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IPA questions the impact of the Section 51(3) repeal on small business

IPA questions the impact of the Section 51(3) repeal on small business

The IPA has urged the ACCC to raise awareness among the small business community as to the consequences of the upcoming repeal of Section 51(3) of the Competition and Consumer Act 2010.

  • Maja Garaca Djurdjevic
  • July 26, 2019
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The Institute of Public Accountants (IPA) has expressed some concerns about the upcoming repeal of Section 51(3) of the Competition and Consumer Act 2010 (CCA) and its potential impact on small business.

The repeal, to commence on 13 September 2019, will mean that conduct involving intellectual property rights (IPR) will no longer be exempt from certain provisions in Part IV of the CCA, particularly in relation to granting a licence; making an assignment; or entering into a contract, arrangement or understanding.

IPA chief executive Andrew Conway warned that the repeal could also stifle competition by having a direct impact on Section 45 of the CCA, which prohibits contracts, arrangements, understandings or concerted practices that have the purpose, effect or likely effect of substantially lessening competition in a market.

The IPA supports innovation as a means to boost small business productivity and intellectual property protection plays a major part in innovation and entrepreneurialism,” said Mr Conway.

Therefore, we remain cautious over the repeal and we encourage the ACCC to raise awareness amongst the small business community as to the consequences that may impact the sector.

He cautioned that while there are guidelines in relation to the repeal, these are for professional advisers, and not aimed at small business people.  

We urge the ACCC to produce a simplified version accessible to small business operators. It is essential that small businesses that may be impacted by the repeal, clearly understand the implications and seek the appropriate legal advice as to their particular intellectual property needs, Mr Conway said. 

He warned that without the ability to control how intellectual property is to be used, a licensor may be reluctant to licence the intellectual property at all.

This will be detrimental for downstream competition and may also deter innovation, Mr Conway explained.

Small businesses will not be in a position to determine whether such a condition is likely to substantially lessen competition in the relevant market, in order to have certainty about their legal position.

To prevent small business taking an overly cautious approach, the IPA recommended the ACCC introduce a class exemption that would create some certainty in how to deal with licensing and transfers of IPR so as not to infringe the CCA. 

The European Commission has a block exemption that applies to technology transfer agreements and a similar approach could be taken here in Australia,” said Mr Conway.

“The IPA Deakin SME Research Centre will be monitoring the implications of the repeal and consider if such class exemptions are appropriate in this regard.

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