AUSTRALIAN COMPETITION TRIBUNAL Real Estate Institute of Australia Limited [2000] ACompT 3 Matter No. 10 of 1999 RE: APPLICATION TO THE TRIBUNAL FOR REVIEW FOR REVOCATION OF AUTHORISATION AND SUBSTITUTION OF REPLACEMENT AUTHORISATION BY THE REAL ESTATE INSTITUTE OF AUSTRALIA LIMITED JUSTICE von DOUSSA, DR B I ALDRICH & PROFESSOR R C DUNCAN ADELAIDE (heard in Sydney) 25 JULY 2000 AUSTRALIAN COMPETITION TRIBUNAL No. 10 of 1999 RE: APPLICATION FOR REVIEW FOR REVOCATION OF AUTHORISATION AND SUBSTITUTION OF REPLACEMENT AUTHORISATION BY: REAL ESTATE INSTITUTE OF AUSTRALIA LIMITED MEMBERS: von DOUSSA J, DR B I ALDRICH & PROFESSOR R C DUNCAN DATE OF DETERMINATION: 16 JUNE 2000 WHERE MADE: SYDNEY THE TRIBUNAL DETERMINES BY CONSENT THAT: 1. The Australian Competition and Consumer Commission determination dated 23 November 1999 in respect of Authorisation A90354 is varied such that substitute authorisation is not granted for the Real Estate Institute of Australia Limited's proposed Code of Conduct for real estate agents; 2. The Australian Competition and Consumer Commission's revocation of the authorisation granted in 1981 to the Real Estate Institute of Australia Limited for its Code of Ethics stands. AUSTRALIAN COMPETITION TRIBUNAL No. 10 of 1999 RE: APPLICATION FOR REVIEW FOR REVOCATION OF AUTHORISATION AND SUBSTITUTION OF REPLACEMENT AUTHORISATION BY: REAL ESTATE INSTITUTE OF AUSTRALIA LIMITED MEMBERS: von DOUSSA J, DR B I ALDRICH & PROFESSOR R C DUNCAN DATE OF DETERMINATION: 16 JUNE 2000 WHERE MADE: SYDNEY REASONS FOR DECISION PUBLISHED 25 JULY 2000 1 On 16 June 2000 the Tribunal made the following determination pursuant to s 101(1A) of the Trade Practices Act 1974 (Cth) (the Act) with the consent of the Real Estate Institute of Australia Limited (the Institute) and the Australian Competition and Consumer Commission (the Commission): 1. The Australian Competition and Consumer Commission determination dated 23 November 1999 in respect of Authorisation A90354 is varied such that substitute authorisation is not granted for the Real Estate Institute of Australia Limited's proposed Code of Conduct for real estate agents; 2. The Australian Competition and Consumer Commission's revocation of the authorisation granted in 1981 to the Real Estate Institute of Australia Limited for its Code of Ethics stands. 2 At the time when the Tribunal was asked to make this determination by consent under s 101(1A), the application to the Tribunal by the Institute had not been notified to persons who had expressed to the Commission an interest in the making of the determination dated 23 November 1999 (the determination). The Tribunal said that it would publish reasons at a later date for exercising jurisdiction under s 101(1A) in these circumstances. Those reasons now follow. 3 By way of background, on 28 July 1981 the Trade Practices Commission (TPC) granted an authorisation to the Institute for its Code of Ethics. On 20 July 1994 the TPC issued a notice under s 91(4)(a) of the Act as it then stood. That provision enabled the TPC to issue a notice stating that it appeared to the TPC that there had been a material change in circumstances since the authorisation was granted, and empowered the Commission, after giving notice, to revoke the authorisation if there had been a material change of circumstances and, if appropriate, to grant a further authorisation in substitution for the authorisation so revoked. 4 Throughout the period 1994 to 1998 the Institute informally sought the views of the TPC and its successor, the Commission, on a number of drafts for a new code of conduct to replace the Code of Ethics. On 5 June 1998 the Institute submitted to the Commission a draft Consumer Code of Conduct for Real Estate Agents (the Code of Conduct), and requested the Commission to consider authorising the Code of Conduct in substitution for the 1981 authorisation. After receiving submissions from interested parties on the public benefit and anti-competitive detriment associated with the Code of Conduct, further discussions took place between the Commission and the Institute. These discussions led to the Institute on 7 May 1999 submitting to the Commission revised terms for the Code of Conduct. 5 The submission of the revised version of the proposed Code of Conduct led to the determination. 6 By the determination the Commission revoked the 1981 authorisation, and granted, subject to a number of substantial conditions, a substitute authorisation only in respect of parts of the proposed Code of Conduct. The determination provided that it would come into force within twenty-one days after 23 November 1999 in the event that no application for a review was made to this Tribunal. Where an application for review is made to the Tribunal, the making of the application defers the coming into force of the determination until the application is determined by the Tribunal or withdrawn: see s 91(1A). When the Institute made the present application to the Tribunal, by covering letter it informed the Registrar that the principal reason for the application was to delay finalisation of the determination pending substantive consideration of its implications by the affiliated bodies of the Institute. The application itself provided only one ground for review, namely that: "it provides insufficient time for adequate consideration of its effect on member agents." 7 A request to the Tribunal for a consent determination in the terms set out at the commencement of these reasons was later made in writing signed on behalf of both the Institute and the Commission. The request recites that on 15 February 2000 the Institute advised the Commission that a number of affiliated Institute bodies no longer wished to implement the proposed Code of Conduct, and that the Institute and its affiliated bodies would be unable to comply with some of the proposed conditions set out in the Commission's determination. The request stated that in light of these matters the Institute and the Commission agreed to the Tribunal making the determination sought under s 101(1A). 8 The Trade Practices Regulations 1974, in reg 20(1), prescribe the form of an application under s 101(1) of the Act for a review of a determination by the Commission. Regulation 20(3) requires that a copy of the application be served on the Commission, and if the person making the application is not the person who made the application to the Commission for authorisation, on the person who made the application to the Commission. The regulations are however silent on the giving of notice of the application to other persons who may have an interest in the determination sought to be reviewed. Section 103 of the Act and reg 22 each empower the Tribunal to give directions in any proceedings before the Tribunal, and provide that directions may be given by the Tribunal constituted by a presidential member. As a matter of practice when an application is made to the Tribunal, a presidential member directs that the applicant give notice of the application to those persons who the Registrar, after making inquiries from the Commission, believes may wish to seek leave to intervene in the matter. In practice, all persons who have expressed to the Commission an interest in the matter are treated as persons who may wish to seek leave to intervene. Notification given pursuant to the standard direction informs persons interested that they are not entitled to take any step in, or to be heard at the hearing of, proceedings before the Tribunal unless an address for service is filed and served in accordance with reg 21. 9 Once a person has filed an address for service under reg 21, that person may apply under s 109(2) of the Act to intervene in the proceedings before the Tribunal. 10 It is against this background that the Tribunal considered the request of the Institute and the Commission to make a determination by consent under s 101(1A) of the Act. 11 Section 101(1A) provides: "Where a person has, whether before or after the commencement of this subsection, made an application under subsection (1) for a review of a determination, the Tribunal may, if the Tribunal determines it to be appropriate, make a determination by consent of the applicant, the Commission, and all persons who have been permitted under subsection 109(2) to intervene in the proceedings for review, whether or not the Tribunal is satisfied of the matters referred to in subsection 90(6), (7), (8) or (9)." 12 This provision empowers the Tribunal to make a determination "by consent of the applicant, the Commission, and all persons who have been permitted under subsection 109(2) to intervene in the proceedings for review". The present application was made with the consent of the applicant (the Institute) and the Commission, but at a time before any person who may have wished to seek to intervene under s 109(2) had received notice that an application under s 101 had been made to the Tribunal. 13 In these circumstances, the Tribunal considered whether the request of the Institute and the Commission to proceed under s 101(1A) was premature. For the reason which follows the Tribunal concluded that it was not. The determination sought by the Institute and the Commission will have the effect that the old Code of Ethics, and the proposed Code of Conduct, will have no authorisation at all under the Act. In other words, the provisions of the Act will apply with full force to all aspects of the conduct of the Institute, its affiliated bodies and its members. This being so, no question could arise whether the proposed determination of the Tribunal would to any extent lessen competition. In these circumstances if any person who had expressed an interest in the matter before the Commission were to apply to intervene in the proceedings before the Tribunal under s 109(2), the Tribunal would refuse leave to intervene, there being no prospect that the proposed determination could adversely affect that person's interests. The situation would however have been otherwise if the determination to any extent would have authorised conduct otherwise proscribed by the Act. 14 The Tribunal concluded that notification of the application to parties who had earlier expressed an interest in the making of the determination would be pointless, and that the Tribunal should dispose of the matter in terms of the consent determination sought by the Institute and the Commission. 15 Where s 101(1A) applies, that provision relieves the Tribunal from conducting a full hearing of the matter, but the Tribunal must nevertheless determine that it is appropriate to make the determination sought by consent. 16 Section 101(1A) is silent as to the matters to which the Tribunal should have regard in determining whether it is appropriate to make a determination by consent. In stating that such a determination may be made "whether or not the Tribunal is satisfied of the matters referred to in subsection 90(6), (7), (8) or (9)", the subsection is not directing that those matters are to be entirely disregarded. The matters referred to in those subsections are concerned with determining whether there is any public detriment constituted by any lessening of competition: Applications by Australian Wool Growers Association Limited & Others [1999] ACompT 4 at para 11. Whilst on an application under s 101(1A) the Tribunal is not required to conduct a full hearing, and is not required to reach a definite conclusion on the matters referred to in subs 90(6), (7), (8) or (9), the Tribunal must nevertheless bear in mind the statutory requirements which govern the grant of an authorisation under the Act if the consent determination would constitute an authorisation of conduct which would otherwise be proscribed by the Act. In such a case if it appears that the proposed consent determination might give rise to public detriment constituted by a lessening of competition, the Tribunal, at the least, will require to be satisfied that a determination by consent should none the less be made. In the instant case, however, as the effect of the determination sought by consent would be to leave the old Code of Ethics, and the proposed Code of Conduct without any authorisation at all, this situation did not arise. Accordingly the Tribunal considered it was appropriate to give effect to the agreement of the parties by making the determination sought. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Decision of the Tribunal Associate: Dated: Agent for the Applicant: Mr D P Smeaton Counsel for the ACCC: Mr P Jeffers Date of Hearing: 16 June 2000 Date of Reasons for Decision: 25 July 2000