Trade Practices Act 1974

Australian Competition and Consumer Commission or ACCC

The Australian Competition and Consumer Commission (ACCC) is an independent Commonwealth statutory authority whose role is to enforce the Competition and Consumer Act 2010 and a range of additional legislation, promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians.

Below are extracts from 4 The Competition and Consumer Act 2010 was formerly known as the Trade Practices Act 1974:

It is important to be aware that the consumer protection provisions contained in Part IVA and Part V of the Trade Practices Act 1974 (Cth) (Trade Practices Act) no longer apply to financial services.22
This means that when considering bringing claims for misleading or deceptive conduct or unconscionable conduct, you will need to refer to and plead the relevant provisions in the ASIC Act. For example, the prohibition against misleading or deceptive conduct by a financial services provider is s12DA of the ASIC Act, not s52 of the Trade Practices Act.

Below are extracts from Designation of Credit Card Schemes in Australia - 12 April 2001:

Following a decision by the Payments System Board, the Reserve Bank has today brought credit card schemes in Australia under its regulatory oversight. It has formally "designated" as payment systems subject to its regulation under the Payment Systems (Regulation) Act 1998, the credit card systems operated in Australia by Bankcard, MasterCard and VISA. Designation is the first step in establishing standards and access regimes for a payment system to deal with public interest issues. The decision to designate was taken after consultations with a range of interested parties.

The credit card systems designated by the Bank have two unique characteristics that raise public interest questions about efficiency and competition:

the systems have wholesale fees (known as interchange fees) set collectively by the financial institutions that are members of these systems, but that are otherwise competitors in providing credit card services to cardholders and merchants. Interchange fees are an important determinant of the fees facing cardholders and merchants in credit card systems; and

membership of the international card systems (MasterCard and VISA), either for credit card issuing or acquiring, is restricted in Australia to authorised deposit-taking institutions. Such membership rules based on institutional status may be more restrictive than necessary to protect the safety and integrity of the systems. Bankcard is currently reviewing its membership rules.

With its mandate to promote efficiency and competition, the Payments System Board has also been taking a close interest in the operation of credit card systems in Australia. It has undertaken a detailed study of card schemes, and has set out its findings in a booklet, Debit and Credit Card Schemes in Australia: A Study of Interchange Fees and Access, published jointly with the ACCC in October 2000. The study identified a number of shortcomings in competition in the provision of card services, which have raised the cost to the community of the retail payments system. In the case of the credit card systems, the study found:

interchange fees are not reviewed regularly by system members on the basis of any formal methodologies;

interchange fees are higher than can be justified by costs, and system members lack clear incentives to bring these fees into line with costs;

price signals are encouraging the growth of credit card usage at the expense of other payment instruments, particularly debit cards and direct debits, that consume fewer resources; and

restrictions by credit card systems on which institutions can enter the acquiring business were unjustified and restrictions on access to card issuing needed to be reviewed.

The Bank will now proceed to establish, in the public interest, standards for the setting of interchange fees and a regime for access to the credit card systems. However, the standards will not cover the setting of credit card fees and charges to cardholders and merchants, or interest rates on credit card borrowings. In developing its approach, the Bank envisages an extensive consultation process, leading to the publication of a consultation document which will explain the public interest issues and outline the Bank’s proposed standards and access regime. Interested parties will have a further period for comment before the Bank’s regulatory framework is finalised. As set out in their Memorandum of Understanding, the Bank and the ACCC will ensure that credit card systems and their members would not be at risk under the Trade Practices Act 1974 as a result of complying with the Bank’s requirements."

Below are extracts from Reform of Credit Card Schemes in Australia: RBA's "A Consultation Document" – December 2001:

In Australia, the Trade Practices Act 1974 prohibits co-operative behaviour between competitors if it has the effect of substantially lessening competition, fixing or maintaining prices, or restricting or limiting dealings with particular persons such as new entrants to a market. However, such conduct may be authorised by the Australian Competition and Consumer Commission (ACCC) if it judges it to result in a net public benefit.

Several payment systems in Australia have sought authorisation to ensure that their regulations can satisfy a public interest test. For instance, the regulations and procedures for four clearing streams operated by the Australian Payments Clearing Association (APCA) – which govern the transfer of funds involved in ATM and debit card (EFTPOS) transactions, cheques, bulk electronic and high-value transactions – have been authorised under the Trade Practices Act 1974, and participants are thus free from the risk of prosecution for engaging in the behaviour authorised.

However, none of the credit card schemes in Australia are authorised under the Trade Practices Act 1974. The Bankcard scheme was granted authorisation in 1980 by the Trade Practices Commission, the predecessor of the ACCC, on condition that scheme members not impose restrictions on the freedom of merchants to determine the prices they were prepared to charge customers paying either with cash or Bankcard. The authorisation was revoked in 1990, one reason being the Commission's concerns about Bankcard's restrictive membership criteria. Neither the MasterCard nor Visa credit card schemes has applied for authorisation.