Introductory Info

Date introduced: 24 March 2021
House: House of Representatives
Portfolio: Treasury
Commencement: Sections 1–3 on Royal Assent; Schedule 1 on the later fo the day after Royal Assent and 1 July 2022.

Purpose of the Bill

The purpose of the Competition and Consumer Amendment (Motor Vehicle Service and Repair Information Sharing Scheme) Bill 2021 (the Bill) is to amend the Competition and Consumer Act 2010 (CCA) to establish a scheme mandating access to diagnostic, service and repair information for certain motor vehicle repairers and registered training organisations at fair market value.

Structure of the Bill

The Bill comprises two Parts both of which amend the CCA.

• Part 1 of the Bill contains the main amendments which create the scheme
• Part 2 of the Bill sets out other amendments—in particular, to extend certain penalties and remedies to the scheme—as well as consequential amendments to the Copyright Act 1968.

Background

Report by the CCAAC

As early as 2012, the Commonwealth Consumer Affairs Advisory Council (CCAAC), reported to the government that the independent automotive repair sector had ‘raised concerns that vehicle manufacturers are increasingly preventing access to repair information at reasonable cost, and that this is threatening their ability to offer repair services’.[1]

For the purposes of its report the CCAAC adopted a broad approach to what comprised ‘repair information’ noting that it ‘can include dimensions and tolerances for mechanical parts, initialisation and reset codes for computerised systems, specifications for oils and lubricants, diagrams of wiring looms and voltages for electronic components’.[2] According to the CCAAC, access to such information was becomingly increasingly important to the repair of motor vehicles due to the prevalence of electronic systems in vehicles.[3]

The CCAAC canvassed a range of regulatory options in its final report. Ultimately, it urged the automotive industry to expedite the development of a voluntary industry code of conduct that would ensure there was a process for independent repairers to access repair information.[4] However, the CCAAC also recommended that if the industry was ‘unable to arrive at an effective industry outcome and access to repair information’ the Government should consider other regulatory options to ensure such access.[5]

Attempts at self-regulation

Following the CCAAC report, the government asked the Chairman of the CCAAC to monitor industry-led negotiations on a voluntary code of conduct. In addition, the government made it clear that a failure by industry representatives to make substantial progress on such a code by the end of 2013 would lead it to examine other regulatory options, including a mandatory code of conduct.[6]

Despite efforts by industry stakeholders and the then Minister for Small Business, Bruce Billson, to develop a voluntary agreement for the sharing of technical information,[7] and the efforts of industry associations to develop codes of practice with their own members,[8] independent repairers continued to experience problems.[9]

ACCC study

In 2016–17 the Australian Competition and Consumer Commission (ACCC) conducted a market study of the new car retailing industry. The study focused on present and emerging competition and consumer issues in the industry. The final report of that study reiterated the concerns which had been earlier expressed by the CCAAC. It noted that the repair and service of new cars:

… is increasingly reliant on access to electronic information and data produced by car manufacturers. Independent repairers, which are not authorised or affiliated with car manufacturers, are reliant on car manufacturers voluntarily sharing information and data.[10]

The ACCC was concerned that although some car manufacturers provided a good level of access to technical information, ‘most car manufacturers do not provide independent repairers with the same level of access to technical information to repair and service new cars as they do to their dealer and preferred repairer networks’.[11] [emphasis added]

The problem is best explained in the context of the growing use of embedded microchips, software and technological elements which have made a simple car repair beyond the capacity of the consumer or a third-party service provider:

… to protect this software, the car manufacturers employ technological protection measures (TPMs) to prevent purchasers from accessing the electronic control mechanisms. While TPMs were introduced in the 1990s to largely protect copyright content on the internet, their application has been expanded to protect the software in everyday items such as cars … When thinking about smart cars, one unintended consequence of the use of TPMs is that car manufacturers are now able to control every aspect of our cars, including the repair or modification of the vehicle. Unknown to many is the fact that car manufacturers also have the total discretion to irrevocably shut down the vehicle if the software update detects that any part of the original design has been replaced by a third-party repairer… By controlling every aspect of the service and repair aftermarket, manufacturers can deny or delay access by independent repairers to technical information that is required to effectively compete.[12] [emphasis added]

Whilst the ACCC study acknowledged that ‘car manufacturers have legitimate concerns about the sharing of some environmental, safety and security-related technical information to repair and service new cars’ it also noted that in other jurisdictions, such information was ‘securely shared with vetted independent repairers’.[13]

Accordingly, the ACCC recommended ‘regulatory intervention to mandate the sharing of technical information with independent repairers on “commercially fair and reasonable terms”, subject to appropriate safeguards to enable the sharing of environmental, safety and security-related technical information’.[14]

Speaking at the Autocare 2018 Conference about the study, Rod Sims, Chair of the ACCC, noted that voluntary commitments to share technical information had not been successful and would not work, stating:

Indeed, it is not surprising that manufacturers do not wish to share information with independent repairers when they have incentives to drive consumers to dealerships instead.[15]

Treasury consultation

On 12 February 2019, Treasury released a consultation paper to allow interested parties to provide views on general principles of a possible model for the scheme.[16] 53 submissions were received in response.[17]

Later in 2019, Treasury provided a high-level summary of the feedback it had received and key outcomes from the consultation process.[18]

An exposure draft of the proposed legislation was circulated for comment during the period 18 December 2020 to 31 January 2021.[19] Treasury received 22 submissions in response to that phase of its consultation.[20]

Whilst the current Bill is similar in intent to the exposure draft, it is not in equivalent terms and seems to include a number of improvements to reflect the comments of submitters.

Productivity Commission

It has been stated:

… almost anything these days (ranging from the mundane, such as coffee machines or water heaters, to the remarkable, such as an electric car) contain some form of electronic chip or other technology embedded into it. This development has placed the ability to control repair in the hands of manufacturers as more specialised tools and knowledge are needed to repair electronic equipment. Additionally, the COVID- 19 pandemic that has ravished the world in 2020, has further amplified the inability to repair, given that people cannot leave their houses during quarantine to access repair services.[21]

In October 2020, Assistant Treasurer, Michael Sukkar, announced that the Productivity Commission would inquire into the right to repair in Australia stating:

Right to Repair is a consumer’s ability to repair faulty goods, or access repair services, at a competitive price. This can include repair by a manufacturer, a third-party, or self-repair.

The inquiry will consider a range of issues impacting the Australian repair market, including potential barriers and enablers of greater competition.

It will draw on international experience and examine Right to Repairmechanisms that support consumer rights, promote competition in the repair market, and encourage product design requirements to extend product life and reduce e-waste.[22]

That inquiry is on-going at the time of writing this Bills Digest.[23] According to the Productivity Commission:

The strength of competition between authorised and independent operators in the repair market can influence the cost and accessibility of repairs for consumers. The terms of reference for this inquiry note that a ‘lack of competition’ in repair markets is inhibiting consumers’ rights to repair. Consumer groups and regulators in Australia and overseas have also raised concerns that some [original equipment manufacturers] OEMs are using their dominant position in repair markets to engage in practices that hinder competition and harm consumers. Concerns such as these in the motor vehicle repair market have led to the Australian Government proposal for a mandatory scheme for sharing motor vehicle repair information.[24] [emphasis added]

Other jurisdictions

The United States (US) and the European Union (EU) have already addressed the issue of a right to repair, although they have addressed the issue from different perspectives.

US—consumer focussed

The current right to repair movement in the US is based on a belief that in recent years:

… repairing electronic equipment has become more and more difficult, as well as expensive. This has been due to intentional efforts on the part of manufacturers. Through a variety of measures, including (but not limited to) product design, sales tactics, limits on authorised repair centres, and the use of various forms of intellectual property protection, manufacturers have all but effectively stymied the ability for a non-expert (and even in some instances, experts as well) to repair their own electronic equipment.[25]

There are two key elements that operate in the US to facilitate the sharing of technical information. The first is the Right-to-Repair law passed by the Commonwealth of Massachusetts in 2012[26] (although there are others[27]). In 2014 motor vehicle industry stakeholders responded to the Massachusetts law by signing an industry Memorandum of Understanding (MoU) voluntarily extending the substantive provisions of the state law nationwide.[28]

Together, the Right-to-Repair law and the voluntary MoU provide that for model year 2002 motor vehicles and later, manufacturers of motor vehicles in the US must, on fair and reasonable terms:

• make available for purchase by owners and independent repair facilities the same diagnostic and repair information, including software updates, in the same form and manner as it makes it available to dealers
• make available for purchase by owners and independent repair facilities the same diagnostic repair tools, incorporating the same diagnostic, repair and wireless capabilities, as it makes available to dealers
• provide diagnostic repair information to each aftermarket diagnostic tool company for the purpose of building aftermarket diagnostic tools and their service information publications and systems.[29]

From model year 2018, manufacturers must make on-board diagnostic data and repair information accessible using an off-the-shelf personal computer and a standardised non‑proprietary vehicle interface.[30]

The second element that operates to facilitate the sharing of technical information in the US is the National Automotive Service Task Force (NASTF), a not-for-profit organisation representing major stakeholder groups in the motor vehicle industry. NASTF facilitates the technical aspects of sharing of repair and service information.[31]

EU—environment focussed

In the EU the right to repair is more of an environmental issue than a consumer one with a move to consider how to ‘promote waste prevention through designing more durable products’ and how to ‘stimulate re-use, repair, remanufacturing and refurbishment of products’.[32]

The EU has implemented a Right to Repair regime through the EU EcoDesign Directive, which comes into force in 2021 and requires manufacturers to create repairable goods and provide spare parts for up to 10 years. On 25 November 2020, Members of the European Parliament called for the EU Commission to “develop and introduce mandatory labelling, to provide clear, immediately visible and easy to understand information to consumers on the estimated lifetime and repairability of a product at the time of purchase”. These are but two of a raft of EU regulatory responses that has, unlike the US approach, environmental sustainability at its core.[33]

Relevant to this Bills Digest, the EU Right-to-Repair Regulation requires a manufacturer to provide unrestricted and standardised access to vehicle repair and maintenance information to independent operators.[34]

The information must include an unequivocal vehicle identification; service handbooks; technical manuals; component and diagnosis information (such as minimum and maximum theoretical values for measurements); wiring diagrams; diagnostic trouble codes (including manufacturer specific codes); the software calibration identification number applicable to a vehicle type; information provided concerning, and delivered by means of, proprietary tools and equipment; and data record information and two-directional monitoring and test data.[35]

Manufacturers may charge reasonable and proportionate fees for access to vehicle repair and maintenance information. A fee is considered unreasonable or disproportionate if it discourages access by failing to take into account the extent to which the independent operator uses it.[36]

The EU Right-to-Repair Regulation does not require a manufacturer to make the tools needed to perform some of the tasks related to the information listed above. It only requires the manufacturer to make the relevant information available through websites using a standardised format in a readily accessible and prompt manner.

Importantly, the EU Right-to-Repair Regulation does not include obligations to provide spare parts or repair information for consumers or other end-users. The obligations apply only to professional repairers, being an operator or undertaking which provides services of repair and professional maintenance of such products.[37]

The Bill contains some elements from each of these approaches.

Committee consideration

Senate Standing Committee for Selection of Bills

At the time of writing this Bills Digest, the Bill had not been considered by the Senate Standing Committee for the Selection of Bills. That being the case, no determination about whether the Bill should be referred to a Committee for inquiry and report has been made.

Senate Standing Committee for the Scrutiny of Bills

At the time of writing this Bills Digest, the Scrutiny of Bills Committee had not commented on the Bill.

Policy position of non-government parties/independents

At the time of writing this Bills Digest the policy position of non-government parties or independent Members and Senators in relation to the Bill is unclear.

However, Australian Labor Party (ALP) Member, Julie Owens spoke in favour of the right-to-repair in 2019 stating:

We have all found times when we have thrown something out because it was too costly to repair it or could not get it repaired and it has gone into landfill when it probably had years of life left. The right-to-repair campaign asks that manufacturers produce goods that are fixable, ensuring manuals and spare parts are easily available and allowing everyday Australians to make reasonable attempts to repair items without risk of voiding the warranty.

A right to repair would also encourage manufacturers to make high-quality, long-lasting goods in the first place rather than products that conveniently die as soon as the warranty expires.[38]

Position of major interest groups

The Bill has been the subject of extensive consultation by Treasury.

The Australian Automobile Association (AAA) ‘supports a mandatory scheme that requires vehicle manufacturers to share service and repair information with all vehicle repairers in Australia on commercially fair and reasonable terms’.[39] According to the AAA ‘the scheme is necessary to support competition in the service and repair sector and enable consumers to choose the repairer they believe will give them the best possible value’.[40]

The Motor Trade Association of Australia echoed that sentiment.[41]

Other stakeholders disagree with the intent of the Bill. For instance, the Federal Chamber of Automotive Industries (FCAI) considers that ‘it has not been demonstrated that the scheme is justified’—particularly in the context of the decline of the Australian new vehicle market since 2017.[42]

According to the Australian Automotive Dealer Association (AADA):

Great care must be taken in the development and implementation of this legislation to ensure that competition is stimulated and not distorted by the creation of opportunities which commercially favour certain repair sectors.[43]

Comments which are specific to the provisions of the Bill are canvassed under the heading ‘Key issues and provisions’ below.

Financial implications

According to the Explanatory Memorandum, the Bill will have nil financial impact for the government.[44] However, the Assistant Treasurer has also stated that ‘the government will provide a $250,000 grant to facilitate online access to service and repair information’ by the scheme adviser, when appointed.[45]

The Treasury ‘has assessed the annual regulatory burden on business to be $1.509 million’.[46]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[47]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights had no comment in relation to the Bill.[48]

Key issues and provisions

Objects

Item 1 in Part 1 to the Bill inserts proposed Part IVE—Motor vehicle service and repair information sharing scheme (comprising proposed sections 57AA–57GE) into the CCA.

Division 1 of this proposed part contains an objects clause and a simplified outline which sets out the key elements of new Part IVE. Importantly, proposed section 57AA stresses the underlying competition and consumer benefits which are intended to flow from Part IVE so that its objects are, amongst other things, to:

• promote competition between Australian repairers of passenger and light goods motor vehicles and establish a fair playing field by mandating access, on fair and reasonable commercial terms, to information used to diagnose, repair, service, modify or dismantle scheme vehicles[49] and
• enable consumers to have scheme vehicles diagnosed, repaired, serviced, modified or dismantled safely and effectively by an Australian repairer of their choice.[50]

Oversight

As a first step, the Bill establishes the role of scheme adviser.[51] That person will be appointed by the Minister and is not entitled to be paid any remuneration or allowances.[52] According to the Assistant Treasurer, Michael Sukkar:

The government intends for the adviser position to be conferred on a joint-industry led organisation that will have the technical expertise, experience and relationships within the automotive industry to support the scheme.

Based on successful arrangements in the United States, industry representatives have advised me that this joint-industry led organisation will run an online portal to facilitate easy access to and supply of information for those that wish to participate. The government will provide a $250,000 grant to facilitate online access to service and repair information.[53] [emphasis added]

The scheme adviser has, amongst other things, the following functions:

• to nominate mediators or technical experts
• to report to the Minister about matters such as scheme prices, the terms and conditions of scheme offers or the availability of scheme information as well as whether certain information should be captured by the scheme
• to report to the ACCC about any systemic regulatory or enforcement issues
• to provide general advice in relation Part IVE
• to publish on its website annual reports containing specified information relevant to the operation of the scheme and
• to provide information online to scheme participants about the availability of scheme information and dispute resolution.[54]

The Bill provides that the scheme adviser’s annual report does not have to be given to the Minister or be tabled in Parliament.[55]

Importantly, even though the scheme adviser is to report to the ACCC about any systemic regulatory or enforcement issues, the scheme adviser has no regulatory powers of its own. Its role is facilitative, rather than compliance-driven.

Part IVE of the CCA applies if a data provider supplies, or offers to supply, scheme information of one or more kinds in relation to one or more kinds of scheme vehicles to one or more Australian repairers or scheme RTOs.[56]

Each of these terms is defined in the Bill.

Data providers

A data provider is a corporation carrying on a business that includes supplying, to any extent and whether directly or indirectly, scheme information to one or more Australian repairers or scheme RTOs or any person who carries on such a business in the course of, or in relation to, trade or commerce.[57] The definition provides the legal foundation for the scheme allowing the Commonwealth to legislate in this area—that is, sections 51(i) and 51(xx) of the Constitution (the trade and commerce power and the constitutional corporations power).

The Explanatory Memorandum gives the following examples of possible data providers:

A data provider may be a vehicle manufacturer, information owner, or licensee. This could include an Australian subsidiary of an overseas vehicle manufacturer, an affiliated car dealership, or a data aggregator who sells service and repair information in its own right.

A data provider (for example, a manufacturer) can use an agent, (for example, a data aggregator) to meet its obligations under the scheme. Although the agent is contractually responsible to the data provider to perform functions, the data provider is liable for compliance with the scheme.[58] [emphasis added]

Extraterritorial operation

The CCA has been framed on the assumption that when conduct is made a contravention of the Act, it is conduct in Australia that is dealt with unless the conditions set out in section 5 apply to extend its operation to extraterritorial conduct.[59] Subsection 5(1) confers limited extraterritorial operation by applying the CCA to conduct outside Australia—only if the party engaging in the conduct is an Australian citizen, a person ordinarily resident in Australia, an Australian incorporated entity or a body corporate carrying on a business in Australia.

Inclusion of bodies corporate carrying on business in Australia significantly broadens the scope of the provisions. Any overseas corporation which carries on business in Australia, at least through a branch, is covered.[60]

The Bill amends subsections 5(1) and 5(2) of the CCA so that new Part IVE will operate extraterritorially.[61]

Australian repairer

A person is an Australian repairer to the extent that the person carries on or actively seeks to carry on, in Australia, a business that involves diagnosing faults with, servicing, repairing, modifying or dismantling scheme vehicles. This may require the person, under a state or territory law, to hold a licence or particular qualifications to lawfully carry on that business.[62]

A scheme vehicle is a light goods vehicle or a passenger vehicle (other than an omnibus) within the meaning of a national road vehicle standard made under the Road Vehicle Standards Act 2018 that specifies definitions and vehicle categories for the purposes of that Act, that was manufactured on or after 1 January 2002 or at a later date prescribed by the scheme rules or another kind of vehicle prescribed by the scheme rules.[63]

Scheme RTO

A scheme RTO is a registered training organisation that provides, or seeks to provide, a course (an RTO course) in Australia providing training in diagnosing faults with, servicing, repairing, modifying or dismantling scheme vehicles.[64]

Key issues—coverage of the scheme

Some submitters do not agree that the definition of an Australian repairer should include a person who actively seeks to carry on a business that involves diagnosing faults with, servicing, repairing, modifying or dismantling vehicles—given that ‘this could potentially include those working from backyards and driveways in domestic homes’.[65] However, it is likely that there are other elements in the information sharing scheme, specifically the price and the terms and conditions of supply, which could operate to discourage such persons from participating.

As drafted, the definition of scheme vehicle does not capture farm machinery. The Insurance Council of Australia (ICA) submitted that it would be desirable if the scheme ‘covered service and repair information relating to other types of vehicles, including heavy vehicles’.[66] However, it would be possible for the Ministers to prescribe such equipment under the scheme rules (see the discussion about scheme rules below).

Making a scheme offer

The Bill requires a data provider to make an offer (called a scheme offer) to supply scheme information in relation to a kind of scheme vehicle to all Australian repairers and scheme RTOs. The supply of scheme information must be offered in the same form—unless a form of supply is not practicable or accessible, in which case, the supply may be in an electronic form that is reasonably accessible to all Australian repairers and scheme RTOs.[67]

Scheme information is broadly defined as information in relation to scheme vehicles prepared by or for manufacturers of those vehicles (or their related bodies corporate) for use in diagnosing faults with, servicing or repairing vehicles, as supplied to the market.[68] This includes but is not limited to:

• manuals, technical service bulletins, wiring diagrams, technical specifications for components and lubricants and testing procedures (including in relation to environmental performance)
• information and codes for computerised systems (such as information that may appear on a scheme vehicle’s on-board display after being plugged into a computer system)
• information about a voluntary or mandatory recalled component of a vehicle and information needed to rectify the issue and
• software updates, for example where necessary after replacement parts are installed to ensure the vehicle’s electronic systems recognise and accept the new part.[69]

However, the Bill excludes the following from the definition of scheme information:

• a trade secret
• the intellectual property of a person, other than intellectual property protected under the Copyright Act
• a source code version of a program
• data automatically generated and transmitted by a scheme vehicle, while it is being driven, regarding driver or vehicle performance
• global positioning system data
• information supplied, or to be supplied, only to a restricted number of Australian repairers for the purposes of developing solutions to emerging or unexpected faults with a scheme vehicle
• information that is commercially sensitive about an agreement between a data provider and another person
• information relating to an automated driving system of a scheme vehicle[70] and
• any other information prescribed by the scheme rules.[71]

As currently drafted, the Bill does not cover diagnostic tools or access to scheme information by other independent operators such as tool and spare part manufacturers.[72]

Scheme rules

The Minister is empowered to make rules, by legislative instrument, prescribing matters which will give effect to Part IVE, provided that the rules do not, amongst other things, create offences or civil penalties or impose a tax.[73]

According to the Explanatory Memorandum to the Bill:

The scheme provides for the making of scheme rules to enable the Minister to prescribe technical details about the coverage of the scheme, update the scheme as necessary to ensure it keeps pace with technology and deal promptly with attempts to frustrate the scheme. These rules will be a disallowable legislative instrument, which is subject to Parliamentary scrutiny.[74]

If it is possible to supply scheme information for a variable period, the data provider must ensure that the scheme offer contains terms and conditions including supply for any period nominated by an Australian repairer or scheme RTO or for supply by day, by month and by year. This is a civil penalty provision.[77]

Price

The scheme offer about a particular make, model or year of scheme vehicle must be at a price that is no more than the fair market value of the information.[78] In calculating the fair market value of the relevant information a data provider must take into account, amongst other things, the following matters:

• the price charged to other Australian repairers and scheme RTOs for supplying scheme information about an equivalent scheme vehicle or—where price information is not available—a scheme vehicle of a similar make, model and year
• the terms and conditions on which the information is offered including how the information is able to be used and accessed, how many users are permitted as well as the frequency or duration of use
• the anticipated demand by Australian repairers and scheme RTOs for the scheme information
• the reasonable recovery of costs incurred in creating, producing and providing the information for supply
• the price charged for the supply of similar information in overseas markets and
• the amount payable (if any) by the data provider to a person who holds copyright in the information.[79]

The scheme offer must be published on the internet in the manner and form specified by the Bill and the data provider must provide the scheme adviser with a copy of the offer in writing as soon as practicable. These requirements are civil penalty provisions.[80]

Stakeholder comments

The Motor Traders Association Queensland (MTA Qld) believes pricing:

… will be a crucial issue for the automotive service and mechanical repair businesses in many remote and rural locations which face the challenge of operating in a dispersed or extended market catchment with diseconomies of scale. In many cases rural and remote independent service providers are forced to operate on tighter margins than their metropolitan counterparts. In determining fair and equitable outcomes in respect of automotive scheduled servicing and mechanical repairs in these remote regional areas the ‘fair market value’ should take into consideration the economic geography of service providers and the costs of operating in these more challenging business environments.[81]

On the other hand, the FCAI considers that ‘”fair market value” should specifically refer to a reasonable profit and take account of the size of the Australian market’.[82]

Supply of scheme information

Once a scheme offer has been made and published about a particular make, model and year of scheme vehicle, an Australian repairer or a scheme RTO which needs to access the information may:

• request the data provider to supply the relevant scheme information and
• pay, or offer to pay, the scheme price or another agreed price for the information.[83]

In that case the data provider must supply the relevant information (subject to certain terms and conditions) within specified time limits.[84]

Terms and conditions

The Bill permits a data provider to supply scheme information on reasonable terms and conditions that do not prevent, restrict or limit the access to, or use of, the information for the purposes of diagnosing faults with, servicing, repairing, modifying or dismantling scheme vehicles.[85]

The Bill prohibits a data provider from entering into a contract for the supply of scheme information which contains any of the following terms or conditions:

• a term or condition requiring an Australian repairer or scheme RTO to acquire one or more services or products from the data provider or any other person
• a term or condition allowing an increase, after the contract is made, in the price for the supply of the scheme information
• a term or condition prohibited by the scheme rules.[86]

Timeframes

The time limits commence when an Australian repairer or scheme RTO pays, or offers to pay, the scheme price, or another agreed price, for the relevant information. Supply must be made:

• immediately—if the information has been supplied before, or is readily accessible and able to be provided in the requested form[87]
• within two business days—if the information being provided includes safety or security information and the data provider needs to consider additional information to assess if an individual is a fit and proper person[88] and
• otherwise—within five business days, or as agreed between parties.[89]

Within two business days of providing scheme information, the data provider must notify the scheme adviser, in writing, of the terms and conditions (including price) on which the relevant information was supplied.[90]

Duty to pay compensation

A data provider must supply information as required by the Bill even if doing so would amount to an infringement of copyright, a breach of contract or a breach of an obligation of confidence.[91]

In that case, the Bill requires the data provider to pay a third-party claimant compensation on just terms for the supply of the scheme information.[92] The amount payable by the data provider is a debt due to the third-party claimant which is recoverable in a court of competent jurisdiction.[93]

About safety and security information

For the purposes of Part IVE, the term safety and security information in relation to a scheme vehicle is safety information and/or security information.

Safety information is information about the following systems which have been installed in the vehicle and are of a kind prescribed by the scheme rules:

• the hydrogen system
• the high voltage system
• the hybrid system
• the electric propulsion system or
• another system prescribed by the scheme rules.[94]

Security information is information about the following systems which have been installed in the vehicle and are of a kind prescribed by the scheme rules:

• the vehicle’s mechanical and electrical security system or
• another system prescribed by the scheme rules.[95]

When making a scheme offer, a data provider must, where it is reasonably practicable, separate safety and security information from other scheme information.[96] The supply of such information is subject to stringent conditions set out in the Bill.[97] These are explained below.

Reasonable grounds to believe

The first condition applying to the supply of scheme information which includes safety and security information about a vehicle is that the data provider must believe on reasonable grounds that:

• the safety and security information is solely for the use by an individual, or individuals, for the purpose of an Australian repairer’s business or for the purpose of providing an RTO course[98] and
• based on information provided by the individual that he, or she, is a fit and proper person to access and use the safety and security information.[99]

The information to be provided by the individual is:

• the individual’s name and residential address
• the individual’s relationship to the Australian repairer or scheme RTO
• the individual’s qualifications for using the safety and security information
• a criminal records check about the individual and
• any other information prescribed by the scheme rules.[100]

The scheme rules will prescribe the criteria for satisfying the fit and proper person test.[101] According to the Explanatory Memorandum to the Bill:

Treasury will consult stakeholders on the proposed safety and security criteria to be prescribed in scheme rules. This will take into consideration the types of fit and proper person checks that are already used for similar purposes in the motor vehicle industry and relevant licensing arrangements that exist in some states. For example, a criminal records check may also be required to access security information to help prevent vehicle theft and associated crime.[102] [emphasis added]

Declaration about the vehicle

The second condition to be satisfied before a data provider supplies scheme information which includes safety and security information is that the Australian repairer or the scheme RTO must provide a declaration:

• confirming that the Australian repairer or scheme RTO is authorised by the owner of the vehicle to access and use the security information in relation to that vehicle
• specifying the relevant vehicle identification number and
• a declaration that the premises used by the Australian repairer or scheme RTO comply with a standard about the premises at which work is to be carried out on the vehicle if one has been prescribed by the scheme rules.[103]

Stakeholder comments

These requirements are quite contentious. According to FCAI it is ‘completely unacceptable’ that data providers should have to verify that the person seeking the safety and security information is a fit and proper person or will use the information solely for diagnosing faults on the grounds that ‘distributors do not have the resources or expertise to do so’.[104] That being the case, FCAI proposes that ‘government, either through the Scheme Advisor or some other entity, should implement a registration process’.[105]

The MTAA concurs with this view and advocates the ‘development and implementation of a system to undertake the functions of identifying and checking credentials and qualifications of persons wanting access to Scheme Information’.[106]

MTAA believes such a system could easily incorporate Bill provisions and Scheme Rules and include processes for the authorisation and approval of Data Providers to ensure ownership of the system.

The development, implementation and operation of such a system MTAA suggests must be a Scheme Adviser function. It would be required to develop and operate an electronic online system to perform checking, vetting and validation of applicants … [107] [emphasis added]

Similarly, the National Motor Vehicle Theft Reduction Council (NMVTRC) expressed its concern that placing:

… the onus on individual data providers to make a [fit and proper person] assessment—with no experience in making such judgements—is problematic and leaves the system vulnerable to manipulation.

While a form of standardised criminal record check may be required, the system seems to rely on delegates of the data provider being able to make non-expert judgements as to what constitutes a relevant or disqualifying criminal offence. In most cases the delegate is likely to have a technical or engineering background with absolutely no experience in the application of FPP standards. The NMVTRC Executive has had considerable direct past experience in applying FPP standards in respect of a range of occupational licensing regimes and can attest that it is a task for specialists with appropriate professional experience and training in applying what is in effect a quasi-judicial assessment.[108] [emphasis added]

And further:

In the NMVTRC’s assessment the above challenges call for a secure, centralised system (perhaps administered by the envisaged Scheme Adviser or other competent authority) to ensure all applications are subject to a consistent, meaningful appraisal of a candidate...[109] [emphasis added]

It is likely that the need for a data provider to conduct the required assessments and then provide the requested information within the two day time limit set by the Bill will be a challenge.

Protecting sensitive information

The Bill extends the operation of the Privacy Act 1988 to data providers which are small businesses and would otherwise be exempt from the operation of that Act.[110] As a result, the information about an individual’s criminal record that is obtained by a data provider for the purpose of determining whether the individual is a fit and proper person will be sensitive information in accordance with the Privacy Act.[111]

The data provider must store that information in Australia or an external Territory of Australia.[112] Further, a person must not take any action that might reasonably enable sensitive information to be accessed outside Australia by the data provider, or any other person.[113]

Record keeping

The Bill also imposes on a data provider a requirement to keep records of the supply of security information about a scheme vehicle for a period of five years from the day it is supplied. The information to be retained includes, amongst other things, personal information used by the data provider to determine whether a person satisfied the fit and proper person test.[114]

Dispute resolution

The dispute resolution provisions of the Bill refer to an initiating party and a responding party.[115]

The first step is for the initiating party to notify the responding party in writing of the nature of the dispute, the matter that is the subject of the dispute, what outcome the initiating party is seeking and what action he or she believes will resolve the dispute.[116] The Bill requires the parties to try to resolve the dispute.[117]

For the purposes of the Bill, the parties must approach the matter in a reconciliatory manner. This is described as doing any of the following:

• attending and participating in meetings at reasonable times
• responding to communications to the party within a reasonable time
• where a technical expert has been engaged to assist in resolving the dispute—considering the opinions of the technical expert
• if a mediation process is being used to try to resolve the dispute by making clear at the beginning of the process what each party is trying to achieve and by observing any obligations relating to confidentiality both during and after the process.[118]

Time limits apply to this first step:

• if the parties cannot resolve the dispute within two business days, either party may refer the matter to a mediator[119]
• in the absence of agreement about who will mediate the dispute, either party may request the scheme adviser to nominate a mediator[120]
• in that case the scheme adviser must nominate a mediator within two business days.[121]

The second step is the mediation itself.

It is for the mediator to decide the time and place for mediation and the parties must attend.[122] The Bill deems that a party has attended if:

• the party is represented at the mediation by a person who has the authority to enter into an agreement to settle the dispute or
• the party, or the party’s authorised representative participates in the mediation using technology that allows a person to participate without physically attending.[123]

The mediator must advise the scheme adviser that mediation has started within five business days of mediation commencing.[124]

The third step is the end of the mediation. Where there is no resolution within 30 days after the day the mediation commenced either of the following may occur:

• the mediator may terminate the mediation at any time unless he or she is satisfied that resolution of the dispute is imminent[125] or
• either party asks the mediator to terminate the mediation in which case the mediator must do so.[126]

Where the dispute remains unresolved and the mediation is terminated the mediator must issue a certificate to that effect to each of the parties and to the scheme adviser.[127]

Potential legal action

Proposed section 57EC of the CCA provides that nothing in Division 5 (which is about dispute resolution) affects the right of either the initiating party or the responding party to bring legal proceedings. Accordingly, Part 2 of the Bill makes a number of consequential amendments to the CCA so that a range of remedies are available under Part IVE.

If mediation fails, the option of taking legal action is open to the initiating party—presumably a repairer or RTO. However, any litigation such as is described below is likely to be expensive and lengthy.

Injunctions

Currently subsection 80(1) of the CCA provides that where, on the application of the ACCC or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute a contravention of certain specified provisions, then the Court may grant an injunction in such terms as the Court determines to be appropriate.

The Bill amends subsection 80(1) so that Division 3 (proposed sections 57CA to 57CD) of Part IVE (that is, those provisions related to the supply of scheme information) will be amongst the specified provisions which are subject to injunction.[128]

Damages

Subsection 82(1) of the CCA permits a person who suffers loss or damage by conduct of another person that was done in contravention of certain specified provisions to recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

The Bill amends subsection 82(1) so that a contravention of the provisions of Part IVE which cause loss of damage to a person will be subject to a claim for damages by that person.[129]

In such a proceeding a finding of any fact made by a court, or an admission of any fact made by the person, is prima facie evidence of that fact if the finding or admission is made in proceedings in which that person has been found to have contravened, or to have been involved in a contravention of Part IVE.[130] This means that if, for example, a person makes certain admissions during the mediation processes, the other party can seek to have that admission filed in court.[131] The practical effect of this is if such admissions are made during mediation the other person is more likely to be able to establish the relevant prohibited conduct and potentially recover damages as a result. 

Concluding comments

The Bill is directed towards promoting competition between Australian repairers of passenger and light goods motor vehicles and establishing a fair playing field by mandating access to information used to diagnose, repair, service, modify and dismantle specified vehicles. However, the cost burden of achieving that is borne largely by those businesses which are designated as data providers. This may lead to regulatory risks of non-compliance arising from a lack of ‘buy-in’ by some scheme participants—despite the penalties that may apply.