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Trade Practices Compliance Manual

1. Introduction

1.1 Background

Over the past few years there have been conflicting legal opinions as to whether the Trade Practices Act 1974 (Cth) applied to universities which, as educational institutions, were generally taken to be outside the meaning of trading corporations as defined in that Act. However, with the changing role of universities over time and the nature of their activities covering a wide range of commercial dealings and not simply "providing education" free of charge, there has emerged a body of opinion which maintains that the Trade Practices Act does in fact apply to universities.

In so far as Restrictive Trade Practices under Part IV of the Trade Practices Act are concerned, the matter is now beyond doubt. In April 1995, the Commonwealth and all the States and Territories signed an agreement to implement the Conduct Code Agreement by which it was intended to achieve and maintain consistent and complementary competition laws and policies which would apply to all business in Australia regardless of ownership.

By virtue of the Conduct Code Agreement, the State and Territory governments agreed to expand the application of Part IV of the Trade Practices Act - Restrictive Trade Practices, to all persons within their jurisdiction via the Competition Code. This enables universal and uniformly applied competitive conduct rules to be applicable to all market participants, regardless of their ownership or legal form, so that those rules would apply to all business activity in Australia including business activities carried on by a government. This expansion took effect from 21 July 1996.

This Manual is designed to assist all Monash University employees in understanding their compliance obligations under the Trade Practices Act and in particular the Competition Code. It contains both a description of those requirements and suggested compliance procedures.

Acting on the premise that the Trade Practices Act applies in full to the University, this Manual also sets out compliance procedures for Part IVA - Unconscionable Conduct and Part V - Consumer Protection of the Trade Practices Act. Should the Trade Practices Act be found not to apply to the University in relation to Part IVA and Part V, then those compliance procedures will relate to the corresponding provisions of the Victorian Fair Trading Act 1985.

The main difference between the Trade Practices Act and the Fair Trading Act in relation to Unconscionable Conduct and Consumer Protection is the penalties, which are much less under the Fair Trading Act but still substantial. All persons, including universities, who engage in trade or commerce in Victoria, are subject to the provisions of the Victorian Fair Trading Act.

The University's compliance program includes this Manual, possible future training sessions and the provision for staff to raise queries with the Compliance Officer or the University Solicitor to assist them in complying with the Trade Practices Act.

Why do we need this manual?

  • Is the basis of the University's compliance program.
  • Sets out our "minimum" code of conduct in carrying out our business.
  • Gives you clear guidance on what you can and cannot discuss when going to the negotiating table.
  • Penalties and consequences of non-compliance are severe, and include:
    • heavy fines
    • injunctions
    • damages
    • management down-time
    • remedial orders
    • and can damage YOUR reputation and Monash's reputation.
    • You and the University are not immune from prosecution.
    • The University cannot pick up (directly or indirectly) the cost of any penalities awarded against you personally.

You must be aware of:

  • the University's obligations and
  • your personal obligations under the Trade Practices Act.

Potential areas of concern include:

  • existing contracts
  • fee structures
  • individual claims and representations to potential customers
  • courses offered
  • marketing material.

The Competition Code or Part IV of the Trade Practices Act regulates or prohibits restrictive trade practices.

The Unconscionable Conduct provisions of the Trade Practices Act, prohibits conduct which is unconscionable under common law or equity as recognised by the courts and usually relates to the misuse of superior bargaining power, or one party taking advantage of another who is at a special disadvantage.

The Consumer Protection provisions of the Trade Practices Act, prohibits unfair trade practices with the aim of protecting consumers.

1.2 The University

Monash University prides itself in providing students, no matter from where, the opportunity to benefit from high quality education and training. Essential to achieving this is our commitment to work responsibly and ethically within the regulatory environment.

The University must comply fully with the requirements of all laws, including the Competition Code and the Fair Trading Act.

The University is determined that its behaviour will meet the highest possible standards. In doing so, our conduct will go further than the mere strict legal requirements; we will take a pro-active position on many issues.

1.3 Consequences of Breach

The consequences of breaching the Trade Practices Act are:

Penalties
Pecuniary penalties for contravention of Part IV - Restrictive Trade Practices or the Competition Code:
up to $10 million for each act or omission by the University and up to $500,000 for each act or omission by an individual employee.

Fines

Penalties
Fines for breach of Part V - Consumer Protection (other than s.52 Misleading and Deceptive Conduct for which there is no fine, however, the remedies set out below may be sought):
- up to $200,000 for each offence by the University
- up to $40,000 for each offence by an individual employee.

Damages
A court may award damages against the University or an individual employee or both, for loss or damage suffered by a competitor or consumer as a result of a breach of the Trade Practices Act.

Injunctions
An injunction may be issued by a court to restrain the University or an individual employee from taking certain actions.

Ancillary Orders
A court may order, amongst other things, rescission or variation of a contract.

Legal Costs
The University or the individual employee or both may be liable for legal costs.

Management Down-time
Considerable time may be spent in defending an alleged breach of the Trade Practices Act.

Corrective Orders
A court may order disclosure of information or corrective advertising orders.

Embarrassment/Adverse Publicity/Reputation
The University and individual employees may suffer embarrassment and/or adverse publicity.

1.4 Your Responsibilities as an Employee of the University

You must be familiar with the Trade Practices Act. You are responsible for your own actions. Individuals are fined frequently and ignorance of the law is no excuse.

The University's Professional Indemnity Insurance Policy cannot cover you for any penalties or fines imposed under the Trade Practices Act. Further, the policy does not cover you for reckless or knowing breaches of the Trade Practices Act and as a result having damages awarded against you.

This Manual is a guide to the requirements of the Trade Practices Act and to the procedures to be implemented to reduce the risk of contravention. You must be familiar with these requirements and procedures.

If you are in doubt about any conduct, or proposed conduct, relating to the Trade Practices Act please contact the Compliance Officer or the University Solicitor before making a decision. You are also encouraged to report to the Compliance Officer or the University Solicitor any conduct by a competitor of, or a supplier to, the University which you believe might be in breach of the Trade Practices Act.