1. Constitutional Issues Open Universities Australia / Graduate School of Business & Law Juris Doctor (JD) LAW1033/LAW2419/OJD340 Competition & Consumer Law Lecturer: Cathryn Nolan, LLB, Grad. Dip. Law (Nat Res), MBA cathryn.nolan@rmit.edu.au

2. Exercise – Commonwealth’s Power to Legislate– which constitutional powers are relevant? COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT - SECT 51 Legislative powers of the Parliament [see Notes 10 and 11] The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: (i) trade and commerce with other countries, and among the States; (v) postal, telegraphic, telephonic, and other like services; (xx) foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth; (xxxvi) matters in respect of which this Constitution makes provision until the Parliament otherwise provides; (xxxvii) matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred, or which afterwards adopt the law; (xxxviii) the exercise within the Commonwealth, at the request or with the concurrence of the Parliaments of all the States directly concerned, of any power which can at the establishment of this Constitution be exercised only by the Parliament of the United Kingdom or by the Federal Council of Australasia; (xxxix) matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth. (c) RMIT University | Cathryn Nolan

3. Trade & Commerce is understood broadly….. ANA v Commonwealth (1954) 71 CLR 29 Interstate trade and commerce “… includes something such as sales of goods tangible or intangible by person in one State to persons in another” (c) RMIT University | Cathryn Nolan

4. Legislative framework: Constitutional Issues From the beginning efforts to regulate competition / consumer issues have been subject to constitutional challenges. Australian Industries Preservation Act 1906 – prohibited any conditions in relation to trade or commerce with other countries or among the States with intent to restrain trade or commerce to the detriment of the public. Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 / Privy Council decision in Attorney-General (Cth) v Associated Northern Collieries (1911) 14 CLR 387 effectively “killed” the Act – in Huddart the majority of the High Court held that the provisions in the Act that prohibited foreign, trading or financial corporations from engaging in competitive agreements were invalid on the basis of the reserved state powers doctrine Strickland V Rocla Concrete Pipes Ltd (1971) 124 CLR 468 challenged the 1965 Act. High Court overturned Huddart, holding that the Court’s reliance on the old reserved powers doctrine had emasculated the legislative power given by s51(xx) (c) RMIT University | Cathryn Nolan

5. Tasmanian Breweries – Considered whether the formation of the Trade Practices Tribunal under the 1965 Act offended the doctrine of separation of power Held that it did not – in part because it had no power to enforce its determinations and orders (accordingly it was not invested with judicial power) Law Legislative (Parliament) Executive (Executive Government) Judicial (Courts) Separation of Powers Law Legislative (Parliament) Executive (Executive Government) Judicial (Courts) (c) RMIT University | Cathryn Nolan

6. Freedom of Interstate Trade Section 92 of the Constitution – trade, commerce and intercourse among the states… shall be absolutely free Tasmanian Breweries – also authority for the proposition that some forms of intercourse are more imune from legislative or executive interference than “trade and commerce” generally. DOES THIS MEAN FREEDOM TO RESTRAIN? Section 92 of the Constitution – trade, commerce and intercourse among the states shall be absolutely free Does this mean freedom to restrain? Tasmanian Breweries – also authority for the proposition that some forms of intercourse are more immune from legislative or executive interference than “trade and commerce” generally (c) RMIT University | Cathryn Nolan

7. A corporation may be a financial corporation even if financial activities are not its predominant or characteristic activities, provided the financial activities are substantial and not insignificant. It may be a financial corporation as well as a trading corporation. See Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134, 22 ALR 621, and State Superannuation Board v TPC (1982) 150 CLR 282, 41 ALR 279 Corporations Foreign Incorporated outside Australia Trading Purposes test: (R v TPT ex Parte St George Council) Activities / Functions Test (Adamson) Involve goods and services (including financial services) Financial Financial activities test: Transactions only involve money and the generation of money Test: What are the current activities of the corporation? S4(1) provides that “business includes a “business not carried on for profit” – accordingly the trading activities of a NFP are caught (however, second reading speech suggests that intention was not to capture public schools or hospitals other than to the extent they receive income from private students/patients) Foreign corporations – incorporated outside Australia Trading Corporations Purposes test (R v TPT ex Parte St George Council) (only relevant in some cases - (c) RMIT University | Cathryn Nolan

8. Does the Act apply to the Crown? s2A,2B & 2BA of the current Act extends the scope General rule of statutory construction provides that the crown is not bound unless expressly stated (Bradken) See s4 of the CCA & 5.4 of the Learning Guide Step 1 Is the entity a manifestation of the Crown? Step 2 If the entity is not a manifestation of the Crown, the Act applies Step 3 If the entity is not a manifestation of the Crown, it is necessary to consider whether the entity “carries on business” Step 4 If the entity does not carry on business, the Act does not apply Step 5 If the entity does carry on business, does an exception under section 2C apply? Step 6 Whether another party is entitled to claim derivative Crown immunity. Step 1 Is the entity a manifestation of the Crown? Step 2 If the entity is not a manifestation of the Crown, the Act applies Step 3 If the entity is not a manifestation of the Crown, it is necessary to consider whether the entity “carries on business” Step 4 If the entity does not carry on business, the Act does not apply Step 5 If the entity does carry on business, does an exception under section 2C apply? Step 6 Whether another party is entitled to claim derivative Crown immunity. (c) RMIT University | Cathryn Nolan

9. When does the crown carry on a business? What activities have been held to constitute carrying on a business What activities have been held NOT to be carrying on a business? What Activities have been held to constitute carrying on a business? What activities have been held NOT to be carrying on a business? (c) RMIT University | Cathryn Nolan

10. When does the crown carry on a business? Activities that have been held to constitute carrying on a business Providing telecommunication servicesProviding postal services;Broadcasting servicesPrinting services (State) providing ambulance services and first aid at sporting events Activities that have been held NOT to be carrying on a business Inviting tenders/ dealing with tenderers (wholly government activities) Providing/causing immigration detention centres to be provided Providing pharmaceutical, sickness and hospital benefits etc. (state) managing a national park (state) Operating the TPC performing regulatory functions (State) Operating a public hospital through 3 rd party (State) Providing police and protective services NB: Examples are Commonwealth unless stated otherwise Activities that have been held to constitute carrying on a business Providing telecommunication services Providing postal services; Broadcasting services Printing services (State) providing ambulance services and first aid at sporting events Activities that have been held NOT to be carrying on a business Inviting tenders/ dealing with tenderers (wholly government activities) Providing/causing immigration detention centres to be provided Providing pharmaceutical, sickness and hospital benefits etc. (state) managing a national park (state) Operating the TPC performing regulatory functions (State) Operating a public hospital through 3 rd party (State) Providing police and protective services (c) RMIT University | Cathryn Nolan

11. Derivative government immunity (Learning Guide Exercise) Bradken (1979) No statute binds the executive government unless it expressly named in the statute, or there is a necessary implication of intention Crown is not bound – so the test is whether the enforcement of the TPA would affect prejudicially the interests of the crown NT Power v PAWA (2004) Did s46, in prevent the enforcement of a clause in a contract between two parties, neither of whom is the Government, impair the existing legal situation of the NT government? On facts, no impairment as NT Govt would only suffer financial prejudice – no legal prerogative impacted Baxter Healthcare (2007) Tendering conduct was found to breach ss46 & 47 ACCC conceded State Govt purchasing authorities (SPAs) were not carrying on a business and entitled to immunity High Court rejected argument and held that derivative governmental immunity extends to prevent the application of operation of the TPA/CCA to commercial negotiations leading up to the formation of the impugned contracts. Overturned Bradken ( “must be regarded… as too widely expressed”) Corporations dealing with the crown that are not carrying on business cannot avoid liability by relying on the shield of derivative government immunity (c) RMIT University | Cathryn Nolan

12. Competition Code – ensuring CCA applies to intra state competition In 1995 the states and territories agreed to enact model application legislation, in concert with Commonwealth legislation (the Competition Policy Reform Act 1995) which effectively created the Competition Code The Competition Code consists of: –The text set out in the Schedule to the CCA (which repeats most, but not all, of Pt. IV, but generalised so as to apply to “persons” instead of “corporations”). This results in an overlap, mainly in the area of corporations (the question of double jeopardy is dealt with in the application legislation) –the remaining provisions of the CCA (with certain exceptions) so far as they relate to the Schedule version of Pt. IV, if the Schedule version were substituted for the actual Pt. IV, and –Relevant regulations under the CCA. In Victoria, the relevant legislation is Competition Policy Reform (Victoria) Act 1995 — Act No 74 of 1995 The State and Territory legislation provides for the uniform or national administration of the Competition Codes, as if those Codes constituted a single law of the Commonwealth. (c) RMIT University | Cathryn Nolan