Independent-Contracting-Collective Bargain 2009

IS THERE A 'PUBLIC BENEFIT' IN IMPROVING WORKING
CONDITIONS FOR INDEPENDENT CONTRACTORS?

COLLECTIVE BARGAINING AND THE TRADE PRACTICES
ACT 1974 (CTH)
Shae McCrystal *
INTRODUCTION
The legal distinction between work performed by an employee under a contract of

service and work performed by an independent contractor under a contract for
services is a central preoccupation in the field of labour law. This preoccupation has been
traditionally focused on which workers fall within the common law definition of
'employee' (workers with a contract of service), which workers do not fall within the
definition but should and what legal consequences follow from the inclusion of a worker
within the labour law regulatory framework. 1 Primarily the focus has been on ensuring
that the labour law net encompasses those workers who are considered to be in need of
the protections offered by labour law and debates over who those workers are. However,
until recently, little attention has focused on the regulation of those workers who fall
outside the definition of employee, where the worker's status as an independent
contractor is uncontested.
The relative inattention within the labour law context to the regulation of the
independent contractor labour market is not surprising. These workers are subject to
the ordinary rules of commerce, found largely within the common law and legislative
regimes like the Corporations Act 2001 (Cth) and the Trade Practices Act 1974 (Cth) ('TP
Act'). In other words, these workers fall under the general banner of 'commercial law',
an area which is fundamentally connected to labour law but conceptually distinct.
In recent years this inattention has changed dramatically, particularly as independent
contractors constituting a distinct class of small business actors, have come under
increased regulatory attention. Federally, the passage of the Independent Contractors Act
2006 (Cth) ('IC Act') and the addition of 'sham contracting' provisions to
* Faculty of Law, University of Sydney. I would like to thank Andrew Stewart for advice in
developing the ideas for this paper, Joellen Riley and Brett Williams for their comments
during the writing of this version of the paper and the anonymous referees for their helpful
suggestions. All errors or omissions remain my own.
1 For discussion of the definition of employment and the recent push to move beyond this
definition see the collection of chapters in Guy Davidov and Brian Langille (eds),
Boundaries and Frontiers of Labour Law (2006).
2009 Collective Bargaining and the Trade Practices Act 1974 (Cth) 264
the federal workplace relations legislation 2 singled out independent contractors as a

separate and distinct group for regulation. Further, the policy platforms of the Australian
Labor Party and the federal Liberal / National Coalition emphasise a commitment to
supporting 'the choice of Australians to pursue a career as independent contractors'. 3
This increase in regulatory attention at the federal level was partially prompted by a
desire on the part of the former Coalition government to exclude independent
contractors from State government legislation aimed at offering some of these workers
labour law style protections. 4 However, it has also contributed to the development of
interest in labour law academics in exploring the regulatory environment applicable to
these workers. 5 One particular focus of this attention has been on considering how the
working conditions of independent contractors might be protected outside the
traditional labour law context.
This paper falls squarely within this context by asking whether or not independent
contractors in Australia can engage in collective bargaining with the explicit goal of
improving their working conditions. Independent contractors do not come under the
employee collective bargaining processes within the Fair Work Act 2009 (Cth) ('FW Act')
so cannot collectively bargain; or create, register or enforce collective agreements in
that context. 6 Instead, the capacity of independent contractors to form collectives and
2 The sham contracting provisions are currently enacted in ss 357-9 of the Fair Work Act 2009
(Cth) which prohibit misleading conduct with respect to employment relationships.

3 Australian Labor Party, National Platform and Constitution 2007, adopted at the 44th National
ALP Conference, Sydney, April 2007, 64, para 147. This view was also expressed by the
former Coalition government in the second reading speech for the IC Act where former
Minister for Employment and Workplace Relations, Kevin Andrews stated: 'In 2004 the
Coalition said we would protect the right of independent contractors to work the way they
want and we will do so.' (Commonwealth, Parliamentary Debates, House of Representatives,
22 June 2006, 10).
4 In New South Wales, s 106 of the Industrial Relations Act 1996 (NSW) had fostered a busy
unfair contracts jurisdiction in which independent contractors could challenge the fairness
of their service contracts in the NSW Industrial Relations Commission. See Joellen Riley, 'A
Fair Deal for the Entrepreneurial Worker? Self-Employment and Independent Contracting
Post Work Choices' (2006) 19 Australian Journal of Labour Law 246, 252.
5 Since around the time of the passage of the IC Act, there have been two books and a
number of articles considering the regulation of independent contractors: Shae McCrystal,
'Regulating Collective Rights in Bargaining: Employees, Self-Employed Persons and Small
Businesses' in Christopher Arup et al (eds), Labour Law and Labour Market Regulation (2006)
597; Michael Rawling, 'The Regulation of Outwork and the Federal Takeover of Labour
Law' (2007) 20 Australian Journal of Labour Law 189; Riley, 'A Fair Deal for the
Entrepreneurial Worker?', above n 4; Joellen Riley, Independent Work Contracts (2007);

Andrew Stewart, Understanding Independent Contractors (2007). Interest in the regulation of
work performed outside the context of employment has also been explored by authors in
other jurisdictions. See, eg, Cynthia Cranford et al, Self-Employed Workers Organize: Law,
Policy, and Unions (2005).
6 Unless otherwise stated, the substantive provisions of the FW Act apply to 'employees'
employed by 'employers' within the definition of employer in s 12 of the FW Act. The word
employee is not defined, so the Act relies upon the common law definition of 'employee',
workers with a contract of service, which is determined at common law through the
'multiple indicia test'. See Hollis v Vabu Pty Ltd (2001) 207 CLR 21 and for discussion of the
legal distinction between employees and independent contractors see Rosemary Owens
bargain to improve their working conditions falls entirely within the commercial
sphere where their collective activities may attract legal liability under the doctrine of
restraint of trade, breach of contract, economic duress, the economic torts or the anti-
competitive conduct provisions of the TP Act. 7
While the common law is generally hostile to collectives of labour and the TP Act
renders most collective action unlawful, it has been acknowledged by competition
regulators that there may be circumstances in which collective bargaining by small
businesses, which includes independent contractors, could be appropriate. The 2003
Dawson Review of the anti-competitive conduct provisions of the TP Act concluded that:
Collective bargaining by a number of competing small businesses may be necessary if
they are to achieve bargaining power to balance that of big businesses with which they have
to deal. Collective bargaining at one level may lessen competition but, at another level, may
be in the public interest, provided that the countervailing power is not
excessive. 8
This argument has also been made within the policy platform of the current federal
government which states that 'Labor recognises that collective bargaining can benefit the
public by allowing small businesses and independent contractors to address imbalances
in bargaining power with larger businesses.' 9 The crucial questions raised by this
recognition of the potential public benefit from collective bargaining by small businesses
(including independent contractors) are: when will it be a public benefit to allow
collective bargaining to occur to redress power imbalances between small businesses and
larger businesses; and what objectives can legitimately be pursued by independent
contractors in such a situation? Can collective bargaining encompass the pursuit of
improved working conditions for independent contractors?
The question of when collective bargaining will produce a public benefit arises in
the context of the TP Act. Groups of small business actors who want to engage in
collective bargaining contrary to the anti-competitive conduct provisions of the TP Act
may pursue bargaining free from TP Act liability if they can convince the Australian
Competition and Consumer Commission (ACCC) of the benefit to the public of allowing
the conduct. This is the focus of this paper. When will collective bargaining undertaken
with the explicit goal of improving the working conditions of independent contractors
constitute a public benefit?
COLLECTIVE BARGAINING AND INDEPENDENT CONTRACTORS
Independent contractors, for the purposes of this paper, are labour market participants,
economically reliant upon the sale of their own labour, who are hired under a contract
for their services rather than an employment contract (a contract of service). 10 A
worker hired under an employment contract has access to collective bargaining
and Joellen Riley, The Law of Work (2007) chap 4; Breen Creighton and Andrew Stewart,
Labour Law (4th ed, 2005) chap 11.

7 Shae McCrystal, 'Collective Bargaining by Independent Contractors: Challenges from
Labour Law' (2007) 20 Australian Journal of Labour Law 1, 14–26.
8 Daryl Dawson, Jillian Segal and Curt Rendell, Review of the Competition Provisions of the
Trade Practices Act (2003) 15 ('Dawson Review').
9 Australian Labor Party, above n 3, 64, para 154.
10 See above n 6.
through either the federal workplace relations system under the FW Act, or if they are
not covered by the FW Act, through one of the State industrial relations systems.
Collective bargaining by employed workers is not subject to certain aspects of the TP Act.
Under s 51(2)(a) of the TP Act, the anti-competitive conduct provisions of the Act do
not apply to conduct in relation to contracts, arrangements or understandings relating
to the remuneration, conditions of employment, hours of work or working conditions of
employees to the extent that the provisions relate to employment conditions. 11 However,
a worker hired under an independent contract is treated as an individual market actor
for the purposes of the TP Act and the negotiation of a contract which deals with
remuneration, hours or conditions of work relating to that worker is subject to the TP
Act prohibitions on contracts or arrangements that substantially lessen competition,
price fixing and collective boycotts. 12 These provisions prevent that worker from
negotiating with a labour purchaser in a collective with other workers hired under
similar (or identical) contractual provisions. 13
Workers engaged under independent contracts for their services work under a wide
variety of contractual arrangements. Judy Fudge has shown that work is performed by
independent contractors on a 'continuum' that includes 'employees who are falsely
labelled as self-employed, franchisees, skilled crafts people, independent professionals
and owners of incorporated businesses who employ many workers'. 14 The spectrum
across which independent contractors work also manifests in the wide array of rates of
remuneration and working conditions experienced by these workers. In Canada,
Fudge points to research showing that 'own account' independent contractors (those that
do not hire their own employees) earn less on average than employed workers and
have access to fewer benefits. 15 In Australia, Matthew Waite and Lou Will have
demonstrated that 'self-employed' contractors (those who do not have their own
employees) work in a range of industries including low and high skilled occupations
11 Employment is not further defined within the TP Act, so the exclusion of activities relating
to 'employment' conditions relies upon the common law definition of an employment
contract. See above n 6. The continued application of this exemption has been challenged
by some sections of the business community; see Australian Chamber of Commerce and
Industry, Workplace Relations and Trade Practices: Reconciling Competition with Collectivism
(2003) <http://www.acci.asn.au/text_files/issues_papers/Labour_Relations/LR47.pdf> at
3 August 2009.
12 TP Act s 45(2).
13 There are some specific State statutory provisions that allow for collective bargaining by
certain groups of contractors. In NSW the Industrial Relations Act 1996 (NSW) ch 6, pt 3
provides for the approval of collective agreements created by drivers of public vehicles and
carriers. In Victoria, the Owner Drivers and Forestry Contractors Act 2005 (Vic) s 25 allows for
the appointment of bargaining agents by groups of contractors. Both Acts authorise

conduct in pursuit of contracts covered by the legislation for the purposes of the TP Act
and the National Competition Code — Industrial Relations Act 1996 (NSW) s 310A; Owner
Drivers and Forestry Contractors Act 2005 (Vic) s 64. The application of these regimes to
services contracts falling within federal jurisdictional competence is not excluded by the IC
Act s 7(2); see Riley, 'A Fair Deal for the Entrepreneurial Worker', above n 4.
14 Judy Fudge, 'Fragmenting Work and Fragmenting Organizations: The Contract of
Employment and the Scope of Labour Regulation' (2006) 44 Osgoode Hall Law Journal 609,
621. For a useful illustration of the spectrum of self-employed work see Cranford et al,
above n 5.
15 Fudge, above n 14, 621.
and include a diverse range of working arrangements including independent

contractors engaged by only one or two major labour purchasers. 16
Collective bargaining is not necessarily appropriate for all workers across this
continuum. In particular, it may not be useful for genuinely independent workers who
service a wide range of clients across a number of different contracts. 17 Combination
by these independent contractors who are able to pick and choose clients and set their
own contract rates may be substantially anti-competitive in effect. However, labour
market participants who are economically dependent upon contracts with a sole or
limited number of major labour purchasers or who have limited contract options for
other reasons, may benefit from access to collective bargaining in order to achieve a
degree of countervailing power in their dealings with the purchasers of their labour.
Workers in these situations fall squarely within the group identified by the Dawson
Review as likely to benefit from collective bargaining: small business actors dealing
with businesses possessing a large degree of market power. 18 This group includes both
those labour market participants who work in circumstances that substantially
resemble employment (disguised employees) but who are legally classified as
independent contractors 19 and genuine independent contractors who may have made
considerable investment in their 'business', but who are in practice economically or
logistically tied to a small number of large market actors. 20 While the focus of the
Dawson report was not explicitly focused on the working conditions of independent
contractors, the argument that small business actors may need to engage in collective
bargaining in order to achieve a measure of countervailing power invites the question
as to whether the processes established under the TP Act can be used for this purpose.
If independent contractors can seek to engage in collective bargaining to achieve
countervailing power, can they use that power to improve their working conditions?
Independent contractors who may benefit from access to collective bargaining are
generally those workers who face significant disadvantages in entering the market for
their services and who may become economically or logistically dependent on one or
two major labour purchasers who possess market power. This dependence may arise
either at the point of first contracting with a labour purchaser because the purchaser is
a monopsonist (single purchaser of labour in that market) or has a high degree of market
power despite the presence of other labour purchasers. Alternatively, dependence may
arise during the contractual relationship if the worker has invested skills or capital in
maintaining contractual arrangements with that labour purchaser or
16 Matthew Waite and Lou Will, Self-Employed Contractors in Australia: Incidence and
Characteristics (2001).
17 McCrystal, 'Regulating Collective Rights in Bargaining', above n 5, 615.
18 Dawson, Segal and Rendell, above n 8, 115.
19 Andrew Stewart has convincingly argued that 'disguised' employees should be defined as
employees for the purposes of regulating the performance of work, see Andrew Stewart,
'Redefining Employment? Meeting the Challenge of Contract and Agency Labour' (2002) 15
Australian Journal of Labour Law 235. However, while it remains possible to manipulate the
definition of employee under the common law and create an independent contractor
relationship even where the worker possesses many of the hallmarks of employment, it is
important to consider what other regulatory avenues may be utilised by these workers.
20 For discussion of those genuinely independent contractors which may be in need of
regulatory protection see Andrew Stewart, 'Good Faith and Fair Dealing at Work' in Arup
et al (eds), above n 5, 579, 595.
where the worker has become part of a bureaucratic hierarchy. In the US context, Warren
Grimes has referred to this power held by a labour purchaser as 'relational market
power', where a small market actor is financially committed to an enduring contractual
relationship and the other party to the contract can change contractual terms or
make contractual decisions without the consent or input of the other party due to
their more powerful position. 21 In the employment context, Hugh Collins has referred
to the 'bureaucratic power' held by an employer over an employee once the employee
has assumed a position within the hierarchy of the employer's business. 22 In this context,
the employee works in a position of subordination to those workers above them in the
organisation. 23 Genuine independent contractors are not usually integrated into
the organisational structure of a hiring firm. However, those contractors who
are financially committed to an enduring contractual arrangement with a labour
purchaser may find themselves subject to the bureaucratic power held by those workers
in the firm responsible for decisions around the ongoing maintenance of contractual
relationships with external labour providers.
Individuals entering the labour market as independent contractors are placed at an
immediate disadvantage as compared to the purchasers of their labour because they
are dependent on their capacity to work for their livelihood. Workers are generally
unable to withhold their labour during poor market conditions or during an
oversupply of labour when the price for their labour is low. In consequence workers
are not equal market actors with the purchasers of their labour who can often increase
or decrease their consumption of labour to suit market circumstances. 24 Labour
purchasers can hire workers or fire workers in response to economic conditions. Workers
have no such choice about the supply of their labour. If workers do not work, they may
be unable to sustain their living conditions. Further, labour is perishable, it cannot be
'stored' for sale on another day when market conditions are more favourable. 25 In
addition to this disadvantage there may be substantial information asymmetries
between a labour purchaser and a labour seller. A labour purchaser has a number of
information advantages including the extent and quality of the work available, the
economic situation of the purchaser, the likelihood of the worker being offered future
or different work and the price that the purchaser pays for other workers
undertaking similar tasks. The worker has access to very little of this information and
has few opportunities to discover further information until after accepting the offered
work. Further, the fact that workers must supply their labour to a market in order to
sustain the necessities of life means that in some markets hirers of labour can behave
opportunistically, lowering the price at which they are willing to buy labour, relying
on the availability of easily substitutable sources of labour. It also
21 Warren Grimes, 'The Sherman Act's Unintended Bias Against Lilliputians: Small Players'
Collective Action as a Counter to Relational Market Power' (2001) 69 Antitrust Law Journal
195.
22 Hugh Collins, 'Market Power, Bureaucratic Power, and the Contract of Employment' (1986)
15 Industrial Law Journal 1.
23 Ibid 2.
24 Alan Hyde, 'What is Labour Law?' in Guy Davidov and Brian Langille (eds), Boundaries and
Frontiers of Labour Law (2006) 37, 55.
25 Simon Deakin and Frank Wilkinson, 'Labour Law and Economic Theory: A Reappraisal' in
Hugh Collins, Paul Davies and Roger Rideout (eds), Legal Regulation of the Employment
Relation (2000) 29, 42.
may discourage investment in the skills of individual workers, both by the hirer (who
may not want to invest in training a worker who is not integrated into their business and
who is likely to take those skills elsewhere) and by the worker, who may not see any
potential return on investment in their skills in the existing market. These are the types
of labour market disadvantages that may impact negatively upon the price at which
contractors sell their labour and which may justify collective bargaining for groups of
independent contractors in order to provide them with a degree of countervailing power
in the market for their labour.
In considering the potential for independent contractors to utilise collective
bargaining in order to improve their working conditions, it is acknowledged that there
is continuing debate over the role of collectives of labour on the operation of competitive
markets. In the labour law literature, there is an increasing focus on expanding the
traditional justifications for regulatory intervention in the labour market (including the
inherently unequal position of employees) 26 to include arguments based on
economic efficiency and labour market failure. 27 However, it is not the purpose of this
paper to enter into those debates which ask fundamental questions about why and how
we regulate labour markets. The focus here is considerably narrower. In allowing
collective bargaining by certain small businesses to occur free from potential liability
under the anti-competitive conduct provisions of the TP Act where there is a public
benefit, assumptions have been made by the legislators (on the recommendation of the
Dawson Committee) that in certain situations collective bargaining by these groups
should be permitted. This paper asks whether the concept of 'public benefit' in this
context can encompass groups of independent contractors pursuing collective
bargaining with the explicit aim of improving their working conditions. As the laws
presently stand, authorisation or notification under the TP Act on public interest
grounds is the only legal avenue that workers who are not employees have to
collectively pursue improvements to their wages and working conditions.
The paper will now examine the system for permitting proposed collective bargaining
under the TP Act, and in particular, the requirement that applicants demonstrate the net
public benefit that will result from the conduct. It will be argued that one of the main
difficulties for independent contractors seeking to utilise collective bargaining to
improve their working conditions is that competition regulators in Australia are not yet
prepared to accept an improvement in contractor working conditions as a concrete and
substantive public benefit. A redistributive approach to the benefits that flow from
bargaining conduct has long been a feature of collective bargaining in the employment
context but has not found any foot holding within competition regulation. As Davies and
Freedland have observed: 'Labour law still is uncertain how far to give market concerns
a place in its analysis, and commercial law is suspicious of arguments based on
distributional considerations rather than efficiency ones.' 28 This can make it difficult
if independent contractors seek to engage in collective bargaining in a manner similar
to that engaged in by employees. Goals that
26 For the classic exposition of this argument see Sir Otto Kahn-Freund, Labour and the Law
(2nd ed, 1977) 3–15.

27 See, eg, Deakin and Wilkinson, above n 25; Grimes, above n 21; Hyde, above n 24.
28 Paul Davies and Mark Freedland, 'Employees, Workers and the Autonomy of Labour Law'
in Collins, Davies and Rideout (eds), above n 25, 267, 271.
are accepted in the employment context (improved working conditions) have no traction
in competition analysis.
COLLECTIVE BARGAINING AND PUBLIC BENEFIT
Anti-competitive conduct and Part IV of the TP Act
Part IV of the TP Act prevents restrictive trade practices: commercial arrangements that
would be anti-competitive in effect undertaken by corporate and non-corporate actors. 29
The Part deals with a range of commercial conduct including resale price maintenance,
boycotts, exclusive dealing and misuse of market power. The prohibitions of
most relevance to collective bargaining by independent contractors are the prohibition
on price fixing (s 44ZZRD), agreements containing exclusionary provisions (s 45(2)), and
contracts, arrangements or understandings that substantially lessen competition (s
45(2)).
The focus of these provisions is on the anti-competitive effect of the impugned
conduct. 'Competition' itself is not defined in the TP Act and its meaning must be
ascertained by reference to decisions of the Australian Competition Tribunal ('the
Tribunal' (formerly the Trade Practices Tribunal)) and the Courts. 30 'Competition' is an
economic concept referring to the competitive process in which individual market
actors compete against each other to discover the kinds of goods and services that the
community wants and the manner in which these may be supplied in the most efficient
and cost effective manner, a process that has been called 'rivalrous market
behaviour'. 31 In a competitive market each actor is constrained by the presence of
other actual or potential actors who may vie for market share and must direct their
resources to their most efficient and effective use and cannot choose their own level of
profit by artificially manipulating the price or the supply of their goods or services. 32
The market in which the impugned conduct is taking place is crucial to ascertaining
the relevant state of competition. 33 In this context competition may be lessened in a
market in which an actor supplies or acquires goods or services or it may be lessened
29 The TP Act primarily applies to corporate conduct or conduct by individuals who are
involved in interstate or international trade or commerce; or in dealings with the
Commonwealth; or in trade and commerce in a Territory (TP Act s 6). Coverage of the anti-
competitive conduct provisions to natural persons involved purely in intrastate trade and
commerce and who are not dealing with the Commonwealth government is achieved
through the National Competition Code (NCC) which involves the replication in State and
Territory legislation of Part IV to apply to persons.
30 While 'competition' is not defined in the TP Act, s 45(3) clarifies that 'competition' for the
purposes of s 45 in relation to a provision (or proposed provision) of a contract,

arrangement or understanding, means competition in any market in which a corporation
that is a party to the contract, arrangement or understanding supplies or acquires or is
likely to supply or acquire goods or services.
31 Re Queensland Co-Operative Milling Association Ltd (1976) 8 ALR 481, 515 (Woodward J,
Shipton and Brunt (Members)); Stirling Harbour Services Pty Ltd v Bunbury Port Authority
[2000] FCA 1381, [11] (Burchett and Hely JJ).
Shipton and Brunt (Members)).

33 Ibid 515–16; Outboard Marine Australia Pty Ltd v Hecar Investments No 6 Pty Ltd (1982) 44
ALR 667, 669 (Bowen CJ and Fisher J).
in a market in which the target of anti-competitive behaviour operates (reduction in

the capacity of the target to compete in a market in which they supply services or sell
goods). 34 In assessing competition in a market, relevant market factors which assist in
determining the extent to which 'rivalrous market behaviour' by individual actors is
constrained by market forces include: the number and size of independent sellers; the
height of barriers to entry (how easy is it for new entrants to enter the market); the extent
to which products are promoted and differentiated; the extent of vertical integration
between customers and suppliers; and the nature of any stable or formal arrangements
between actors which restrict their capacity to act independently. 35
Against this background, it is possible to show how collective bargaining by
independent contractors may be categorised as anti-competitive conduct falling within
the prohibitions in s 45(2) and the prohibition on price fixing. Collective arrangements
entered into by a group of independent contractors concerning the supply of their labour
to a single or multiple targets may constitute price fixing if they agree between
themselves or seek to negotiate collectively with the target on a set price at which they
will sell their labour (or one that they will not sell below). 36 Such behaviour reduces
price competition between those individual independent contractors. An exercise in
collective power by a group of independent contractors, such as an agreement to
withhold their labour supply to a specific bargaining target in support of a bargaining
claim, will constitute an anti-competitive collective boycott and will be in breach of the
TP Act prohibition on contracts, arrangements or understandings that contain
'exclusionary provisions'. 37 Collective arrangements that do not directly fix price but
that seek to regulate other aspects of the terms on which independent contractors
supply their labour (for example working hours and conditions) may constitute a
contract, arrangement or understanding that has the purpose, or the effect, of
substantially lessening competition, or that is likely to have that purpose or effect. 38
Price fixing and collective boycotts are prohibited outright irrespective of the actual
anti-competitive effect of the conduct in any given circumstances. It is presumed that the
impact of the arrangements is to reduce competition between parties who are
34 See TP Act s 45(3) for the definition of 'competition'.

Shipton and Brunt (Members)).
36 TP Act s 44ZZRD.
37 See TP Act s 4D definition of 'exclusionary provision' and s 45(2)(a)(i), (b)(i). The High
Court in Visy Paper Pty Ltd v ACCC (2003) 216 CLR 1, 25 (Kirby J) cautioned against the use
of the label 'collective boycott' when referring to arrangements containing exclusionary

provisions because the potential scope of conduct that could fall within the meaning of an
exclusionary provision is greater than that suggested by the term 'boycott'. However, in the
context of this paper, the term 'collective boycott' will be used when referring to
agreements between independent contractors which contain an exclusionary provision
involving a refusal to deal with a target until that target agrees to a demand because it is
the form of potential exclusionary provision that is most relevant for these workers if they
engage in collective bargaining. The use of the term 'collective boycott' does not imply that
this is the only form of activity that could potentially breach the prohibition on
exclusionary provisions, but it is the most relevant type of exclusionary provision for the
purposes of this discussion.
38 TP Act s 45(2)(a)(ii), (b)(ii). An example of collective bargaining by independent contractors
involving exclusionary provisions and conduct which substantially lessened competition is

Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159.
acting collusively. In acting in combination to establish price or impose a collective

restriction on their dealings with another market actor, they have reduced a market
pressure that would otherwise be operational. Other collective arrangements are
prohibited if it can be shown that the contract, arrangement or understanding has the
purpose or the effect of 'substantially lessening competition' in a relevant market or
where it would be likely to have that effect. In these cases the focus is the current state of
competition in any given market and on whether or not the members of the group had
the purpose of substantially reducing competition, are likely to substantially reduce
competition, or actually have substantially reduced the existing state of competition.
The prohibitions in s 45(2) in combination with general difficulties attendant on
organising collective bargaining (access to information and resources) and the
difficulty, particularly for lay people in assessing whether conduct 'substantially
lessens competition' are a potent combination to discourage any collective activity by
independent contractors, including activity that may not actually be anti-competitive
in effect. 39 To be able to use collective bargaining in most circumstances, but particularly
where the independent contractors' goal is the improvement of their working conditions
through the fixing of prices or conditions or an exercise in collective power, they
would have to seek immunity from liability under s 45(2) through the TP Act
authorisation and notification processes.
Authorising and notifying collective bargaining

As noted above, Part VII of the TP Act provides for parties to make applications to the
ACCC for permission to engage in conduct that might otherwise occur in breach of the
Act. The application may take the form of a request for the ACCC to authorise the
proposed conduct. 40 Alternatively, in the case of proposed collective bargaining
involving transaction values of less than three million dollars, the applicant may notify
the ACCC of the proposed conduct. 41 The ACCC has 14 days to object to the conduct
proposed in the notification. 42 If no objection is made, the notification will stand and
immunity from the relevant provisions of the TP Act will apply unless the ACCC
subsequently objects to the notification. 43 Protection only extends to the conduct set
out in the application for the purposes of the relevant TP Act provisions. It does not
39 For example in ACCC Objection Notice in respect of a collective bargaining notification lodged by
Australian Medical Association (Vic) Pty Ltd on behalf of a group of doctors at Latrobe Regional
Hospital, 19 December 2007, CB00004, Public Register Number C2007/1749, the Australian
Medical Association which had lodged the notification submitted that doctor members of the
proposed bargaining group were 'often uncertain about which topics they are permitted
to collectively discuss freely' at [3.99]. Objection notices are accessible on the ACCC website
at <http://www.accc.gov.au>.
40 TP Act s 88. For discussion see Rhonda Smith, 'Authorisation and the Trade Practices Act:
More About Public Benefit' (2003) 11 Competition and Consumer Law Journal 21.
41 TP Act s 93AB. Regulations passed in March 2007 increased the contract price threshold in
certain industries (petrol retailing — $15 million; new motor vehicle retailing — $20
million; farm machinery retailing — $10 million and primary production — $5 million):
Trade Practices Regulations 1974 (Cth) regs 71A–71D. For discussion see Shae McCrystal,
'Collective Bargaining and the Trade Practices Act: The Trade Practices Legislation
Amendment Act (No 1) 2006 (Cth)' (2007) 20 Australian Journal of Labour Law 207.
42 TP Act s 93AD(1).
43 TP Act s 93AC does not limit the use of objection notices to the initial application period.
extend to conduct that is not set out in the application and does not protect against
liability under the common law or other legislative regimes. 44
The capacity to seek authorisation of collective bargaining behaviour that may
otherwise breach s 45(2) is longstanding. Historically, independent contractors have
been unlikely to seek, or obtain, authorisation to engage in collective bargaining except
where they are members of a professional association that has undertaken the
authorisation application on their behalf. 45 For example, for 2005 the ACCC website
lists only eight determinations of applications for authorisation of collective
bargaining. Of these applications four related to the sale of produce by growers or
farmers, 46 one involved a group of councils seeking authorisation to collectively
purchase garbage disposal services, 47 two involved peak bodies seeking to negotiate
prices on behalf of their members 48 and one involved a small business seeking to
bargain collectively with its contractors! 49 The website listing of authorisation
determinations for 2006 reveals only a marginally different picture. Of nine collective
bargaining authorisation determinations, two dealt with applications from associations
representing contractor workers for approval to engage in collective bargaining. 50
The notification provisions, inserted in response to concerns that the authorisation
process could be 'expensive, time consuming and impose an unnecessary burden on
small business' 51 commenced operation in January 2007. However, despite the simpler
process, there has not been any upsurge in collective bargaining applications by
independent contractors. Of the 10 substantive notifications made to the ACCC over
the first two years of the operation of the provisions, only three (two of which involved
substantially the same circumstances) have involved groups of independent
44 See McCrystal, 'Collective Bargaining by Independent Contractors', above n 7.

45 Authorisation applications and decisions are accessible on the ACCC website at
<http://www.accc.gov.au>.
46 The authorisations were for tobacco growers (A90941–A90943), chicken growers (A90901–
A90905) and two for milk vendors (A90927; A90965–A90973).
47 Determination, Applications for authorisation by the Southern Sydney Organisation of Councils in
respect of joint tendering and contracting for the services of contractors to provide residual waste
transfer, processing and disposal services to respective local government areas, 13 April 2005,
Authorisation Number A90926, Public Register Number C2004/989.
48 The authorisations were for TAB agents (A90952) and motor vehicle storage on wharves
(A90937).
49 Determination, Applications for authorisations lodged by CSR Building Products Limited in
relation to collective bargaining by its contracted owner-drivers in the Brisbane area, 31 August
2005, Authorisation Numbers A90964 and A90965, Public Register Number C2005/598,
C2005/547.
50 Determination, Application for authorisation lodged by the Tasmanian Forest Contractors
Association Ltd in relation to collective bargaining arrangements between its members and various
Tasmanian wood companies, 22 February 2006, Authorisation Number A90974, Public
Register Number C2005/1079 (denied); Determination, Application for authorisation lodged by
Australian Swimmers Association on behalf of its members in relation to collective bargaining with
Swimming Australia Limited, 22 March 2006, Authorisation Number A40106, Public Register
Number C2006/260 (approved).
51 Commonwealth, Parliamentary Debates, House of Representatives, 17 February 2005, 2
(Christopher Pearce).
contractors seeking to engage in collective bargaining. 52 This take up rate has been
extremely slow, in keeping with the standard set by authorisation applications. It is
suggested that one of the primary reasons for the apparent lack of interest in the
collective bargaining notification process by independent contractors relates to the
substance of the public benefit test that is applied to all authorisation applications and
notifications. Improvement in working conditions is likely to be one of the main
motivating factors for groups of independent contractors to lodge a notification.
However, in practice the public benefit test is a significant obstacle to independent
contractors utilising an authorisation or notification to engage in collective bargaining
in order to improve their working conditions. While the test applies to both
notifications and authorisations, the following discussion will examine the public benefit
test in the context of notifications because most collectives of independent contractors
will be able to bring their conduct within the notification requirements. The three
notifications lodged to date will be used to illustrate the effect of the operation of the
test.
The public benefit test
When a collective bargaining notification is lodged with the ACCC, the ACCC may issue
an objection notice which will have the effect of stopping the notification from taking
effect, if it is satisfied that any public benefit from a proposed collective boycott or price
fixing arrangement is outweighed by the likely public detriment. 53 Where the conduct
disclosed by the notice is a contract, arrangement or understanding that may
substantially lessen competition, the ACCC may only issue an objection notice if it is
satisfied that the contract, arrangement or understanding would actually have the
effect of substantially lessening competition and any public benefit of the conduct is
likely to be outweighed by the likely public detriment that may result from the lessening
of competition. 54 When assessing price fixing and collective boycott notifications the
ACCC can consider all possible public detriments, but when considering arrangements
that lessen competition, the ACCC can only consider public detriments flowing from the
lessening of competition. 55
In practice there are a number of steps to the public benefit test. 56 The first step is to
identify the market in which the proposed collective bargaining will take place and
52 The ACCC notification register is accessible on the ACCC website at
<http://www.accc.gov.au>. The other notification applications have followed a similar

pattern to the one demonstrated by the discussion of authorisations and have, for example,
involved citrus growers (Notifications CB00001 and CB00002, C2007/1525); arrangements

for medical insurance fees (Notification CB00006, C2007/2172) and franchise operators
(Notifications CB00009–CB00056, C2008/1648).
53 TP Act s 93AC(1).
54 TP Act s 93AC(2).
55 This interpretation is applied by analogy with the authorisation provisions which use
identical language and were interpreted in this manner in Australian Association of Pathology
Practices Incorporated (2004) 180 FLR 44. The wider range of public detriments that can be
taken into account by the broader test was illustrated in Re VFF Chicken Meat Growers
Boycott Authorisation [2006] ACompT 2 where the Competition Tribunal considered the
animal welfare implications of an application to authorise proposed collective boycott
conduct.
56 These steps are outlined in Australian Competition and Consumer Commission, Guide to
Collective Bargaining Notifications (2008) ('ACCC Guide').
any markets which will be impacted by the proposed conduct. Once the market is
established, the ACCC establishes the likely effect of the proposed conduct on the market
by examining the counterfactual, expressed as the 'future with and without test'. The
ACCC considers the likely operation of the market if the proposed conduct is not allowed
to proceed (which can usually be illustrated through the current operation of the market
taking into effect any known future variables) and the likely operation of the market if
the conduct is allowed to proceed. From this information, the ACCC draws out the
public detriments that would occur from the proposed conduct: consequences that are
likely to be anti-competitive in effect, or in the case of price fixing or collective
boycotts any relevant public detriments. The ACCC then draws out the public benefits
that would occur from the proposed conduct and weighs them against the public
detriment. The conduct will not be allowed to proceed unless there is a net public
benefit, ie, there must be enough public benefit to cancel out any public detriment and
leave some public benefit from the proposed conduct remaining. The elements of this
test that assume the most importance are the characterisation of public benefit and public
detriment.
Public benefit
The phrase 'benefit to the public' is not defined under the TP Act and must be gleaned
from decisions of the Tribunal. The accepted legal meaning of public benefit was set
out in Re Queensland Co-Operative Milling Association Ltd ('Re QCMA') which advocated
adoption of
the widest possible conception of public benefit. This we see as anything of value to the
community generally, any contribution to the aims pursued by the society including as one
of its principal elements … the achievement of the economic goals of efficiency and
progress. 57
Any public benefit alleged to result from proposed conduct must be a substantial benefit
that is directly referable to that conduct and which is not otherwise available. 58
This is a broad conception of public benefit, encompassing both benefits that clearly
constitute a by-product of the competitive process (efficiency gains) and the broader
public good, which is a more intangible measure. The potential breadth of benefits that
could be 'of value to the community generally' means that assessments of public
benefit in practice require the exercise of value judgements on the part of competition
regulators. 59 In practice this means that the capacity of a group of independent
contractors to demonstrate net public benefit from their proposed conduct is almost
entirely dependent upon the approach taken to the meaning of public benefit by the
ACCC and the Tribunal.
The primary focus of the public benefit test is on the economic benefits that are
alleged to flow from the proposed conduct through the achievement of efficiency
gains. This was emphasised by the Tribunal in Re 7-Eleven Stores Pty Ltd:
Plainly the assessment of efficiency and progress must be from the perspective of society
as a whole: the best use of society's resources. We bear in mind that (in the language of
economics today) efficiency is a concept that is usually taken to encompass 'progress';
57 (1976) 8 ALR 481, 510 (Woodward J, Shipton and Brunt (Members)).

58 Ibid.
59 Justice Robert Shenton French, 'Competition Law — Covering a Multitude of Sins' (2004) 12
Competition and Consumer Law Journal 125, 129–30.
and that commonly efficiency is said to encompass allocative efficiency, production

efficiency and dynamic efficiency. 60
The focus on public benefits that produce efficiencies, and in particular allocative,
production and dynamic efficiencies can be seen from suggested possible public benefits
of collective bargaining conduct set out in the ACCC Guide. 61 Allocative efficiency
occurs when society's resources are allocated to their most valued use, an outcome which
can be achieved if competitive markets drive business actors to allocate resources to their
most efficient and productive uses. Collective bargaining proposals that enable all parties
to have a greater say in contractual arrangements may assist in producing allocative
efficiencies if greater contractual input allows for more effective management of
resources. 62 Production efficiency occurs when costs are minimised and waste is
avoided, an outcome which may be prompted through competitive pressures exerted on
business actors by actual or potential competitors. Productive efficiency public benefits
may be obtained through collective bargaining arrangements which allow for greater
efficiencies in contracting and management processes producing transaction cost
savings. 63 Dynamic efficiency occurs when business actors invest in innovation in order
to improve existing products or develop new products. Competitive pressures
encourage innovation in order to 'get ahead' of business rivals. Dynamic efficiency may
also be achieved through collective bargaining arrangements which increase the
exchange of information between bargaining participants, enabling business actors to
make better decisions and potentially encouraging investment and training. 64
The public benefits emphasised in the discussion so far are all essentially economic
gains. Reduced transaction costs, greater allocative efficiency and innovation should lead
to the more efficient distribution of resources. A related question when considering
public benefits flowing from collective bargaining conduct is where any suggested gains
go. Will it constitute a public benefit if a reduction in transaction costs simply leads to an
increased profit margin for a business actor? This question is important in the context
of collective bargaining by independent contractors undertaken with the aim of
improving their working conditions. If the 'public' in
'public benefit' only means the ultimate consumers of goods and services, it will be
more difficult for collectives of independent contractors to argue that the utilisation of
a transaction cost saving to increase their own rate of remuneration constitutes a
'public benefit'.
The 'public' in 'public benefit' could constitute the consuming public: the end users
or purchasers in any production chain. In this context, to constitute a public benefit,
efficiency gains are measured by the extent to which they flow to the consuming
public, an approach known as the 'consumer welfare standard'. Alternatively, the
'public' in 'public benefit' could encompass all members of the Australian community,
including the members of the collective bargaining group. Here, to constitute a public
benefit, efficiency gains from collective bargaining would be measured by the extent that
they flow to any members of the Australian community, an approach known as
60 (1994) ATPR ¶41-357, 42 677.

61 ACCC Guide, above n 56.
62 Ibid 28–9.
63 Ibid 29–30.
64 Ibid 30–1.
the 'total welfare standard'. 65 In this approach there is no qualitative difference

between a benefit which flows to consumers and one which flows to the bargaining
parties. Either result constitutes an equal public benefit. 66
The Tribunal has confirmed that the correct approach to characterising public
benefit is the total welfare standard. Efficiency gains and savings do not necessarily have
to be passed on to consumers in order to constitute a public benefit. The objective behind
the public benefit test is not redistributional. In Qantas Airways Ltd ('Qantas') the Tribunal
commented: 'In our view, the purpose of Part IV of the Act is the promotion of
competition, as a means by which to promote efficient resource allocation and maximise
community welfare, rather than any distributional objective'. 67 The aim of competition
law is not to distribute the benefits of competition to either consumers or producers;
distribution to either is generally appropriate. However, despite this the Tribunal has not
made an unqualified endorsement of the total welfare standard. In Qantas, the Tribunal
stated:
In our view, the objective and statutory language of the Act, as well as precedent, support
the use of a form of the total welfare standard as the most appropriate standard for
identifying and assessing public benefit. … the phrase 'benefit to the public' is to be given
a broad definition which, in addition to group interests, takes into account (with
appropriate weighting) individual interests to the extent that such interests are
considered by society to be worthy of inclusion and measurement. 68
The Tribunal endorses a form of the total welfare standard which takes some
account of whether there is any pass through of efficiency benefits that flow from
collective bargaining (or any anti-competitive conduct) to consumers. Efficiencies do
not have to be passed on to consumers, but if the gains only flow to a limited number
of members of the community, for example a small number of shareholders of one of
the relevant companies, then the public benefit claimed will carry less weight. 69 This
means that if proposed collective bargaining by independent contractors creates
efficiency gains but the bargaining group seeks to retain all of those gains in the form
of increased remuneration, the claimed benefit will carry less weight in the overall
assessment.
While the main focus of the public benefit test is the establishment of economic
benefits in the form of efficiency gains, the test extends to other benefits that are not
economic in nature. The exact extent of the benefits which may be claimed outside the
context of efficiency gains has not been definitively defined. The Tribunal has reflected
that:
65 For a discussion of private versus public benefit and the construction of the 'public' in the
context of ACCC and Australian Competition Tribunal authorisation decisions see Robert
Officer and Philip Williams, 'The Public Benefit Test in an Authorisation Decision' in
Megan Richardson and Philip Williams (eds), The Law and the Market (1995) 157, 158–9; John
Duns, 'Competition Law and Public Benefits' (1994) 16 Adelaide Law Review 245, 253–6.
66 Qantas Airways Ltd [2004] ACompT 9, [170] and see Maureen Brunt, 'The Australian
Antitrust Law after 20 Years — A Stocktake' (1994) 9 Review of Industrial Organization 483,
507.
67 [2004] ACompT 9, [179].
68 Ibid [185], [187].
69 Ibid [185].
It is undesirable to attempt to fix in advance the limits of what the concept of "benefit to the
public" encompasses or to exclude, in advance, from its ambit any contribution to the
legitimate aims pursued by society. 70
Any non-economic public benefits that are claimed must constitute a contribution
to the legitimate aims pursued by society and must be directly referable to the
proposed collective bargaining conduct. Exactly what this means can be difficult to
establish and there is no other clear benchmark to measure claimed non-economic public
benefits. Further, the ACCC Guide does not mention any incontestable non- economic
public benefits. 71 However, Corones provides a list of non-economic public benefits
which have been accepted by the ACCC in a variety of different contexts (not confined
to collective bargaining authorisations and notifications). 72 This list includes the
promotion of sport, the promotion of breast-feeding by mothers, the creation of increased
employment opportunities, the promotion of public safety, the reduction of landfill and
the promotion of research. 73 Further, the promotion of the 'happiness' of doctors, if it
encouraged them to retain their positions in an outer suburban hospital, was considered
to possibly constitute a public benefit in a notification relating to collective
bargaining. 74
This general survey demonstrates that 'the legitimate aims pursued by society' can
be construed broadly provided that the claim is a legitimate one, relates to the general
public good and flows from the proposed conduct. However, the ACCC in its Guide to
Notifications also identifies potential effects of collective bargaining which it does not
consider to be public benefits. Demonstrating a change in bargaining power will not of
itself constitute a public benefit. 75 This is despite the conclusions of the Dawson
Review that 'collective bargaining by a number of competing small businesses may be
necessary if they are to achieve bargaining power to balance that of the big businesses
with which they have to deal'. 76 Instead, a change of bargaining power is only relevant
if it assists in producing some other claimed public benefit. 77 Increased fairness will
not of itself constitute a public benefit 'in the absence of examples of extreme or
unconscionable conduct in past negotiations'. 78 Improved industrial harmony will be
unlikely to constitute a public benefit 'in the absence of recent examples of industrial
disputes'. 79
The discussion so far has outlined the approach taken by the ACCC and the
Tribunal to the ascertainment of public benefit. While non-economic benefits can be
included in any assessment, the emphasis (which is particularly pronounced in the
ACCC Guide) is on any efficiency or competition gain of value to the community
rather than anything in more general terms. This approach is understandable in the
70 Re Rural Traders Co-Operative (WA) Ltd (1979) 37 FLR 244, 261–2.

71 ACCC Guide, above n 56, 28–32.
72 Stephen Corones, Competition Law in Australia (4th ed, 2007) 186.
73 Ibid.
74 ACCC Objection Notice in respect of a collective bargaining notification lodged by Australian
Medical Association (Vic) on behalf of a group of doctors at Latrobe Regional Hospital, 19

December 2007, CB00004, Public Register Number C2007/1749.
75 ACCC Guide, above n 56, 28.
76 Dawson, Segal and Rendell, above n 8, 15.
77 ACCC Guide, above n 56, 28.
78 Ibid 31.
79 Ibid 32.
context of legislation regulating competition, in particular given the emphasis placed

in Re QCMA on the achievement of the economic goals of efficiency and progress as
one of the principal aims of society. 80 However, in construing public benefit almost
entirely in competition terms, the capacity to argue for improved working conditions
and remuneration or improved industrial harmony as a demonstrable benefit to the
community generally is substantially reduced or removed altogether. Independent
contractors must rely on establishing efficiency gains from proposed collective
bargaining rather than utilising the types of arguments that have traditionally been
brought to bear to justify collective bargaining by employed workers, including
inequality of bargaining power. The difficulty is that there may be very few concrete
efficiency gains that independent contractors can identify from their proposed
collective bargaining. As Grimes has noted, '[t]he collective action of small rival sellers
and buyers designed solely or primarily to create offsetting power is an unlikely
source for most readily recognized efficiencies'. 81 However, Grimes also argues that
increased costs do not necessarily equate with anti-competitive conduct, particularly
where all elements of the bargain including quality, service and safety are taken into
account. 82 If collective bargaining can assist in improving the quality of product, the
range of choices available, the level of service offered or the safety of the product,
increased cost will not necessarily 'signify an injury to competition'. 83 However, in
bargaining situations it may not always be possible to demonstrate these benefits.
An additional problem for independent contractors with respect to the construction
of public benefit relates to the modified form of the total welfare standard. As noted
above, the Tribunal endorses an approach to public benefit that, within limits,
embraces the distribution of public benefits to either producers or consumers.
However, this fact is not immediately evident from the approach taken by the ACCC
to authorisation applications and, since 2007, collective bargaining notifications.
Rhonda Smith has argued that the ACCC construes any benefits flowing to the
participants in anti-competitive conduct as 'private' benefits rather than public
benefits, only accepting that there is a public benefit when at least some of the benefit
is passed through to consumers in the form of lower prices or improved terms. 84 This
apparent reluctance to fully embrace the total welfare standard is reflected in ACCC
literature outlining the collective bargaining notification process. The list of public
benefits is focused primarily on the efficiency benefits to be gained from collective
bargaining and emphasises the point that where savings accrue, these are of greater
weight where they accrue 'broadly', or in other words, where they are passed on to
consumers. 85 It is difficult to see in the ACCC discussion any clear accommodation of
the modified total welfare standard where benefits to the bargaining participants are
considered to rank (almost) equally with benefits to the public. This makes it more
difficult for independent contractors to seek to retain efficiency gains in the form of
improved terms and conditions when presenting a case to the ACCC.
80 Re QCMA (1976) 8 ALR 481, 510 (Woodward J, Shipton and Brunt (Members)).
81 Grimes, above n 21, 207.
82 Ibid 210.
83 Ibid.
84 Smith, above n 40, 26–7.
85 See, eg, ACCC Guide, above n 56, 29 under the heading 'Transaction cost savings'.
However, even if we accept that in assessing public benefit the ACCC treats
improvements in the welfare of the bargaining parties and improvements in consumer
welfare (almost) equally, it is not clear that the total welfare approach accommodates
collective bargaining undertaken with the explicit aim of improving contractor
working conditions. In many circumstances, collective bargaining undertaken in order
to improve working conditions will result in increased cost, usually borne by consumers,
and may not be measurable in terms of efficiency gains. To increase remuneration or
introduce restrictions on the use of labour, the cost of labour may have to increase.
What happens when the immediate result of collective bargaining is to increase cost
rather than result in an efficiency saving? Can this ever constitute a public benefit?
Public detriment
The converse of public benefit for the purposes of applying the public benefit test is
public detriment. The ACCC must assess whether or not the public benefits identified
outweigh any likely public detriments that could flow from the proposed conduct. Public
detriment is quantified by examining the anti-competitive effects of the proposed
conduct in the relevant market. The approach of the ACCC to the assessment of public
detriment is different to the approach taken to public benefit. In assessing the proposed
conduct in each notification lodged to date, the ACCC has stated:
Generally speaking, competition between individual businesses generates price signals
which direct resources to their most efficient use. Collective agreements to negotiate
terms and conditions can interfere with these price signals and accordingly lead to
inefficiencies. However, the extent of the detriment and the impact on competition of the
collective agreement will depend upon the specific circumstances involved. 86
In each case the ACCC makes a preliminary assumption that the conduct is anti-
competitive and the goal of the assessment is to see how anti-competitive. There does
not appear to be any acknowledgement of the potential that the conduct may not be anti-
competitive at all.
After beginning with this assumption, the ACCC examines the proposed collective
bargaining conduct in the context of the market in order to discover if there are any
factors which limit the potential anti-competitive effect of the proposed conduct. If
there are significant existing market inefficiencies and considerable market power on the
side of the target of the proposed conduct, then the anti-competitive effect of the
proposed conduct will be lessened. If the proposed conduct does not substantially impact
upon the market as a whole, then the anti-competitive impact will be further reduced.
There are a number of factors that are relevant to this determination.87 Where current
levels of negotiation between labour suppliers and labour purchasers are low or non-
existent, the anti-competitive effect of the proposed bargaining conduct will be limited
because the market does not currently produce healthy negotiations.
86 See, eg, Draft Objection Notice in respect of a collective bargaining notification lodged by
Australian Medical Association (Vic) Pty Ltd on behalf of a group of doctors at Werribee Mercy
Hospital, CB00005, Public Register Number C2007/1930, 8 November 2007, [3.58]; Assessment:
collective bargaining notification lodged by the Australian Newsagents' Federation, CB00003, Public
Register Number C2007/1612, 13 September 2007, [3.25]. The paragraph appears in all
notification decisions published by the ACCC to date, with a slight (but not substantive)
variation in later notifications.
87 The following factors are taken from the ACCC Guide, above n 56, 24–8.
Compulsion is also an important factor. Compelling market actors to participate in a

collective bargaining process either as members of the group or as a target is
considered to be highly anti-competitive in effect. The inclusion of strictly voluntary
arrangements, that permit members of the bargaining group to opt in or opt out at any
time, or that allow members of the group to negotiate individually, will lessen the anti-
competitive effect of the proposed conduct. The size and coverage of the bargaining
unit in relation to the market must also be considered. Smaller bargaining groups with
low relative density will have a lower anti-competitive effect. Finally, if the proposed
bargaining group already holds some degree of power in the relevant market, this will
exacerbate the anti-competitive effect of the proposed conduct.
Once the factors that limit or enhance the potential anti-competitive effect of the
proposed conduct have been considered, the ACCC will ascertain the overall anti-
competitive detriment posed by the proposed conduct. A notification that involves a
group with low membership density (in comparison to the number of actual and
potential participants in the particular market for services), no existing market power,
low levels of existing negotiation and which does not propose to compel any members
of the bargaining group or the target to participate in the bargaining will be considered
to have very low anti-competitive detriment. However, the presence of high density,
binding outcomes or the opportunity to engage in coercive bargaining tactics, will
produce a high level of anti-competitive detriment that will be very difficult to overcome
by demonstrating a commensurately high degree of public benefit.
In practice it will be virtually impossible for a notification which includes proposed
potential collective boycott activity to survive the ACCC process. During the history of
the authorisation scheme, the ACCC has only approved one request for authorisation
of potential collective boycott activity 88 (in this case a collective refusal to deal) and
this authorisation was overturned on appeal to the Tribunal. 89 The circumstances of
this application involved the Victorian Farmers Federation (VFF) acting on behalf of
chicken meat growers who were seeking authorisation to permit individual growers of
to form 'grower groups' to act collectively in order to negotiate fees and conditions for
chicken growing contracts and engage in collective boycotts. 90 The targets of the
proposed bargaining were chicken processors who supply day old chicks to the
chicken growers and then purchase the mature chickens once grown. At the time of the
application, the chicken meat growers were at a significant market disadvantage due to
their heavy sunk investment costs in growing sheds and equipment, the 'tied' nature of
the contracts whereby the chicks were supplied and then purchased by the same
88 Determination, Applications for authorisation lodged by the Victorian Farmers Federation on behalf
of its member chicken meat growers in relation to collective bargaining by chicken meat grower groups
with their nominated processors in Victoria, 2 March 2005, Authorisation Numbers A40093 and
A90931, Public Register Numbers C2004/642, C2004/1364.
89 Re VFF Chicken Meat Growers Boycott Authorisation [2006] ACompT 2. In overturning the
decision of the ACCC, the Competition Tribunal reflected on the fact that a collective
boycott had never before been authorised: 'In the thirty-two years of the life of the Act, the
ACCC and its predecessor have never before authorised a collective boycott' [442].
90 The facts are taken from Determination, Applications for authorisation lodged by the Victorian
Farmers Federation on behalf of its member chicken meat growers in relation to collective bargaining
by chicken meat grower groups with their nominated processors in Victoria, 2 March 2005,
Authorisation Numbers A40093 and A90931, Public Register Numbers C2004/642,

C2004/1364.
chicken processor and the extremely low level of existing negotiations and low returns
on contracts experienced by growers across the industry. The ACCC approved collective
boycott action against specific chicken processors, whereby members of the collective
could refuse to accept day old chicks, if negotiations and mediation had failed, 21
days notice had been given and no chicken grower with an existing contract with the
relevant processor was involved in the boycott. 91 The evidence suggested that the
practical likelihood of an actual boycott was low. It was ultimately found by the ACCC
that authorisation of the proposed conduct would assist in providing countervailing
power to the small business actors sufficient to enable them to negotiate improved terms
and conditions. 92 However, in overturning the authorisation, the Tribunal found that the
potential for anti-competitive detriment to arise from a collective boycott was too high
and there was no guarantee that the collective boycott would only be used by the
chicken growers to develop more 'efficient outcomes'. 93
Certainly any suggestion that a collective boycott could be used to improve the
working conditions in the businesses involved without such an improvement being
linked to clear efficiency gains would have been unacceptable.
This approach by the Competition Tribunal is now reflected in the ACCC Guide:
Given that the ACCC considers that collective boycotts can significantly increase the
potential anti-competitive effects of collective bargaining arrangements, it is unlikely to
allow protection from legal action to such conduct in most cases. … The case for a collective
boycott would be contingent on it being clear that a failure to collectively negotiate would
result in inefficiencies. … The tribunal decision [Re VFF Chicken Meat Growers Case] made
it clear that parties seeking immunity for a collective boycott bear a
heavy onus. 94
Warren Pengilley has argued that this approach to collective boycotts by the
competition regulators is not justified by the text of the authorisation provisions. 95 The
provisions allowing for notification of potential exclusionary provisions including
collective boycotts provide parties with an opportunity to show that the conduct does
not have anti-competitive effect. Assuming that collective boycotts will almost always
have too high a degree of anti-competitive detriment to ever pass the public benefit test
contradicts the plain intention of Parliament to allow such conduct in appropriate
circumstances. 96 If there are no appropriate circumstances, what is the point of
legislating for authorisation or notification of such conduct? Certainly, as will be seen
in the case of collective bargaining by independent contractors, the approach to collective
boycotts removes a significant amount of the practical utility of collective bargaining
notifications. It effectively restricts the benefit of collective bargaining to the potential for
increased cooperation and information exchange. It would not extend to correcting
countervailing power through the ability to collectively refuse to deal.
Having considered the substance of the public benefit test, the discussion will now
examine the operation of the test in practice in the collective bargaining context.
91 Ibid [13.8].
92 Ibid [12.1]–[12.27].
93 Re VFF Chicken Meat Growers Boycott Authorisation [2006] ACompT 2, [451].
94 ACCC Guide, above n 56, 33, 35.
95 Warren Pengilley, 'The Competition Tribunal and Chicken Meat: Do Exclusionary
Provisions Have Any Future Hope of Authorisation?' (2006) 14 Competition and Consumer
Law Journal 196.
96 Ibid 199.
THE PUBLIC BENEFIT TEST IN PRACTICE
As noted above, the procedures in the TP Act for allowing anti-competitive behaviour
to occur without attracting liability under s 45(2) have been little used by independent
contractors, with the exception of well organised groups represented by professional
associations. Applications to the ACCC with respect to collective bargaining have more
commonly occurred in the context of the agricultural sector (as a cushion in the move
to deregulation) or by groups of retail outlets, often in the context of franchises or
statutory licensing schemes. 97 Where applications have been made by groups of
independent contractors, success has been limited. For example, there were only two
applications for authorisation in 2006. An application for authorisation of collective
bargaining by forestry contractors who wanted to negotiate the conditions of the
contracts under which they supplied their labour to timber companies was denied. 98
The ACCC was not satisfied that the forestry contractors were a sufficiently homogenous
group to generate efficiencies, and the potential level of anti-competitive detriment in
limiting competition between the forest contractors was too high. 99
Conversely, an application by the Australian Swimmers Association to engage in
collective bargaining with Swimming Australia over a range of conditions in the
contracts of professional swimmers was allowed. 100 The level of anti-competitive
detriment was limited by the fact that there was no existing competition between the
swimmers over their contracts with Swimming Australia. Competition took place in
the pool between swimmers and not with Swimming Australia over who would swim
for the lowest price. 101 The clear difference between these two authorisations is that
the forest workers were in competition with each other but the swimmers were not
with respect to the proposed bargaining arrangements. Generally speaking, where
independent contractors are in active competition with each other, it becomes
substantially more difficult to establish sufficient public benefit to overcome anti-
competitive detriment. This will be illustrated by in-depth analysis of the notifications
for collective bargaining lodged by independent contractors since the notification
process took effect in January 2007. In particular the discussion will demonstrate the
97 See, eg, Determination, Application for revocation of authorisation A90853 and substitution by
new authorisation A91109 lodged by Lottery Agents Queensland Ltd in respect of collective
negotiation by Lottery Agents Queensland, on behalf of its members, in relation to terms and
conditions of agency agreements and arrangements with the Golden Casket Lottery Corporation, 19
November 2008, Authorisation Number A91109, Public Register Number C2008/1433;
Determination, Application for authorisation lodged by Victorian Potato Growers Council on behalf
of its members in respect of collective bargaining with potato buyers, 27 June 2007, Authorisation
Number A91048, Public Register Number C2007/881; Determination, Application for
authorisation lodged by Office Choice Limited, Office National Limited and Office Products Depot
Limited in respect of collective bargaining with office products suppliers, 19 September 2007,
Authorisation Number A91058, Public Register Number C2007/1468.
98 Determination, Application for authorisation lodged by The Tasmanian Forest Contractors
Association Ltd in relation to collective bargaining arrangements between its members and various
Tasmanian wood companies, 22 February 2006, Authorisation Number A90974, Public
Register Number C2005/1079.
99 Ibid [9.1]–[9.35].
100 Determination, Application for authorisation lodged by Australian Swimmers Association on behalf
of its members in relation to collective bargaining with Swimming Australia Limited, 22 March
2006, Authorisation Number A40106, Public Register Number C2006/266.
101 Ibid [2.30].
difficulties each group faced in establishing the relevant public benefits that would
flow from their proposed conduct.
There have been three notifications lodged by groups of independent contractors
since the commencement of the notification provisions in January 2007. Two of these
were substantially the same (facts and outcome) and therefore only one of these two will
be discussed. The first notification was lodged by a collective of telecommunications
subcontractors in respect of proposed collective bargaining with a head contractor. The
notification provides a useful example due to the poor market position of the relevant
workers. In contrast, the second notification involved a group of visiting medical
officers servicing a regional hospital in Victoria. The visiting medical officers held a
degree of existing market power but were unable to utilise that power to negotiate
individually with the hospital over their terms and conditions of engagement and
therefore sought to bargain collectively. The contrasting circumstances of the workers
in these two notifications will demonstrate how in practice the public benefit test may
prevent most groups of contractor workers, regardless of their existing market position,
from utilising the collective bargaining processes, particularly where their aim is an
improvement in their working conditions. The discussion will also illustrate how the
requirements of the public benefit test act to negate the capacity of contractor workers to
exercise countervailing power if they are able to lodge a notification that survives
without objection from the ACCC.
Telecommunications subcontractors
In March 2008, a group of 95 telecommunications workers lodged notification of their

intention to engage in collective bargaining with Service Stream Communications Pty
Ltd ('Service Stream'). 102 Service Stream operates as a head contractor to Telstra
Corporation Ltd ('Telstra'), subcontracting maintenance work for telecommunications
infrastructure. Service Stream is one of a small number of Telstra head contractors
holding the exclusive rights to the installation, repair, upgrade and disconnection of
Telstra telecommunications services in residential properties in allocated geographical
areas. Service Stream is a major head contractor to Telstra servicing areas covering
approximately half the population in each state in Australia. Service Stream subcontracts
this work to individual telecommunications contractors. It is unclear from the
notification what 'density' of available telecommunications subcontractors the
bargaining group constituted, but given the relative size of Service Stream, it was likely
to be small.
The notification was withdrawn by the applicants when problems with the
composition of the bargaining group were identified by Service Stream. Under
s 93AB(3) of the TP Act, the applicant must have a 'reasonable expectation of reaching
agreement with the target'. Service Stream identified a number of contractors in the
bargaining group that did not currently have a contract with Service Stream or who were
outside the geographical area serviced by Service Stream. The ACCC concluded that for
the notification to be valid, all of the contractors must have a reasonable expectation of
reaching agreement with the target. The inclusion of any contractors
102 These facts are taken from Collective Bargaining Notification CB00008 lodged with the ACCC
on 25 March 2008 by Ken Hardisty on behalf of a group of telecommunications
subcontractors. This notification is no longer available on the notifications register but a copy
obtained while the application was listed on the register is held by the author.
who did not satisfy this requirement rendered the whole notification invalid. In
consequence, the contractors withdrew the application. 103 I have argued elsewhere
that the 'reasonable expectation requirement' in s 93AB(3) can operate in practice to
effectively derail any collective bargaining notification because it allows a target to
submit that the group can have no reasonable expectation of reaching an agreement
because it will absolutely refuse to bargain with the group. 104 The invalidity of this
notification also suggests that it may be difficult for a bargaining group to include
contractors who do not already have dealings with a target (in this case those who
were not currently contractors) because it will be easier to argue that they have no
reasonable expectation of dealing with the target.
Despite the withdrawal of the notification, it is possible to use the facts to illustrate
the operation of the public benefit test in practice. 105 As there was no ACCC decision,
some of this discussion is necessarily speculative. Further, it is not possible to ascertain
the exact terms of the contracts under which the telecommunications workers are
engaged because, according to the notification, the standard form contract under
which each of the contractors works contains a confidentiality clause prohibiting its
disclosure. 106 However, the detail contained in the notification provides a reasonable,
if incomplete, picture of the contractual arrangements. Service Stream contractors are
hired on a standard form contract. There appears to be no actual negotiation (or any
prospect of negotiation) over the contractual terms between individual contractors and
Service Stream. Contractors sign up initially to a 12 month contract with no right to
terminate the contract. After the first 12 months, contracts can be terminated by the
contractor on 30 days notice. Work is priced according to task rather than time and
task rates are set by Service Stream and adjustable during the life of the contract. Working
hours, allocation of weekend work and rostering appears to be entirely within the
discretion of Service Stream. The contract appears to contain penalty provisions for
omissions and defects. The notification suggests that the contract does not require the
exclusive services of the contractor but that in practice the contract prevents operators
from accepting work from other potential clients (undertaking work outside the
Telstra network). These contractors straddle the two groups of independent contractors
recognised earlier in the paper who would benefit from collective bargaining. They
are legally considered to be genuine independent contractors who have made a
considerable investment in their skills and equipment. However, they are economically
and logistically tied to a large market actor (Service Stream) because of the size of the
market for their work held by Service Stream. Further, once under contract, their
working conditions involve a degree of subordination and lack of control that makes
them resemble employees (disguised employment).
The collective bargaining notification sought permission to engage in collective
bargaining in order to negotiate a new model contract incorporating input from the
bargaining group. The proposed model contract would form the basis for future
103 Information provided by Shane Chisholm, Assistant Director, Adjudication Branch, ACCC,
email from Shane Chisholm to Shae McCrystal, 8 August 2008.
104 McCrystal, 'Collective Bargaining and the Trade Practices Act', above n 41, 214.
105 The following facts and submissions are taken from Collective Bargaining Notification
CB00008, above n Error! Bookmark not defined..
106 Ibid.
contracting arrangements that could be adopted by Service Stream and individual

contractors on a purely voluntary basis. 107 The notification indicated that the contractors
were seeking increases to the set rates for certain contract tasks, amendments to penalty
rates, improved arrangements for termination, more input into work arrangements,
modifications to the exclusivity requirement and mechanisms to investigate bulk
purchasing of insurance, equipment and materials.
This factual scenario provides a good illustration of a situation where a large business
holds considerable market power and collective bargaining could assist in providing the
independent contractors with a degree of countervailing power. Service Stream appears
to have considerable market power including the capacity to dictate contractual terms
and adjust rates of payment and conditions both before and during the life of the
contracts with little or no input from contractors. Further, Service Stream operates
exclusively in certain geographical areas giving it potentially monopsonistic market
power (depending on whether work for other telecommunications networks would be
considered as substitutable for work on Telstra infrastructure). 108 The contractors have
invested in their skills and equipment and appear to have little option but to offer their
labour at the prevailing terms and conditions.
Despite this, this group of contractors would have faced difficulties in maintaining
a collective bargaining notification or subsequently engaging in collective bargaining.
In applying the public benefit test to this notification we would, as is ACCC practice,
begin from the assumption that combination by the contractors would be anti-
competitive in effect because it would interfere with the market for their services and
impact upon price signals, thus producing inefficiencies. However, the anti-
competitive detriment would be comparatively low because of the low density of the
group, the voluntary nature of the proposed bargaining arrangements and the low
degree of existing market power. In other words, while collective action would
produce inefficiencies in the market, the existing market is already inefficient and the
proposed conduct would involve relatively few contractors in a voluntary
arrangement. In a market which is already inefficient, proposing collective action
would not make a substantial difference but would just move from one inefficiency to
another.
The difficulty that the group would have is establishing the public benefit of the
proposed collective bargaining conduct. The focus of the public benefit test is on
establishing benefits flowing from efficiencies caused through collective negotiations
rather than the poor bargaining position of the independent contractors involved in the
application. It is difficult for a contractor collective to demonstrate the efficiencies that
will flow from proposed negotiations when the contracting process and the potential
for efficiencies are completely controlled by the target. However, there are a number of
potential arguments that may be raised to establish the efficiencies necessary to establish
public benefit.
The first and most substantial potential public benefit that the telecommunications
subcontractors may be able to make out is allocative efficiency through increased input
into contractual negotiations. This was an argument put very strongly in the
107 While the proposal was to develop a 'voluntary' model contract, the previous practice of
Service Stream suggests that if it agreed to develop a new standard form contract, it would
probably be offered to new contractors on a take-it-or-leave-it basis.
108 This was not clear from the information provided in the notification.
notification by the bargaining group. The contractors may be able to show that the terms
and operation of the standard form contract itself may operate in a more efficient manner
if the contractors were able to have more input into the formation of the contractual
document, the setting of pricing for set tasks and the contract arrangements including
rostering. The contractors have substantial experience of working under the standard
form contract and of the inefficiencies created by existing practices. Collective
negotiations could improve the use and allocation of one of society's resources — the
labour of the workers. The challenge for the contractors here lies in establishing that
the proposed negotiated model contract would be more efficient, involving a more
efficient use of the time of the workers and deployment of their resources, than the
current contractual arrangements provide. The current arrangements, involving a
standard form contract dictated by Service Stream, rely only on the input of one party,
the labour purchaser, who may not be able to perceive efficiencies as well as the
contractors who carry out the work under the contracts or be as motivated to identify
those efficiencies, particularly if it is able to dictate price in the market. This argument
is probably the most effective argument that the telecommunications contractors can
raise. However it relies upon the contractors being able to identify specific areas of
work that may be performed more efficiently if they were able to change the terms of
their contracts. Further, if the group is able to point to such benefits, these may be
reduced in practice by efficiency losses through more complicated bargaining
arrangements. Standard form contracts may not produce the most efficient outcomes,
but they are simple to administer and low cost to implement.
The second public benefit that the telecommunications contractors may be able to
demonstrate is the potential for dynamic efficiencies including reduced information
asymmetry from collective bargaining. If the contractors have greater access to
information they may be able to make better commercial decisions. One difficulty of
course is that the telecommunications contractors in this scenario have little or no
existing control over their working conditions. The contractors would have to identify
the relevant commercial decisions that would be impacted by increased access to
information and show the concrete efficiency gains that would flow from this
information. Here, it may be that increased information exchange could allow the
telecommunications contractors to have a greater input into their contractual terms
and identify other efficiency gains.
Finally, the telecommunications contractors may be able to show productive
efficiencies through reduced transaction costs. They can argue that collective
negotiations will reduce the transaction costs in setting up contracting arrangements and
in administering the contracts after commencement. However in a situation where there
is no negotiation and the target uses standard form contracts, it is not immediately
clear where these transaction cost savings will arise. To constitute a public benefit the
claimed efficiencies must be substantial and connected to the proposed conduct, not
merely speculative. Demonstrating decreased transaction costs in a standard form
contract 'take–it–or–leave–it' model of business operation is likely to be difficult. This
was recently highlighted by the ACCC in the context of a collective bargaining
authorisation application by a group of truck owner drivers. 109 The
109 Determination, Application for authorisation lodged by Construction, Forestry, Mining & Energy,
Industrial Union of Employees, Queensland (CFMEU Qld) in respect of collective negotiations by
current and future owner drivers with current and future acquirers of earthmoving services in
existing contractual arrangements involved standard form contracts with little or no

negotiations between the owner drivers and the acquirer of their services. The ACCC
acknowledged that in such circumstances there was little evidence of the reduced
transaction costs to be gained from collective negotiations unless the owner drivers could
demonstrate a reduction in the costs associated with obtaining professional advice
or information on the effect of the proposed contracting arrangements. 110
The telecommunications contractors will also have to deal with the price impact of
the proposed collective bargaining conduct. The contractors can try to argue that the
price impact of the conduct will be neutral or minor. However, in this scenario the impact
on price is ultimately in the control of the target. If there is a price increase from the
conduct, whether the target absorbs any price increase, passes the price increase on to
Telstra (if it can) or if Telstra passes it on to consumers is a factor in the equation that
would be largely out of the hands of the contractors. The telecommunications contractors
would need to show that any price increase is offset by the provision of a better service
to Service Stream, Telstra or consumers through increased choice or quality.
The bargaining group cannot point to their increased bargaining power, improved
industrial harmony (unless there has been conflict), poor contract position or
improvement of their contract rates as potential public benefits flowing from the
conduct. They have to point to efficiency gains. The total welfare standard suggests
that it will not be a problem if they seek to retain the efficiency gains for themselves,
but before they can reach this hurdle they have to show those efficiency gains.
The difficulty is that the current poor market position of the contractors
significantly impedes their capacity to provide concrete evidence of the potential
efficiency gains that may flow from their conduct. In a situation where price and
contractual terms are dictated by the other party it is very difficult to demonstrate
efficiencies that will actually make any significant difference to the cost of delivering
the service. The proposed collective bargaining negotiations would likely have relatively
little impact in practice other than to increase the price paid by Service Stream for
the work performed by the contractors, a price that would ultimately be passed on to
either Telstra or Telstra's clients. In this context it would be very difficult for the
contractors to demonstrate a net public benefit. They may be able to demonstrate
the efficiencies outlined above such as greater input into contractual arrangements and
reduced information asymmetry to ensure that work is performed more efficiently, but
would this offset the public detriment and ensure some public benefit remains? Would
this be sufficient to offset any potential rise in the cost to consumers, particularly where
the aim of the bargaining is to ensure that the contractors receive an increased
contract rate for their labour? This discussion suggests that demonstrating a net public
benefit, even with the very low level of anti- competitive detriment identified, may be
difficult.
Visiting medical officers
To provide a useful contrast with the position of the telecommunications subcontractors,

we can look at the other notification (one of two nearly identical
110 Ibid [5.32].
south-east Queensland, 26 March 2009, Authorisation Number A91103, Public Register
Number C2008/1627.
110 Ibid [5.32].

notifications submitted) lodged by independent contractors. This notification was

rejected by the ACCC. The notification was lodged by the Australian Medical
Association on behalf of 39 specialist medical practitioners who were engaged as
contractors to provide services to the Latrobe Regional Hospital in Victoria. 111 The
collective bargaining group consisted of approximately two thirds of the doctors hired
on contract to service the Latrobe Hospital. 112 The doctors came from a group of
different specialities and had readily transferable skills. They lodged notification of
their intention to negotiate collectively with the Hospital over rostering arrangements,
fee levels, out of hours service provision and other conditions of their engagement. The
proposed arrangements were to be purely voluntary with no coercion of either the target
hospital or any of the members of the bargaining group. Further, individual members
would be free to opt out at any time. Despite the fact that each member of the bargaining
group could be said to have an existing degree of market power due to the high demand
for their skills, the evidence in the notification suggested that there was very little actual
negotiation over contractual arrangements which were offered to the doctors on a
'take–it–or–leave–it' basis. The evidence also suggested that the contracting
arrangements were impacted by the budget constraints experienced by reliance by the
employer, a public hospital, on government funding. These workers fall into the second
group of independent contractors recognised earlier in the paper who would benefit
from collective bargaining. They appear to be genuinely independent in that many have
their own separate practices. However, they are economically and logistically tied to the
hospital sector because they have to access hospitals to practice their skills and there are
a limited number of hospitals in any given area.
In contrast to the telecommunications contractors, the doctors faced a relatively
high degree of anti-competitive detriment from their proposed collective bargaining
conduct. The group covered a high proportion of the market and held highly marketable
skills. While the doctors pointed to the fact that in practice there was very little or no
negotiation over contract arrangements and contract price, the ACCC insisted that the
doctors could negotiate and therefore already operated from strong individual
bargaining positions. 113 Further, the purely voluntary nature of the proposed
arrangement did not significantly impact the degree of anti-competitive detriment that
would arise because, according to the ACCC, the capacity of the doctors to seek work
elsewhere had the potential to operate in a coercive manner against the hospital. 114 In
other words, because the doctors had the market position to be able to leave and obtain
alternative work if the negotiations were unsuccessful (even if this
111 Objection Notice in respect of a collective bargaining notification lodged by Australian Medical
Association (Vic) Pty Ltd on behalf of a group of doctors at Latrobe Regional Hospital, 19
December 2007, CB00004, Public Register Number C2007/1749. The second notification
involving almost identical facts at another Victorian public hospital was also rejected by the
ACCC in Draft Objection Notice in respect of a collective bargaining notification lodged by
Australian Medical Association (Vic) Pty Ltd on behalf of a group of doctors at Werribee Mercy
Hospital, 8 November 2007, CB00005, Public Register Number C2007/1930.
112 The facts of this notification are taken from Objection Notice in respect of a collective bargaining
notification lodged by Australian Medical Association (Vic) Pty Ltd on behalf of a group of doctors
at Latrobe Regional Hospital, 19 December 2007, CB00004, Public Register Number C2007/1749.
113 Ibid [3.79]–[3.81].
114 Ibid [3.92]–[3.93].
meant relocating), this counteracted the fact that the arrangements were designed to be
purely voluntary in effect. Consequently, despite the best efforts of the doctors to remove
any element of coercion from their application and despite the reality of little or no
actual negotiation, the ACCC concluded that there was a high level of anti- competitive
detriment in the proposed conduct. 115 The doctors were unable to overcome the fact that
they held a degree of existing market power even if in practice individual members of
the bargaining group had not been able to capitalise on that power.
Faced with this high degree of anti-competitive detriment it was very difficult for
the doctors to establish sufficient public benefits from the proposed conduct to satisfy
the public benefit test. The doctors also faced the difficulty of establishing that
negotiations would produce efficiencies in the context of a target which controlled the
hospital operations and whose funding was controlled by government. 116 The doctors
tried to argue that collective bargaining would create dynamic efficiencies by
increasing the rate of collaboration between the doctors over patient matters, but the
ACCC found that this would not be conduct that would breach the TP Act and could
occur without collective bargaining. 117 The doctors also argued that collective
bargaining could create allocative efficiencies through increased input into their
contracts which could improve their working conditions. The ACCC conceded that if
doctors had increased input into their working arrangements they may have an
improved relationship with the hospital, which in turn could lead to the improvement
of doctor retention in the area. 118 However this potential public benefit was
insufficient to offset the high level of anti-competitive detriment.
The contrasting position of these two groups of independent contractors, the only two
substantive notifications made by independent contractors since the provisions
commenced operation, illustrates the difficulties of trying to use a competition
framework to achieve countervailing bargaining power for independent contractors. The
public benefit test in its current form is not a useful mechanism if the goal of the workers
involved is to improve their working conditions and increase their remuneration. Unless
the improvements or increased remuneration will clearly result from efficiency savings
that can be realised through bargaining, the notification is unlikely to be successful. For
workers who are already relatively powerless like the telecommunications workers, such
efficiencies may be difficult to establish. Where workers have some existing power (like
the doctors) the public detriment from the proposed conduct will be too high. If workers
can show efficiency gains, if those efficiency savings are to be wholly retained by the
bargaining group, they will have less weight as a public benefit (under the 'modified'
total welfare standard). If the improvement ultimately must be paid for by increasing
the cost of the service, a cost which will be borne by the target or consumers, the
notification will probably be unsuccessful.
118 Ibid [3.134].

115 Ibid [3.148].

116 Ibid [3.76].
117 Ibid [3.108].
118 Ibid [3.134].

Exercising countervailing power?
The additional problem with the notification process that is revealed by these examples
relates to the potential market power wielded by collectives of independent
contractors. The examples suggest that if contractor workers are already powerless, it
is possible, provided that they keep their proposed arrangements purely voluntary and
only constitute a small share of the market, they might get a notification accepted on
the basis of efficiencies resulting from increased input into contractual negotiations.
However, if a notification is successful, the notification itself will not allow them to use
any coercive tactics to get the target to agree to the proposed arrangement or to enforce
the arrangement if it is ultimately made. 119 Any notification including a collective
boycott will almost automatically be refused.
The futility of collective bargaining by powerless labour market actors without at
least the potential for a degree of collective pressure to be brought to bear has long
been acknowledged in the employment context:
If the law were just to ban strikes by employees, that would effectively end collective
bargaining. It would deprive the union of the ultimate lever it has to extract concessions
from a recalcitrant employer … it would leave the employees with no more than the right
of collective begging. 120
A similar point was made by the ACCC in its authorisation of collective boycott
activity by the collective of chicken meat growers:
Generally speaking, the target of collective bargaining arrangements is less likely to
participate in collective bargaining arrangements (ie arrangements without the threat of
collective boycott) and to agree terms and conditions different to those they may have
obtained absent the collective bargaining process where their bargaining power, relative
to the bargaining power of participants of the collective, is greater. 121
119 For example, in early February 2009 the ACCC authorised proposed collective bargaining
arrangements by a group of 24 truck owner drivers to negotiate collectively with
earthmoving contractors in relation to the terms, prices and conditions for the supply of
earthmoving services by the owner drivers. At the time of the application, the bargaining
group was powerless, subject to standard form contracting arrangements and represented
a very small proportion of the market. The group was only able to demonstrate very
limited public benefit (increased input into contracting arrangements) and had to keep
their proposed arrangements entirely voluntary (no compulsion of members of the group
or the target) in order to gain approval. Even in these circumstances, the ACCC only granted
conditional authorisation of the application, requiring the bargaining group to provide the
ACCC with regular updates on the number of participating drivers in order to ensure that
any bargaining remained purely voluntary and the size of the group did not allow for
coercive conduct. See Determination, Application for authorisation lodged by Construction,
Forestry, Mining & Energy, Industrial Union of Employees, Queensland (CFMEU Qld) in respect
of collective negotiations by current and future owner drivers with current and future acquirers
of earthmoving services in south-east Queensland, 26 March 2009, Authorisation Number A91103,
Public Register Number C2008/1627.
120 Paul Weiler, Reconcilable Differences: New Directions in Canadian Labour Law (1980) 66–7
(emphasis in original).
121 Determination, Applications for authorisation lodged by the Victorian Farmers Federation on behalf
of its member chicken meat growers in relation to collective bargaining by chicken meat grower groups
with their nominated processors in Victoria, 2 March 2005, Authorisation Numbers A40093 and
A90931, Public Register Numbers C2004/642, C2004/1364, [10.74]. As
Equally, for more powerful labour market actors, like the Visiting Medical Officers
at Latrobe Hospital, the very fact of potential market power will mean that a notification
will usually be rejected. In establishing the anti-competitive detriments, the ACCC was
very concerned about the perceived degree of power that the doctors held because they
had tradeable skills and the impact that they could have if they chose to walk away from
the hospital. 122 These factors ultimately meant that as a collective they could
potentially hold some coercive power, even if they did not seek to exercise coercive
tactics. This meant they were not going to be able to proceed with the application. This
produces an absurd outcome. Access to collective bargaining for contractor workers
is stripped of meaning for all circumstances but the most innocuous. Any hint of
pressure or power will result in refusal of the notification. Collective bargaining may be
in the public interest if, according to the Dawson Review, small businesses are 'to
achieve bargaining power to balance that of big businesses with which they have to
deal' 123 but such countervailing power does not constitute a public benefit.
CONCLUSION
The public benefit test is a substantial obstacle to independent contractors utilising

collective bargaining to improve their working conditions. Insistence on purely
voluntary arrangements prevents contractors from seeking bargaining arrangements
that overcome market disadvantages such as those identified earlier in the paper
including the fact that in many cases contractors must work in order to maintain the
necessities of life and have little chance to refuse to work and hold out for a better
price. The necessity that there be absolutely no coercion or suggestion that market power
may be utilised prevents contractors from establishing countervailing power against
much larger and stronger businesses who have market power.
The problem is ultimately the failure of the public benefit test to accommodate public
benefits that cannot be measured in terms of efficiency or reduced cost outcomes.
It may be the case that contractors can seek to retain a share of any concrete efficiency
gains produced by collective bargaining but they cannot utilise the processes with the
objective of improving their working conditions. The public benefit test does not
accommodate the argument that improved control over working conditions can be a
public benefit in and of itself, especially where it ultimately increases the cost of service
provision. Additionally, the competition regulators appear unable to conceive of
countervailing bargaining power as a public good of itself. Potentially coercive collective
action operating in opposition to strong market power is considered too great an
anti-competitive risk to be allowed. Parties with no market power may, if a notification
is allowed, collectively try to pursue efficiency gains provided that the collective does
not seek to exercise any muscle. Groups with existing market power,
discussed above this authorisation was overturned on appeal to the Competition Tribunal
in Re VFF Chicken Meat Growers Boycott Authorisation [2006] ACompT 2.
122 Determination, Application for authorisation lodged by Construction, Forestry, Mining & Energy,
Industrial Union of Employees, Queensland (CFMEU Qld) in respect of collective negotiations by

current and future owner drivers with current and future acquirers of earthmoving services in
south-east Queensland, 26 March 2009, Authorisation Number A91103, Public Register
Number C2008/1627, [3.79].
123 Dawson, Segal and Rendell, above n 8.
however theoretical, cannot combine. Countervailing market power as an objective is

relevant in theory only.
When the notification process was added to the authorisation process at the
beginning of 2007, it was envisioned that the rates of collective bargaining by small
business would substantially increase. Commenting on the slow uptake of the
notification process, ACCC Chairman Graeme Samuel remarked: '[w]e were expecting
with the Dawson Amendments that came into place on January 1 2007, to have literally
hundreds of notifications brought before us'. 124 However, at the time of writing there
have only been 10 substantive notifications lodged with the ACCC. The quicker, more
efficient process has not increased the number of small businesses seeking to access
collective bargaining because the substantive requirements to be allowed to bargain
collectively have not changed. The public benefit test remains a significant obstacle.
Notifications are difficult to maintain and there is questionable utility to pursuing a
notification when any form of coercion or actual use of countervailing market power is
virtually out of bounds.
If the provision of collective bargaining for groups of small business actors, like
independent contractors, may 'be necessary if they are to achieve bargaining power to
balance that of big businesses', 125 the relevant test for allowing such conduct must
accommodate countervailing power. Further, there must be some acknowledgement,
particularly in the case of independent contractor labour, that maintenance of fair
working conditions is a public benefit, acknowledged as being 'of value to the
community generally' 126 even where, after all the efficiencies are accounted for, society
may pay a little more for the labour than it has done in the past.
124 ACCC Chairman Graeme Samuel quoted in Kathy Swan, 'Collective Bargaining Option
Ignored' ABC News Online, 30 March 2008.

<www.abc.net.au/news/stories/2008/03/30/2202837.htm> at 3 August 2009.
125 Dawson, Segall and Rendell, above n 8.
126 Re QCMA (1976) 8 ALR 481, 510 (Woodward J, Shipton and Brunt (Members)).

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IS THERE A 'PUBLIC BENEFIT' IN IMPROVING WORKING

CONDITIONS FOR INDEPENDENT CONTRACTORS?

The legal distinction between work performed by an employee under a contract of

the federal workplace relations legislation 2 singled out independent contractors as a

(Cth) which prohibit misleading conduct with respect to employment relationships.

Entrepreneurial Worker?', above n 4; Joellen Riley, Independent Work Contracts (2007);

COLLECTIVE BARGAINING AND INDEPENDENT CONTRACTORS

Labour Law (4th ed, 2005) chap 11.

the appointment of bargaining agents by groups of contractors. Both Acts authorise

and include a diverse range of working arrangements including independent

(2nd ed, 1977) 3–15.

COLLECTIVE BARGAINING AND PUBLIC BENEFIT

Anti-competitive conduct and Part IV of the TP Act

purposes of s 45 in relation to a provision (or proposed provision) of a contract,

Shipton and Brunt (Members)).

in a market in which the target of anti-competitive behaviour operates (reduction in

34 See TP Act s 45(3) for the definition of 'competition'.

of the label 'collective boycott' when referring to arrangements containing exclusionary

involving exclusionary provisions and conduct which substantially lessened competition is

acting collusively. In acting in combination to establish price or impose a collective

Authorising and notifying collective bargaining

44 See McCrystal, 'Collective Bargaining by Independent Contractors', above n 7.

The public benefit test

52 The ACCC notification register is accessible on the ACCC website at

<http://www.accc.gov.au>. The other notification applications have followed a similar

involved citrus growers (Notifications CB00001 and CB00002, C2007/1525); arrangements

57 (1976) 8 ALR 481, 510 (Woodward J, Shipton and Brunt (Members)).

and that commonly efficiency is said to encompass allocative efficiency, production

60 (1994) ATPR ¶41-357, 42 677.

the 'total welfare standard'. 65 In this approach there is no qualitative difference

70 Re Rural Traders Co-Operative (WA) Ltd (1979) 37 FLR 244, 261–2.

Medical Association (Vic) on behalf of a group of doctors at Latrobe Regional Hospital, 19

context of legislation regulating competition, in particular given the emphasis placed

Compulsion is also an important factor. Compelling market actors to participate in a

Authorisation Numbers A40093 and A90931, Public Register Numbers C2004/642,

THE PUBLIC BENEFIT TEST IN PRACTICE

In March 2008, a group of 95 telecommunications workers lodged notification of their

contracting arrangements that could be adopted by Service Stream and individual

existing contractual arrangements involved standard form contracts with little or no

Visiting medical officers

To provide a useful contrast with the position of the telecommunications subcontractors,

south-east Queensland, 26 March 2009, Authorisation Number A91103, Public Register

110 Ibid [5.32].

notifications submitted) lodged by independent contractors. This notification was

118 Ibid [3.134].

115 Ibid [3.148].

118 Ibid [3.134].

Exercising countervailing power?

The public benefit test is a substantial obstacle to independent contractors utilising

Industrial Union of Employees, Queensland (CFMEU Qld) in respect of collective negotiations by

however theoretical, cannot combine. Countervailing market power as an objective is

Ignored' ABC News Online, 30 March 2008.

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