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AMA (WA) Trade Practices Compliance Manual

19 March, 2002

The AMA (WA) Trade Practices Compliance Policy

Dear Staff and members,

On 12 December 2001 the AMAWA consented to orders in a Federal Court action by the Australian Competition and Consumer Commission ("ACCC") to implement a Trade Practices Compliance Programme in respect of Part IV of the Trade Practices Act 1974 (Commonwealth) ("TPA") and maintain the programme for 3 years. The AMAWA is committed to complying with the Court orders and the TPA.

Part IV of the TPA is designed to promote and protect competition and thus provide consumer protection. The AMAWA supports this policy and is committed to:

Marketing, promoting and negotiating in respect of the services provided by its members in a way which is ethical, honest and fair.
Acting fairly and reasonably.
Avoiding restrictive trade practices.

The ACCC oversees the operation of the TPA, and the ACCC can bring proceedings against companies, incorporated associations and individual employees who infringe the Act. This can result in substantial fines, court action and adverse publicity for the AMAWA.

Others, such as hospitals and health funds, can seek damages and court orders for infringement of the TPA. These fines and other court processes are expensive, time consuming and, most importantly, damage confidence and our reputation in the community.

The AMAWA is committed to creating a culture of trade practices compliance through a number of measures including member and staff training, the development and implementation of a compliance manual, the introduction of support systems and compliance aids and the appointment of an external designated compliance officer and an internal compliance officer. Member training will involve the training of Branch Council members, members on Professional Standards Committees and members on Accreditation Committees. Collectively, Branch Council, Professional Standards and Accreditation Committees will be referred to as "Members" in this manual.

It is your responsibility to make use of the training systems and support offered by AMAWA to enable you to meet your legal obligations and to avoid liability and loss to yourself and the AMAWA.

AMAWA expects employees and Members to actively support this trade practices compliance initiative. Non-compliance with the TPA will not be tolerated and could result in disciplinary action, including dismissal in respect of employees.

Paul Boyatzis
Executive Director
AMAWA

The AMA (WA) Compliance Department

External Designated Compliance Officer ("DCO")
Richard Lewis
of Deacons, 385 Bourke Street, Melbourne, Victoria 3000. Telephone: (03) 8686 6565 Facsimile: (03) 8686 6505 Email: richardb.lewis@deacons.com.au

Internal Compliance Officer ("ICO")
Charlene Suresh
of 14 Stirling Highway, Nedlands. WA. 6009. Telephone: (08) 9273 3000 Facsimile: (08) 9273 3073 Email: mail@amawa.com.au

The ICO and the Executive Director are responsible for ensuring that AMAWA complies with the Trade Practices Act ("TPA") and for implementing procedures, processes and practices to:

Liaise with the DCO in respect of providing education and training to ensure that all AMAWA staff and Members have an appropriate level of understanding of the requirements of the TPA.
Embed compliance throughout AMAWA through the adoption of appropriate compliance procedures and support systems.
Liaise with the DCO in respect of reviewing at the appropriate level the decisions, contracts and arrangements entered into by the AMAWA which may have a potential trade practices impact.
Act as the liaison point with the ACCC.
In consultation with the Branch Council, decide upon appropriate action for breaches of the TPA.

If you are ever in any doubt about any conduct or proposed conduct relating to the TPA, please contact the ICO. The role of the ICO is to assist you when you are unsure of your obligations and to provide guidance as to what you must do to comply with the TPA.

The Purpose of this Compliance Manual

The Trade Practices Act ("TPA") is very important to our organisation. Failure to comply with the TPA can result in serious sanctions, including fines, damages, payments and in some cases criminal liability. However, apart from these sanctions, it makes good sense to comply with the TPA.

This Compliance Manual is intended to assist you to understand the TPA and the relevance of the TPA to the AMAWA. The Compliance Manual will be supplemented by staff and Member training programs and other compliance procedures and support systems which together will form our compliance program.

It is your responsibility to make use of all of AMAWA's compliance program procedures, systems and training programs.

You are expected to read and familiarise yourself with Module 1 which provides an overview of the TPA and the importance of compliance to our organisation. You are expected to read and familiarise yourself with Modules 2 to 4 which relate to Restrictive Trade Practices Risk. You are also expected to read and understand those other Modules which are relevant to your day-to-day activities. The Compliance Manual is to be used as an initial point of reference for all TPA issues. The Compliance Manual will be updated from time to time.

This Compliance Manual consists of:

Module 1 - An Overview of our Trade Practices Act Responsibilities
Module 2 - Restrictive Trade Practices Risk - Overview
Module 3 - Restrictive Trade Practices Risk - The Absolute Prohibitions
Module 4 - Restrictive Trade Practices Risk - The Market Impact Prohibitions
Module 5 - Communications and Promotions Risk
Module 6 - Unfair and Unconscionable Practices
Module 7 - Service Quality
Module 8 - ACCC Authorisations and Notifications

Module 1 - An Overview of Our Trade Practices Act Responsibilities

Outline of this Module

The purpose of this Module is to provide an overview of the TPA and explain the relevance of the TPA to the AMAWA.

The Module outlines why compliance with the TPA is important, and explains the AMAWA compliance program. It also summarises the key points from the restrictive trade practices Modules.

All staff and Members need to read and be familiar with the contents of this Module. It should be read from start to finish, and the examples considered.

On completion of training relevant to this Module and the recommended reading, you should have a clear understanding of the relevance of the TPA to the AMAWA. If you are ever in any doubt about any conduct or proposed conduct relating to the TPA, please contact AMAWA's ICO. The role of the ICO is to assist you when you are unsure of your obligations and to provide guidance as to what you must do to comply with the TPA.

The Internal Compliance Officer is responsible for authorising the publication of this Compliance Manual and any changes to it.

Original date of procedure: 19 March 2002
Date of latest update:

1. Importance of TPA Compliance

1.1 The importance of the TPA to business and professions

The objective of the TPA as stated in the Act is to:

"enhance the welfare of Australians through the promotion of competition and fair trading and provision of consumer protection"

The TPA regulates all business conducted by corporations and professionals in Australia. It also regulates the business conducted by incorporated associations such as the AMAWA. The TPA is designed to promote and protect competition and provide consumer protection. It aims to ensure that organisations, businesses and professions operate in a highly competitive manner, prohibiting activities such as price fixing, resale price maintenance, market sharing, boycotts, and misusing market power. Other parts of the TPA protect consumers from faulty products, improper advertising tactics, misleading or deceptive conduct and unconscionable conduct.

1.2 The role of the ACCC

The ACCC is the government body responsible for administering the TPA. The ACCC's stated objectives, amongst others, are to:

Improve competition and efficiency in markets
Promote competitive pricing wherever possible
Foster adherence to fair trading practices in well-informed markets.

The ACCC rigorously enforces compliance with the TPA. No matter how large or small the nature of a complaint concerning trade practices, the ACCC will be interested. Should you ever be contacted by the ACCC, you need to immediately direct the call to the ICO.

1.3 Failure to comply can have serious consequences

Failure to comply with the TPA can result in legal action, substantial fines, negative publicity and other adverse consequences. The TPA imposes heavy fines for transgression. Breaches of the anti-competitive conduct provisions may attract fines of up to $10 million for corporations. Breaches of the consumer protection provisions may attract fines of up to $1.1 million for corporations.

Apart from the pecuniary penalties, other remedies under the TPA include damages, injunctions to prevent certain action or conduct, enforceable undertakings, orders requiring corrective advertising and any other orders as a court sees fit, including termination, variation or extension of an existing written agreement.

There are of course other adverse consequences associated with non-compliance with the TPA, including legal costs involved in an ACCC investigation and any subsequent proceedings, diversion of management time away from the business of the organisation and the negative effect on brand, image and reputation of the business.

1.4 Failure to comply can attract individual liability

Most breaches of the TPA are committed by managerial staff going about their normal work activities. A breach of certain provisions of the TPA will not only render the AMAWA liable, but individuals who are involved in the breach can also be made personally liable for breaches of the TPA. Breaches of the anti-competitive conduct provisions may attract fines of up to $500,000 for individuals. Breaches of the consumer protection provisions may attract fines of up to $220,000 for individuals.

The impact on an organisation for breaches of the TPA can be seen in the following cases:

In 1997 George Weston Foods was fined a total of $1.2m for price fixing arrangements in contravention of section 45 of the TPA and resale price maintenance provisions of section 48.
In 1998 J. McPhee & SA was fined $3.75m, with personal penalties imposed on its executives ranging from $15,000 to $100,000 for price fixing in a kind of collusive bidding.
In 1998 the Federal Court ordered Nissan to pay a total of $130,000 in fines for false advertising in contravention of section 53 of the TPA. Nissan's marketing director was fined $10,000 for aiding and abetting Nissan's contravention of the TPA. Undertakings were given to pay compensation to purchasers of certain vehicles.
In 2000 Simsmetal Limited was ordered to pay $2m for attempting to make a market sharing arrangement with a competitor. It was also ordered to contribute $100,000 to the ACCC's costs and undergo a comprehensive review of its TPA compliance program.

1.5 Breaches of the TPA

Breaches of the TPA can be proven:

Even though there is nothing in writing
Even if they occurred many years ago
Even if you were not the instigator or leader
Even if the conduct fails to achieve its objective.

Evidence for a trade practices breach can come from:

Consumers
Customers, eg. hospitals
Competitors, eg. fellow medical practitioners
Fellow employees
ACCC and State bodies
Your files, diaries and computer records

2. AMAWA'S TPA Compliance Program

2.1 Why do we have a TPA compliance program?

It is very important that we comply in all respects with the TPA. The AMAWA Branch Council has adopted a Trade Practices Act Compliance Policy reinforcing this commitment. The AMAWA compliance program formalises the commitment of AMAWA to compliance with the TPA. There are a variety of different reasons for doing this including:

To raise TPA compliance awareness throughout our organisation
To minimise our legal risk (for penalties, damages and other Court enforceable orders)
To protect our image and reputation
To build a better organisation

2.2 What is our TPA compliance program?

Our compliance program consists of:

This Compliance Manual (Modules 1 - 4)
Initial training sessions and on-going training sessions
Various compliance systems, procedures and processes
Continuous improvement to and maintenance of our system and procedures.

It is important that each staff member and Member understands and is fully committed to the AMAWA compliance program.

2.3 Complaint Handling Procedure

To ensure that proper and consistent attention is given to TPA compliance issues, it is AMAWA's policy that all complaints (from any source), suggesting that AMAWA or any staff member may have breached the TPA are fully reported and investigated. If you consider that there are any past or ongoing breaches of the TPA by you or anyone else you must immediately discuss them with the ICO. If you receive a complaint it must be reported immediately to the ICO and confirmed in writing. This reporting procedure should be followed regardless of how trivial you consider a complaint to be. AMAWA has established a procedure for dealing with complaints which must be followed. Refer to AMAWA Compliance Procedures & Systems - Complaint Handling Procedure.

3. Overview of the Trade Practices Act

The content of the TPA is extensive. In order to help you understand the application of the TPA to our organisation, this Manual provides a brief overview highlighting those sections directly relevant to our operations. The section of the TPA that is particularly relevant to our organisation is Part IV which deals with restrictive trade practices.

An explanation of the type of conduct that falls within Part IV of the TPA is given in Module 2. For further more specific and detailed information, cases studies, examples of conduct, and "do's and don'ts", you need to refer to Modules 3 and 4. You should note that there is some overlap between Modules and that where applicable we have covered provisions of the TPA in more than one Module.

Module 2 - Restrictive Trade Practices Risk - An Overview

Outline of this Module

Our organisation deals with hospitals, health funds, and medical practitioners on a daily basis. Medical practitioners also deal with hospitals and patients on a daily basis. The restrictive trade practices provisions of the TPA makes certain arrangements between medical practitioners, our organisation and hospitals highly illegal. A breach of these provisions of the TPA could:

Damage the AMAWA's reputation.
Result in heavy financial penalties and damages for the AMAWA.
Result in the AMAWA being sued for compensation.
Result in financial penalties being imposed on you, Members and medical practitioners personally.

To assist you in understanding your obligations under the TPA we have produced Module 2 - Restrictive Trade Practices Risk - An Overview. The purpose of this module is to provide an overview of the restrictive trade practices provisions of the TPA and the implication of those provisions on the AMAWA organisation. The Module gives an explanation of the key areas that you must be aware of.

You should make sure that you are familiar with the contents of this Module. It should be read from start to finish. If after reading this Module you are in any doubt about any conduct or proposed conduct relating to the TPA, please contact the ICO. The role of the ICO is to assist you when you are unsure of the obligations and to provide guidance as to what you must do to comply with the TPA.

The Internal Compliance Officer is responsible for authorising the publication of this Compliance Manual and any changes to it.

Original date of procedure: 19 March 2002
Date of latest update:

1. The Law - Outline

1.1 Illegal Restrictive Trade Practices

The TPA prohibits organisations such as the AMAWA from engaging in a wide range of restrictive trade practices. These practices are prohibited as they are seen to be anti-competitive.

1.2 The Absolute Prohibitions: Conduct that is Strictly Prohibited

The restrictive trade practices provisions of the TPA are concerned with conduct in the market. Some conduct is prohibited outright. (That is, without having to demonstrate that the conduct substantially lessened competition in the relevant market). The Five Absolute Prohibitions relate to conduct that is prohibited outright.

For a breach of these provisions, it is not necessary for the prohibited conduct to be set out in a formal contract or arrangement. All that is necessary is the "meeting of two or more minds". Often evidence of the conduct may be gathered through:

Evidence of parallel conduct
Evidence of joint action
Evidence of similar pricing structures
Evidence of an opportunity, whether social or otherwise, for the parties to reach an understanding

1.3 The Market Impact Prohibitions: Conduct that may be Prohibited

The TPA also prohibits restrictive trade practices which have the purpose or effect of substantially lessening competition in the market. Conduct falling within the Market Impact Prohibitions is prohibited, if the conduct was for the purpose or has the effect of substantially lessening competition in the market.

2. The Absolute Prohibitions

As an organisation we must not engage in the following prohibited restrictive trade practices:

Price Fixing
Resale Price Maintenance
Exclusionary Provisions
Third Line Forcing
Misusing Market Power

Together these are known as the Absolute Prohibitions because conduct falling within any of these provisions is illegal regardless of whether or not the conduct has the purpose or the effect of substantially lessening competition in the market.

3. The Market Impact Prohibitions

As an organisation we must be wary of engaging in the following restrictive trade practices:

Creating Territorial Exclusivity
Customer Restraints
Tying Supply
Anti-competitive Arrangements
Anti-competitive Acquisitions

Together these are known as the Market Impact Prohibitions because these practices are illegal if they were done for the purpose of or have the effect of substantially lessening competition in the relevant market.

4. Consequences of Breach

The consequences of breaching the restrictive trade practices provisions of the TPA are severe. The TPA imposes considerable monetary penalties for breaches of the restrictive trade practices provisions. The AMAWA may be fined up to $10 million for each breach committed. An employee or Member who is involved in committing the breach may be personally liable for a fine of up to $500,000.

In addition, if someone suffers financial loss as a result of a breach, they can institute legal proceedings to recover compensation for that loss. A breach may also have serious consequences, such as loss of reputation and damage to our image.

The AMAWA will not support any employee or Member who commits a conscious or deliberate breach of the restrictive trade practices provisions.

Module 3 - Restrictive Trade Practices Risk - The Absolute Prohibitions

Outline of this Module

As an organisation we deal with medical practitioners, hospitals, health funds and relationships between medical practitioners and their patients.

The restrictive trade practices provisions of the TPA makes certain arrangements between medical practitioners and patients, hospitals, and other medical practitioners, and between medical practices and health funds highly illegal. Any involvement in such arrangements by the AMAWA is also highly illegal. A breach of these provisions of the TPA by the AMAWA could:

Damage the AMAWA's reputation
Result in heavy financial penalties and damages for the AMAWA
Result in the AMAWA being sued for compensation
Result in financial penalties being imposed on you personally.

To assist you in understanding your obligations under the absolute prohibition sections of the TPA we have produced Module 3 - Restrictive Trade Practices - The Absolute Prohibitions. The purpose of this Module is to provide an overview of the absolute prohibitions and the implication of those provisions to the AMAWA organisation.

The Module gives an explanation of the key areas that you must be aware of. It also provides a number of "Dos and Don'ts" and gives case studies and examples to assist you in recognising the risk areas. You should make sure that you are familiar with the contents of this Module.

It should be read from start to finish, and the examples considered. If after reading this Module you are in any doubt about any conduct or proposed conduct relating to the TPA, please contact the ICO. The role of the ICO is to assist you when you are unsure of your obligations and to provide guidance as to what you must do to comply with the TPA.

The ICO is responsible for authorising the publication of this Compliance Manual and any changes to it.

Original date of procedure: 19 March 2002
Date of latest update:

1. The Absolute Prohibitions - Outline

1.1 The Absolute Prohibitions

The TPA prohibits organisations from engaging in a wide range of restrictive trade practices. These practices are prohibited as they are seen to be anti-competitive. As an organisation we must not engage in the following absolutely prohibited restrictive trade practices:

Price Fixing
Resale Price Maintenance
Exclusionary Provisions
Third Line Forcing
Misusing Market Power

The absolute prohibitions are illegal regardless of whether the conduct has caused a substantial lessening of competition in the market.

1.2 Consequences of Breach

The consequences of breaching the restrictive trade practices provisions of the TPA are severe.

The TPA proposes considerable monetary penalties for breaches of the restrictive trade practices provisions. The AMAWA may be fined up to $10 million for each breach committed. An employee or Member who is involved in committing the breach may be personally liable for a fine of up to $500,000.

The AMAWA will not support any employee or Member who commits a conscious or deliberate breach of the restrictive trade practices provisions or the procedures set out in this Module.

1.3 Conduct that is Strictly Prohibited

For a breach of the absolute prohibitions, it is not necessary for the prohibited conduct to be set out in a formal contract or arrangement. All that is necessary is the "meeting of two or more minds". Often evidence of the conduct may be gathered through:

Evidence of parallel conduct
Evidence of joint action
Evidence of similar pricing structures
Evidence of an opportunity, whether social or otherwise, for the parties to reach an understanding

2. What is Price Fixing?

Price fixing is an arrangement between parties in competition with each other which has the purpose or effect of controlling the price of goods or services bought or sold by them.

It is illegal to agree or make arrangements with competitors which has the purpose or effect of controlling prices charged to customers or prices paid to suppliers. It is also illegal to agree or make arrangements with competitors on discounts, rebates, allowances or credit terms. It is illegal to be involved in such agreements or arrangements, eg. by negotiating on behalf of one of the parties.

Discussing medical practitioners' prices, discounts, rebates, allowances or credits with other medical practitioners, or sending a set fee list or other set fee information to hospitals, may lead to price fixing. Fixing prices or advising medical practitioners of other practitioners' prices could lead to price fixing. Practitioners may obtain price information from market sources other than competitors.

2.1 What is Resale Price Maintenance?

Resale price maintenance is conduct imposing, controlling or determining customers' prices for goods or services. This conduct is illegal whether engaged in by agreement with a competitor or by an organisation acting alone. Parties must be free to resell services at any price they choose. It is illegal for us to demand, threaten, require or even encourage medical practitioners or hospitals to set prices or set a minimum price specified by us. You can however impose maximum resale prices. This is not resale price maintenance.

You must not make threats or give encouragements to comply with a recommended price. The party must be free to sell at another price if it chooses to do so.

2.2 What are Exclusionary Provisions?

Exclusionary provisions, commonly referred to as "collective boycotts", are contracts, arrangements or understandings between two or more competitors which have the purpose of restricting the supply of goods or services to certain customers, or the acquisition of goods and services from certain suppliers.

The prohibition applies to conduct that restricts supply or acquisition of goods or services outright, and also conduct where the supply or acquisition of goods or services is restricted as a result of the parties imposing certain conditions.

Market sharing is a form of collective boycott where competitors agree not to try and take customers from each other. It is illegal for us or medical practitioners to agree not to supply services to a particular hospital, patient or group of patients identified by us or a medical practitioner, and in return the other medical practitioner agrees not to supply his or her services to a different hospital, patient or group of patients.

You must not impose on a customer such as a hospital conditions which have been agreed or arranged between competitors.

2.3 What is Third Line Forcing?

Third line forcing is supplying products to a customer on the condition that the customer takes products or services from another organisation. This conduct is illegal whether engaged in by agreement with a competitor or by the organisation acting alone.

There will be third line forcing even where the other organisation is a related company. The purpose of this provision of the TPA is to ensure that the customer is not required to take goods or services that it does not want. You cannot make it a condition of any terms of supply, that the customer must purchase goods or services from another person. Similarly, you cannot provide discounts, allowances, rebates or credits to the customer to encourage the customer to take products or services from another organisation.

It is illegal for us to tell customers such as hospitals that they will only receive a discount on services if they buy a product or service from someone else. We can "recommend" or "suggest" suppliers of certain goods and services to customers such as hospitals, but ultimately, the customer must be free to choose whether or not it wishes to purchase goods or services from that third person.

2.4 What is Misusing Market Power?

Misusing market power is using the organisation's market power to take advantage of a weaker entity and compete unfairly. Whether we have "market power" in any particular market depends on a number of factors. Where we have more than 30% of the market, then we should consider ourselves as having a substantial degree of market power (but this is a threshold test only).

Where we have market power, it will be a misuse of that power where we use it to prevent a person from acting competitively. There may be a misuse of market power if you sell goods or services below cost, or if you refuse to supply a new customer, or stop supplying an existing customer:

Because the customer is discounting products or services
Because you want to discourage the customer from competing
Because other customers pressure you to do so
For vindictive reasons or retaliation.

Refusing to supply a new customer or stopping supply to an existing customer is permitted for legitimate commercial reasons such as:

Creditworthiness or insolvency
Inability to comply with trading terms
Lack of appropriate technical or support skills
Failure to protect and promote the products or services
Capacity constraints
The new customer does not operate at the appropriate trading level

3. Dealing with Customers, Suppliers and Competitors

In dealing with patients or hospitals you need to be careful to avoid price fixing, resale price maintenance, market sharing, third line forcing, misuse of market power and anti-competitive conduct generally. In dealings with medical practitioners and hospitals the price fixing, market sharing and misuse of market power issues are particularly high risk areas.

Perhaps the greatest care needs to be exercised in dealings between competitors. If you make an agreement or come to an arrangement with competitors on any matter, it could be price fixing, market sharing or anti-competitive arrangements.

If you discuss quotations or tenders with competitors, it could be price fixing, market sharing or anti-competitive arrangements. Making joint purchasing or joint supply agreements with competitors may be considered price fixing, market sharing or anti-competitive arrangements.

Price Fixing

What can I do?

Do negotiate prices on behalf of medical practitioners.
Do conduct market research to ascertain competitive pricing.
Do make independent decisions about pricing.

What can't I do?

Do not telephone competitors and ask what prices they are charging or request a price to set prices for all your services.
Do not assist in determining competitors' prices by arrangement or agreement.
Do not communicate with competitors about price fixing.
Do not discuss and agree or take part in discussions or agreements between competitors on any price related matters such as discounts, allowances, rebates and credit terms.

Resale Price Maintenance

What can I do?

Do allow customers to resell products and services at the price they choose.
Do set maximum prices if you think it is appropriate.

What can't I do?

Do not impose, control or determine customer selling or advertising prices.
Do not threaten or encourage customers to sell products or services at or above prices you specify.
Do not fix minimum resale prices. You can however set maximum resale prices.
Do not use a recommended price list in a manner which makes it a "specified price".
Do not threaten or refuse to supply a customer unless that customer agrees not to discount its price.

Exclusionary Provisions

What can I do?

Do leave an AMAWA meeting or any other meeting of competitors if discussion arises relating to whom the AMAWA's members should deal with or the terms and conditions which members should adopt.
Make sure that all decisions are made independently.
Watch what competitors are doing in the market.

What can't I do?

Do not decide or determine or aid the deciding or determination of who to supply to or stop supplying by arrangement or agreement between competitors.
Do not decide or aid the deciding of who to purchase from or stop purchasing from by arrangement or agreement between competitors.
Do not impose or aid the imposition on a customer conditions of sale which have been agreed or arranged between competitors.
Do not become a party to any "Black List".
Do not agree or aid in an agreement between competitors to deal in certain geographic areas.

Third Line Forcing

What can I do?

Do recommend or suggest other medical practitioners' services as long as the supplied party retains its own choice in purchasing such other services.

What can't I do?

Do not supply services on condition that the customer take products or services from a third party.
Do not provide encouragement by way of discounts, allowances, rebates or credits to the customer to take products or services from a third party.

Misusing Market Power

What can I do?

Do refuse to supply a new customer or stop supply to an existing customer if they are of questionable creditworthiness or insolvency.
Do refuse to supply a new customer or stop supply to an existing customer if they are unable to comply with terms.
Do refuse to purchase from a new supplier or stop purchasing from a supplier for the above reasons.

What can't I do?

Do not refuse to supply a new customer, or stop supplying an existing customer because the customer is discounting products or services.
Do not refuse to supply a new customer, or stop supplying an existing customer because you want to discourage the customer from competing.
Do not refuse to supply a new customer, or stop supplying an existing customer because of vindictive reasons or retaliation.
Do not refuse to purchase from a new supplier or stop purchasing from a supplier for the above reasons.

Case Studies and Examples

The Trade Practices Act can impact in many ways on the way we operate. In your everyday work activities you may be confronted with situations that have a potential restrictive trade practices risk. You should take time to read these case studies and examples to familiarise yourself with potential restrictive trade practices situations that you may encounter.

Price Fixing

Example: John is a GP practising with 4 other GPs at the same location with common reception, fee collection, bank account, trading name, medical records and accreditation by written agreement. He wants to make sure the prices charged to patients at the location are the same regardless of which GP the patient sees. He phones the AMA to ask whether he can he discuss and set fees with the other GPs.

Answer: As interim authorisation has been given by the ACCC to GPs working in the same general practice, the answer is currently yes. It will not be a breach of the TPA because of the authorisation. However, without authorisation from the ACCC, it would be illegal.

Example: John then wants to standardise fees and procedures in the suburb in which he works. He telephones the AMA to ask for assistance and details of what other practices are doing. What should the AMA do?

Answer: They should refuse and tell John that the AMA will not agree to any price fixing and should end the conversation immediately. It is illegal to agree with other practitioners outside your practice as to fees and procedures.

Example: Mark and Sally are the two GPs in a rural town. They wish to agree to boycott bulk-billing. Mark calls the AMA for advice.

Answer: The AMA should tell Mark that this is a form of price fixing and is an illegal breach of the Act.

Example: The AMA feels that new arrangements to allow no gap arrangements by private health insurers through the transaction-by-transaction Medical Purchaser Provider Agreement process would disadvantage its members. It proposes a collective boycott to prevent it. Can it do this legally?

Answer: The ACCC has said it will thoroughly investigate this sort of action. It may be viewed as an illegal breach of the Act as a form of price fixing. The ACCC views this as having the potential to harm patients.

Example: The AMA wants to enter into an arrangement with a hospital provider company that its visiting medical practitioners will not provide services unless the price at which they provide their services is fixed. Can it do this legally?

Answer: No. This is a breach of the Act as a form of price fixing.

Resale Price Maintenance

Example: The AMAWA has recently introduced a high quality line of products that it supplies to customers for resale. The prices at which customers begin to re-sell the product are varying considerably. The AMAWA thinks the products should be sold at a minimum price of $5,000 because selling the product below this price may detract from the image of the product as a high quality product. It sends a memo to all its customers who re-sell the product stating that the product should not be sold for less than $5,000. Is this legal?

Answer: No. The AMAWA cannot impose minimum resale prices. Instead of imposing minimum resale prices, it may recommend a price it considers to be appropriate. It is important that the price suggested is recommended only and is not enforced or encouraged by the AMAWA. It should not do anything to prevent or discourage customers from re-selling the product at less than $5,000.

Exclusionary Provisions - Market Sharing

Example: Mark and Sally are the two GP's in a rural town. They wish to agree that Mark will treat the patients in a neighbouring town which is to the north of their town, and Sally will treat the patients in the neighbouring town to the South.

Answer: No. This is market sharing and a breach of the Act.

Third Line Forcing

Example: Geoffrey an anaesthetist in a country town, wants to agree with Jill, the local surgeon, that neither will accept referrals from a local GP unless the other is also engaged for any surgery to be performed. Is this permissible?

Answer: No. It is a breach of the Act as it imposes a condition that services will not be provided unless another party's services are engaged.

Misusing Market Power

Example: Geoffrey is the only anaesthetist in a country town. Mary commences practice in the next town, also as an anaesthetist. Geoffrey has traditionally serviced both towns. Geoffrey reduces his fees to a level which makes it impossible for Mary to establish her practice if she is to be competitive on fees. Is this legal?

Answer: No Geoffrey is misusing his market power and contravenes the Act.

Module 4 - Restrictive Trade Practices Risk - The Market Impact Prohibitions

Outline of this Module

As an organisation we deal with medical practitioners, hospitals, health funds and relationships between medical practitioners and their patients on a regular basis.

The restrictive trade practices provisions of the TPA makes certain arrangements between the medical practitioners and patients, hospitals or other medical practitioners, and medical practices and health funds highly illegal if they substantially lessen competition in the market. Any involvement in such arrangements by the AMAWA is also highly illegal. A breach of these provisions of the TPA could:

Damage the AMAWA's reputation
Result in heavy financial penalties and damages for the AMAWA
Result in the AMAWA being sued for compensation
Result in financial penalties being imposed on you personally.

To assist you in understanding your obligations under the TPA in respect of market impact prohibitions we have produced Module 4 - Restrictive Trade Practices Risk - The Market Impact Prohibitions. The purpose of this Module is to provide an overview of the market impact prohibitions restrictive trade practices provisions of the TPA and the implication of those provisions on the AMAWA organisation.

The ICO is responsible for authorising the publication of this Compliance Manual and any changes to it.

Original date of procedure: 19 March 2002
Date of latest update:

1. The Law - Outline

1.1 The Market Impact Prohibitions

The TPA prohibits organisations from engaging in a wide range of restrictive trade practices. These practices are prohibited as they are seen to be anti-competitive. As a business we must be wary of engaging in the following restrictive trade practices:

Establishing Exclusive Territories
Customer Restraints
Tying Supply
Anticompetitive Arrangements
Anticompetitive Acquisitions

These practices are illegal if they were done for the purpose of or have the effect of substantially lessening competition in the relevant market.

1.2 Consequences of Breach

The consequences of breaching the restrictive trade practices provisions of the TPA are severe. The TPA imposes considerable monetary penalties for breaches of the restrictive trade practices provisions. The AMAWA may be fined up to $10 million for each breach committed. An employee, Member or member who is involved in committing the breach, may be personally liable for a fine of up to $500,000.

In addition, if someone suffers financial loss as a result of a breach, they can institute legal proceedings to recover compensation for that loss. A breach may also have serious commercial consequences, such as loss of reputation and damage to our image.

The AMAWA will not support any employee or Member who commits a conscious or deliberate breach of the restrictive trade practices provisions or the procedures set out in this Module.

2. The Market Impact Prohibitions

2.1 Conduct that may be Prohibited

The TPA prohibits restrictive trade practices which have the purpose or effect of substantially lessening competition in the market. Conduct falling within the Market Impact Prohibitions is prohibited, if the conduct was for the purpose or has the effect of substantially lessening competition in the market.

3. What is Establishing Exclusive Territories?

Establishing exclusive territories is imposing restrictions on medical practitioners or customers about the territories that the medical practitioner or customer is permitted to supply into. Territory restrictions can operate to limit the number of medical practitioners in a market and so can disadvantage consumers.

It is illegal for us to dictate what territory a hospital must resell services into, if such a restraint is so serious that it substantially lessens competition.

4. What are Customer Restraints?

Customer restraints are restrictions imposed on customers about who they can buy from or supply to. Customer restraints can operate to limit the number of medical practitioners in the market and so can disadvantage patients.

It is illegal for us to insist that a hospital buy all its products that are to be used by a medical practitioner from a particular organisation, if such a restraint is so serious that it substantially lessens competition.

5. What is Tying Supply?

Tying supply is placing restrictions on, eg. medical practitioners. These restrictions relate to the patients or hospitals that the medical practitioner can provide services to and the suppliers that the medical practitioner can purchase from.

It is illegal for us to demand that a medical practitioner must not provide the medical practitioner's services to any particular hospital or patient or group of hospitals or patients, if such a restriction is so serious that it will substantially lessen competition.

6. What are Anti-Competitive Arrangements?

Anti-competitive arrangements are arrangements, usually made between competitors, that seriously impact the market. Anti-competitive arrangements can decrease the level of competitive activity in a market which can disadvantage patients.

For instance, it is illegal for us to arrange or be involved in arrangements between competitors to not use new technology, if such an arrangement is so serious that it substantially lessens competition.

7. What are Anti-Competitive Acquisitions?

Anti-competitive acquisitions can occur if the shares or assets of a competitor are acquired. Anti-competitive acquisitions can operate to limit the level of competitive activity in a market and so can disadvantage consumers.

If a medical practice enjoys a large market share, it is illegal for that practice to buy out a competitor who also has a large market share, if such a business acquisition is so serious as to substantially lessen competition.

8. The Market

The concept of a "market", and what amounts to a "substantial lessening of competition" in that market, is relevant to many provisions of the TPA.

The market that we and our members operate within is determined by a number of factors. You should be aware that a market could be: A service market, that is a market consisting of services supplied together with competing services which patients and hospitals could reasonably use as a substitute for those services.
A geographic market, that is a geographical area or areas where sellers of particular services operate and in which purchasers of those services can practically turn to for those services
A functional market, that is the level on which the persons operate, for example a specialisation.

The market will be defined by the degree of substitution between one service and another and one source and another.

9. Dealing with Customers, Suppliers and Competitors

In dealing with customers such as patients, hospitals and suppliers you need to be careful to avoid price fixing, resale price maintenance, market sharing, third line forcing, misuse of market power and anti-competitive conduct generally. In dealings with medical practitioners the price fixing, market sharing and misuse of market power issues are particularly high risk areas.

If you make an agreement or come to an arrangement with competitors on any matter, it could be price fixing, market sharing or anti-competitive arrangements. If you discuss quotations or tenders with competitors, it could be price fixing, market sharing or anti-competitive arrangements. Making joint supply agreements with competitors may be considered price fixing, market sharing or anti-competitive arrangements.

Buying the shares in or the assets of a competitor may be an anti-competitive acquisition. If you refuse to supply a new customer, stop supplying an existing customer or discriminate against an existing customer because the customer:

Buys from a competitor
Sells to a competitor
Resells to any person
Resells in particular places or territories,

that may be considered a customer restraint or the establishment of exclusive territories.

Similarly, if you refuse to purchase from a new supplier, stop purchasing from an existing supplier or discriminate against an existing supplier because the supplier:

Purchases from any other person
Sells to a competitor
Sells to any other person
Sells in particular places or territories,

that may be considered tying supply or establishing exclusive territories.

Establishing Exclusive Territories

What can't I do?

Do not refuse or take part in a refusal to supply a new customer or stop supply to an existing customer because that customer operates in particular places or territories.
Do not refuse or take part in a refusal to purchase from a new supplier or stop purchasing from an existing supplier because the supplier sells in particular places or territories.

Customer Restraints

What can't I do?

Do not refuse or take part in a refusal to supply a new customer, stop supplying an existing customer or discriminate against an existing customer because the customer also deals with a competitor.
Do not restrain a medical practitioner from supplying services in competition with another medical practitioner.

Tying Supply

What can I do?

Do deal with suppliers honestly and fairly.
Do ensure that the supplier understands all important and adverse aspects of the purchase and the purchase terms.

What can't I do?

Do not refuse or take part in a refusal to purchase from a new supplier, stop purchasing from an existing supplier or discriminate against an existing supplier because they sell to a competitor.
Do not impose or take part in the imposition on a supplier conditions of a purchase which have been agreed or arranged with a competitor.
Do not withhold information that would influence the supplier's decision either way.

Anti-Competitive Arrangements

What can't I do?

Do not agree or take part in agreements between competitors on fixing a price for particular services.
Do not agree or take part in agreements between competitors not to deal with a particular company or persons.
Do not agree or take part in agreements between competitors to provide services only to certain customers.
Do not agree or take part in agreements between competitors on timing to release the use of new technology.

Anti-Competitive Acquisitions

What can I do?

Do obtain a pre-merger consultation with the ACCC prior to a merger.

What can't I do?

Do not make a business acquisition that will substantially lessen competition.

Case Studies and Examples

The Trade Practices Act can impact in many ways on the way we do business.

In your everyday work activities you may be confronted with situations that have a potential restrictive trade practices risk. You should take time to read these case studies and examples to familiarise yourself with potential restrictive trade practices situations that you may encounter.

Establishing Exclusive Territories

Example: "Super Machines" supplies to a number of different customers throughout Perth's southern suburbs. Some of these customers have approached Super Machines with complaints that they are losing business to other "Super Machines" customers within this area. Super Machines decides that the best approach to keep all its customers happy is to ensure that each customer only treats patients with their machines who live within a two kilometre radius of their surgery. Super Machines decides that this will have the effect that patients must have treatment from their local GP. Super Machines wants to impose this requirement on all of its customers in the southern suburbs. Can it do so?

Answer: Probably not, but this is harder to determine. It depends on whether the purpose or effect of the Agreement is to substantially lessen competition in the south.

Customer Restraints

Example: Super Machines has been having ever increasing problems with competitors attempting to supply to its customers in the southern suburbs market. It decides that the best way to avoid losing business in this market is to offer customers a discount on prices on the condition that customers will purchase all of their requirements from "Super Machines" and not buy any goods from competitors of "Super Machines". Can it impose such a condition?

Answer: No. Again it will depend on whether the purpose or effect of the Agreement is to substantially lessen competition in the southern suburbs. Its purpose in attempting to impose such a restriction is clearly to substantially lessen competition in the southern suburbs market and therefore such a condition would be illegal. It can offer discounts for buying larger quantities from "Super Machines" and thereby perhaps achieve the result that customers are purchasing all of their requirements from "Super Machines", without resorting to imposing an illegal restriction on customers.

Tying Supply

Example: Super Machines has found that a line of products it purchases from Tommy, a supplier of "Super Machines", is selling extremely well. It believes that the reason for this is because Tommy is currently only supplying to "Super Machines". It is aware that Tommy is proposing to approach "X Co." to offer the supply of the product. It believes that if "X Co." also supplies the product, "Super Machines" sales of the product will decrease. It informs Tommy that "Super Machines" will not continue to purchase the product from Tommy, if Tommy supplies the product to "X Co.". Is this legal?

Answer: No. This is clearly designed to substantially lessen competition in the market for the particular good and is also likely to have the effect of substantially lessening competition in that market.

Anti-Competitive Arrangements

Example: A number of doctors in Geraldton want to get together to arrange a roster for after hours and weekend work. Is this anti-competitive?

Answer: No. As long as the roster is genuine and created to ensure the availability of medical services from general practitioners after hours and on weekends, it will not be a breach of the Act.

Example: The AMA negotiates with a hospital and states that unless the hospital agrees to their terms and conditions for which visiting medical practitioners would provide their services, all visiting medical practitioners would withdraw their services. Is this legal?

Answer: No. This is a breach of the Act as its purpose is to prevent, restrict or limit the supply of medical services and would substantially lessen competition in the market for medical services.

Example: The AMA wants anaesthetists to be paid $25 per hour by a local hospital for "on-call" services to ensure the availability of an anaesthetist. The hospital refuses. Consequently it wishes to arrange for its members to boycott that hospital by ceasing to provide medical services to it. Is this legal?

Answer: No. This is a breach of the Act as it is anticompetitive. The ACCC states such breaches are a serious breach and it will not hesitate to seek penalties. Regardless, such an arrangement would be price fixing, also a breach of the Act.

Module 5 - Communications and Promotions Risk

Outline of this Module

In our everyday communications we interact with medical practitioners, hospitals, health funds and patients. Advertising and promotional materials present our services and organisation to the community. The communications and promotions provisions of the TPA, and the Fair Trading Act ("FTA"), the Western Australian equivalent of the TPA, prohibit a range of communication and promotional practices which are false, inaccurate, misleading, or deceptive. These are not all offences of dishonesty; it is possible to breach this area of the law even if you do not have an intention to do so.

As an organisation we must make sure that we do not make inaccurate communications or untruthful or misleading advertising promotions. A breach of these provisions of the TPA or the FTA by the AMAWA could:

Damage the AMAWA's reputation;
Result in the AMAWA being sued for compensation;
Result in heavy financial penalties and damages for the AMAWA;
Result in financial penalties being imposed on you personally;

To assist you in understanding your obligations under the TPA and the FTA, we have produced Module 5 - Communications and Promotions Risk. The purpose of this Module is to provide an overview of the communications and promotions provisions of the TPA and the FTA, and the implication of those provisions on the AMAWA.

It should be read from start to finish, and the examples considered. If after reading this Module you are in any doubt about any conduct or proposed conduct relating to the TPA or the FTA, please contact the ICO. The role of the ICO is to assist you when you are unsure of your obligations and to provide guidance as to what you must do to comply with the TPA and the FTA.

The ICO is responsible for authorising the publication of this Compliance Manual and any changes to it.

Original date of procedure: 19 March 2002
Date of latest update:

1. The Law - Outline

1.1 Illegal Communications and Promotions

The TPA and the FTA prohibit businesses and organisations from engaging in a wide range of communications and promotional practices which are false, inaccurate, misleading, or deceptive. As an organisation we must not engage in the following communications and promotional risk practices:

Misleading or Deceptive Conduct
Make False Claims
Give Unsubstantiated Predictions
Offer Imaginary Prizes
Use Bait Advertising
Advertise Partial Prices

1.2 Consequences of Breach

The consequences of breaching the consumer protection provisions of the FTA and the TPA are severe.

If you make False Claims, or engage in one of the specific advertising prohibitions of Offering Imaginary Prizes, Using Bait Advertising or Advertising Partial Prices the AMAWA could be fined up to $1.1 million under the TPA and up to $100,000 under the FTA for each breach committed. An employee or Member who is involved in committing the breach, may be personally liable for a fine of up to $220,000 under the TPA or $20,000 under the FTA.

If someone suffers financial loss as a result of a breach of any of these provisions or if you make Unsubstantiated Predictions or engage in Misleading or Deceptive Conduct and someone suffers a financial loss as a consequence, then that person can institute legal proceedings to recover compensation for that loss. The compensation payable can be significant.

A breach may also have serious consequences, such as loss of reputation, and damage to our image.

The AMAWA will not support any employee or Member who commits a conscious or deliberate breach of these provisions of the TPA or the FTA, or the procedures set out in this Module.

2. Prohibited Conduct

2.1 What is Misleading or Deceptive Conduct?

Misleading or deceptive conduct is any conduct which misleads or deceives. The TPA and the FTA provide that a corporation or organisation must not, in trade or commerce, engage in conduct that is misleading or deceptive, or likely to mislead and deceive.

The ACCC, the Department of Consumer and Employment Protection ("DCEP") (the WA equivalent of the ACCC) and the Courts will look at the overall impression when considering whether conduct is misleading or deceptive. For example, if you fail to correct an inaccurate impression, then your silence may be misleading or deceptive.

Misleading and deceptive conduct is not based on intention. It is no defence that an assertion was honestly or genuinely made. It is also no defence to argue that the other party should have made his or her own inquiries as to whether or not any representation or other conduct was accurate.

The misleading or deceptive conduct provisions of the TPA and the FTA have wide reaching scope. The requirement not to mislead or deceive is relevant to all of our publications, promotions and advertisements. It is therefore important that any representations that you make in publications, advertisements and promotional material give a truthful impression.

If we advertise a service without making it clear that there are qualifications or exclusions, we could be found to be engaging in misleading or deceptive conduct.

2.2 What is a False Claim?

A false claim occurs when a claim is made about our services which is untrue. False claims can occur in relation to:

Standard, quality, or grade;
Sponsorship, approval or benefits;
Price;
Conditions;
Matters concerning land, employment and organisation activities.

False claims often overlap with misleading or deceptive conduct. A false claim is almost always also misleading or deceptive.

2.3 What is an Unsubstantiated Prediction?

Unsubstantiated predictions are unsupported suggestions that certain things will happen in the future.

If we suggest to medical practitioners, hospitals, patients, or the general public that there e.g. may be a price increase for certain goods or services so they should acquire the goods or services now, with no reasonable basis for believing that there will be such an increase, this could be an unsubstantiated prediction. Unsubstantiated predictions become illegal when the prediction does not happen, and there were no reasonable grounds at the time for thinking that it would.

2.4 What is Offering Imaginary Prizes?

Offering imaginary prizes occurs when services are promoted by offering gifts, prizes or other free items with no intention of actually providing them at all, or providing them as described.

If we conduct a scratch 'n' win promotion offering ten substantial prizes, but only intend to offer five on the basis of past redemption rates, this would be offering imaginary prizes.

2.5 What is Bait Advertising?

Bait advertising is advertising a service at a lower than normal price, where the service is unavailable at that price, or available only in limited quantities. The purpose is to attract customers.

If we advertise one of our services for supply at a specified price and we cannot offer it at that price for a reasonable period and in reasonable quantities, that is bait advertising. We must not use "specials" to attract patients or hospitals in order to sell other services to them unless the "specials" are available in sufficient quantities to satisfy demand.

2.6 What is Advertising Partial Prices?

Advertising partial prices is promoting services by reference to only a portion of the full or final price. If we advertise our services, with the benefit of a payment plan, but we only include the amount of the initial deposit in our advertisement, we are only advertising a partial price.

3. Communications

3.1 Generally

You must be accurate in your communications with medical practitioners, patients, suppliers, hospitals, health funds and the public generally. This means you must not write or take part in any communication which is inaccurate, misleading, deceptive or unsubstantiated.

You must be careful with all communications and business contact with people, companies or organisations outside the AMAWA whether that contact is by way of letter, telephone, fax, e-mail, personal discussions, meetings, advertising or any other means.

3.2 Making Statements

Do not include in a communication any material or ideas which you have not checked or confirmed, or which you do not know to be accurate and true. That could be misleading or deceptive conduct or a false claim.

If you make a statement that is inaccurate or unsubstantiated, do not assume that just because it is:

Not written down
Followed by a written contract or a written document
Covered by an exclusion or exemption clause
Subject to a statement of qualification or limitation,

that the inaccuracy or absence of substantiation has been removed. It depends on the circumstances, and could be misleading or deceptive conduct or a false claim.

Do not assume that you will always know when your own communication is inaccurate, misleading or deceptive. It could still be misleading or deceptive conduct or a false claim. If you are unsure, check.

3.3 Silence

Do not leave out material which is likely to be important or relevant to the recipient. Leaving material out could be misleading or deceptive conduct.

Do not allow a recipient of your communication to suffer from a false impression, a wrong idea or a mistake. Clarify the situation. Otherwise, this could be misleading or deceptive conduct.

3.4 Predictions

Do not guess or speculate about a future matter unless you have a reasonable basis for doing so. Guessing or speculating could be an unsubstantiated prediction.

4. Advertising and Promotions

4.1 Generally

Our publications, advertising and promotions pose a special trade practices risk, as they are targeted at the general public and are generated to promote our services and reputation. Each time you prepare or make publications, advertising or promotional material or claims, you must observe the requirements relating to communications generally.

You must also observe the following requirements:

Do not assume that because some medical practitioners, hospitals, health funds and patients will understand or not be misled by publications, advertising or promotional material that all medical practitioners, hospitals, health funds and patients will understand or not be misled.
Do not rely on any general statements of qualification or limitation such as "some exclusions apply" or "limited offer" without the approval of the ICO.

When preparing publications, advertising or promotional material:

Include a "use by" date wherever possible, such as "not valid after…" or "only available until…";
Include a recommendation and contact telephone number to enable currency to be checked;
Keep a register of where and when the material was broadcast, disseminated or distributed;
Maintain a file copy of each and every publication and piece of promotional and advertising material exactly in the form released, together with the corresponding Publication Approval Checklist which is Attachment 1 to this Module.
Do not make any extreme, unusual, comical, fanciful, dangerous or unreal claims about any of our services without the approval of the ICO.
Do not use words or expressions which may be ambiguous such as "free", "new", "breakthrough", "scientific", "revolutionary", "Australian made" or "natural" without the approval of the ICO.
Do not use absolute words or expressions such as "total", "pure", "100%", "guaranteed", "most efficient", "most effective" without the approval of the ICO.
Do not offer any gifts or prizes with our services when you do not intend to provide them exactly as offered. That is offering imaginary prizes.
Do not advertise our services for sale, knowing or suspecting that we probably cannot meet the resulting demand. That is bait advertising.
ALWAYS complete the Publication Approval Checklist, before releasing any publication, advertising or promotional material.

4.2 Making Price Claims

In addition to meeting the compliance requirements set out in paragraph 4.1 above, when making price claims:

Do not advertise "reduced", "discounted" or "special" prices unless the service has actually been provided for the higher price for most of the previous 12 months. That is misleading or deceptive conduct, and could be a false claim.
Do not publish or advertise that a potential or actual price increase is likely due to release of a new service, the introduction of a GST or other tax increase, equipment price increase etc without the approval of the ICO. That could be misleading or deceptive conduct, a false claim or an unsubstantiated prediction.

4.3 Making Performance Claims

In addition to meeting the compliance requirements set out in paragraph 4.1 above, when making performance claims, do not make a claim in relation to service performance, unless:

The claim can be substantiated by a suitably qualified expert; and
The performance characteristic is actually material to the performance of the service and is not a red herring,

otherwise, it could be misleading or deceptive conduct, or a false claim.

If tests have been conducted and will be used in publications or on advertising or promotional material:

Do not select and use certain test results and ignore other (perhaps less favourable) results;
Ensure that test conditions reflect real world conditions and not laboratory conditions;
Do not refer to any expert or expert body without obtaining their written consent.

4.4 Making Association Claims

In addition to meeting the compliance requirements set out in paragraph 4.1 above, when making association claims:

Do not use any third party material such as testimonials, reports, images of people, images of property, quotations, extracts in advertising or promotional material without the written consent of the author or owner. That could be misleading or deceptive conduct or a false claim.
Do not make a claim of association or sponsorship with or by any person unless:
- you have their written consent.
- the consent is still current.
- the person has used or tested the service.
- the person believes the service to have the claimed attributes.
- the person has approved in writing the final form of the copy.

4.5 Making Comparative Claims

In addition to meeting the compliance requirements set out in paragraphs 4.1 above, when making comparative claims, do not make a direct or veiled comparison to competitors' services unless:

The comparison is strictly "like with like".
The compared service is a current and available service.
Features of the service are strictly equivalent, and each of the relevant differences is specified.
The competitors' services are closely monitored while the comparison is being made.
The publication, advertising or promotional material can quickly and easily be withdrawn or cancelled if the competitors' services change in any material respect.

4.6 Using Fine Print

You must carefully consider whether or not you should use fine print or asterisks to qualify or limit statements, or exclude certain services, medical practitioners, hospitals, health funds, patients, times or geographic areas. Using fine print to qualify less appealing statements or claims can mislead medical practitioners, hospitals, health funds, patients and the public at large, who may be unfairly lured into requesting a service that is not what they expected.

The ACCC has announced that it is cracking down on advertisements, catalogues, print media, point of sale material and television that use fine print to qualify a message. The ACCC has stated that these types of advertisements will be subject to greater scrutiny than advertisements which immediately bring to consumers' attention any qualifications or exclusions.

Be sure that fine print is only used when absolutely necessary. All important statements which will influence a medical practitioner's, hospital's, health fund's, patient's or the public's decision whether or not to request a service should be immediately brought to their attention in the main part of the text. If you are unsure, contact the ICO.

4.7 Appointing Publications Agents

You must only appoint a publications agent to prepare publications, advertising or promotional material if a binding agreement is in place that makes it clear that:

Responsibility and reliability for the accuracy of service claims as well as the currency of the factual material, lies with the AMAWA.
Responsibility and reliability for the publication, advertising and promotional concept, exaggeration or puffery, use of third party materials including copyright and trade marks, special advertising regulations (such as for sales promotions) lies with the agency.
Any intellectual property in the publication, advertising or promotional material is the property of the AMAWA.

4.8 The Medical Rules

As well as the TPA and the FTA, the Medical Rules of Western Australia also prohibit advertising that:

is materially false;
is misleading or deceptive or is likely to mislead or deceive;
is vulgar, sensational or of such frequency to be likely to adversely affect the reputation of the medical profession;
claims or implies the superiority of a medical practitioner over other medical practitioners;
contains testimonials or endorsements concerning the medical practitioner;
contains testimonials or endorsements by a medical practitioner concerning any goods or services.

The penalty for breaching these conditions is $2,000.

The prohibitions on advertising in the Medical Rules are wider than under the TPA or FTA. The Medical Rules are State Legislation and therefore the restrictions they impose on advertising are not a breach of the TPA or FTA.

Misleading or Deceptive Conduct

What can I do?

Do ensure the statement or conduct is the truth.
Do consider whether the statement or conduct conveys a truthful impression.
Do consider whether your statements, silence or conduct may have misled medical practitioners, hospitals, health funds, patients and the public at large.
Do put yourself in the position of the person you are dealing with and consider how they would understand your conduct, what you are saying and whether your silence is not raising a point.
Do promptly correct any misunderstanding or belief another party may have. Do clearly state any qualifications or assumptions relating to any information you provide.
Do ensure that any published test conditions reflect real world conditions and not just laboratory conditions.

What can't I do?

Do not exaggerate claims.
Do not tell half truths; there is a duty to complete the picture.
Do not be silent when there is an obligation to clear up misleading conduct.
Do not rely on small print exclusion clauses if you have created an overall impression that is contrary to what is contained in the exclusion clause.
Do not express an opinion based on a claim of expertise when that expertise does not exist.
Do not make a promise you cannot keep.
Do not select and use certain test results and ignore other results.
Do not refer to any expert or expert body without obtaining first their written consent.

Making False Claims

What can't I do?

Do not represent that the service has sponsorship, approval, performance characteristics or benefits it does not have.
Do not make a false or misleading representation concerning the place of origin of the service or equipment used.
Do not make a claim in relation to the service, especially a scientific one unless the claim can be substantiated by a suitably qualified expert.
Do not make a claim of association or sponsorship with or by any person unless you have their written consent, their consent is still current, the person has used or tested the service, the person believes the service to have the claimed attributes, and the person has approved in writing the final form of the advertising copy.

Unsubstantiated Prediction

What can I do?

Do ensure you have a reasonable basis for making any representation in relation to future matters.
Do consider whether the grounds for your prediction are reasonable.

What can't I do?

Do not make suggestions that things will happen in the future without reasonable grounds that they will.

Offering Imaginary Prizes or Gifts

What can't I do?

Do not offer gifts or prizes unless you intend to provide them exactly as offered.

Bait Advertising

What can I do?

Do advertise a service for a specified price if it can be offered at that price for a reasonable period and in reasonable quantities.

What can't I do?

Do not advertise a service, knowing or suspecting that resulting demand will probably not be able to be met.
Do not advertise a service at a lower than normal price, where the service is unavailable at that price or only available in limited quantities.

Advertising Partial Prices

What can't I do?

Do not promote a service by reference only to a portion of the full and final price.

Business Communications

What can I do?

Do be accurate in your communications with medical practitioners, hospitals, health funds, patients and the public generally.

What can't I do?

Do not include in any communications any material that has not been checked or confirmed.
Do not include in any communications any material that you do not know to be accurate or true.
Do not believe that if you make an inaccurate or unsubstantiated statement that is not written down, is followed by a written contract or document, is covered by an exclusion clause or subject to a statement of qualification or limitation that anything misleading or false about it has been removed.
Do not leave material out which is likely to be important or relevant to the recipient.
Do not allow a recipient to suffer a false impression, a wrong idea or mistake.
Do not make a prediction as to a future matter without a reasonable basis for doing so.

General Publications, Advertising and Promotions

What can I do?

Do include a "use by" date wherever possible.
Do use the word "new" if it's still within 6 months of release of the service.
Do keep a register of where the material is broadcast, disseminated or distributed.
Do maintain a file copy of each and every piece of promotional material exactly in the form released.
Do set out any limitations in full.

What can't I do?

Do not use any third party material such as testimonials, reports, images of people, images of property, quotes or extracts in promotional material without the written consent of the author or the owner.
Do not make claims that are inaccurate, misleading, deceptive or unsubstantiated.
Do not leave material out that is likely to be important or relevant.
Do not include any material or ideas which you have not checked or confirmed or which you do not know to be accurate and true.
Do not assume that because some members of your target audience will understand and will not be misled that all members will understand and not be misled.
Do not rely on general statements of qualification such as "some exclusions apply" or "limited offer".
Do not leave important statements that will influence the decisions of medical practitioners, hospitals, health funds, patients, or the general public in the fine print.

Making Price Claims

What can I do?

Do advertise "reduced", "discounted" or "special" prices when the service has been provided for the higher price for most of the previous 12 months.

What can't I do?

Do not advertise a potential or actual price increase is likely due to an event unless you have a substantiated basis for the prediction.

Making Performance Claims

What can I do?

Do ensure that test conditions reflect real world conditions and not laboratory conditions.
Do obtain the prior written consent of any expert or expert body referred to.

What can't I do?

Do not make a claim in relation to a service unless the claim can be substantiated by a suitably qualified product expert.
Do not make a claim in relation to a characteristic of a service unless the performance characteristic is actually relevant to the outcome of the service
Do not select a new set of test results and ignore other results.

Making Association Claims

What can't I do?

Do not use any third party material such as testimonials, reports, images of people, images of property, quotations, extracts in publications, advertising or promotional material without the written consent of the author or owner.
Do not make a claim for association or sponsorship with or by any person unless you have their written consent, the consent is still current, a person has used or tested the service, the person believes the service has the claimed attributes, and the person has approved in writing the final form of the copy.

Making Comparative Claims

What can I do?

Do compare services "like with like".
Do ensure the compared service is a current and available service.
Do ensure that the features of the services are strictly relevant when being compared and each of the relevant differences is specified.
Do ensure a competitor's service is closely monitored while the comparison is being made.
Do ensure that the advertising or promotional material can quickly and easily be withdrawn or cancelled if a competitor's service changes in a material respect.

Appointing Publication Agents

What can I do?

Do ensure that any contract with a publication agent specifies that any intellectual property in the publication advertising or promotional material is the property of the AMAWA.
Do ensure that an agreement with a publication agent clearly states that the responsibility for the accuracy of product claims as well as the currency of the factual material lies with the AMAWA.
Do ensure that an agreement with an advertising agent clearly states that the responsibility and reliability for the advertising and promotional concept, exaggeration or puffery, use of third party materials including copyright and trade marks and special advertising regulations lie with the agency.

Case Studies and Examples

The TPA and the FTA can impact in many ways on the way we operate.

In your everyday work activities you may be confronted with situations that have a potential communications and promotions risk. You should take time to read these case studies and examples to familiarise yourself with potentially risky situations that you may encounter.

Misleading or Deceptive Conduct

Example: Adam, a specialist surgeon has developed a new procedure for operating to counteract the effects of arthritis. He has tested it in clinical trials which showed a high success rate. He wants to represent to patients that his procedure is better than other treatments and has a high success rate. He seeks the advice of the AMAWA. What should we advise?

Answer: Although Adam's claims may be true, the procedure has only been conducted in clinical conditions. For him to state that his procedure is better than others, and successful, it must be accredited by an independent expert in the field. Telling patients that it is successful when it is an unproven procedure will likely amount to misleading and deceptive conduct in breach of the TPA, the FTA and the Medical Rules. The AMAWA should therefore advise that Adam should not make such representations to patients at this stage.

Example: Jerry works with "Super Machines", a wholesaler and distributor of specialty surgical equipment. Jerry has decided to run a special offer promotion from January to increase the sales of a specialty machine. Jerry has organised the promotion so that customers who purchase more than 3 machines before July receive a voucher for a free meal at Jacksons when another meal is purchased. Jerry advertises the special offer as follows: "Buy more than 3 machines this financial year and we'll send you to Jacksons for a free meal". Is this legal?

Answer: No. This implies that the meal is free when in fact another meal must be purchased to receive the 'free' meal. A better way to advertise the promotion would be: "Buy more than 3 machines this financial year and we'll give you a voucher for a free meal when another meal of equal or greater value is purchased at Jacksons". The use of the word 'free' in relation to a promotion can be dangerous and you should always seek the assistance of the ICO before using it in a promotion or advertising campaign.

Example: A potential "Super Machines" customer, George, approaches Jerry to find out about purchasing the speciality machines for re-sale. George asks Jerry whether other customers of "Super Machines" are achieving high sales in re-selling the machines. Jerry is aware that the machines have not been selling well, but he tells George that he thinks that the machines seem to be selling pretty well, but that he cannot be sure. Is this legal?

Answer: No. George has asked Jerry a direct question to which Jerry knows the answer. Jerry should answer George truthfully. Jerry should tell George that the machines have not been selling well.

False Claims

Example: George asks Jerry how much the machines are per item. Jerry tells George the machines normally sell for $2,000 per item but because George is a new customer "Super Machines" will sell them to George at $1,750 per item. Super Machines in fact usually sells the machines at $1,750 per item but Jerry thinks that as George is new to the business, he will not be aware of this. Is this legal?

Answer: No. Jerry has made false claim in relation to the price of the machines. This would also amount to misleading or deceptive conduct. Jerry may sell the machines to George at $2,000, but should not make any representations as to how much other customers usually pay for the machines in this situation unless he is prepared to tell the truth. If George asks Jerry how much "Super Machines" usually charges customers, Jerry should tell George that it is $1,750. Alternatively, Jerry may sell the machines to George at $1,750, but should not state or imply that this is a discount off the usual price.

Unsubstantiated Predictions

Example: In answer to George's question about how well the machines are selling, Jerry answers truthfully that the machines are not selling particularly well. However, Jerry also tells George that "Super Machines" are likely to run a new promotion assisting customers that re-sell the machines by offering GPs who purchase the machines the chance to win a prize. "Super Machines" is actually not considering such a promotion. Jerry has recently thought of the promotion and intends to raise the issue with his Manager at "Super Machines". Is it legal for Jerry to tell George that "Super Machines" are likely to run the new promotion?

Answer: No. This amounts to making a future prediction without a reasonable basis and is therefore likely to be misleading or deceptive conduct. If Jerry had discussed the idea with his Manager and reasonably believed that "Super Machines" was likely to run the promotion, this may be legal. However, he should make it clear to George that "Super Machines" has not yet decided to run the promotion.

Offering Imaginary Prizes and Gifts

Example: The AMAWA has an affiliation with "Super Machines". In promoting its equipment to medical practitioners, it decides that it should run a promotion offering those practitioners who purchase the equipment the chance to go in a draw to win a trip for 2 to the AFL Grand Final. After commencing the promotion, the AMAWA realizes that there are no remaining tickets and it cannot acquire any. Has the AMAWA acted illegally?

Answer: Yes. Even though the AMAWA intended to give away the prize, this amounts to misleading and deceptive conduct and is illegal. You should always ensure that the prize or gift you are offering is available and secured, prior to making any offers.

Bait Advertising

Example: "Super Machines" has been trying to break into the market for supplying customers in the northern suburbs of Perth who have traditionally been loyal to another wholesale supplier. Jerry is aware that there is a large demand for a particular brand of surgical equipment. "Super Machines" currently has low stocks of the brand, which are likely to be sold out very quickly. However, Jerry decides to make a special offer on the brand, selling the brand at a significant discount on the usual price in order to attract new customers to "Super Machines". He also provides on the leaflet: "limited offer, while stocks last". Is this legal?

Answer: No. This would be illegal and would amount to Bait Advertising. The qualification providing "limited offer, while stocks last" is not sufficient in circumstances where the brand cannot be offered in reasonable quantities for a reasonable period. Jerry should not advertise the brand in this manner and should not provide any special offers on goods when the stocks "Super Machines" holds are not sufficient to meet customer demands for a reasonable period of time.

Advertising and Promotions Generally

Example: Jerry advertises a special offer available to "Super Machines" customers whereby customers receive a free 2 week "try before you buy" trial of a product when another product is purchased. Jerry intends the promotion to run only for the months of October to December and believes the provision "limited offer" would be sufficient in this respect. Is this correct?

Answer: No. It is important to insert a date after which the offer will no longer be valid. Jerry should also ensure that he has sufficient stocks of the sample product to satisfy customer requirements. Previous redemption rates on similar offers may be a good guideline as to how many sample products will be required, however Jerry should make provision for the situation where higher redemption rates are experienced. Jerry should seek the assistance of the "Super Machines" Compliance Officer.

Example: "Super Machines" has begun to distribute a new heart rate monitor. Jerry considers that he may advertise the product as a revolutionary breakthrough in heart rate monitoring. What should he do?

Answer: He should seek assistance from the "Super Machines" Compliance Officer. Although Jerry may consider the product revolutionary, this may be considered misleading in some cases.

Example: Andrew, a surgeon and member of the AMAWA, has just treated a famous celebrity. He wishes to tell patients this in order to reassure them of the quality and effectiveness of the surgery. What should he do?

Answer: Under the TPA Andrew should not suggest any association between himself and a third party without the written consent of a third party. It would be acceptable if written consent was obtained. However, Andrew should not advertise an endorsement as this would be a breach of the Medical Rules and expose him to a $2,000 penalty.

Example: Jerry is aware that a product sold by "Value Machines" is very similar to a product sold by "Super Machines" and that customers of "Super Machines" are considering switching to the "Value Machines" product because it is cheaper. Jerry decides to run a promotion comparing the two products and stating that the "Super Machines" product requires less maintenance than the "Value Machines" product. "Value Machines" subsequently changes the product and reduces the maintenance requirements to the same level as the "Super Machines" product. What should Jerry do?

Answer: Jerry should recall any advertising comparing the products and making the claim immediately. If he fails to do so he it could amount to misleading and deceptive conduct. Jerry should ensure at the time the comparative advertising is distributed, that any promotional material can quickly and easily be withdrawn and that the date of the comparative testing is made clear on all promotional material. Jerry should speak to the "Super Machines" Compliance Officer prior to undertaking such advertising.

Attachment 1

Publication Approval Checklist

Important! No publishing is to be undertaken unless the following checklist has been completed and signed for in full:

Has someone been allocated to ensure that the publication remains current, and to keep copies and records of releases and updates?
Is each claim made about a service correct and up to date
Are all comparisons with other services fair, correct and up to date?
Are all conditions, qualifications, limitations and exclusions included and legible?
Has the AMAWA received permission from the owner of all artwork, trade marks and symbols to use them?
Does the AMAWA have sufficient service capacity available to meet the anticipated demand from consumers?
Are there any other specific legislation or codes that need to be complied with, eg. sales promotion legislation, trade measurement legislation?
Have any issues been raised with the ICO if necessary?
Has the final artwork received sign off by the relevant manager / supervisor?