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Competition policy review: will it affect you?

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The Australian Government has commissioned a review into competition policy as it stands in Australia as of 2014. After considering 318 non-confidential submissions, the Competition Policy Review Panel released a draft report on 22 September 2014, which provided multiple draft recommendations that are likely to affect Australian business.

Submissions regarding the draft report and recommendations are open until 17 November 2014.While not intending to cover the considerable breadth of the full competition policy review, we have highlighted some of the more progressive recommendations for Australian businesses below.

Repeal of statutory IP licencing exemptions in the Competition and Consumer Act 2010 (Cth) (“the CCA”)

Currently, certain commercial transactions involving Intellectual Property Rights (IPRs), including the licencing and transferring of those rights, are exempt from the application of the CCA (with the exception of the clauses dealing with misuse of market power, including in trans-Tasman markets, and resale price maintenance).

The report recommends that the exemption be repealed in full, on the basis that IPRs can potentially be used in a manner that harms competition. The application of the full CCA to these transactions would mean that any IPR licencing agreement in Australia would need to consider the effect of Part IV of the CCA being Restrictive Trade Practices to ensure the parties are not committing an offence (with the notable exception of Cartel Conduct still being exempted). This is likely to increase the regulatory cost on individual parties to these IPR transactions through additional legal and policy review and adaptation.

Repeal of statutory prohibitions on parallel importation

The limitations on parallel importation have been slowly phased out over the past two decades with only a few prohibitions on parallel importation contained in various legislative instruments remaining, most notably against some parallel importation of books in the Copyright Act 1968 (Cth).

Owners and licenced users of trade marks also have common law protection against the importation of goods which use trade marks in certain circumstances. Similarly, authorised distributors of goods in Australia have a vested business interest in limiting the available of parallel imports, though there may be no legislative limitations. The review recommends the removal of all final limitations on parallel importation to increase competition in Australia.

CCA applying to government procurement processes

Another recommendation of the review is for all Government activities in trade or commerce to be subject to the CCA, whether Federal, State, Territory or Local Government.

Comments regarding the state of intellectual property legislation

The report recommends that Australia’s IPRs regime be a priority area for legislative review so as to allow IP law to work in a pro-competition manner for Australian’s, especially when considering Australia’s position in regional free trade agreements.

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