 Events Occurring After Balance DateThere are no events that have occurred after balance date which affect the amounts brought to account in thefinancial statements for the year ended 30 June 2002.

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 3 Operating Revenues3(a) R3(a) R3(a) R3(a) R3(a) Revenues from governmentevenues from governmentevenues from governmentevenues from governmentevenues from governmentAppropriations for outputs 83 40083 40083 40083 40083 400 75 627Resources received free of charge 6060606060 60

Total 83 46083 46083 46083 46083 460 75 687

3(b) Sales of goods and ser3(b) Sales of goods and ser3(b) Sales of goods and ser3(b) Sales of goods and ser3(b) Sales of goods and servicesvicesvicesvicesvicesGoods 4545454545 144Services 345345345345345 901

Total 390390390390390 1 045

Goods and services were sold as follows:Government 2323232323 -Non-Government 367367367367367 1 045

Total 390390390390390 1 045

3(c) Interest3(c) Interest3(c) Interest3(c) Interest3(c) InterestLitigation Reserve Fund 467467467467467 -Interest on deposits 263263263263263 237

Total 730730730730730 237

Note 4 Operating Expenses4(a) Employee expenses4(a) Employee expenses4(a) Employee expenses4(a) Employee expenses4(a) Employee expensesRemuneration (for services provided) 32 56832 56832 56832 56832 568 28 579Separation and redundancy 137137137137137 -Total remuneration 32 70532 70532 70532 70532 705 28 579Other employee expenses 1 1541 1541 1541 1541 154 1 127

Total 33 85933 85933 85933 85933 859 29 706

4(b) Suppliers expenses4(b) Suppliers expenses4(b) Suppliers expenses4(b) Suppliers expenses4(b) Suppliers expensesSupply of goods and services 33 36633 36633 36633 36633 366 34 506Operating lease rentals 2 6252 6252 6252 6252 625 2 840

Total 35 99135 99135 99135 99135 991 37 346

4(c) Depreciation and amor4(c) Depreciation and amor4(c) Depreciation and amor4(c) Depreciation and amor4(c) Depreciation and amortisationtisationtisationtisationtisationAmortisation of leasehold improvements 471471471471471 543Depreciation of property, plant and equipment 243243243243243 303Amortisation of intangibles 349349349349349 346Amortisation of leased assets 948948948948948 531

Total 2 0112 0112 0112 0112 011 1 723

The aggregate amounts of deprecation or amortisation expensed during the reporting period for each class ofdepreciable asset are as follows:Leasehold improvements 471471471471471 543Plant and equipment 1 1911 1911 1911 1911 191 834Intangibles 349349349349349 346

Total 2 0112 0112 0112 0112 011 1 723

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

4(d) Net loss from sales of assets4(d) Net loss from sales of assets4(d) Net loss from sales of assets4(d) Net loss from sales of assets4(d) Net loss from sales of assets

Infrastructure plant and equipment:Procceds from sale 99999 10Net book value at sale (15)(15)(15)(15)(15) (2)Amortised loss on sale of assets (278)(278)(278)(278)(278) (279)

Total net loss from sales of assets (284)(284)(284)(284)(284) (271)

Less: plant and equipment written off on disposal (31)(31)(31)(31)(31) (9)

Net loss on disposal of property, plant and equipment (315)(315)(315)(315)(315) (280)

4(e) W4(e) W4(e) W4(e) W4(e) Write down of assetsrite down of assetsrite down of assetsrite down of assetsrite down of assetsPlant and equipments—write off on disposal 3131313131 9

Total 3131313131 9

4(f) Borrowing costs expense4(f) Borrowing costs expense4(f) Borrowing costs expense4(f) Borrowing costs expense4(f) Borrowing costs expenseFinance charge—leases 110110110110110 121

Total 110110110110110 121

Note 5 Financial Assets5(a) Cash5(a) Cash5(a) Cash5(a) Cash5(a) CashCash at bank and on hand 3 7073 7073 7073 7073 707 8Cash on deposit 12 67112 67112 67112 67112 671 1 392

Total 16 37816 37816 37816 37816 378 1 400

All cash is recognised as a current asset.

Cash on deposit includes an amount for the litigation reserve fund.

5(b) R5(b) R5(b) R5(b) R5(b) ReceivableseceivableseceivableseceivableseceivablesGoods and services 185185185185185 461Less: Provision for doubtful debts (31)(31)(31)(31)(31) (34)GST receivable 835835835835835 666

989989989989989 1 093

Receivables (gross) are aged as follows:Not overdue 927927927927927 917

Overdue by:Less than 30 days 88888 2430–60 days 2727272727 10360–90 days 2424242424 83More than 90 days 3434343434 –

Total receivable (gross) 1 0201 0201 0201 0201 020 1 127

All receivables are current assets.

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 6 Non Financial Assets6(a) Land and buildings6(a) Land and buildings6(a) Land and buildings6(a) Land and buildings6(a) Land and buildingsLeashold improvements at cost ––––– 897Work in progress ––––– 562Less: Accumulated depreciation ––––– (422)

––––– 1 037

Leasehold improvements at 1999–2002 valuation ––––– 1 548Less: Accumulated depreciation ––––– (674)

––––– 874

Leasehold improvements at 2002–2005 valuation 3 9003 9003 9003 9003 900 –Less: Accumulated depreciation (1 438)(1 438)(1 438)(1 438)(1 438) –

2 4622 4622 4622 4622 462 –

Total leasehold improvements 2 4622 4622 4622 4622 462 1 911

All land and buildings are non-current assets.

6(b) Infrastructure, plant and equipment6(b) Infrastructure, plant and equipment6(b) Infrastructure, plant and equipment6(b) Infrastructure, plant and equipment6(b) Infrastructure, plant and equipmentInfrastructure, plant and equipment at cost 208208208208208 703Less: Accumulated depreciation (19)(19)(19)(19)(19) (193)

189189189189189 510

Infrastructure, plant and equipment at 1999–2002 valuation ––––– 596Less: Accumulated depreciation ––––– (297)

––––– 299

Infrastructure, plant and equipment at 2002–2005 valuation 1 1551 1551 1551 1551 155 –Less: Accumulated depreciation (497)(497)(497)(497)(497) –

658658658658658 –

Plant and equipment under finance lease at cost 2 4312 4312 4312 4312 431 2 117Less: Accumulated amortisation (1 616)(1 616)(1 616)(1 616)(1 616) (795)

815815815815815 1 322

Plant and equipment under finance lease at 2002–2005 valuation 153153153153153 –Less: Accumulated amortisation (72)(72)(72)(72)(72) –

8181818181 –

Total infrastructure, plant and equipment 1 7431 7431 7431 7431 743 2 131

All infrastructure, plant and equipment are non-current assets.Plant and equipment under finance leases is subject revaluation.The revaluations were in accordance with the revaluation policy stated at Note 1.13 and were completed by anindependent valuer, Chris Tuttle (Australian Valuation Office). Revaluation increments of $283,742 for property, plant andequipment were taken to the asset revaluation reserve.

6(c) Intangibles6(c) Intangibles6(c) Intangibles6(c) Intangibles6(c) IntangiblesComputer software at cost 1 5411 5411 5411 5411 541 1 453Work in progress 208208208208208 –Less: Accumulated amortisation (962)(962)(962)(962)(962) (613)

787787787787787 840

All intangibles are non-current assets.

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6(d) Analysis of proper6(d) Analysis of proper6(d) Analysis of proper6(d) Analysis of proper6(d) Analysis of propertytytytyty, plant, equipment and intangibles, plant, equipment and intangibles, plant, equipment and intangibles, plant, equipment and intangibles, plant, equipment and intangibles

TTTTTable A—Rable A—Rable A—Rable A—Rable A—Reconciliation of the opening and closing balances of propereconciliation of the opening and closing balances of propereconciliation of the opening and closing balances of propereconciliation of the opening and closing balances of propereconciliation of the opening and closing balances of propertytytytyty, plant and equipment and intangibles, plant and equipment and intangibles, plant and equipment and intangibles, plant and equipment and intangibles, plant and equipment and intangibles

LLLLLeaseholdeaseholdeaseholdeaseholdeasehold InfrastructureInfrastructureInfrastructureInfrastructureInfrastructure IntangiblesIntangiblesIntangiblesIntangiblesIntangibles TTTTTotalotalotalotalotalimprovementsimprovementsimprovementsimprovementsimprovements plant andplant andplant andplant andplant and (computer(computer(computer(computer(computer

equipmentequipmentequipmentequipmentequipment sofsofsofsofsoftware)tware)tware)tware)tware)ItemItemItemItemItem $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Gross value as at 1 July 2001 3 0083 0083 0083 0083 008 3 4163 4163 4163 4163 416 1 4531 4531 4531 4531 453 78777877787778777877Additions:

Purchases of assets 724724724724724 865865865865865 296296296296296 1 8851 8851 8851 8851 885Revaluations: write-ups/(write-downs) 518518518518518 (267)(267)(267)(267)(267) 251251251251251Assets transferred in/(out) ----- ----- ----- -----Disposals (350)(350)(350)(350)(350) (66)(66)(66)(66)(66) (416)(416)(416)(416)(416)

Gross value as at 30 June 2002Gross value as at 30 June 2002Gross value as at 30 June 2002Gross value as at 30 June 2002Gross value as at 30 June 2002 3 9003 9003 9003 9003 900 3 9483 9483 9483 9483 948 1 7491 7491 7491 7491 749 95979597959795979597

Accumulated depreciation/amortisationas at 1 July 2001 1 0971 0971 0971 0971 097 1 2851 2851 2851 2851 285 613613613613613 29952995299529952995Disposals (320)(320)(320)(320)(320) (48)(48)(48)(48)(48) (368)(368)(368)(368)(368)Depreciation/amortisation charge for the year 471471471471471 1 1911 1911 1911 1911 191 349349349349349 20112011201120112011Revaluations: write-ups/(write-downs) 190190190190190 (223)(223)(223)(223)(223) (33)(33)(33)(33)(33)Assets transferred in/(out) ----- ----- ----- -----

Accumulated depreciation/amorAccumulated depreciation/amorAccumulated depreciation/amorAccumulated depreciation/amorAccumulated depreciation/amortisationtisationtisationtisationtisationas at 30 June 2002as at 30 June 2002as at 30 June 2002as at 30 June 2002as at 30 June 2002 1 4381 4381 4381 4381 438 2 2052 2052 2052 2052 205 962962962962962 4 6054 6054 6054 6054 605

Net book value as at 30 June 2002Net book value as at 30 June 2002Net book value as at 30 June 2002Net book value as at 30 June 2002Net book value as at 30 June 2002 2 4622 4622 4622 4622 462 1 7431 7431 7431 7431 743 787787787787787 4 9924 9924 9924 9924 992

Net book value as at 1 July 2001 1 9111 9111 9111 9111 911 2 1312 1312 1312 1312 131 840840840840840 4 8824 8824 8824 8824 882

TTTTTable B—Assets at Vable B—Assets at Vable B—Assets at Vable B—Assets at Vable B—Assets at Valuationaluationaluationaluationaluation

LLLLLeaseholdeaseholdeaseholdeaseholdeasehold InfrastructureInfrastructureInfrastructureInfrastructureInfrastructure ComputerComputerComputerComputerComputer TTTTTotalotalotalotalotalimprovementsimprovementsimprovementsimprovementsimprovements plant andplant andplant andplant andplant and sofsofsofsofsoftware—tware—tware—tware—tware—

equipmentequipmentequipmentequipmentequipment TTTTTotalotalotalotalotalintangiblesintangiblesintangiblesintangiblesintangibles

ItemItemItemItemItem $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

As at 30 June 2002Gross value 3 9003 9003 9003 9003 900 1 3081 3081 3081 3081 308 ----- 5 2085 2085 2085 2085 208Less: accumulated depreciation/amortisation (1 438)(1 438)(1 438)(1 438)(1 438) (569)(569)(569)(569)(569) ----- (2007)(2007)(2007)(2007)(2007)

Net book value 2 4622 4622 4622 4622 462 739739739739739 ----- 3 2013 2013 2013 2013 201

As at 30 June 2001Gross value 1 5481 5481 5481 5481 548 596596596596596 ----- 2 1442 1442 1442 1442 144Less: accumulated depreciation/amortisation (674)(674)(674)(674)(674) (297)(297)(297)(297)(297) ----- (971)(971)(971)(971)(971)

Net book value 874874874874874 299299299299299 ----- 1 1731 1731 1731 1731 173

Revaluation increments and decrements were processed during the year to the following asset classes:

$’000$’000$’000$’000$’000

Leasehold improvements increment 328328328328328Property plant and equipment decrement (5)(5)(5)(5)(5)Leased plant & equipment decrement (39)(39)(39)(39)(39)

Net revaluations processed 284284284284284

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TTTTTable C—Assets held under finance leaseable C—Assets held under finance leaseable C—Assets held under finance leaseable C—Assets held under finance leaseable C—Assets held under finance lease

20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

As at 30 June 2002Gross value 2 5842 5842 5842 5842 584 2 117Accumulated depreciation/amortisation (1 688)(1 688)(1 688)(1 688)(1 688) (795)

Net book value 896896896896896 1 322

TTTTTable D—Wable D—Wable D—Wable D—Wable D—Work in progressork in progressork in progressork in progressork in progress

LLLLLeaseholdeaseholdeaseholdeaseholdeasehold ComputerComputerComputerComputerComputer TTTTTotalotalotalotalotalImprovementsImprovementsImprovementsImprovementsImprovements sof sof sof sof softwaretwaretwaretwaretware

$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

As at 30 June 2002Gross value ----- 208208208208208 208208208208208Accumulated depreciation/amortisation ----- ----- -----

Net book value ----- 208208208208208 208208208208208

As at 30 June 2001Gross value 562562562562562 ----- 562562562562562Accumulated depreciation/amortisation ----- ----- -----

Net book value 562562562562562 ----- 562562562562562

20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

6(e) Inventories6(e) Inventories6(e) Inventories6(e) Inventories6(e) InventoriesPublications held for sale 103103103103103 94

All inventories are current assets.

6(f) Other6(f) Other6(f) Other6(f) Other6(f) OtherLeasehold rights 156156156156156 338Prepayments 1 1791 1791 1791 1791 179 1 623Ancillary costs of arranging borrowings ----- 278

Total 1 3351 3351 3351 3351 335 2 239

Other assets are represented byCurrent 1 2301 2301 2301 2301 230 2 188Non current 105105105105105 51

Total 1 3351 3351 3351 3351 335 2 239

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 7 Interest Bearing LiabilitiesLLLLLeaseseaseseaseseaseseases

Finance lease commitmentsPayable:

Within one year 831831831831831 846In one to five years 238238238238238 540In more than five years ----- 238

Minimum lease payments 1 0691 0691 0691 0691 069 1 624Deduct: future finance charges (74)(74)(74)(74)(74) (153)

Lease liability 995995995995995 1 471

Lease liability is represented by:Current 770770770770770 752Non-current 225225225225225 719

995995995995995 1 471

Note 8 ProvisionsEmployee liabilitiesEmployee liabilitiesEmployee liabilitiesEmployee liabilitiesEmployee liabilities

Salaries and wages 750750750750750 590Leave 8 8508 8508 8508 8508 850 7 924Superannuation 103103103103103 95

Total 9 7039 7039 7039 7039 703 8 609

Employee liabilities are represented by:Current 4 9994 9994 9994 9994 999 4 975Non current 4 7044 7044 7044 7044 704 3 634

9 7039 7039 7039 7039 703 8 609

Note 9 Payables9(a) L9(a) L9(a) L9(a) L9(a) Loansoansoansoansoans

Loans from Government ----- 3 019

Maturity schedule for loans (refer note 1.8)

9(b) Suppliers9(b) Suppliers9(b) Suppliers9(b) Suppliers9(b) Suppliers

Trade creditors and accruals 6 5106 5106 5106 5106 510 5 660

9(c) Other debt9(c) Other debt9(c) Other debt9(c) Other debt9(c) Other debtLease incentives 411411411411411 550Prepaid income 182182182182182 -

593593593593593 550

Other debt is represented byCurrent 266266266266266 244Non current 327327327327327 306

593593593593593 550

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Note 10 Equity10(a) Equity—Agency10(a) Equity—Agency10(a) Equity—Agency10(a) Equity—Agency10(a) Equity—Agency

ItemItemItemItemItem ContributedContributedContributedContributedContributed AccumulatedAccumulatedAccumulatedAccumulatedAccumulated Asset revaluationAsset revaluationAsset revaluationAsset revaluationAsset revaluation TTTTTotal equityotal equityotal equityotal equityotal equityEquityEquityEquityEquityEquity resultsresultsresultsresultsresults reser reser reser reser reserveveveveve

20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

Opening balance as at 1 July 8181818181 81 (10 450)(10 450)(10 450)(10 450)(10 450) (18 243) 768768768768768 768 (9 601)(9 601)(9 601)(9 601)(9 601) (17 394)

Net result and extraordinary items - - 12 29412 29412 29412 29412 294 7 793 ----- - 12 29412 29412 29412 29412 294 7 793Net revaluation increment/(decrement) - - ----- - 284284284284284 - 284284284284284 -----

Contribution of equity 3 0193 0193 0193 0193 019 - ----- - ----- - 3 0193 0193 0193 0193 019 -

Closing balance as at 30 JuneClosing balance as at 30 JuneClosing balance as at 30 JuneClosing balance as at 30 JuneClosing balance as at 30 June 3 1003 1003 1003 1003 100 81 1 8441 8441 8441 8441 844 (10 450) 1 0521 0521 0521 0521 052 768 5 9965 9965 9965 9965 996 (9 601)

Less:outside equity interests ----- - ----- - ----- - ----- -

TTTTTotal equity attributable tootal equity attributable tootal equity attributable tootal equity attributable tootal equity attributable tothe Commonwealththe Commonwealththe Commonwealththe Commonwealththe Commonwealth 3 1003 1003 1003 1003 100 81 1 8441 8441 8441 8441 844 (10 450) 1 0521 0521 0521 0521 052 768 5 9965 9965 9965 9965 996 (9 601)

Transactional banking arrangements introduced from 1 July 1999 enabled agencies to manage their surplus cash balancesand earn interest on them. Reviews are being conducted by the Department of Finance and Administration with eachagency to determine whether interest earned to 30 June 2002 was consistent with the Governments Budget-neutralitycondition for the arrangements. However at the date of signing these financial statements, no decision has been made bythe Government of the amount, if any, of the distribution of equity to be made by the Commission.

20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 11 Cash Flow Reconciliation11(a) Cash flow reconciliation—Agency11(a) Cash flow reconciliation—Agency11(a) Cash flow reconciliation—Agency11(a) Cash flow reconciliation—Agency11(a) Cash flow reconciliation—Agency

Reconciliation of net surplus (deficit) to net cash from operating activities:

Reconciliation of cash per Statement of Financial Position to Statement of Cash Flows

Cash at year end per Statement of Cash Flows 16 37816 37816 37816 37816 378 1 400

Statement of Financial Position itemsComprising above cash: ‘Financial Asset - Cash’ 16 37816 37816 37816 37816 378 1 400

Reconciliation of net surplus (deficit) to net cash from operating activities:Net surplus (deficit) 12 29412 29412 29412 29412 294 7 793Depreciation/amortisation 2 0112 0112 0112 0112 011 2 004Write down of non-current assets 3131313131 9(Gain)/ loss on disposal of assets 284284284284284 (7)(Increase)/decrease in net receivables 104104104104104 (1 024)(Increase)/decrease in inventories (9)(9)(9)(9)(9) 1(Increase)/decrease in prepayments 444444444444444 387(Increase)/decrease in other assets 181181181181181 (337)Increase/(decrease) in employee provisions 1 0941 0941 0941 0941 094 413Increase/(decrease) in supplier payables 850850850850850 (8 722)Increase/(decrease) in prepayments received 183183183183183 -Increase/(decrease) in other liabilities (139)(139)(139)(139)(139) 545

Net cash from/(used by) operating activities 17 32817 32817 32817 32817 328 1 062

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Note 12 Remote ContingenciesLegal advice has identified 10 matters before the Federal Court alleging breaches of the Trade Practices Act that it hasreceived legal advice that there is a remote chance of an unfavourable judgment by the court. The Commission stands tolose by way of costs awarded. It is not possible to determine the amounts in relation to these matters.

The Commission is defending the claims.

Note 13 Executive RemunerationThe number of executive officers who received or were due to receive total remuneration of $100 000 or more:

20022002200220022002 2001NumberNumberNumberNumberNumber Number

$100 000 to $110 000 11111 1$110 001 to $120 000 22222 –$120 001 to $130 000 55555 3$130 001 to $140 000 11111 3$140 001 to $150 000 22222 1$150 001 to $160 000 ––––– 1$160 001 to $170 000 22222 1$170 001 to $180 000 11111 1$180 001 to $190 000 ––––– 3$190 001 to $200 000 22222 –$200 001 to $210 000 11111 6$210 001 to $220 000 11111 –$220 001 to $230 000 11111 –$270 001 to $280 000 ––––– 1$320 001 to $330 000 11111 –

The aggregate amount of total remuneration of executive officers shown above $3 293 046$3 293 046$3 293 046$3 293 046$3 293 046 $3 571 957

The aggregate amount of separation payments during the year to executive officers ––––– –

Total remuneration includes salary and wages, accrued leave, performance pay,superannuation entitlements, motor vehicles and other fringe benefits, and fringe benefits tax.

Note 14 Remuneration of AuditorsFinancial statement audit services are provided free of charge tothe Commission by the Australian National Audit Office (ANAO).The fair value of the services provided was: 60 00060 00060 00060 00060 000 60 000

No other services were provided by ANAO.

Note 15 Average Staffing LevelsThe average staffing levels for the Commission in 2001–02 were 478.20. (438.10 for 2000–01).

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Note 16 Acts of Grace Payments, Waivers and Defective Administration SchemeNo Acts of Grace payments were made during the reporting period. (2000–2001 : Nil)

No waivers of amounts owing to the Commonwealth were made pursuant to subsection 34(1) of the FinancialManagement Accountability Act 1997. (2000–2001 : Nil)

No payments were made under the Defective Administration Scheme during the reporting period. (2000–2001 : Nil)

No waivers of amounts were made pursuant to any other legislation. (2000–2001 : Nil)

Note 17 Financial Instruments17(a) T17(a) T17(a) T17(a) T17(a) Terms, conditions and accounting policieserms, conditions and accounting policieserms, conditions and accounting policieserms, conditions and accounting policieserms, conditions and accounting policies

FFFFFinancialinancialinancialinancialinancial NoteNoteNoteNoteNote Accounting policies and methodsAccounting policies and methodsAccounting policies and methodsAccounting policies and methodsAccounting policies and methods Nature of underlying instrumentNature of underlying instrumentNature of underlying instrumentNature of underlying instrumentNature of underlying instrumentinstrumentinstrumentinstrumentinstrumentinstrument (including recognition criteria and (including significant terms & conditions

measurement basis) affecting the amount, timing and certaintyof cash flows)

Financial assets Financial assets are recognised whencontrol over future economic benefitsis established and the amount of thebenefit can be reliably measured.

Cash 5(a) Deposits are recognised at their The Commission invests excess funds withnominal amounts. Interest is credited the Reserve Bank. Operational bankingto revenue as it accrues. arrangements are managed by the Westpac

Bank. Monies in the Commission’sDepartmental bank accounts earn interest onthe daily balance at rates determined by theDepartment of Finance and Administration.Interest is paid quarterly.

Receivables for 5(b) Receivables are recognised at the All receivables are with entities external togoods and services nominal amounts due, less any the Commonwealth. Credit sales are on

provision for bad and doubtful debts. 30 day terms (2000-2001: 30 days).Collectability of debts is reviewed atbalance date. Provisions are madewhen collection of the debt is judgedto be less rather than more likely.

Financial liabilities Financial liabilities are recognised whena present obligation to another party isentered into and the amount of theliability can be reliably measured.

Finance lease 7 Liabilities are recognised at the present At reporting date, the Commission hadliabilities value of the minimum lease payments at finance leases with terms averaging 3.4 years

the beginning of the lease. The discount and a maximum term of 5 years. The interestrates used are estimates of the interest rate implicit for the leases averaged 6.54%rates implicit in the leases. (2000-2001: 6.7%). The leased assets

secure the lease liabilities.

Lease incentives 9(c) The lease incentive is recognised as a The Commission has received rent free periodliability on receipt of the incentive. The incentives on entering property operatingamount of the liability is reduced on a leases. Lease payments are made monthly.straight line basis over the life of thelease by allocating lease paymentsbetween rental expense and reduction ofthe liability.

Trade creditors 9(b) Creditors and accruals are recognised Trade creditors are normally settled onat their nominal amounts, being the 30 day terms.amounts at which the liabilities will besettled. Liabilities are recognised to theextent that the goods or services havebeen received (and irrespective of havingbeen invoiced).


174

FFFFFinancialinancialinancialinancialinancial NoteNoteNoteNoteNote FloatingFloatingFloatingFloatingFloating FFFFFixed Interest Rixed Interest Rixed Interest Rixed Interest Rixed Interest Rateateateateate Non InterestNon InterestNon InterestNon InterestNon Interest TTTTTotalotalotalotalotal WWWWWeighted Aeighted Aeighted Aeighted Aeighted AverageverageverageverageverageInstrumentsInstrumentsInstrumentsInstrumentsInstruments Interest R Interest R Interest R Interest R Interest Rateateateateate Bearing Bearing Bearing Bearing Bearing Effective Interest Effective Interest Effective Interest Effective Interest Effective Interest

RRRRRateateateateate

1 year or less 1 to 5 years > 5 years

20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

FFFFFinancial Assetsinancial Assetsinancial Assetsinancial Assetsinancial Assets

Cash at bank 5(a) 3 7073 7073 7073 7073 707 1 400 ––––– – ––––– – ––––– – ––––– – 3 7073 7073 7073 7073 707 1 400 2.0%2.0%2.0%2.0%2.0% 2.0%

Cash on deposit 5(a) ––––– – 12 67112 67112 67112 67112 671 – ––––– – ––––– – ––––– – 12 67112 67112 67112 67112 671 – 4.86%4.86%4.86%4.86%4.86% –

Receivablesfor goods andservices (net) 5(b) ––––– – ––––– – ––––– – ––––– – 989989989989989 1 093 989989989989989 1 093 N/AN/AN/AN/AN/A N/A

TTTTTotal financialotal financialotal financialotal financialotal financialassetsassetsassetsassetsassets 3 7073 7073 7073 7073 707 1 400 12 67112 67112 67112 67112 671 – ––––– – ––––– – 989989989989989 1 093 17 36717 36717 36717 36717 367 2 493 ––––– –


FFFFFinancialinancialinancialinancialinancialLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilities

Finance leaseliabilities 7 ––––– – 770770770770770 752 225225225225225 719 ––––– – ––––– – 995995995995995 1 471 6.54%6.54%6.54%6.54%6.54% 6.7%

Lease incentive 9(c) ––––– – ––––– – ––––– – ––––– – 411411411411411 550 411411411411411 550 N/AN/AN/AN/AN/A N/A

Trade creditors 9(b) ––––– – ––––– – ––––– – ––––– – 65106510651065106510 5660 65106510651065106510 5660 N/AN/AN/AN/AN/A N/A

TTTTTotal financialotal financialotal financialotal financialotal financialliabilitiesliabilitiesliabilitiesliabilitiesliabilities ––––– – 770770770770770 752 225225225225225 719 ––––– – 6 9216 9216 9216 9216 921 6 210 7 9167 9167 9167 9167 916 7 681 ––––– –

TTTTTotal liabilitiesotal liabilitiesotal liabilitiesotal liabilitiesotal liabilities 17 80117 80117 80117 80117 801 19 309

17(b) Interest rate risk17(b) Interest rate risk17(b) Interest rate risk17(b) Interest rate risk17(b) Interest rate risk

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17(c) Net fair values of financial assets and liabilities17(c) Net fair values of financial assets and liabilities17(c) Net fair values of financial assets and liabilities17(c) Net fair values of financial assets and liabilities17(c) Net fair values of financial assets and liabilities

NoteNoteNoteNoteNote 20022002200220022002 2001

TTTTTotal carrotal carrotal carrotal carrotal carryingyingyingyingying AggregateAggregateAggregateAggregateAggregate Total carrying Aggregateamountamountamountamountamount net fair valuenet fair valuenet fair valuenet fair valuenet fair value amount net fair value

$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000 $’000

Agency financial assetsAgency financial assetsAgency financial assetsAgency financial assetsAgency financial assets

Cash at bank 5(a) 3 7073 7073 7073 7073 707 3 7073 7073 7073 7073 707 1 400 1 400Cash on deposit 5(a) 12 67112 67112 67112 67112 671 12 67112 67112 67112 67112 671 - -Receivables for goods and services 5(b) 989989989989989 989989989989989 1 093 1 093

Total financial assets 17 36717 36717 36717 36717 367 17 36717 36717 36717 36717 367 2 493 2 493

Agency financial liabilitiesAgency financial liabilitiesAgency financial liabilitiesAgency financial liabilitiesAgency financial liabilities

Finance lease liabilities 7 995995995995995 995995995995995 1 471 1 471Lease incentives 9(c) 411411411411411 411411411411411 550 550Trade creditors 9(b) 6 5106 5106 5106 5106 510 6 5106 5106 5106 5106 510 5 660 5 660

Total financial liabilities 7 9167 9167 9167 9167 916 7 9167 9167 9167 9167 916 7 681 7 681

FFFFFinancial assetsinancial assetsinancial assetsinancial assetsinancial assets

The net fair values of cash and non-interest bearing monetary financial assets approximate their carrying amounts.

FFFFFinancial liabilitiesinancial liabilitiesinancial liabilitiesinancial liabilitiesinancial liabilities

The net fair values of finance leases are based on discounted cash flows using interest rates for liabilities with similar riskprofiles.

The net fair values for trade creditors which are short term in nature, are approximated by their carrying amounts.

17(d) Credit risk exposures17(d) Credit risk exposures17(d) Credit risk exposures17(d) Credit risk exposures17(d) Credit risk exposures

The Commission’s maximum exposure to credit risk at reporting date in relation to each class of recognised financial assetsis the carrying amount of those assets as indicated in the Statement of Financial Position. The Commission does not haveany significant exposures to any concentrations of credit risk. The maximum value of credit risk exposure does not take into account the value of any collateral or other security.

20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 18 Administered Items18(a) — R18(a) — R18(a) — R18(a) — R18(a) — Revenues administered on behalf of governmentevenues administered on behalf of governmentevenues administered on behalf of governmentevenues administered on behalf of governmentevenues administered on behalf of governmentfor the year ended 30 June 2002

RRRRRevenueevenueevenueevenueevenue

Other taxes, fees and finesOther taxes, fees and finesOther taxes, fees and finesOther taxes, fees and finesOther taxes, fees and finesFines and costs 6 7806 7806 7806 7806 780 42 807Authorisation fees 361361361361361 432Other 1111111111 6

Total 7 1527 1527 1527 1527 152 43 245

TTTTTotal revenues administered on behalf of governmentotal revenues administered on behalf of governmentotal revenues administered on behalf of governmentotal revenues administered on behalf of governmentotal revenues administered on behalf of government 7 1527 1527 1527 1527 152 43 245

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 18(b)—Expenses administered on behalf of governmentNote 18(b)—Expenses administered on behalf of governmentNote 18(b)—Expenses administered on behalf of governmentNote 18(b)—Expenses administered on behalf of governmentNote 18(b)—Expenses administered on behalf of governmentfor the year ended 30 June 2002

ExpensesExpensesExpensesExpensesExpenses

WWWWWrite Down of Assetsrite Down of Assetsrite Down of Assetsrite Down of Assetsrite Down of AssetsFines and costs—provision for doubtful debts ----- 101

Total ----- 101

TTTTTotal expenses administered on behalf of governmentotal expenses administered on behalf of governmentotal expenses administered on behalf of governmentotal expenses administered on behalf of governmentotal expenses administered on behalf of government ----- 101

Note 18(c)—Assets administered on behalf of governmentNote 18(c)—Assets administered on behalf of governmentNote 18(c)—Assets administered on behalf of governmentNote 18(c)—Assets administered on behalf of governmentNote 18(c)—Assets administered on behalf of governmentas at 30 June 2002


CashCashCashCashCashCash at bank 33333 -

Total 33333 -

RRRRReceivableseceivableseceivableseceivableseceivablesFees and fines 7 1387 1387 1387 1387 138 3 834

Less: Provision for doubtful debts (331)(331)(331)(331)(331) (362)

6 8076 8076 8076 8076 807 3 472

Receivables (gross) are aged as follows:Not Overdue 6 6586 6586 6586 6586 658 3 411

Overdue by:Less than 30 days 4747474747 630 to 60 days 66666 260 to 90 days 66666More than 90 days 421421421421421 415

Total receivables (gross) 7 1387 1387 1387 1387 138 3 834

TTTTTotal assets administered on behalf of governmentotal assets administered on behalf of governmentotal assets administered on behalf of governmentotal assets administered on behalf of governmentotal assets administered on behalf of government 6 8106 8106 8106 8106 810 3 472

Current 6 2006 2006 2006 2006 200 1 137Non current 610610610610610 2 335

6 8106 8106 8106 8106 810 3 472

Note 18(d)—Liabilities administered on behalf of governmentNote 18(d)—Liabilities administered on behalf of governmentNote 18(d)—Liabilities administered on behalf of governmentNote 18(d)—Liabilities administered on behalf of governmentNote 18(d)—Liabilities administered on behalf of governmentas at 30 June 2002

PPPPPayablesayablesayablesayablesayablesOther ----- 1

Total ----- 1

TTTTTotal liabilities administered on behalf of governmentotal liabilities administered on behalf of governmentotal liabilities administered on behalf of governmentotal liabilities administered on behalf of governmentotal liabilities administered on behalf of government ----- 1

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 18(e)—Administered Cash FlowsNote 18(e)—Administered Cash FlowsNote 18(e)—Administered Cash FlowsNote 18(e)—Administered Cash FlowsNote 18(e)—Administered Cash Flowsfor the year ended 30 June 2002

OPERAOPERAOPERAOPERAOPERATING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIESTING ACTIVITIES

Cash RCash RCash RCash RCash Receivedeceivedeceivedeceivedeceived

Fines and costs 3 4453 4453 4453 4453 445 43 981Authorisation fees 361361361361361 432Other 1111111111 6

Total cash received 3 8173 8173 8173 8173 817 44 419

Cash UsedCash UsedCash UsedCash UsedCash Used

Cash to Official Public Account 3 8143 8143 8143 8143 814 44 447

Total cash used 3 8143 8143 8143 8143 814 44 447

Net cash from (used by) operating activities 33333 (28)

Net increase (decrease) in cash held 33333 (28)Cash at the beginning of the reporting period ----- 28

Cash at the end of the reporting period 33333 -

Note 18(f)—Administered CommitmentsNote 18(f)—Administered CommitmentsNote 18(f)—Administered CommitmentsNote 18(f)—Administered CommitmentsNote 18(f)—Administered Commitmentsas at 30 June 2002

BBBBBY TYPEY TYPEY TYPEY TYPEY TYPECapital commitments - -----Other commitments - -----Commitments receivable - -----

Net commitments - -----

BBBBBY MAY MAY MAY MAY MATURITYTURITYTURITYTURITYTURITYAll net commitments ----- -

One year or less ----- -From one to five years ----- -Over five years ----- -

Net commitments ----- -

NB: All commitments are GST inclusive where relevant.

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20022002200220022002 20012001200120012001$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000

Note 18(g)—Administered ContingenciesNote 18(g)—Administered ContingenciesNote 18(g)—Administered ContingenciesNote 18(g)—Administered ContingenciesNote 18(g)—Administered Contingenciesas at 30 June 2002

BBBBBY TYPEY TYPEY TYPEY TYPEY TYPE

CONTINGENT LCONTINGENT LCONTINGENT LCONTINGENT LCONTINGENT LOSSESOSSESOSSESOSSESOSSESContingent losses ----- -

TTTTTotal contingent lossesotal contingent lossesotal contingent lossesotal contingent lossesotal contingent losses ----- -

CONTINGENT GAINSCONTINGENT GAINSCONTINGENT GAINSCONTINGENT GAINSCONTINGENT GAINSContingent gains1 17 02217 02217 02217 02217 022 45 848

Net contingenciesNet contingenciesNet contingenciesNet contingenciesNet contingencies 17 02217 02217 02217 02217 022 45 8481 The Commission is expecting to succeed in 11 alleged breaches of the Trade Practices Act, although the cases are

continuing. The estimate is based on legal advice and the precedents in such cases.

UNQUUNQUUNQUUNQUUNQUANTIFIABLE ADMINISTERED CONTINGENCIESANTIFIABLE ADMINISTERED CONTINGENCIESANTIFIABLE ADMINISTERED CONTINGENCIESANTIFIABLE ADMINISTERED CONTINGENCIESANTIFIABLE ADMINISTERED CONTINGENCIESAs at reporting date the Commission has 46 matters before the Federal Court alleging breaches of the Trade Practices Act.In the event of favourable judgment by the court, the Commission stands to gain by way of penalties or costs awarded. It isnot possible to determine the amounts in relation to these matters.

Note 18(h)—Administered FNote 18(h)—Administered FNote 18(h)—Administered FNote 18(h)—Administered FNote 18(h)—Administered Financial Instrumentsinancial Instrumentsinancial Instrumentsinancial Instrumentsinancial Instruments

(a) T(a) T(a) T(a) T(a) Terms, conditions and accounting policieserms, conditions and accounting policieserms, conditions and accounting policieserms, conditions and accounting policieserms, conditions and accounting policies

FFFFFinancial instrumentinancial instrumentinancial instrumentinancial instrumentinancial instrument NoteNoteNoteNoteNote Accounting policies andAccounting policies andAccounting policies andAccounting policies andAccounting policies and Nature of underlying instrumentNature of underlying instrumentNature of underlying instrumentNature of underlying instrumentNature of underlying instrumentmethods (including recognitionmethods (including recognitionmethods (including recognitionmethods (including recognitionmethods (including recognition (including significant terms and(including significant terms and(including significant terms and(including significant terms and(including significant terms andcriteria and measurementcriteria and measurementcriteria and measurementcriteria and measurementcriteria and measurement conditions affecting the amount,conditions affecting the amount,conditions affecting the amount,conditions affecting the amount,conditions affecting the amount,basis)basis)basis)basis)basis) timing and certiming and certiming and certiming and certiming and certainty of cash flowstainty of cash flowstainty of cash flowstainty of cash flowstainty of cash flows

Cash 18(c) Deposits are recognised at their Monies in the Commission’s Administerednominal amounts Receipts bank account are swept into the

Official Public Account.

Administered receivables 18(c) As for receivables for goods Fines and costs are payable as per judgmentfor fines, costs and and services. orders. Authorisation fees are payable onauthorisation fees receipt of application.


179

FFFFFinancialinancialinancialinancialinancial NoteNoteNoteNoteNote FloatingFloatingFloatingFloatingFloating FFFFFixed Interest Rixed Interest Rixed Interest Rixed Interest Rixed Interest Rateateateateate Non InterestNon InterestNon InterestNon InterestNon Interest TTTTTotalotalotalotalotal WWWWWeighted Aeighted Aeighted Aeighted Aeighted AverageverageverageverageverageInstrumentsInstrumentsInstrumentsInstrumentsInstruments Interest R Interest R Interest R Interest R Interest Rateateateateate Bearing Bearing Bearing Bearing Bearing Effective Interest Effective Interest Effective Interest Effective Interest Effective Interest

RRRRRateateateateate

1 year or less 1 to 5 years > 5 years

20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000


Cash 18(c) ––––– – ––––– – ––––– – ––––– – 33333 – 33333 – N/AN/AN/AN/AN/A N/A

Fines and costsreceivable 18(c) ––––– – ––––– – ––––– – ––––– – 6 8076 8076 8076 8076 807 3 472 6 8076 8076 8076 8076 807 3 472 N/AN/AN/AN/AN/A N/A

TTTTTotal financialotal financialotal financialotal financialotal financialassetsassetsassetsassetsassets ––––– – ––––– – ––––– – ––––– – 6 8106 8106 8106 8106 810 3 472 6 8106 8106 8106 8106 810 3 472 ––––– –


FFFFFinancialinancialinancialinancialinancialLiabilitiesLiabilitiesLiabilitiesLiabilitiesLiabilities

Other 18(d) ––––– – ––––– – ––––– – ––––– – ––––– 1 ––––– 1 ––––– N/A

TTTTTotal financialotal financialotal financialotal financialotal financialliabilitiesliabilitiesliabilitiesliabilitiesliabilities ––––– – ––––– – ––––– – ––––– – ––––– 1 ––––– 1 ––––– –

TTTTTotal liabilitiesotal liabilitiesotal liabilitiesotal liabilitiesotal liabilities ––––– 1

(b) Interest rate risk(b) Interest rate risk(b) Interest rate risk(b) Interest rate risk(b) Interest rate risk

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(c) Net fair values of financial assets and liabilities(c) Net fair values of financial assets and liabilities(c) Net fair values of financial assets and liabilities(c) Net fair values of financial assets and liabilities(c) Net fair values of financial assets and liabilities

NoteNoteNoteNoteNote 20022002200220022002 2001

TTTTTotal carrotal carrotal carrotal carrotal carryingyingyingyingying AggregateAggregateAggregateAggregateAggregate Total carrying Aggregateamountamountamountamountamount net fair valuenet fair valuenet fair valuenet fair valuenet fair value amount net fair value

$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000 $’000

Administered financial assetsAdministered financial assetsAdministered financial assetsAdministered financial assetsAdministered financial assets

Cash 18(c) 33333 33333 – –Fines and costs receivable 18(c) 6 8076 8076 8076 8076 807 6 8076 8076 8076 8076 807 3 472 3 472

Total financial assets 6 8106 8106 8106 8106 810 6 8106 8106 8106 8106 810 3 472 3 472

Administered financial liabilitiesAdministered financial liabilitiesAdministered financial liabilitiesAdministered financial liabilitiesAdministered financial liabilities

Other 18(d) ––––– ––––– 1 1

Total financial liabilities ––––– ––––– 1 1

20022002200220022002 20012001200120012001

Note 19 Appropriations19(a) Agency appropriations19(a) Agency appropriations19(a) Agency appropriations19(a) Agency appropriations19(a) Agency appropriations

Annual appropriations for deparAnnual appropriations for deparAnnual appropriations for deparAnnual appropriations for deparAnnual appropriations for departmental items (outputs)tmental items (outputs)tmental items (outputs)tmental items (outputs)tmental items (outputs)

Appropriation Acts No. 1 and 3 creditsSection 7 — Act 1 Budget appropriation 83 400 00083 400 00083 400 00083 400 00083 400 000 75 627 000Section 7 — Act 3 Additional estimates ––––– –Section 10 — Departmental items — adjustments ––––– –

Total Current appropriation Acts 83 400 00083 400 00083 400 00083 400 00083 400 000 75 627 000

Add: FMA Act appropriationsSection 30A appropriations (GST recoverables) 3 824 6553 824 6553 824 6553 824 6553 824 655 3 705 009Section 31 appropriations 1 711 7951 711 7951 711 7951 711 7951 711 795 1 009 468

TTTTTotal appropriated in the yearotal appropriated in the yearotal appropriated in the yearotal appropriated in the yearotal appropriated in the year 88 936 45088 936 45088 936 45088 936 45088 936 450 80 341 477

Balance brought forward from previous period 1 507 7101 507 7101 507 7101 507 7101 507 710 1 645 950

TTTTTotal appropriations available for paymentsotal appropriations available for paymentsotal appropriations available for paymentsotal appropriations available for paymentsotal appropriations available for payments 90 444 16090 444 16090 444 16090 444 16090 444 160 81 987 427

Payments during the year (74 065 979)(74 065 979)(74 065 979)(74 065 979)(74 065 979) (80 479 717)

Balance of appropriations (unspent) at 30 JuneBalance of appropriations (unspent) at 30 JuneBalance of appropriations (unspent) at 30 JuneBalance of appropriations (unspent) at 30 JuneBalance of appropriations (unspent) at 30 Junecarried to next periodcarried to next periodcarried to next periodcarried to next periodcarried to next period 16 378 18116 378 18116 378 18116 378 18116 378 181 1 507 710

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19(b) Annual appropriations for depar19(b) Annual appropriations for depar19(b) Annual appropriations for depar19(b) Annual appropriations for depar19(b) Annual appropriations for departmental capital itemstmental capital itemstmental capital itemstmental capital itemstmental capital items

Equity Injections Loans Carryovers

20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001

Appropriation Act No 2 & 4 ––––– – ––––– – ––––– –Appropriation Act No. 2 ––––– – ––––– – ––––– –Advance to the Finance Minister ––––– – ––––– – ––––– –FMA Act s. 30 appropriations ––––– – ––––– – ––––– –Appropriation Act No. 4 ––––– – ––––– – ––––– –

TTTTTotal appropriated in the yearotal appropriated in the yearotal appropriated in the yearotal appropriated in the yearotal appropriated in the year ––––– – ––––– – ––––– –

Balance available at 1 Julybrought forward from previous period

Less: expenditure debited during the year ––––– – ––––– – ––––– –

Balance of appropriations for capital atBalance of appropriations for capital atBalance of appropriations for capital atBalance of appropriations for capital atBalance of appropriations for capital at30 June 200230 June 200230 June 200230 June 200230 June 2002 ––––– – ––––– – ––––– –

20022002200220022002 20012001200120012001$$$$$ $$$$$

Note 20 Special Public MoniesOther TOther TOther TOther TOther Trust Monies (ACCC)rust Monies (ACCC)rust Monies (ACCC)rust Monies (ACCC)rust Monies (ACCC)

Legal authority—Financial Management and Accountability Act 1997; s. 20

Purpose—for the receipt of moneys temporarily held on trust or otherwisefor the benefit of a person other than the Commonwealth

Balance carried forward from previous period 4 384 7034 384 7034 384 7034 384 7034 384 703 4 506 087Receipts during the period 690 995690 995690 995690 995690 995 796 066

5 075 6985 075 6985 075 6985 075 6985 075 698 5 302 153

Payments made 4 823 1104 823 1104 823 1104 823 1104 823 110 917 450

Balance carried forward to next period 252 588252 588252 588252 588252 588 4 384 703

ACCC—serACCC—serACCC—serACCC—serACCC—services for other Governments and non-deparvices for other Governments and non-deparvices for other Governments and non-deparvices for other Governments and non-deparvices for other Governments and non-departmental bodiestmental bodiestmental bodiestmental bodiestmental bodies

Legal authority—Financial Management and Accountability Act 1997; s. 20

Purpose—for the expenditure in connection with services performed onbehalf of other Governments and bodies that are not FMA agencies

Balance carried forward from previous period ----- -----Add: Receipts from other sourcesAdd: Receipts from appropriations ----- -----

----- -----

Less: Payments made ----- -----

Balance carried forward to next period ----- -----

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BudgetBudgetBudgetBudgetBudget ActualActualActualActualActual BudgetBudgetBudgetBudgetBudget ActualActualActualActualActual$’000$’000$’000$’000$’000 $’000$’000$’000$’000$’000 $’000 $’000 $’000 $’000 $’000 $’000$’000$’000$’000$’000

Net taxation, fees and fines revenue (40 000) (6 780) (40 000) (6 780)Other administered revenues - (372) - (372)Administered expenses 200 - 200 -Net cost of departmental outputs 77 699 71 104 77 699 71 104Cost of outcome before extraordinary items 37 899 63 952 37 899 63 952Extraordinary items - - - -

Net cost to Budget outcomeNet cost to Budget outcomeNet cost to Budget outcomeNet cost to Budget outcomeNet cost to Budget outcome 37 89937 89937 89937 89937 899 63 95263 95263 95263 95263 952 37 89937 89937 89937 89937 899 63 95263 95263 95263 95263 952

Note 21 Reporting of Outcomes21(a) — T21(a) — T21(a) — T21(a) — T21(a) — Total cost/contribution of outcomes (Whole of Government)otal cost/contribution of outcomes (Whole of Government)otal cost/contribution of outcomes (Whole of Government)otal cost/contribution of outcomes (Whole of Government)otal cost/contribution of outcomes (Whole of Government)

Note 21(b) — Major deparNote 21(b) — Major deparNote 21(b) — Major deparNote 21(b) — Major deparNote 21(b) — Major departmental revenues and expenses by output grouptmental revenues and expenses by output grouptmental revenues and expenses by output grouptmental revenues and expenses by output grouptmental revenues and expenses by output group


20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

Operating revenuesOperating revenuesOperating revenuesOperating revenuesOperating revenuesRevenue from government 57 71657 71657 71657 71657 716 ----- 25 74425 74425 74425 74425 744 ----- ----- 75 68775 68775 68775 68775 687 83 46083 46083 46083 46083 460 75 68775 68775 68775 68775 687Sale of goods and services 198198198198198 ----- 192192192192192 ----- ----- 1 0451 0451 0451 0451 045 390390390390390 1 0451 0451 0451 0451 045Other non-taxation revenues 481481481481481 ----- 249249249249249 ----- ----- 237237237237237 730730730730730 237237237237237

TTTTTotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenues 58 39558 39558 39558 39558 395 ----- 26 18526 18526 18526 18526 185 ----- ----- 76 96976 96976 96976 96976 969 84 58084 58084 58084 58084 580 76 96976 96976 96976 96976 969

Operating expensesOperating expensesOperating expensesOperating expensesOperating expensesEmployees 21 00921 00921 00921 00921 009 ----- 12 85012 85012 85012 85012 850 ----- ----- 29 70629 70629 70629 70629 706 33 85933 85933 85933 85933 859 29 70629 70629 70629 70629 706Suppliers 27 71827 71827 71827 71827 718 ----- 8 2738 2738 2738 2738 273 ----- ----- 37 34637 34637 34637 34637 346 35 99135 99135 99135 99135 991 37 34637 34637 34637 34637 346Depreciation & amortisation 1 5041 5041 5041 5041 504 ----- 507507507507507 ----- ----- 1 7231 7231 7231 7231 723 2 0112 0112 0112 0112 011 1 7231 7231 7231 7231 723Other 285285285285285 ----- 140140140140140 ----- ----- 401401401401401 425425425425425 401401401401401

Total operating expenses 50 516 - 21 770 - - 69 176 72 286 69 176

21(c) — Major classes of depar21(c) — Major classes of depar21(c) — Major classes of depar21(c) — Major classes of depar21(c) — Major classes of departmental assets and liabilities by output grouptmental assets and liabilities by output grouptmental assets and liabilities by output grouptmental assets and liabilities by output grouptmental assets and liabilities by output group


20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

DeparDeparDeparDeparDepartmental assetstmental assetstmental assetstmental assetstmental assets

Cash at bank and on hand ----- - ----- ----- 16 37816 37816 37816 37816 378 1 400 16 37816 37816 37816 37816 378 1400Goods and services receivable ----- - ----- ----- 185185185185185 461 185185185185185 461Net GST receivable ----- - ----- ----- 835835835835835 666 835835835835835 666Less: provision for doubtful debts ----- - ----- ----- (31)(31)(31)(31)(31) (34) (31)(31)(31)(31)(31) (34)Land & buildings ----- - ----- ----- 2 4622 4622 4622 4622 462 1 911 2 4622 4622 4622 4622 462 1 911Plant & equipment ----- - ----- ----- 1 7431 7431 7431 7431 743 2 131 1 7431 7431 7431 7431 743 2 131Intangibles ----- - ----- ----- 787787787787787 840 787787787787787 840Inventories held for sale ----- - ----- ----- 103103103103103 94 103103103103103 94Other ----- - ----- ----- 1 3351 3351 3351 3351 335 2 239 13351335133513351335 2 239

TTTTTotal deparotal deparotal deparotal deparotal departmental assetstmental assetstmental assetstmental assetstmental assets ----- - ----- ----- 23 79723 79723 79723 79723 797 9 708 23 79723 79723 79723 79723 797 9708

DeparDeparDeparDeparDepartmental liabilitiestmental liabilitiestmental liabilitiestmental liabilitiestmental liabilitiesEmployees ----- ----- ----- ----- 9 7039 7039 7039 7039 703 8 609 9 7039 7039 7039 7039 703 8 609Leases ----- ----- ----- ----- 995995995995995 1 471 995995995995995 1 471Suppliers ----- ----- ----- ----- 6 5106 5106 5106 5106 510 5 660 6 5106 5106 5106 5106 510 5 660Loans ----- ----- ----- ----- ----- 3 019 ----- 3 019Other ----- ----- ----- ----- 593593593593593 550 593593593593593 550

TTTTTotal deparotal deparotal deparotal deparotal departmental liabilitiestmental liabilitiestmental liabilitiestmental liabilitiestmental liabilities ----- ----- ----- ----- 17 80117 80117 80117 80117 801 19 309 17 80117 80117 80117 80117 801 19 309

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20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Operating revenuesOperating revenuesOperating revenuesOperating revenuesOperating revenuesFines and costs 6 7806 7806 7806 7806 780 42 807 6 7806 7806 7806 7806 780 42 807Authorisation fees 361361361361361 432 361361361361361 432Other 1111111111 6 1111111111 6

TTTTTotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenuesotal operating revenues 7 1527 1527 1527 1527 152 43 245 7 1527 1527 1527 1527 152 43 245

Operating expensesOperating expensesOperating expensesOperating expensesOperating expensesNet write-down of assets ----- 101 ----- 101

TTTTTotal operating expensesotal operating expensesotal operating expensesotal operating expensesotal operating expenses ----- 101 ----- 101

21(d) — Major classes of administered revenues and expenses by outcome21(d) — Major classes of administered revenues and expenses by outcome21(d) — Major classes of administered revenues and expenses by outcome21(d) — Major classes of administered revenues and expenses by outcome21(d) — Major classes of administered revenues and expenses by outcome

21(e) — Major classes of administered assets and liabilities by outcome21(e) — Major classes of administered assets and liabilities by outcome21(e) — Major classes of administered assets and liabilities by outcome21(e) — Major classes of administered assets and liabilities by outcome21(e) — Major classes of administered assets and liabilities by outcome

Output Group 1Output Group 1Output Group 1Output Group 1Output Group 1 Non-attributableNon-attributableNon-attributableNon-attributableNon-attributable TTTTTotalotalotalotalotal

20022002200220022002 2001 20022002200220022002 2001 20022002200220022002 2001$’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000 $’000$’000$’000$’000$’000 $’000

Outcome specific administered assetsOutcome specific administered assetsOutcome specific administered assetsOutcome specific administered assetsOutcome specific administered assetsFees and fines receivable 7 1387 1387 1387 1387 138 3 834 ----- ----- 7 1387 1387 1387 1387 138 3 834Less: provision for doubtful debts (331)(331)(331)(331)(331) (362) ----- ----- (331)(331)(331)(331)(331) (362)Cash 33333 - ----- ----- 33333 -

TTTTTotal outcome specific administered assetsotal outcome specific administered assetsotal outcome specific administered assetsotal outcome specific administered assetsotal outcome specific administered assets 6 8106 8106 8106 8106 810 3 472 ----- ----- 6 8106 8106 8106 8106 810 3 472

Outcome specific administered liabilitiesOutcome specific administered liabilitiesOutcome specific administered liabilitiesOutcome specific administered liabilitiesOutcome specific administered liabilitiesOther ----- 1 ----- ----- ----- 1

TTTTTotal outcome specific administered liabilitiesotal outcome specific administered liabilitiesotal outcome specific administered liabilitiesotal outcome specific administered liabilitiesotal outcome specific administered liabilities ----- 1 ----- ----- ----- 1

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Appendix 1

Amendments to the Trade Practices Act in 2001–02

Regulations introduced under the Act in2001–02

Trade Practices Amendment Regulations 2002(No. 1)

Trade Practices Amendment Regulations 2001(No. 5)

Amendments to the Prices Surveillance Actin 2001–02Statute Law Revision Act 2002 (No. 63 of 2002)(commenced immediately after Schedule 3 tothe Competition Policy Reform Act 1995commenced)

ActsDuring the 2001–02 financial year, the TradePractices Act 1974 (No. 51 of 1974) wasamended by:

Statute Law Revision Act 2002 (No. 63 of 2002)(commences at various times)

Corporations (Repeals, Consequentials andTransitionals) Act 2001 (Act No. 55 of 2001)(commenced 15 July 2001)

Trade Practices Amendment Act (No. 1) 2001(No. 63 of 2001) (commenced 26 July 2001)

Treasury Legislation Amendment (Application ofthe Criminal Code) Act (No. 3) 2001 (Act No117 of 2001) (commenced 15 December 2001)

Treasury Legislation Amendment (Application ofthe Criminal Code) Act (No. 2) 2001 (Act No.146 of 2001) (commenced 15 December 2001)

Financial Services Reform (ConsequentialProvisions) Act 2001 (Act No. 123 of 2001)(commenced 11 March 2002)

Trade Practices Amendment(Telecommunications) Act 2001 (Act No. 124 of2001) (commenced 27 September 2001)

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Appendix 2

Number of inquiries and complaints received during 2001–02

Total

Pursued1

Consumer protection 1,615Restrictive trade practices 1,374

Unconscionable conduct/Industry codes 311GST 297

Prices2 31Other3 269

Sub total 3,897

Not pursuedInquiries4 9,602

Complaints5 43,621

Sub total 53,223

Totals 57,120

1 Pursued complaints include all matters where additional information was sought to establish whether a possible contravention was involved andwhether Commission action was appropriate. Of these, some were concluded after initial inquiries and others were investigated in depth.

2 Prices Surveillance Act matters.

3 Other includes access regime and general Trade Practices Act inquiries.

4 This figure includes substantial inquiries. It does not include general administrative inquiries and matters falling outside the scope of the Act.

5 Complaints not pursued include matters where detailed advice was given to the inquirers about rights, obligations and remedies and also includematters more appropriate for private action.

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NSW VIC QLD WA SA ACT TAS NT OS Total

Part IV 1,333 954 959 467 294 137 92 81 7 4,324

Part V 11,263 9,718 7,664 3,858 2,430 1,693 789 392 261 38,068

Part VB 1,311 771 684 366 280 113 80 36 10 3,651

Part IVA/B 381 275 364 154 110 30 41 29 5 1,389

Prices 117 86 154 44 29 17 15 15 2 479

Other 2,836 2,202 1,984 877 498 338 156 239 78 9,208

Total 17,241 14,007 11,809 5,766 3,641 2,328 1,173 792 363 57,120

Number of inquiries and complaints across all states, territories and overseas

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Appendix 3

Information statistics for 2001–02

The following table summarises the information powers exercised during the year.

Notice Part IV Other Total

s. 155(1)(a) 106 49 155

s. 155(1)(b) 135 53 188

s. 155(1)(c) 78 17 95

s. 155(2) 6 1 7

Note:

1. Other includes Part V, VA and IIB matters.

2. Each notice issued which includes alleged contraventions of several provisions of the Act is counted once.

3. Does not include variations as a separate notice.

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Statement required under s. 8 of the Freedom of InformationAct 1982

Organisation and functions of theCommissionThe structure of the Commission is set out onp. 17 and an organisation chart is on p. 9. Thefunctions of the Commission under the variousenactments for which it is responsible are set outon p. 10–11. More detailed descriptions of theexercise of the Commission’s powers areexplained in Chapters 2–6, by reference to thedifferent activities of the Commission.

Arrangements for outside participationThe Commission’s functions bring it intofrequent contact with private individuals,companies, industry and consumer groups andother state, territory and CommonwealthGovernment agencies. This contact allowsinterested bodies outside the Commission toexpress their opinions and to have them takeninto account by the Commission when itestablishes its policies and priorities.

The Trade Practices Act sets out formalprocedures for the submission of views andinformation to the Commission on adjudicationmatters and division 1A conferences. Less formalarrangements have been established by theCommission through contact with industry

associations and consumer groups. TheCommission convenes a general consultativeconsumer committee four times per year to actas a forum to exchange views and information ontrade practices issues. It has expanded its liaisonby establishing a Small Business Advisory Groupthat comprises representatives from a wide rangeof business and professional areas. It meets everysix months. The Commission has also establishedthe Utility Regulators Forum which meets threetimes a year to discuss specific issues in regulatedindustries. The Commission also establishes adhoc consultative committees from time to time.

Under s. 31(1) of the Prices Surveillance Act theCommission is required to conduct its pricinginquiries in public unless the minister directsotherwise.

Public registers

The Trade Practices Act and the PricesSurveillance Act require the Commission tomaintain a number of public registers.

Trade practices registers

The Commission maintains a public registercontaining the details of authorisation

Appendix 4

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applications, related submissions, theCommission’s decision, reasons for its decisionand any conferences held on bans or mandatoryrecall of defective goods.

With respect to its functions under Part IIIA theCommission is required to maintain publicregisters of:

! each decision by a Commonwealth ministerthat a regime established by a state orterritory for access to a service is an effectiveaccess regime for the service and eachdeclaration of a service, including a declarationthat is no longer in force (s. 44Q)

! certain details of registered contracts foraccess to declared services including the datethe contract was made, the parties and thenature of the service (s. 44ZW)

! all access undertakings accepted by theCommission, including those no longer inforce and all variations to access undertakings(s. 44ZZC)

! the details of each determination, the namesof the parties, the service to which thedetermination relates and the date thedetermination was made (s. 44ZZL).

In addition, although it is not obliged to bystatute, the Commission maintains publicregisters on mergers and s. 87B undertakings.The purpose of the mergers register is to makeavailable to the public brief details of mergersand acquisitions considered by the Commission.The details include the names of the target/acquirer/possible acquirer, product description,outline of the matter and the Commission’sdecision, including the reasons for that decision.

The undertakings register contains copies ofs. 87B undertakings. Under s. 87B enforceableundertakings may be given to the Commission inconnection with a matter in relation to which theCommission has a power or function other thanunder Part X. Such undertakings provide for theCommission to negotiate administrativesettlements.

Prices surveillance register

Although it is not obliged to do so by the statute,the Commission maintains a public register onprices surveillance matters showing price

notifications, the Commission’s deliberations,the outcome and the reasons for the outcome.

Guidance

The Commission consults with outside groups inthe development of its guidance publications.The minister can request the Commission toexamine and report on any aspect of laws relatingto the protection of consumers, and it mustpublicly invite submissions from interestedparties. It may not submit its report untilinterested people have had a reasonableopportunity to express their views.

Categories of documentsThe Commission maintains the followingcategories of documents:

! particulars of agreements furnished to theCommissioner of Trade Practices underprevious Acts

! court, adjudication and legal material

! library material

! organisation matters

! publications, speeches and media releases

! personnel records

! working documents including staffinvestigations, reports, analyses,recommendations, correspondence andcomplaints

! public registers and confidential materialexcluded from public registers; andCommission papers

! relating to parliamentary committees andquestions

! relating to meetings of the Commission withgovernment and non-government bodies

! relating to new and amending legislation

! general correspondence with members of thepublic.

Facilities for access

Commission publications may be inspected atany of the Commission’s offices at the addressesshown at the end of this report. Mostpublications are available from any of the

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Commission’s offices. Some are available on theCommission’s Internet websites <http://www.accc.gov.au> and <http://gst.accc.gov.au>.

Documents on the public register may beexamined and photocopies bought at any of theCommission’s offices during business hours.Prior notice is advisable as not all documents areheld in each office.

Information about facilities available to helppeople with a disability gain access to documentsmay also be obtained from Commission offices.If necessary, special arrangements can be made toovercome any difficulties with physical access.

Freedom of Information procedures andcontact officers

The Freedom of Information (FOI) contactofficer in each state is the Regional Director, andin national office, Canberra, the FOI Officer,Legal Group.

The FOI contact officer will help applicants toidentify the particular documents they seek.Access to documents may not always be availablebecause of disclosure restrictions imposed by theTrade Practices Act 1974 and the Privacy Act1988 as well as exemptions set out under theFOI Act; for example, confidentiality of somepublic register material kept under ss. 89(3) and95(2) of the Trade Practices Act, disclosure incertain adjudication or compliance work(s. 157(1) of the TPA) and the secrecy ofdocuments provided to the Commissioner ofTrade Practices before the commencement of thecurrent Act.

If a request is refused on the grounds set out ins. 15(2) or s. 24(1) of the Freedom of InformationAct 1982 (insufficient information orunreasonable diversion of resources), applicantswill be notified and given the opportunity forconsultation. The officer authorised to denyaccess to documents is the Chairperson of theCommission, who has delegated that power tocertain specified officers, including the GeneralManager, Corporate Management, the GeneralManager, Legal Group, the Assistant GeneralCounsel (Policy and Advisings) and one othersenior lawyer.

Requests for access under the Freedom ofInformation Act should be submitted in writingto any of the Commission’s offices. All requestswill be dealt with in national office, Canberra.Access will be provided through the office thatreceived the request and in the mannerrequested by the applicant (unless this is notpracticable). If an applicant lives some distancefrom the place where access is normallyprovided, alternative arrangements will beconsidered.

Inquiries about access to documents or othermatters on freedom of information should bedirected to the contact officers between 9.00 amand 4.30 pm.

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Commissioners’ biographies

Chairperson

Professor Allan Fels, AO

Professor Allan Fels has been Chairman of the Australian Competitionand Consumer Commission since November 1995. Professor Fels wasChairman of the former Trade Practices Commission from July 1991until November 1995. He was also Chairman of the PricesSurveillance Authority from March 1989 until October 1992.Professor Fels was formerly the Director of the Graduate School ofManagement, Monash University, from 1985 until 1990 and is now anHonorary Professor in the Faculty of Business and Economics atMonash University.

Professor Fels is the co-Chairman of the Joint Group on Trade andCompetition at the OECD. He was awarded the Order of Australia inJune 2001.

Professor Fels’ appointment is until 30 June 2004.

Appendix 5

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Commissioners

Mr Sitesh Bhojani

Mr Sitesh Bhojani has been a full-time member of the Commissionsince November 1995. Before then he was a barrister with a generalcommercial and civil litigation practice at the independent bar inWestern Australia. In 1994 he was appointed an AssociateCommissioner of the Trade Practices Commission. He was DeputyChairman of the Law Council of Australia, Business Law Section’sTrade Practices Committee.

From 1986 to 1992 he was a barrister and solicitor with theCommonwealth Attorney-General’s Department Perth office, and alsothe Trade Practices Unit of the Australian Government Solicitor/Federal Court and Tribunals Registry.

In June 1991 and subsequently in June 1994 Mr Bhojani completedthe Negotiation workshop and the Advanced Negotiation workshoprespectively at the program of Instruction for Lawyers at Harvard LawSchool, Harvard University.

He holds a Bachelor of Science (Monash) and Bachelor of Laws(Monash). In 1986 he was admitted as a barrister and solicitor inVictoria and Western Australia. He has also tutored in trade practiceslaw at the University of Western Australia.

Mr Bhojani’s Commission responsibilities include its enforcementactivities (as Chairman of the ACCC’s Enforcement Committee), theprofessions and health sector. He regularly represents the Commissionin negotiations and mediation of Commission litigation.

Mr Bhojani’s appointment is until 10 November 2003.

Mr Ross Jones

Mr Ross Jones was appointed as a Commissioner in June 1999 withresponsibilities for mergers and acquisitions. Mr Jones is alsoCommissioner responsible for matters related to specific sectorsincluding aviation, petroleum and media and broadcasting. He isChairman of the International Air Services Commission and anAssociate Member of the Australian Broadcasting Commission.

Mr Jones is an economist and before his appointment was seniorlecturer in Economics at the University of Technology, Sydney. He haslectured in industrial organisation and micro-economic policy atuniversities in Australia and overseas.

Mr Jones has worked as an economic consultant to the private andpublic sector. He has undertaken extensive consultancy work for theACCC, the Trade Practices Commission and the Prices SurveillanceAuthority.

Mr Jones has been appointed to the Commission until 14 June 2004.

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Mr John Martin

John Martin was Executive Director of the Australian Chamber ofCommerce and Industry from 1989 until his appointment to theCommission in June 1999. In his position at ACCI he was responsiblefor representation of business interests nationally and development ofbusiness policies and programs, particularly as they affect small andmedium enterprises. Mr Martin was a member of the Board ofStandards Australia for over 5 years and was an Australian industryrepresentative on the Business Industry Associations Committee tothe OECD.

Earlier in his career, Mr Martin was a policy adviser and programmanager with the Commonwealth Treasury and the Department ofIndustry and a regional industrial consultant with the United Nationsin Bangkok.

Mr Martin has responsibility for the Commission’s small business andrural and regional program and he is Chairman of the Commission’sTransport Committee.

Mr Martin holds an economics degree from the Australian NationalUniversity.

Mr Martin’s appointment is until 6 June 2004.

Ms Jennifer McNeill

Jennifer McNeill began her five-year term as Commissioner on 22 July2002.

Before joining the Commission, she was a partner in a major nationallaw firm, practising predominantly in litigation and disputemanagement. While with that firm she gained broad experience incontentious matters covering areas of the law such as Parts V and VAof the Trade Practices Act, insurance, professional negligence andcontractual disputes. She was a NSW Law Society accreditedspecialist in commercial litigation, a LEADR accredited mediator andtutored in her field of expertise at the Australian National University.

Ms McNeill now plays an active role in the Commission’senforcement, consumer protection and adjudication activities.

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Mr Rodney Shogren

Mr Rodney Shogren was appointed as a Commissioner in May 1997.Before that he was head of the Fiscal Policy Division in theCommonwealth Treasury for four years, responsible for the budget andinter-governmental financial relations.

In the early 1990s he headed the Structural Policy Division in Treasurywith responsibility for micro-economic reform, industry policy, tradeand the environment.

Before that Mr Shogren served in a number of agencies of theAustralian Public Service including the Department of PrimaryIndustries and Energy, the Industry Commission and the Departmentof Finance. In 1985 and 1986 he was a Sydney-based managementconsultant.

Mr Shogren graduated from the University of Queensland in 1971 as aBachelor of Science with first class honours in mathematics. In 1984he was awarded a Public Service Postgraduate Management Award andcompleted an MBA at Stanford University, California, as an ArjayMiller Scholar.

Mr Shogren’s appointment expired on 29 April 2002.

Dr David Cousins

Dr David Cousins was appointed Commissioner with specialresponsibility for GST in July 1999. Before his appointment he was adirector with KPMG Management Consulting where he headed anational competition policy practice and conducted major reviews oflegislation restricting competition.

Dr Cousins was a member of the Prices Surveillance Authority from1989 to 1992 and its Chairman from 1992 to 1995. He has also held arange of appointments in the Victorian public sector including senioreconomist with the State Electricity Commission and Director ofResearch with the Economic and Budget Review Committee of theVictorian Parliament. He has taught competition and regulationcourses at universities in Australia and overseas.

Dr Cousins graduated with honours and masters degrees in economicsfrom Monash University. His PhD was completed at the University ofManchester in the UK after undertaking a major study of business self-regulation for the Office of Fair Trading.

Dr Cousins’ appointment expired on 13 July 2002.

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Part-time Commissioners

Ms Teresa Handicott

Ms Teresa Handicott is a partner with Corrs Chambers Westgarth. Shewas appointed an Associate Commissioner of the Trade PracticesCommission in 1994 and Associate Commissioner of the ACCC inNovember 1995. She is a director of CS Energy Limited, a member ofthe Corporations and Securities Panel, and member of CompanyCommittee, Queensland Law Society and Law Council of Australia.

Ms Handicott was awarded a Bachelor of Laws (Hons) (QIT) in 1985and was admitted as a solicitor in Queensland in 1987. She practisesexclusively in areas of commercial and corporate law, particularlymergers and acquisitions, capital raisings and securities industry law.

Ms Handicott’s appointment expired on 3 June 2002.

Ms Yasmin King

Ms Yasmin King is a director of Flexible Resource, a consultancypractice which focuses on outsourcing, bid project management andindustry development advisory services particularly in informationtechnology. She was appointed as an Associate Commissioner in 1998.

Ms King was previously an economic adviser for the State Governmentof South Australia during the establishment and implementation ofNational Competition Policy. Before that she held a number of seniorpositions in the finance industry. She is a director of Le Cordon BleuAustralia and is on the Information Economy Advisory Council andMajor Projects Panel for the SA Government. She is also a director ofMainyak Productions, a children’s television production company.

Ms King has an honours degree in Economics, a masters degree inBusiness Administration and is a Fellow of the Australian Society ofCertified Practising Accountants.

Ms King’s appointment expired on 25 October 2001 and she wasreappointed on 4 December 2001 until 25 October 2004.

Mr Don Watt

Mr Don Watt is a lawyer and company director. He is currently adirector of Atkins Carlyle Ltd, Burswood Ltd and various non-listedcompanies. He is also Chairman of the Legal Practice Board ofWestern Australia.

Mr Watt was awarded a Bachelor of Laws (WA) in 1962 and wasadmitted as a barrister and solicitor in 1964. In 1974 he establishedand taught the first trade practices course at the University of WA.

From 1974 to 1987 he was a commercial partner at Mallesons StephenJacques, solicitors in Perth and London. In recent years his major area

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of legal practice has been advising the State of Western Australia inrelation to various commercial matters.

Mr Watt’s appointment expired on 3 June 2002.

Mr Warwick Wilkinson, AM

Mr Warwick Wilkinson is a retired pharmaceutical company director.He was Chairman (part-time) of the Ambulance Service Board ofNSW from 1990 to 1995. Since 1989 he has been a lay member of theDisciplinary Committee of the Australian Society of CertifiedPracticing Accountants. In 1996 he was appointed an honorary trusteeand member NSW Advisory Committee of the Committee forEconomic Development of Australia. From 1992 to 1993 he was amember of the Economic Planning and Advisory Council. He was amember of the National Small Business Forum from 1993 to 1995.

In 1952 he qualified at the Pharmacy School (University of Sydney)and was awarded a Master of Pharmacy (Honoris Causa) in 1991.From 1974 to 1993 he was senior executive and director, Merck Sharp& Dohme Pty Ltd. From 1991 to 1993 he was President of theAustralian Council of Professions and from 1975 to 1980 Chairman ofthe Pharmacy Board of NSW. In 1995 he was appointed Chairperson,Professional Standards Council NSW and in 1998 was appointedChairman, Professional Standards Council of Western Australia. FromJune 1999 to Feburary 2000 he was Chairman of NationalCompetition Policy Review of Pharmacy appointed by the Council ofAustralian Governments.

Mr Wilkinson served in the Royal Australian Army Medical Corp from1955 to 1990, part-time/full-time retired with the rank of Colonel.

Mr Wilkinson’s appointment expired on 3 June 2002.

Professor Douglas Williamson, QC

Professor Douglas Williamson RFD QC FAIM was the director of theCentre for Energy and Resources Law at the Law Faculty, theUniversity of Melbourne, until retirement in March 2001. Hecontinues as a professorial fellow in the Law Faculty. He was appointedAssociate Member of the Commission in June 1999 for three years.He is also Deputy Chairman of the National Electricity Tribunal, amember (part-time) of the National Native Title Tribunal, and amediator accredited to the Supreme Court of Victoria.

Professor Williamson graduated LLB (Hons) in 1955 from theUniversity of Melbourne, and practised as a barrister from 1957 to1996. He was appointed Queen’s Counsel in Victoria in 1975, andsubsequently in other states and territories. From the mid-1970s hepractised mainly in commercial law, with emphasis upon tradepractices law, resources law and corporate governance. He was a RoyalCommissioner in the Tricontinental Inquiry from 1990 to 1992.

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From 1970 to 1974 Professor Williamson took leave from the Bar, andas Corporate Manager for Special Projects with Comalco Limitedworked worldwide to help establish international joint ventureconsortia in the aluminium industry. For 13 years he was a non-executive director of Kobe Aluminium (Australia) Pty Ltd (a subsidiaryof Kobe Steel Ltd), which participates in the Gladstone aluminiumsmelter joint venture.

Other past positions include National President of the AustralianMining and Petroleum Law Association, Chairman of the VictorianBranch of the Commercial Law Association of Australia, NationalChairman of the Trade Practices Committee of the Law Council ofAustralia, National Chairman of the Resources Law Committee of theLCA, and honorary consultant to the Australian Law ReformCommission reference on competition policy issues.

Professor Williamson’s appointment expired on 3 June 2002.

Ex-officio members

Mr Paul Baxter

Mr Paul Baxter is Senior Commissioner, ACT IndependentCompetition and Regulatory Commission in a part-time capacity andpartner, PricewaterhouseCoopers, Economic Studies and StrategiesUnit.

Mr Baxter has had a lengthy career as a corporate and strategic policyadviser, and before joining PricewaterhouseCoopers held various seniorindustry policy roles in the federal public service and as a UNconsultant on development planning and economic statistics.

Mr Baxter is also a member of the two-person independent advisorypanel to the Murray–Darling Basin Ministerial Council on the cappingon the water usage in the Murray–Darling river system.

Mr Baxter’s appointment is until 30 June 2004.

Professor David Edward Flint, AM

Professor David Flint is the Chairman of the Australian BroadcastingAuthority. He is an Emeritus Professor, University of TechnologySydney and Visiting Professor, Faculty of Law, University of WesternSydney Macarthur; National President (Australia) of the World JuristsAssociation; Chairman of the Executive Council of World Associationof Press Council; and Consulting Editor of the Australian InternationalLaw Journal.

Past positions include Chairman, Australian Press Council; Dean ofLaw School University of Technology, Sydney; Convenor/Chairman,Committee Australian Law Deans; Director of Studies, InternationalLaw Association (Australian and New Zealand branch); and Editor,Australian International Law News. He holds the following

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qualifications: LLB, LLM (Sydney); BSc (Ecs) (London); DSU(Paris 2).

Professor Flint is a Member of the Order of Australia. In 1991 he wonthe World Jurists Association’s World Outstanding Legal Scholar Prize.

Professor Flint’s appointment is until 4 October 2004.

Mr Edward John Hall

Mr John Hall has substantial experience at chief executive level inboth the public and private sectors, particularly in the areas ofmanagement, finance and public policy development andimplementation.

From 1970 to 1990 Mr Hall held a variety of senior positions in theQueensland Treasury, including that of Under Treasurer (ChiefExecutive) from 1988 to 1990. Subsequent to this, and until hisappointment to the QCA, he was firstly Executive Director of majorQueensland law firm, Feez Ruthning, and upon its merger withnational law firm, Allen Allen and Hemsley, was Queensland PracticeDirector of the merged firm.

Mr Hall is a member of the Board of Consolidated Rutile Ltd and hasheld board positions with a variety of Queensland statutory bodies,including Suncorp Insurance and Finance, the Queensland IndustryDevelopment Corporation (Deputy Chairman), the QueenslandTourist and Travel Corporation, Queensland Events Corporation(Deputy Chairman), the North Queensland Enterprise Zone and theWorkers Compensation Board.

Mr Hall’s appointment is until 30 September 2002.

Mr Andrew Reeves

Mr Andrew Reeves is the Commissioner, Government PricesOversight Commission, Tasmania, and in that role has headed reviewson electricity prices, structure of the Tasmanian electricity supplyindustry, public transport, motor accident insurance and the waterindustry. He is also the Tasmanian Energy Regulator with theresponsibility for the economic regulation of the electricity and naturalgas industries in Tasmania. These responsibilities include determiningthe maximum price for each of the monopoly electricity businessactivities and administering the Electricity Supply Industry Act andthe Tasmanian Electricity Code, the application of the Natural GasCode in Tasmania, and the duties of the Director of Gas.

Mr Reeves holds a Bachelor of Engineering (Mining) Hons, Universityof Queensland, and postgraduate qualifications in businessadministration and resource economics.

Mr Reeves’ appointment expired on 31 December 2001.

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Mr Tony Shaw, PSM

Mr Tony Shaw is the Chairman of the Australian CommunicationsAuthority (ACA). Mr Shaw has extensive experience in public policyresearch, development, implementation and administration. Since1987 he has played a leading role in the formation of Australiantelecommunications and broadcasting policies and in theadministration of various communications Acts. This includes thepreparation of advice to government on post-1997 telecommunicationspolicy and regulation and management of implementation of thegovernment’s decisions.

He has been Chairman of the ACA since 1 July 1997.

Mr Shaw’s appointment expired on 30 June 2002.

Dr John Tamblyn

Dr John Tamblyn was appointed as Victoria’s Regulator-General on14 July 1997. In that capacity he is responsible for regulation of accessand service performance of the electricity, gas, water and transportutility industries.

In June 2001 the Victorian Government announced that Dr Tamblynhas been appointed as the inaugural Chairperson of the VictorianEssential Services Commission (ESC) which was created from1 January 2002. His appointment has been extended to 31 December2003 for that purpose. The ESC subsumed the Office of theRegulator-General and is responsible for economic regulation of thesame utility sectors but with a larger water sector regulation role fromJanuary 2003.

Before appointment as Regulator-General, Dr Tamblyn was adviser tothe Commission on micro-economic reform and public utility regulationmatters. He also worked as an adviser to the International MonetaryFund and as a policy adviser on industry policy and regulatory mattersin the Commonwealth Treasury and Department of Finance.

Dr Tamblyn’s appointment expired on 13 July 2002.

Dr Thomas Parry

Dr Thomas Parry is Executive Chairman of the Independent Pricingand Regulatory Tribunal of NSW. He has previously been Dean, Facultyof Economics, University of Wollongong and Principal EconomicAdviser, Economic Studies Group, Price Waterhouse. He is alsoChairman of First State Super Trustee Corporation.

Dr Parry’s appointment is to 6 June 2005.

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Mr Alan Tregilgas

Mr Alan Tregilgas was appointed for four years on 1 April 2000 as theNorthern Territory’s new independent industry regulator. The role ispart time. He is supported in Darwin by a four-person secretariat, andspecialist consultants are engaged as needed.

He remains a senior associate with Access Economics, the Canberra-based economic consultancy group.

As an economic consultant since 1996 Mr Tregilgas has worked withgovernment agencies in six Australian jurisdictions, including the NT.He assisted the NT Government during the 1998 strategic review ofthe Power and Water Authority.

Mr Tregilgas is a former senior Commonwealth, SA and NT Treasuryofficer. He spent four years in the early 1990s as a utilities analyst withthe Standard & Poor’s Ratings Group in Australia and the Asia/Pacificregion. For two years in the mid-1980s he represented Australia at theInternational Monetary Fund in Washington DC.

Mr Tregilgas holds a first class honours degree in economics from theUniversity of Adelaide, and a masters degree in economics from theFlinders University of SA.

Mr Tregilgas’ appointment is until 31 March 2004.

Mr Lew Owens

Last year Mr Lew Owens was appointed as the South AustralianIndependent Industry Regulator (SAIIR).

With qualifications in chemical engineering, urban studies andeconomics, Mr Owens worked in the mining and oil refining industriesbefore joining the SA Government in the 1970s. In the mid-1980s hewas involved in committees planning the state’s future energy suppliesand was director of the Energy Planning Secretariat from 1985–87.From 1987–90 he was responsible for supply planning and gascontracts for the SA Gas Company.

After a decade out of the sector, first as CEO of the SA WorkCoverscheme and then as CEO of the superannuation investment body,Funds SA, he returned as SAIIR on 1 January 2000 for a term of sixyears.

Mr Owens has been appointed from 29 June 2001 as an ex-officioCommissioner until 31 December 2005.

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Appendix 6AC

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mak

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Commission publications published in 2001–02

Regular publicationsACCC Journal: bi-monthly journal ($75 annualfee, second and following subscriptions to sameaddress $37.50, $25 student subscription—IDrequired). Six issues per year plus index. Journalback issues $10 each. The Journal is now alsoavailable on CD-ROM.

ACCC update: quarterly newsletter.

No. 11 General

No. 10 Small business

No. 9 Consumers and market reform

Other corporate publicationsThe ACCC and its use of penalties. June 2001

ACCC annual report 2000–01.(available from ACCC offices). ($15)

ACCC state annual reports ('working in' series)2000–01. (available from each state office)

Summary of the Trade Practices Act 1974.September 2002 ($10)

Keeping good company—an insight into the ACCC.(video) ($10)

These publications were published in the pastyear and are available free from Commissionoffices unless otherwise indicated. Most of thefree publications are available in both printedform and on the Commission's website.

A full list of Commission publications is availableon the website http://www.accc.gov.au or in theACCC Journal.

Publications can be purchased by sending acheque or money order made out to theAustralian Competition and ConsumerCommission with your order; or by telephoneorder using Mastercard, Visa or Bankcard; or overthe counter at Commission offices.

For sales of 10 or more copies there is a 25 percent discount.

The prices of the Commission's publications havenot increased but are GST-inclusive.

Appendix 7

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LegalACCC cooperation policy for enforcementmatters. Leaflet. July 2002

ACCC submission to the Trade Practices Actreview. June 2002

ACCC intervention in private proceedings. July2002

Business

Storecharter—a service charter for stores servingremote and Indigenous communities. February2002

Small business and the Trade Practices Act: apractical guide for small business. February 2002

Advertising and promotion

Advertising and selling. November 2001 ($10)

Advertising, selling and the Trade Practices Act—a small business overview. (leaflet)

Straight talking—advertising, selling and theTrade Practices Act. July 2002 (video) ($10)

Country of origin claims

Textile, clothing and footwear industries—country of origin guidelines to the TradePractices Act. December 2001 (guide)

Compliance

How to comply with the Trade Practices Act: aguide for small businesses. May 2002 (leaflet)

Primary producers and the Trade Practices Act.June 2002 (leaflet)

Retailers and the Trade Practices Act. June 2002(leaflet)

Service industries and the Trade Practices Act.June 2002 (leaflet)

GST

9th Report to the Minister under s. 75AZ of theTrade Practices Act 1974—for the periodOctober to December 2001.

7th and 8th Reports to the Minister under s. 75AZof the Trade Practices Act 1974—for the periodApril to June 2001 and July to September 2001.

Franchising

The franchisee’s guide to the Franchising Code ofConduct. (leaflet)

The franchisee's guide: A guide to the FranchisingCode of Conduct. November 2001

Unconscionable conduct

Brochures

Guaranteed a loan for someone? Lost your house?September 2001

Are you happy with your retail tenancy lease?September 2001

Bought a franchise without enough information?September 2001

Do you supply goods or services to major retailchains? September 2001

Business manuals

Franchising code of conduct compliance manual.Updated January 2002 ($50)

Best and fairest: compliance training package.Updated May 2002 ($100)

Consumers

ACCC consumer express—a free monthlynewsletter about recent ACCC activities.

Storecharter brochure—a service charter forstores serving remote and Indigenouscommunities. April 2002

IMSN brochure—protecting consumersworldwide. July 2002

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Debt collectionAre you being harassed about debts?November 2001 (leaflet)

Product safety

Product safety guide: Children's nightwear.September 2001 (photocopy and website only)

Industry

Health

Reports to the Australian Senate on anti-competitive and other practices by health fundsand providers in relation to private healthinsurance:

— for period ending 30 June 2001. August 2001($10)

— for period 1 July–31 December 2001. June2002 ($10)

Petroleum

Reducing fuel price variability. December 2001($20)

Retail

Retail flash (published jointly with the AustralianRetailers Association). November 2001, July 2002

Warranties and refunds. December 2001 (leaflet)

Shipping and waterfront

Container stevedoring monitoring report

No. 3 October 2001 ($10)

Tobacco

Response to Senate Motion 1031 (24 September2001)—Tobacco. April 2002 ($10)

Utilities

Utility Regulators Forum

National regulatory reporting for electricitydistribution and retailing businesses. March 2002(discussion paper)

Network (joint newsletter of the UtilitiesRegulators Forum) produced three times a year.

Gas

Draft greenfields guideline for natural gastransmission pipelines. June 2002

Post-tax revenue handbook. October 2001

Telecommunications

Telecommunications infrastructures inAustralia—a BIS Shrapnel report prepared forthe ACCC. July 2001 ($25)

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CONTACTS

ACCC infocentre(for all business and consumer inquiries)

infoline: 1300 302 502

Websites

ACCC (information, publications, media releases, speeches) http://www.accc.gov.au

Competing fairly forum http://forums.accc.gov.au

National office

Chief Executive OfficerBrian Cassidy (02) 6243 1124

Compliance DivisionDavid Smith (02) 6243 1234

Enforcement and Coordination BranchLee Hollis (02) 6243 1382

Compliance Strategies BranchRobert Antich (02) 6243 1297

Small Business, Rural and Regional UnitNigel Ridgway (02) 6243 1223

Regulatory Affairs DivisionJoe Dimasi (03) 9290 1814

Electricity GroupSebastian Roberts (03) 9290 1867

Gas GroupRussell Phillips (02) 6243 1259

Transport and Prices Oversight GroupMargaret Arblaster (03) 9290 1862

Telecommunications GroupMichael Cosgrave (03) 9290 1914

Adjudication BranchTim Grimwade (02) 6243 1226

Mergers and Asset Sales BranchMark Pearson (02) 6243 1276

Corporate Management BranchHelen Lu (02) 6243 1009

Legal GroupBruce Brown (02) 6243 1273Bob Alexander (General Counsel)(02) 6243 1283

Media liaisonLin Enright (02) 6243 1108

General publications queriesPublishing Unit, Canberra (02) 6243 1143Email: [email protected]

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OFF ICES

ACT (national office)

Chief Executive Officer, Brian Cassidy470 Northbourne AvenueDICKSON ACT 2602

PO Box 1199, DICKSON ACT 2602

Tel: (02) 6243 1111Fax: (02) 6243 1199

New South Wales

Regional Director, Rose WebbLevel 7123 Pitt StreetSYDNEY NSW 2000

GPO Box 3648, SYDNEY NSW 2001

Tel: (02) 9230 9133Fax: (02) 9223 1092

Tamworth

Manager, Steve Kilfoyle39 Kable AvenueTAMWORTH NSW 2340

PO Box 2071, TAMWORTH NSW 2340

Tel: (02) 6761 2000Fax: (02) 6761 2445

Victoria

Regional Director, Tom FahyLevel 35, The TowerMelbourne Central360 Elizabeth StreetMELBOURNE VIC 3000

GPO Box 520J, MELBOURNE VIC 3001

Tel: (03) 9290 1800Fax: (03) 9663 3699

South Australia

Regional Director, Bob Weymouth14th Floor, ANZ House13 Grenfell StreetADELAIDE SA 5000

GPO Box 922, ADELAIDE SA 5001

Tel: (08) 8213 3444Fax: (08) 8410 4155

Queensland

Regional Director, Alan DucretLevel 3, AAMI Building500 Queen StreetBRISBANE QLD 4000

PO Box 10048, Adelaide Street Post OfficeBRISBANE QLD 4000

Tel: (07) 3835 4666Fax: (07) 3832 0372

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North Queensland

Director, Tony HiltonLevel 6, Commonwealth Bank BuildingFlinders MallTOWNSVILLE QLD 4810

PO Box 2016, TOWNSVILLE QLD 4810

Tel: (07) 4729 2666Fax: (07) 4721 1538

Western Australia

Regional Director, Sam Di Scerni3rd floor, East Point Plaza233 Adelaide TerracePERTH WA 6000

PO Box 6381, EAST PERTH WA 6892

Tel: (08) 9325 3622Fax: (08) 9325 5976

Tasmania

Regional Director, Peter Clemes3rd floor, AMP Building86 Collins StHOBART TAS 7000

GPO Box 1210, HOBART TAS 7001

Tel: (03) 6215 9333Fax: (03) 6234 7796

Northern Territory

Regional Director, Derek FarrellLevel 8, National Mutual Centre9–11 Cavenagh StreetDARWIN NT 0800

GPO Box 3056, DARWIN NT 0801

Tel: (08) 8946 9666Fax: (08) 8946 9600

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INDEX

AA. Royle & Co (Aust) Pty Ltd, 48–9AAPT, 112, 118, 119ABB Power Transformers Pty Ltd, 30Aboriginal and Torres Strait (ATSI) people, 22, 142‘Abtronic’, 42ACCC Certified Agreement, 140ACCC consumer express, 20ACCC Infocentre, 20, 21, 65–7ACCC Journal, 147ACCC Legal Panel, 145ACCC update, 147access regimes

electricity, 99gas, 104–7rail, 126–7telecommunications, 113, 115–19

accidents and injuries, 141accommodation, 148accommodation industry, 21, 48accountability, 1–2accounting framework, telecommunicationsindustry, 112Acepark Pty Ltd, 59ACIF, 121–2acquisitions and mergers, 7, 68, 71–7, 136Action Supermarkets Ltd, 86Adams, Shane, 140addresses of Commission, 207–8Adelaide airport, 122, 123, 124, 125Adelaide–Moomba pipeline system, 104, 109

adjudication, 5, 78–87aviation, 123–6electricity, 94–103gas, 104–9harbour towage, 128–9post, 129–30rail, 126–7telecommunications, 113–19

AdPost service, 129ADR, 121ADSL competition notice, 113Adsteam Marine Ltd, 128–9ADT Security Pty Ltd, 27Advanced Medical Institute Pty Ltd, 43Advantra Pty Ltd, 145advertising, 39, 40–4, 45–52, 53, 57–60

by Commission, 20, 148Competing Fairly Forum, 63

Advisings and Policy Unit, 145aeronautics, see airline industry; airportsAES Environmental Pty Ltd, 74, 75agribusiness sector, 74, 80–1, 82–4

see also food industryAgsafe Ltd, 83–4agvet industry, 83–4Air New Zealand, 81airline industry, 34, 45, 64, 123, 125

authorisations, 82complaints, 66frequent flyer programs, 48, 64satisfaction with airport services, 124

Airline Industry Competition Guideline, 64

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airports, 89, 122–6, 138Airports Act 1996, 11, 123Airservices Australia, 124, 126Ajax Sheet Metal Pty Ltd, 33alarm systems, 27alcohol prices, 23Alex Salter Pty Ltd, 46Alice Springs airport, 122, 124, 125Allans Music Group Pty Ltd, 47Alstom, 30alternative dispute resolution, 121alternative health therapies, 42–3Alwyn Rehabilitation Hospital, 84Amadeus Basin to Darwin Pipeline System, 104–5amicus curiae, 2, 29, 36Ampco Automotive Pty Ltd, 52ANAO, 17ancillary electricity services, 94animal health, 30, 83–4annual reports/statements, see reportingarrangementsanodised aluminium plate, 42Ansell latex gloves, 41Ansett Airlines, 125Ansonguard Pty Ltd, 32ANZ Banking Group Ltd, 33API, 75Apollo Bicycle Co Pty Ltd, 55Apollo Optical (Australia) Pty Ltd, 54APN Newspapers Pty Ltd, 53arbitration, see adjudicationArchery Wizard Australia, 35Architectural & Structural Adhesives, 47Ardmona Foods Ltd, 74, 75Arnold’s Ribs and Pizzas, 58ARTC, 126–7Asia-Pacific Economic Cooperation (APEC), 68,134ASIC, 8, 85ASIC Act, 8, 40–1assessing the public benefit, 78–87

see also adjudicationATTM Card Scheme, 62.au Domain Administration, 37Auditor-General, 17audits, 17

Aurora Energy, 96Aussie Breaks Pty Ltd, 48Australia Post, 11, 129–30Australian and New Zealand Banking Group, 33Australian Bankers’ Association, 82Australian Capital Territory, 46, 48, 187

Canberra airport, 122, 123, 124, 125Australian Capital Territory Community &Health Services Complaints Commissioner, 37Australian Capital Territory IndependentCompetition and Regulatory Commission, 133Australian Communications Industry Forum, 121–2Australian Competition Tribunal, 79, 82–4, 104,118Australian Cooperative Foods Ltd, 32Australian Customs Service, 124Australian Dairy Farmers’ Federation, 82–3Australian Disc Brakes Pty Ltd, 52Australian Divisions of General Practice, 38Australian Early Childhood College, 59Australian Government Solicitor, 145Australian Indoor Tanning Association Pty Ltd, 43Australian Industries Group, 58Australian Institute of Mining and Metallurgists, 81‘Australian Made’, 51–2Australian Medical Association (WesternAustralia), 30–1Australian National Audit Office, 17‘Australian owned’, 47Australian Pensioners League of WesternAustralia, 84–5Australian Pharmaceutical Industries Ltd, 75Australian Pipeline Trust, 104, 106–7, 109Australian Postal Corporation, 11, 129–30Australian Postal Corporation Act 1989, 11Australian Rail Track Corporation, 126–7Australian Safeway Stores Pty Ltd, 32Australian Securities and Investments Commission,8, 85Australian Securities and InvestmentsCommission Act 2001, 8, 40–1Australian Stock Exchange, 82, 85–6Australian Workplace Agreements (AWAs), 140authorisations, 78, 79, 80–7

electricity, 94–9gas, 107–8

Autobarn Pty Ltd, 54

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automotive industry, see motor vehiclesAvanti Investments Pty Ltd, 56Aventis Animal Nutrition Pty Ltd, 30aviation, see airline industry; airportsAW Tyree Transformers Pty Ltd, 30Axxess Australia Pty Ltd, 56, 113–14

Bbaby walkers, 54Back to Basics Worldwide Education AidsSystems Pty Ltd, 60Bagnall, Ronald, 33Baker, Wayne, 60Baker Bros, 32Ballarat region, 33Ballera pipelines, 105, 106, 108Balson, Terry, 33bans on consumer products, 54banks and banking, 33, 58, 66, 82Barbaro, Dr Giuseppe, 56Barenhagen, John, 139BASF Aktiengesellschaft, 30BASF Australia Ltd, 30BASF East Asia Regional Headquarters Ltd, 30Basslink Pty Ltd, 95–6, 99Baxter, Paul, 198bean bags, 55beds, 54‘Beefing up the Economy’ advertisement, 50–1beer prices, 23belts, 48–9Benchmark Sales Pty Ltd, 56, 113–14Berbatis, GB, 56Berri Ltd, 51Berry, Jack Numan, 32betting software, 59beverages, 23, 50, 51, 52Bevins, John, 40Bhojani, Sitesh, 136, 193bicycle helmets, 54, 55bicycles, 54, 55Bikes Direct, 55Billbusters Pty Ltd, 50Bio Medical Research Ltd, 42Black on White Pty Ltd, 59boarding houses, 20

books, see publishing industryBoral Besser Masonry Ltd, 34Boral Ltd, 34Boral Masonry Ltd, 34Borthwick, Osmond, 140bottled wine prices, 23Boyatzis, Paul Constantine, 31Boyce, Raymond, 30boycotts, 31, 33Bradley, Brian, 32Bradshaw, Gregory John, 56bread and flour market, 32, 46, 74, 75Bridge Printing Office, 31Brisbane airport, 122, 123, 124, 125, 126Brisbane port, 129Brisbane–Wallumbilla pipeline, 105, 106–7broadband cable television network, 115–16, 119broadcasting, 11, 25, 53, 76, 115–16

by Commission, 63Broadcasting Services Act 1922, 11Bruckshaw, David, 59Bruckshaw, Kerry, 59Buangor, 35budget, see financebuilding industry, 21, 25, 26, 27, 46bunk beds, 54Burnett, Keith, 33business investment, leasing and finance, 35, 56,57, 59, 60–1

see also franchises and franchisingbusiness applications, Commission, 145–6Butler, Terence, 62Buttercup, 46Buyers Group Pty Ltd, 42–3

Ccable networks, 115–16, 119Caboolture Ice Works, 32cabs, 34Cadbury Schweppes Pty Ltd, 52cafés and restaurants, 21Calvary Private Hospital Wagga Wagga, 84Cameron, Ron, 140Canadian Competition Bureau, 139Canberra airport, 122, 123, 124, 125Canberra Hospital, 46

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Capital Finance Australia Ltd, 27caravan parks, 20Carpenteria Gas Pipeline Joint Venture, 106Carpet One Australasia Ltd, 49cars, see motor vehiclescartels, 30, 36, 65, 68Cash Services Australia Pty Ltd, 33Cassidy, Brian, 136CDMA, 116Central West Pipeline, 109Certification Trade Marks, 79Certified Agreement, 140Chairman, see Fels, Professor Allancharities, 24Chaste Corporation Pty Ltd, 42Cheesecake Shop, 56chemicals, 74, 76–7, 83–4chicken meat industry, 80–1Chickenfeed Bargain Stores, 35childcare services, 33children’s products, 53, 54‘chipping’, 36Chmielewski, Konrad, 139Chubb Security Australia Pty Ltd, 46cigarette lighters, disposable, 54cigarettes and tobacco products, 23cinemas, 33, 64Clingan, Paul, 33clothing industry, 50, 51Clyde Apac Division of Downer Group Ltd, 74, 75COAG, 89, 90Coast Metal Recyclers, 33Coates Ltd, 77codes of conduct, 64coercion and harassment, 31, 56, 57, 58, 59Coles Myer Ltd, 36Coles Supermarkets Australia Pty Ltd, 51Colgate-Palmolive, 35Collagen Aesthetics Australia Pty Ltd, 43collecting societies, 133–4collusive arrangements, 30–4, 36, 66COM.AU.REGISTER, 38Comcare premium, 141Commercial & General Publications Pty Ltd, 45–6commercial leasing market, 56, 57commercial property operators and developers,21, 56

commercial television networks, 25commissioners, 17, 63, 64, 136, 192–201committees, 136–7

parliamentary, 17, 39–40Commodore Homes (WA) Pty Ltd, 26Commonwealth Bank of Australia, 33, 58Commonwealth Criminal Code, 7Commonwealth Cross-Government TobaccoLiaison Committee, 40Commonwealth Disability Strategy, 141Commonwealth Food Regulators OfficialsGroup, 52communication strategies, 20–2, 63–4

see also publicationsCompaq Computer Corporation, 74compensation claims, 141Competing Fairly Forums, 63Competition and Consumer Law Conference, 36competitive tendering and contracting, 148

gas industry, 109complaints and inquiries, 65–7, 186–7

New Tax System, 20, 21, 66petrol prices, 66, 130telecommunications, 21, 66, 113

compliance, 29–70airport price caps, 124New Tax System, 20–3

Compliance Division, 136Compliance Strategies Branch, 139compressors, 32computers and computing, 36, 45, 59

Commission, 138, 145–6industry merger activity, 73, 74see also Internet

concrete masonry products, 34conferences, seminars and workshops, 36, 37, 38,53, 63

electricity rebidding rules, 98international, 65, 70, 134senior management, 137

conflict of interest, 137consent, informed, 39construction industry, 21, 25, 26, 27, 46consultancy services used, 121, 148Consumer Alert, 37Consumer Consultative Committee, 44Consumer express, 20

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consumer price index, 23consumer protection, 3–4, 7–8, 44, 68, 186contact numbers and officers, 206–8container stevedore monitoring, 128contraceptives, 41–2contracting, see purchasingconvenience stores, see supermarkets and grocerystoresCoolangatta airport, 122, 124, 125cooperation, 36

international, 67–8with other government agencies, 64–5

Copyright Act 1968, s. 116A, 36, 133copyright collecting societies, 133–4corporate governance and management, 135–48,202Corporate Governance Committee, 136Corporate Management Branch, 135Corrs Chambers Westgarth, 145Cosgrove, Michael, 134cosmetics, 54cots, 54Council of Australian Governments, 89, 90country of origin claims, 50–2courts, see litigation; undertakingsCousins, David, 17, 195CPI, 23Crackerjack Productions, 53creative advertising agencies, money paid to, 148criminal consumer protection regime, 7–8Crowded Planet, 41–2CSX World Terminals Pty Ltd, 128cultural diversity, 17, 22, 142Curtin, Ronald James, 59Custom Security Services Pty Ltd, 48customer transfer, unauthorised (slamming), 56,113–14CWO & XYZed P/L, 119cyclist helmets, 54, 55cycles, 54, 55

DDaewoo Australia Pty Ltd, 58Daewoo Heavy Industries and Machinery Ltd, 58dairy industry, 32, 82–3, 86Daniels Corporation International Pty Ltd, 36

Danoz Direct Pty Ltd, 42Darwin airport, 122, 123, 124, 125Darwin–Amadeus Basin pipeline, 104Dataline.net.au Pty Ltd, 57Davidson, Elizabeth, 70Dawson, Sir Daryl, 1Day, Martin, 31debt collection, 59DM Faulkner Pty Ltd, 33Deacons, 145deceptive, false or misleading conduct, 35, 42,45, 52, 59, 66

see also advertisingdecision-making structure, 136–7, 202declaration of services, 115–17, 122, 123, 128–9Delhi Petroleum, 108–9Dell Computers, 45dental profession, 39Department of Health and Aged Care, 38Department of Health and Ageing, 39, 40Department of Industry Science and Resources, 50Department of Prime Minister and Cabinet, 140Department of the Treasury, 37, 39, 64, 85‘Dial High Club’, 50Dictomax Pty Ltd, 54diesel fuel, 130, 131digital mobile (GSM), 116, 119, 120–1digital subscriber line (DSL) services, 113Dingo Blue, 119direct mail organisations, money paid to, 148disability, staff with, 142Disability Action Plan, 141disc brake pads, 52disposable cigarette lighters, 54dispute resolution, 37, 97, 121Dispute Resolution in E-Commerce, 37diversity, 17, 22, 141–2doctors, 30–1, 38–9, 64, 81general practitionersdocuments

Commission, 17, 190Commission’s powers to acquire, 36, 188see also publications

domain names, 37–8Domaine Homes (NSW) Pty Ltd, 25domestic appliance retailing, 21

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door-to-door sales agents, 56, 57.au Domain Administration, 37Downer Group Ltd, 74, 75Draft greenfields guidelines for natural gastransmission pipelines, 110Duke Energy International, 104, 105–6, 109Dunn, Peter, 33

Ee-commerce, 37–8, 57, 58, 68Easybuy.com.au Pty Ltd, 55East Australian Pipeline Limited, 104education and training, 53, 59, 60education and training, Commission programs,53, 63

international, 69staff training and development, 138, 139–40,146see also publications

elastic luggage straps, 54ElectraNet SA, 100electrical goods, 50, 57electricity, 34, 89, 90, 91–103, 132electricity transformers, 30electronic commerce, 37–8, 57, 58, 68electronic information, see InternetElectronic Investigation Support Unit, 37electronic muscle stimulation products, 42Ella Baché products, 87Elliott, Sandy, 30Emerald Ocean Distributors Pty Ltd, 42Employee Assistance Program, 141employment advertisements, 53employment services, 31energy, see electricity; gas; petroleum productsEnergy Committee, 136Energy Market Review, 90, 140enforcement, 2, 67

cooperation policies, 36price exploitation, 20–7see also compliance; litigation

Enforcement Committee, 136Entee Food & Beverage Distributors andWholesalers, 51Envestra Limited, 107Environment Australia, 53–4Epic Energy, 104, 106, 109

equipment hire market, 77equity and social justice, 17, 22, 141–2Ergoline (Australia) Pty Ltd, 43ergonomic inspections, 141Esanda Finance Corporation Ltd, 57ethanol, 54Eui Hwan Kang, 58European Commission, 67European Union, 53exclusive dealing, 34, 35, 78, 79exercise cycles, 54ex-officio members of Commission, 198–201external scrutiny, 17Eyelines Tasmania Pty Ltd, 43–4

FF. Hoffman-La Roche Ltd, 30Fair.com, 37false, misleading or deceptive conduct, 35, 42,45, 52, 59, 66

see also advertisingFarmland orange juice concentrate, 51Farrington Fayre Shopping Centre, 56fast food franchises, 58Faulkner, David, 33Federal Court, see litigationFels, Chairman Professor Allan, 53, 63, 136, 192

review by, 1–8female staff, 142–4‘Feminique’ muscle stimulation device, 42–3Ferndale Recyclers Pty Ltd, 33film exhibition and distribution, 33, 64Fiji Commerce Commission, 67finance, 7, 16, 136–8, 139, 148, 149–83

audit, 17financial accounts, of privatised airports, 124–5financial consent, informed, 39financial institution duty (FID), 21financial services industry, 8, 57

authorisations, 82, 85–6banks, 33, 58, 66, 82home loans, 47, 58, 62merger activities, 73, 76price exploitation, 21, 24–5

Financial Services Reform Act 2001, 8, 85financial statements, 17, 149–83

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fine print advertising, 40, 46Fire Fighting Enterprises, 46–7fire protection industry, 46–7Flint, Professor David Edward, 198–9Flipstock Pty Ltd, 26floor coverings, 49flotation toys, 54flu vaccinations, 141fluorescent tube starter units, 51–2FMIS, 146food industry, 32, 46, 50–1, 52

authorisations, 80–1, 82–3merger activities, 73, 74, 75

Food Standards Australia New Zealand, 52footwear industry, 50foreign exchange contracts and credit, 8Forrester, Sidney, 33Forrester Kurts Properties Ltd, 484WD Systems Australia Pty Ltd, 57–84WD Systems Pty Ltd, 57–8Foxtel, 76, 115–16, 119Franchise Council of Australia conference, 63franchises and franchising, 42, 56, 57–8, 60–1,63, 67Franchising Code of Conduct, 64Franchising Policy Council, 63Franke, Anthony, 33Franke, Hendricus, 33Franklins Ltd, 86Freedom Group Ltd, 55freedom of information, 18

statement required under s. 8, 189–91Freelaw Pty Ltd, 55Free2aiR, 58freight services, 61, 77, 123–4, 126–9Freightcorp, 77frequent flyer programs, 48, 64friend of the court, 36fruit juice/drinks, 51, 52, 64Fruit Juice Industry Code of Conduct, 51, 64fruit juicing machines, 60fuel, see electricity; gas; petroleum productsfull retail competition/contestability, 97, 110–11full-time commissioners, 192–5functions of Commission, 10funerals, pre-paid, 84–5Furnelect Pty Ltd, 47

furniture and furnishings industry, 47, 50Furniture Direct Pty Ltd, 47

Ggalvanizing services, 75–6Gannawarra Shire Council, 109gas, 11, 90, 103–11Gas Market Company, 111Gas Pipelines Access (Commonwealth) Act 1998, 11Gas Unit, 140GasNet Pty Ltd, 107, 109Geelong, 81–2GEMS, 146gene technology, 52General Counsel, 145General Practitioners—a guide to the TradePractices Act, 38George Weston Foods Ltd, 32, 74, 75GIA Pty Ltd, 51Giandomenico, Francesco, 35Giandomenico, Remo, 35Giandomenico Holdings Pty Ltd, 35gift deductible entities, 24GIO Australia, 76Giraffe World Australia, 62–3Gladstone–Wallumbilla via Rockhamptonpipeline, 105–6global cartels, 30, 68Global Forum on Competition, 68Glover, Helen Therese, 42Gold Coast, 33, 58Golden Sun Pty Ltd, 55golf, 46goods and services tax, see New Tax Systemgovernance and management, 135–48, 202GPU GasNet Pty Ltd, 107, 109graduate program (Commission), 139Grant, Robert, 25Greater Union Organisation Pty Ltd, 33Greenstar Cooperative Ltd, 62Greenwich, 58Grevis, Gary John, 32Grevis, Leo, 32Grocery Pricing Inquiry, 52grocery stores, see supermarket and grocerystores

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Group 5 Contract, 145GSM, 116, 119, 120–1GST, see New Tax SystemGST Bulletin, 20GST Committee, 136GST information network, 21GST Price Line 21GST website, 22Guardian Finance & Insurance Consultants PtyLtd, 62Guidelines for the negotiation of discounts ontransmission charges, 101–2Gulloti, Tony, 58

HHalf Price Shutters, 58Hall, Edward John, 199Hallas Franchising Co Pty Ltd, 87Hallas Trading Company Pty Ltd, 87Han, Robin, 62–3Handicott, Teresa, 17, 196harassment and coercion, 31, 56, 57, 58, 59harbour towage, 128–9Hartwich Pty Ltd, 60Hassett, Anthony Robert, 45–6Hatfield, David, 140HCF, 41headgear, protective, 54, 55head light covers, 54health and medical services, 30–1, 38–42, 64, 81–2

animal vitamin suppliers, 30authorisations, 84, 87mergers and acquisitions activity, 72, 73

health claims, 42–3health insurance, 8, 32, 39, 40–1Health Purchasing Victoria, 81helmets, 54, 55herbicides, 74, 76–7Hewitson, Thomas David, 57–8Hewlett Packard Company, 74Higgins, Allan, 33High Court, 31, 36, 60, 116HIH, 44Hobart airport, 122, 124, 125Hobert, Raleigh Julian, 57–8home loans, 47, 58, 62

Hong Kong Consumer Council, 69, 140Hornsby Day Surgery Centre, 84horse-race betting software, 59hospitals, 84, 87Hotelcheque Pty Ltd, 48house building industry, 21, 25, 26, 27, 46household cots, 54housing loans, 47, 58, 62Hoyts Corporation Ltd, 33HPM Industries Pty Ltd, 51–2HRMS Aurion, 146Hughes, David Zero Population Growth, 41–2Hunter Valley Private Hospital, 84Hutchison, Paul, 140Hwu, Jishyan, 139Hydro Tasmania, 95–6hylaform products, 43Hyundai Automotive Distributors, 54

Iice industry, 32ICN, 69, 73IMB Group Pty Ltd, 35imports, parallel, 34IMSN, 69Indigenous (ATSI) people, 22, 142Industrial Galvanizers Corporation Pty Ltd, 75–6industry codes of conduct, 64Infant & Nursery Products Association ofAustralia, 53Infocentre, 20, 21, 65–7Info4pc.com Pty Ltd, 45informed consent, 39information management, 146–7information powers, 36, 188information technology, see computers andcomputing; Internetinquiries, see complaints and inquiriesinquiries (official), submissions to, 37, 38–40,52, 89, 90, 121, 129

parliamentary, 17, 39–40insurance, 24–5, 44, 59, 66, 76

private health, 8, 32, 39, 40–1intellectual property, 36, 133–4Intellectual Property and Competition ReviewCommittee, 133–4

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interest, conflict of, 137Interfrank Holdings Pty Ltd, 86Internal Audit Committee, 136–7international activities, 64, 67–70

e-commerce, 37mergers, 73product safety, 53regulatory activities, 134staff development programs, 139–40

International Air Transport Association (IATA), 81International Competition Network (ICN), 69, 73International Internet Sweep Day, 37International Internship Program, 140International Maritime Correspondence CollegePty Ltd, 33International Marketing Supervision Network(IMSN), 69international visitors, 69Internet, 37–8, 57, 58, 68

Commission, 22, 146Internet Name Group, 37–8Internet Name Protection Pty Ltd, 37–8Internet service providers, 58, 113, 119Internet TV Australia Pty Ltd, 58internship program, 140interstate rail network, 126–7Intervention in private proceedings guidelines, 36inthebigcity.com, 53Intranet, 146investment, in airports, 125IPMG Pty Ltd, 75Ippaso, Filippo, 32Ipswich Ice Supplies, 32IQC Quarries, 35IT&T AG, 61Ithaca Ice Works Pty Ltd, 32ITP Income Tax Professionals, 43

Jjacks, 54, 55jelly cups, 54Jewellery and Timepieces Industry Code, 64John Bevins Pty Ltd, 40Johnstone Shire Council, 35Jones, Ross, 136, 193Joondalup Health Campus, 30–1

KKabushiki Kaisha Sony Computer Entertainment,36Kang, Eui Hwan, 58Keirle, Robert, 58Kendrick-Smith, Miles, 50Khoo, Paul, 32Khoury, Monty, 47King, Yasmin, 17, 136, 196Kingsford Smith (Sydney) airport, 122, 123–4,125, 126konjac, 54Kotowicz, Michael, 46Kritharas Nick, 60Kurts, Forrester, 48Kwik Fix International Pty Ltd, 59

Llabelling, 40, 54, 50–2labour hire services, 31Labrador Children’s Playschool, 33laminar flow products, 75language diversity, 17, 22, 142Launceston airport, 122, 124, 125Leahy Petroleum Pty Ltd, 33, 35leasing, commercial and retail, 56, 57leather belts, 48–9legal costs, Commission, 137legal education, Commission staff, 138Legal Group, 145Legal Panel, 145legal profession, 39legislation, 7–8, 10–12, 89

intellectual property, 36, 133–4Philippines, 70prices surveillance, 10, 89, 122, 128–9, 130,185see also Trade Practices Act 1974

Leniency Policy, 36Leyden, Mark, 32liaison, 7library, 147line sharing declaration inquiry, 115liner shipping, 128linguistic diversity, 17, 22, 142Liquorland (Australia) Pty Ltd, 36

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litigation, 29–38, 40–53, 54–63, 145authorisations, review of, 80–1cable network access, 115–16costs, 137price exploitation, 24–7telecommunications, 56, 113–14, 115–16

litigation reserve fund, 7Litigation Unit, 145local carriage service, 116–17, 119local number portability, 114–15, 119, 122Loddon Murray Gas Supply Group, 109Logan Lions Ltd, 35Longueville Private Hospital, 84luggage straps, 54Lux Pty Ltd, 57Lyster, Neal Arthur, 42

MMacDonald, Ian, 31McDonald’s Australia Ltd, 47McGovern, Stephen Vincent, 56McMatch & Win Monopoly competition, 47McNeill, Jennifer, 136, 194‘Made in Australia’, 51–2magazine publishing and distribution, 75mail services, 11, 129–30Malanda Dairyfoods Ltd, 32males, see menmanagement and governance, 135–48, 202management training and development, 138Mandura, WA, 26Manildra Starches Pty Ltd, 74, 75Man’s Toyshop, 26Maritime Union of Australia, 31market gardeners, 56market network service providers (MNSPs), 95, 99market power, misuse of, 31, 32, 34, 66market sharing, 30, 31, 32market surveys, 22–3, 54MARS, 146Marsh Pty Ltd, 24–5Martin, John, 63, 136, 194Marven Poultry Pty Ltd, 80–1Mater Misericordiae Hospital, 87Matheson, Roderick Ian, 32Mayne Group Ltd (Mayne Nickless Ltd), 30–1

Mayo Private Hospital, 84MBF, 40MCT, 119media activities, 2, 20, 22media advertising organisations, money paid to, 148Medibank Private, 40–1Medical Benefits Fund of Australia Ltd, 40medical informed financial consent, 39medical practitioners, 30–1, 38–9, 64, 81medical services, see health and medical servicesMee, Anthony John, 32Mee, Gregory Paul, 32Meerkin & Apel, 36Melbourne airport, 122, 123, 124, 125, 126memorandums of understanding, 52, 67men

impotence and erectile dysfunction, 43staff, 143–4

mergers, 7, 68, 71–7, 136Mergers and Asset Sales Branch, 140Mergers Committee, 136Merlin Bows, 35metal products sector, 33Metals Recovery Pty Ltd, 33Metropolis Real Estate Pty Ltd, 25Michigan Group, 60Mike Carney Motors Pty Ltd (Mike CarneyToyota), 25Mildura pipeline, 107milk, 32, 82–3, 86Millar, William Greig, 59mini jelly cups, 54misleading, false or deceptive conduct, 35, 42,45, 52, 59, 66

see also advertisingMissell, Craig, 37–8Misuma, Akihiko, 62–3misuse of market power, 31, 32, 34, 66Mitre 10 Australian Ltd, 47MNSPs, 95, 99mobile home parks, 20mobile telecommunications, 49–50

GSM, 116, 119, 120–1number portability, 122retail outlets, 114

Monsanto Australia Ltd, 74, 76–7

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Moomba to Adelaide Pipeline System, 104, 109Moomba to Sydney Pipeline System, 104, 109Moomba-Sydney Pipeline System Sale Act 1994, 11Moon, John, 60motor vehicles

car ramps, 54child restraints, 54disc brake pads, 52franchises, 57–9fuel, 53–4, 130–2hire industry code, 64jacks, 54, 55panel beaters and spray painters, 33prices, 21, 25, 27, 46tinted head light covers, 54

Mt Isa–Ballera pipeline, 105, 106, 108mountain bikes, 55MUA, 31Multigroup Distribution Services Pty Ltd, 61Murray, Sidney James, 60–1Murraylink Transmission Company Pty Ltd, 99muscle stimulation products, 42–3music sales, 76music records, importation of, 34musical instruments, 47

NNAPC, 58Narrandera Flour Mill, 74, 75National Competition Council (NCC), 104, 105,107, 133National Competition Policy reviews, 39, 40National Electricity Code, 91–9, 101National Electricity Code Administrator(NECA), 91–9, 103national electricity market, 90, 91–103National Electricity Market ManagementCompany (NEMMCO), 95, 96, 97, 98National Food Industry, 82National Office for the Information Economy, 37National Rail Corporation, 77National regulatory reporting for electricitydistribution and retailing businesses, 132National Rugby League, 33natural gas, see gasNatural Gas Pipelines Advisory Committee, 111

‘negative ion’ mats, 62–3Neitner, Michael, 33Network Ten, 53New South Wales, 11–12, 54, 187

‘Beefing up he Economy’ advertisements, 50–1electricity, 96, 97gas, 110, 111harbour towage, 129hospitals, 84, 87local council recycling facilities, 82professions, 39scrap metal auctions, 33Sydney Airport, 122, 123–4, 125, 126

New South Wales Dental Therapists Association,39New South Wales Health ComplaintsCommission, 37New South Wales Independent Pricing andRegulatory Tribunal, 132New South Wales Treasury, 99New Tax System, 7, 19–27, 48, 66, 130

funding for activities, 137GST Committee, 136staff, 138, 140

New Zealand Commerce Commission, 48–9,139, 140News Limited, 33newspaper publishing, 31Nick Kritharas Holdings Pty Ltd, 60non-English speaking backgrounds (NESB),people from, 22, 142Norman Waterhouse, 145North Coast Ice, 32Northern Accessories Pty Ltd, 54Northern Pacific Paper, 31Northern Territory, 12, 54, 187

airports, 122, 123, 124, 125‘Darwin Squeezed Orange Juice’, 51electricity, 34gas, 104–5, 108milk prices, 32

Northern Territory Power and Water Authority,105Northern Territory Utilities Commission, 133notifications, 78, 79, 87NT Gas Pty Ltd, 104–5NT Power Generation Pty Ltd, 34

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NOIE, 37NRMA Health Pty Ltd, 40NRMA Insurance Ltd, 40Nufarm Australia Ltd, 74, 76–7number portability, 114–15, 119, 122nurses, 39

Oobstetrics and obstetricians, 32, 40occupational health and safety, 141Oceana Commercial, 58office accommodation, 148Offtrack Investments Pty Ltd, 59One.Tel, 114, 119Options Clearing House Pty Ltd, 85–6Optus, 76, 112, 118, 119, 120oral contraceptives, 41–2orange juice, 51, 60Orbit Homes Australia Pty Ltd, 46organisation and structure, 9, 17, 145, 146

decision-making, 136–7, 202Organisation for Economic Cooperation andDevelopment (OECD), 68, 69origin claims, 50–2Origin Energy, 108–9outlook, 8, 73outputs, 13–15outside participation, arrangements for, 189Owens, Lew, 201Ozama, Moshe, 42

PP&O Port Ltd, 128Pacific Access Pty Ltd, 50Pacific Dunlop Limited, 41Palmer, Robin, 35Pan Australian Industries (WA), 33panel beaters, 33paper industry, 31paper patterns, 54parallel imports, 34Pardoo Panel and Paint, 33Parker Freight Express Pty Ltd, 61parliamentary committees, 17, 39–40Parry, Dr Thomas, 200part-time commissioners, 196–8

part-time staff, 144Patrick Stevedores Operations Pty Ltd, 128Pauls Ltd, 32, 86Pauls Victoria Ltd, 51pay television, 76, 115–16, 119Pearson, Mark, 136pedal bicycles, 54, 55penalties, 7, 30–1, 32, 34, 35, 42, 60people management, 138–41people Telecom, 119performance indicators, 14–16Perth airport, 122, 123, 124, 125, 126petroleum products, 66, 130–2

fuel standards, 53–4price fixing, 33resale price maintenance, 35see also gas

pharmaceutical wholesale market, 75pharmacies, 40Philippines, 70Phillips Fox, 121, 145Pick ’n Pay, 86Pilbara region, 33Pink Panther Paints and Panel Beaters, 33PINNACLE, 146pipelines, 103–11place of origin claims, 50–2PlayStation consoles, 36PMP Ltd, 75Poplar Private Hospital, 84port services, 31, 128–9Portland, 34post, 11, 129–30Post-tax Revenue Model handbook, 110Poteri, James, 59Poteri, Nicholas James, 59poultry growers, 80–1Power and Water Authority, 34Powerlink, 99–100powers of Commission, 36, 188practising.trade E-Commerce Conference, 37Premium Milk Supply Pty Ltd, 86press articles, 20Price, Robert James, 59price exploitation, 19–27

see also New Tax Systemprice fixing, 30–3

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price maintenance, 35, 42, 57prices and pricing, 22–3, 45–9, 66

aeronautical charges, 122–6complaints, 187electricity, 91–4, 95, 100petrol, 130–2post, 129–30telecommunications, 113, 120–1

Prices Surveillance Act 1983, 10, 89, 122, 128–9,130, 185prices surveillance register, 190Pricing Methodology for the GSM TerminationService, 120–1primary boycotts, 31Primus, 112, 114, 118, 119printed music, 76printing and publishing industries, 31, 45–6, 75PRISM, 146private proceedings, 36private health insurance, 8, 32, 39, 40–1privatised airports, 122–6procurement, see purchasing‘Product of Australia’, 50–2product safety, 53–5Productivity Commission, 89, 121, 122, 123, 129professions, 30–1, 32, 38–44, 81–2protective headgear, 54, 55prostheses, 39prudential arrangements, national electricitymarket, 96PSTN (public switched telephone network),113, 118, 119public benefit, assessment of, 78–87

see also adjudicationpublic liability, 44public registers, 146–7, 189–90Public Service Act staff, 143publications, 147, 203–5

e-commerce, 37electricity, 101–3gas, 110genetically modified foods, 52New Tax System, 20–1, 22petrol prices, 131post, 130product safety standards, 54professional conduct, 38

rail, 126small business, 63telecommunications, 112–13, 115, 120–1Utility Regulators Forum, 132see also conferences, seminars and workshops

publishing industry, 31, 45–6, 75purchasing, 145, 148

gas industry, 109inter-hospital arrangements, 84, 87

Purple Harmony Plates Pty Ltd, 42pyramid selling, 62–3

QQantas Airways Ltd, 34, 45, 48Quality Bakers Australia Ltd, 46quality of airport services, 124quarry products, 35Queensland, 12, 54, 187

airports, 122, 123, 124, 125, 126childcare services, 33cinemas, 33dairy industry, 86electricity, 95, 99–100fire protection industry, 46–7freight services, 61gas, 105–7, 108–9, 110harbour towage, 129ice industry, 32medical services, 32professions, 39

Queensland Competition Authority, 132Queensland Gas Pipeline, 105–6Queensland Health Department, 39Quix Food Stores, 24

RRae, James, 45rail, 126–7real estate and real estate agents, 21, 25, 48, 58,66, 86–7Real Estate Institute of Western Australia, 86–7rebidding rules, electricity market, 97–8recall of products, 54, 55recorded music, importation of, 34records management, 146

telecommunications industry, 112–13

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Recruitment and Consulting Services AssociationLtd, 31recyclable waste management industry, 31, 83Redbeak Pty Ltd, 35Reeves, Andrew, 199referral selling, 62–3regional offices, 145, 146, 148, 207–8

staff, 63, 139, 140, 143–4Regional Outreach Officers, 63regional programs, 63–4Regulations introduced, 185regulatory activities, 88–134Regulatory Affairs Legal Unit, 145rental payments, 48reporting arrangements, 63

airports, 122gas industry, 108, 109New Tax System, 21telecommunications industry, 112–13, 117,120

resale price maintenance, 35, 42, 57Reserve Bank of Australia, 85residential building industry, 21, 25, 26, 27, 46residential property operators, 21Resource New South Wales, 82resources, see finance; staffrestaurants and cafés, 21retailing, 63, 66

electricity, 94, 97gas, 110–11mobile phones, 114price exploitation, 20, 21, 24, 25, 26resale maintenance, 35, 57Telstra, 117–18, 120

retail competition/contestability, 97, 110–11Retail Flash, 63retail leasing market, 56, 57retail prices, see prices and pricingrevenue (Commission), 16, 137–8review of integrating the energy market andnetwork services (RIEMNS), 98, 140Review of the Trade Practices Act, 1reviews of regulatory activities, 89–90Rhone Poulenc Animal Nutrition Pty Ltd, 30ring fencing, 102–3, 108–9Riverland pipeline, 107Riverside Metal Industries Pty Ltd, 33

RM TRIM, 146road transport industry, 77

see also motor vehiclesRoberts, David Evan, 31Robinson, Allan, 33Rob’s Panel and Paint, 33Robson, Stephen, 32Roche Vitamins Asia Pacific Pty Ltd, 30Roche Vitamins Australia Pty Ltd, 30Rockhampton, 32, 105–6Rod Turner Consulting Pty Ltd, 48Royal Australasian College of Surgeons, 81Royal Australian College of GeneralPractitioners, 81Roundup, 74, 76–7rubber gloves, 41rugby league, 33, 35Rural and Regional Outreach Program, 63rural and regional programs, 63–4, 80, 130–1rural doctors, 38–9, 64Rural Press Ltd, 31

SSaatchi & Saatchi Australia Pty Ltd, 40safety, 141

consumer products, 53–5St James, Peter Martin, 62St Vincent’s Private Hospital, 87Salters of Moorooka, 46Samton Holdings Pty Ltd, 56Santos, 108Schneider Electric (Australia) Pty Ltd, 30Schoonenberg, Josephus, 43Schoonenberg, Marianne, 43scrap metal, 33scrutiny, 17secondary boycotts, 31secondments of staff, 140section 87B undertakings, see undertakingssecurity charges, at airports, 125–6security deposits, national electricity market, 96security systems, 27, 48SEF Clearing Corporation Pty Ltd, 85–6seminars, see conferences, seminars and workshopsSenate committees, 17, 39–40Senior Executive Service (SES), 142, 144

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senior management conference, 137September 11 terrorist attacks, 44, 126service charter, 137Seven Cable Pty Ltd, 115–16, 1197-Eleven Stores Pty Ltd, 26SGIC Health, 40SGIO Health, 40Shark Challenge 2000 Golfing Competition, 46Shaw, Tony, 200shipping, 31, 128–9Shoalhaven Starches Pty Ltd, 74Shogren, Rodney, 17, 195shopping centre leases, 56, 57Sigma Company Ltd, 75Signature Security Group Pty Ltd, 27Simons, David, 43Sinclair Knight Merz, 103Singtel Optus, 120SIP Australia Pty Ltd, 32Sisters of Charity Healthcare Australia Ltd, 87skin care products, 87SkyBiz.Com Inc, 62slamming, 56, 113–14Slater & Gordon, 145Slaney, Peter Edward Russell, 56Slendertone Health and Beauty Pty Ltd, 42slimming products, 42–3Smaji Management Pty Ltd, 43small business, 4–5, 7, 45–6, 63–4, 67Small Business Advisory Group, 63Small Business Unit, 139small print advertising, 40, 46Smith, David, 136Smith, Kenneth John, 32Snowden, David, 139social justice, 17, 22, 141–2Sofos, Terry, 25solarium tanning, 43Solutions Software International Pty Ltd, 59Sony Computer Entertainment, 36South African Competition Commission, 69South Australia, 12, 187

Adelaide Airport, 122, 123, 124, 125electricity, 97, 99, 100gas, 104, 110

South Australian Independent Industry

Regulator, 133South Australian Independent Pricing and AccessRegulator, 133South Australian Minister for Energy, 98South Sydney District Rugby League FootballClub, 33South-West Queensland Producers, 108–9spam, 37Specktor, Mark, 37–8SPC Ltd, 74, 75SPI PowerNet, 100–1Spier, Hank, 70spirits, price of, 23sport, 33, 35, 46spray painting, 33SPY ISIS sunglasses, 54St James, Peter Martin, 62St Vincent’s Private Hospital, 87staff, 7, 16, 138, 142–4

conflict of interest self-assessment, 137Regional Outreach Officers, 63self-referral assistance program, 141

staff management, 138–41, 146staff training and development, 138, 139–40, 146stamp duty, 21Standards Australia, 53Star Alliance, 81Statement of principles for the regulation oftransmission revenues, 102stevedoring industry, 31, 128Stevens, Giles, 139Stocker, Russell, 30Strasburger Enterprises (Properties) Pty Ltd, 24structure, see organisation and structuresubmissions, see inquiries, submissions tosubscription television, 76, 115–16, 119Sudakov, Sasha, 37–8Summit Homes, 27sun visors, 54Suncorp-Metway Ltd, 76sunglasses, 54Suffolke Parke Pty Ltd, 56Super Toyworld, 55supermarket and grocery stores, 50–1, 66, 86

prices, 21, 22, 24, 26, 52Swan Hill Rural City, 109Sydney airport, 122, 123–4, 125, 126

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Sydney Airports Corporation Ltd, 123–4Sydney councils, recycling facilities for, 82Sydney Futures Exchange, 82, 85–6Sydney–Moomba pipeline system, 104, 109

TT&D Metals and Demolitions, 33Taiwan Fair Trade Commission, 139Takeda Chemical Industries Ltd, 30Tamar Knitting Mills, 51Tamblyn, Dr John, 200Tangent Nominees Pty Ltd, 27tanning, in solariums, 43TARBS, 115–16, 119tariff filings, 112Tasmania, 12, 51, 45–6, 187

airports, 122, 124, 125electricity, 95–6, 99, 101

Tasmanian Department of Treasury, 101Tasmanian Government Prices OversightCommission, 132Tasmanian Office of the Electricity Regulator,101, 132taxation reform, see New Tax Systemtaxation services, 43Taxis of Portland Pty Ltd, 34T&D Metals and Demolitions, 33technical assistance, 67, 69–70Tele Choice Pty Ltd, 55telecommunications, 8, 49–50, 56, 111–22, 134,136

Commission, 146complaints, 21, 66, 113

Telecommunications Act 1997, 11Telecommunications Committee, 136Telecommunications Group, 134Telecommunications Industry RegulatoryAccounting Framework, 112Telecommunications Unit, 140telephone bill-paying services, 50telephone interpreter service, 22telephone number portability, 114–15, 119, 122television, 25, 53, 76, 115–16Television and Radio Broadcasting Services(TARBS), 115–16, 119Telstra Carrier Charges—Price ControlArrangements, Notifications and Disallowance

Determination No. 1 of 2001, 120Telstra Corporation Limited, 112, 113, 114–22tendering, see purchasingtemporary staff, 144textile, clothing and footwear industry, 50, 51Therapeutic Goods Administration (TGA), 37Thompson, Eric Ian, 51tinted head light covers, 54tobacco products, 23, 39, 54Toogood, David, 30toothpaste, 35Top Snack Foods Pty Ltd, 60Torres Strait Islander and Aboriginal (ATSI)people, 22, 142Total Communications (Tas) Pty Ltd, 49–50Townsville airport, 122, 124, 125toys, 50, 54Trade Marks Act 1995, 11Trade Practices Act 1974, 7–8, 10, 17, 89, 185

Dawson Inquiry, 1information powers under, 36, 188Part IIIA, 126–7Part IV, 38–9Part VB, 21Part X, 128Part XIB, 111–15Part XIV, 115–19section 50, 71section 51(1) exceptions, 11–12section 51(3), 133see also undertakings

Trade Practices Amendment(Telecommunications) Act 2001, 9trade practices registers, 189–90training, see education and trainingTransend, 101Transfield Galvanising, 75–6TransGrid, 99transport industry merger activities, 72, 73Transport Panel, 136transmission of electricity, 94–5, 96–7, 99–103transmission of telecommunications, 117travel industry, 34, 45Treasury, 37, 39, 64, 85Tregilgas, Alan, 201TRIM, 146TRIMit, 42

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trolley jacks, 55trucking industry, 77Trustees of the Sisters of Charity of Australia andSisters of Charity Healthcare Australia Ltd, 87Tullamarine (Melbourne) airport, 122, 123, 124,125, 126Turner, Rod, 48

Uunauthorised customer transfer (slamming), 56,113–14unconditional local loop, 119unconscionable conduct, 7, 42, 55–9UNCTAD Regional Seminar on CompetitionPolicy and Multilateral Negotiations, 70undertakings, 31, 43–4, 62–3

advertising and prices, 45, 46–7, 48country of origin, 51–2mergers, 74price exploitation, 24–5, 26, 27product safety, 55resale price maintenance, 35telecommunications industry, 56

undue harassment and coercion, 31, 56, 57, 58, 59United Kingdom, 53, 139, 140United States, 74Universal Music Australia Pty Ltd, 34Universal Sports Challenge Ltd, 46unsolicited goods and services, 45–6, 48, 61Utility Regulators Forum, 132–3

Vvacuum cleaners, 57vaccination of staff, 141Vaisman, Jacov, 43vehicles, see motor vehiclesVENCorp, 100–1, 107, 108, 109veterinary chemicals, 83–4Veterinary Manufacturers and DistributionAssociation, 84veterinary vitamins, 30Victoria, 12, 54, 187

chicken meat industry, 80–1electricity, 94, 97, 99, 100–1gas, 107–8, 109, 110–11Melbourne airport, 122, 123, 124, 125, 126petrol prices, 132

professions, 39, 81–2taxis, 34

Victorian Dental Practice Board SpecialistAdvisory Committee, 39Victorian Department of Human Services, 39Victorian Department of Natural Resources, 110Victorian Essential Services Commission (Officeof the Regulator-General), 109, 132Victorian Farmers Federation Chicken MeatGroup, 80–1Victorian Gas Retail Rules Committee, 111Victorian Medical Practitioners Boardvideoconference systems, Commission, 146Vietnam, 70Virgin Blue Airlines Pty Ltd, 34, 45, 123Virgin Mobile Australia Pty Ltd, 50Visy Paper Pty Ltd, 31Vitalcall, 46vitamins, veterinary, 30Vodafone, 112, 120voluntary codes of conduct, 64

WWaikerie Printing House, 31Wallumbilla pipelines, 105–8Warner Chappell Music Australia, 76Warner Music Australia Pty Ltd, 34waste recycling industry, 31, 83Waste Services Corporation New South Wales, 83water, 56water rates, 48waterfront, 31, 128–9Waterman Collections Pty Ltd, 59Watt, Don, 17, 196–7Wayt, Stephen Henry, 38websites, see Internetweight-loss products, 42–3Western Australia, 12, 187

funerals, pre-paid, 84–5gas, 110health and medical services, 30–1panel beaters and spray painters, 33Perth airport, 122, 123, 124, 125, 126petrol prices, 132real estate agents, 86–7

Western Australian Funeral DirectorsAssociation, 85

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Western Australian Office of Gas Regulation, 133Western Australian Office of Health Review, 37Western Australian Office of Water Regulation, 133Western District Health Fund Ltd, 41Westfield Design and Construction Pty Ltd, 57Westfield Management Ltd, 57Westfield Shopping Centre Management Co(Qld) Pty Ltd, 57Weston Bioproducts, 74, 75Westpac Bank, 33whitegoods industry, 50Wilkinson, Warwick, 64, 197Will Writers Guild Pty Ltd, 60–1Williamson, Professor Douglas, 197–8Wilson, Robert, 30Wilson Transformer Company Pty Ltd, 30Wilton, Ainslee, 139wine prices, 23Wizard Mortgage Corporation Ltd, 47Wolper Jewish Hospital, 84women staff, 142–4Woolworths Ltd, 36, 50–1workers compensation, 141workplace diversity, 142workplace relations, 140Workplace Relations Consultative Committee, 140workshops, see conferences, seminars andworkshopsWorld Netsafe Pty Ltd, 62World Trade Organisation (WTO), 68–9WorldxChange, 119WPS, 57Wreckair, 77

YYellow Pages Connect service, 50York, Richard, 69Young, James, 58

ZZambian Competition Commission, 140Zimbabwe Industry and Trade Competition, 140