Federal Register of Legislation - Australian Government

Primary content

A Bill for an Act to allow franchisees in the petroleum sector to purchase fuels for resale from a variety of sources
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Introduced Senate 19 Jun 2001

Fair Prices and Better Access for All (Petroleum) Bill 2001
First Reading

1998-1999-2000-2001

The Parliament of the

Commonwealth of Australia

THE SENATE

Presented and read a first time

Fair Prices and Better Access for All (Petroleum) Bill 2001

No. , 2001

(Senator Schacht)

A Bill for an Act to allow franchisees in the petroleum sector to purchase fuels for resale from a variety of sources

ISBN: 0642 459592

Contents

A Bill for an Act to allow franchisees in the petroleum sector to purchase fuels for resale from a variety of sources

The Parliament of Australia enacts:

1 Short title This Act may be cited as the Fair Prices and Better Access for All (Petroleum) Act 2001.

2 Commencement This Act commences on the day the Trade Practices (Industry Codes--Oil Code) Regulations commence.

3 Object of Act The main object of this Act is to secure improved competition in the wholesale sector of the petroleum market and to help create an environment of fairer pricing and better access in the supply of petroleum products by ensuring that franchisees in the petroleum sector are able to purchase fuels for resale from a variety of sources.

4 Definitions In this Act, unless the contrary intention appears:

associate, for a franchisor, means a person:

(a) who:

(i) is a director or related body corporate, or a director of a related body corporate, of the franchisor; or

(ii) for a franchisor that is a proprietary company--directly or indirectly owns, controls, or holds with power to vote, at least 15 per cent of the issued voting shares in the franchisor; or

(iii) is a partner of the franchisor; and

(b) whose relationship to the franchisor is relevant to the franchise system, including supplying motor fuels to a retailer.

authorised officer means an officer of the Australian Competition and Consumer Commission.

dispensing equipment means a pump which transfers motor fuel from an underground storage into that part of a road vehicle in which motor fuel for the propulsion of that vehicle is stored.

franchise includes the following:

(a) the rights and obligations under a franchise agreement;

(b) a master franchise;

(c) a subfranchise;

(d) an interest in a franchise.

franchise agreement means an agreement:

(a) that takes the form, in whole or part, of any of the following:

(i) a written agreement;

(ii) an oral agreement;

(iii) an implied agreement; and

(b) in which a person (the franchisor) grants to another person (the franchisee) the right to carry on the business of offering, supplying or distributing motor fuel in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and

(c) under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:

(i) owned, used or licensed by the franchisor or an associate of the franchisor; or

(ii) specified by the franchisor or an associate of the franchisor; and

(d) under which, before starting business or continuing the business, the franchisee must pay or agree to pay the franchisor or an associate of the franchisor an amount including, for example:

(i) an initial capital investment fee; or


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(ii) a payment for goods or services; or

(iii) a fee based on a percentage of gross or net income whether or not called a royalty or franchise service fee; or

(iv) a training fee or training school fee;

but excluding:

(v) payment for motor fuel at or below wholesale price; or

(vi) repayment by the franchisee of a loan from the franchisor; or

(vii) payment for the wholesale price of motor fuel taken on consignment; or

(viii) payment of market value for the purchase or lease of real property, fixtures, equipment or supplies needed to start business or to continue business under the franchise agreement; and

for the purposes of this Act, the transfer, renewal or extension of a franchise agreement and an agency arrangement to which paragraphs (1)(a), (b), (c) and (d) apply are taken to be a franchise agreement, but any of the following do not in themselves constitute a franchise agreement:

(a) an employer and employee relationship;

(b) a partnership relationship;

(c) a landlord and tenant relationship;

(d) a mortgagor and mortgagee relationship;

(e) a lender and borrower relationship;

(f) the relationship between the members of a cooperative that is registered, incorporated or formed under any of the following laws:

(i) Co-operatives Act 1992 of New South Wales;

(ii) Co-operatives Act 1996 of Victoria;

(iii) Cooperatives Act 1997 of Queensland;

(iv) Co-operative and Provident Societies Act 1903 of Western Australia;

(v) Co-operatives Act 1997 of South Australia;

(vi) Co-operative Industrial Societies Act 1928 of Tasmania;

(vii) Co-operative Societies Act 1939 of the Australian Capital Territory;

(viii) Co-operatives Act of the Northern Territory.

franchise system includes a business system in which a franchisor grants a franchise to a retailer.

interest in a franchise includes a legal or beneficial interest in:

(a) a franchise agreement or a franchised business; or

(b) shares or voting rights in a corporation, not being a listed corporation, that owns a franchised business; or

(c) units or voting rights in a unit or other trust, controlled by a trustee, that owns a franchised business; or

(d) the capital or income of a partnership that owns a franchised business.

master franchise means a franchise in which the franchisor grants a subfranchisor the right:

(a) to grant a subfranchise; or

(b) to participate in a subfranchise.

motor fuel means any fuel to be used in propelling road vehicles, other than liquefied gas.

road vehicle means a vehicle designed mainly to transport people, goods or animals by road.

primary franchisor means a person who has agreed to supply motor fuel to another person under a franchise agreement.

site means premises at which motor fuel is sold by retail and is usually dispensed through dispensing equipment.

underground storage means a storage tank or a number of storage tanks for motor fuel installed underground at a site.

5 Franchisee's rights (1) A franchisee may, subject to this Act and the Trade Practices Act 1974 and notwithstanding any Act or law affecting the contractual relationship between the franchisee and the franchisor or agreement to the contrary (whether the agreement was made between the franchisee and the franchisor or made between either of them and any other person or persons or made between any other persons), use any underground storage at, or dispensing equipment on, the site for the storage or dispensing of motor fuel which the franchisee is lawfully able to purchase from a person other than the primary franchisor for the purpose of resale at the site.

(2) A franchisee must not exercise the power conferred by subsection (1) unless the franchisee has given at least 7 days' notice in writing of his or her intention to do so to his or her franchisor or his or her primary supplier.

(3) Where a franchisee exercises his or her right under subsection (1), he or she must ensure that:

(a) so far as is practicable he or she has motor fuel of each kind and grade that he or she is obligated to purchase from his or her primary franchisor available for sale at the site;

(b) where in any six month period the franchisee purchases motor fuel from a supplier, other than his or her primary franchisor, he or she must purchase at least as much motor fuel of each kind or grade from his or her primary supplier

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as he or she purchases from that other supplier;

(c) if any dispensing equipment on the site is used to dispense motor fuel other than motor fuel supplied by the primary franchisor it must also be disclosed that motor fuel may be supplied by a supplier other than the primary supplier;

(d) a permanent register is maintained containing the prescribed particulars of all purchases of motor fuel;

(e) forthwith on the receipt of any motor fuel, there is entered in the register maintained for the purposes of paragraph (d) the prescribed particulars of such receipt;

(f) an authorised officer is allowed to inspect and take extracts from the register maintained by a franchisee for the purposes of paragraph (d);

(g) so far as is practicable, any underground storage that he or she uses does not contain a mixture of petrol and diesel fuel;

(h) all dispensing equipment on the site is fitted with sealed volume totalisers which record the total amount of fuel dispensed by the equipment.

(4) Paragraph (3)(b) does not apply in any six month period where the primary supplier has been unable to supply the reasonable requirements of the franchisee.

(5) Where a term or provision of a franchise agreement:

(a) requires a franchisee to display the name or business name of the primary supplier or any colour or distinguishing symbol or motif identifying or commonly associated with or controlled by the primary franchisor on all items of dispensing equipment; or

(b) restricts the rights of the franchisee to use or maintain or paint dispensing equipment operated in accordance with this Act; or

(c) permits the franchisor or primary franchisor to paint or affix signs, symbols or motifs to or write on dispensing equipment being operated by the franchisee in accordance with this Act;

the term or provision, to the extent that it restricts or modifies or purports to restrict or modify the exercise of the franchisee's rights under this Act, is void and of no effect.

(6) Where a franchisee exercises his or her right under subsection (1) he or she must display on any dispensing equipment used to dispense motor fuel purchased from a person other than the primary franchisor a notice that conforms with the regulations.

(7) Any person who fails to make an entry in a register as required by the Act or who makes a false entry in or in any other manner falsifies a register referred to in subsection (3) is guilty of an offence against this Act.

Penalty: 10 penalty units.

6 Franchisee's liability (1) Where a franchisee exercises his or her right under this Act to use dispensing equipment that has been installed and maintained by the franchisor or primary franchisor he or she is liable to pay to the franchisor or primary supplier, as the case requires, 50 per cent of the cost incurred by the franchisor or primary franchisor in the maintenance of the dispensing equipment.

(2) Dispensing equipment is deemed to have been used by a franchisee for the dispensing of motor fuel supplies otherwise than by the primary supplier from the day upon which notice in writing to the primary franchisor of his or her intention to so use the equipment took effect until he or she has given notice in writing to the primary supplier that he or she ceased to so use the equipment.

7 Franchisor not to impose charges or limitations (1) A franchisor or primary supplier of a site shall not, by reason only that the franchisee exercises or purports or attempts to exercise any right or power under this Act, impose any charge (other than a charge authorised by or under this Act) or remove or threaten to remove any right, benefit or privilege enjoyed by the franchisee.

(2) Subsection (1) does not apply in relation to the imposition of a charge or removal, or threatened removal, of a right, benefit or privilege if:

(a) the imposition, removal or threatened removal relates to a matter which is referred to in section 20 of the Petroleum Retail Marketing Franchise Act 1980, even if that Act has been repealed; or

(b) the right, benefit or privilege removed or threatened to be removed was given primarily to promote the sale of motor fuel supplied by the primary supplier; or

(c) the right, benefit or privilege removed related to the terms of payment required of a class or classes of franchisees and was removed pursuant to a general variation of such terms for all members of that class or those classes.

(3) In determining whether a contravention of subsection (1) has been committed, regard shall not be had to any act or thing that is, or is of a kind, specifically authorised or approved by the regulations.


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8 Compensation
(1) Where a person suffers loss or damage by reason of another person contravening or failing to comply with a provision of this Act or the regulations, the second-mentioned person is liable to compensate the first-mentioned person who may recover the amount of the compensation in a court of competent jurisdiction.

(2) An action under subsection (1) may be commenced at any time within 3 years after the day on which the cause of action occurred.

(3) A certified copy of a court order convicting a person for contravening or failing to comply with a provision of this Act or the regulations is evidence of such contravention or failure to comply in any proceedings for compensation brought under this Act.

(4) In any proceedings for compensation brought under this Act the standard of proof required for establishing each element of the first-mentioned person's case shall be the same as that required for the proof of a fact in issue in civil proceedings generally.

9 Injunctions (1) The court may, on the application of any person, make one or more of the following orders:

(a) an order restraining a person from engaging in conduct that constitutes or would constitute a contravention of the provisions of this Act or the regulations;

(b) an order directing a person to comply with an obligation imposed by this Act or the regulations; or

(c) such other or ancillary orders as the court thinks fit to ensure observance of this Act or the regulations.

(2) If in the opinion of the court it is desirable to do so, the court may grant an interim injunction pending determination of an application under subsection (1).

(3) The court may rescind or vary an order granted under subsection (1) or (2).

(4) The court may grant an order under subsection (1) or (2) restraining a person from engaging in conduct of a certain kind, whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind and whether or not there is an imminent danger of substantial damage to a person if the first-mentioned person engages in conduct of that kind.

10 Offences Any person who fails to comply with a provision of this Act or of the regulations is guilty of an offence.

Penalty: 100 penalty units.

11 Minister may designate authorised officer The Minister may designate an officer of the Australian Competition and Consumer Commission as an authorised officer for the purposes of this Act.

12 Regulations The Governor-General may make regulations:

(a) required or permitted by this Act to be prescribed; or

(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.

13 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1--Amendment of the Trade Practices Act 1974 1 At the end of section 47

Add:

(14) for the purposes of subsection 47(10) any contract, whether oral or in writing, entered into from the date of commencement of the Trade Practices (Industry Codes--Oil Code) Regulations for the supply of motor fuel to resellers shall be deemed, per se, to have the purpose or effect of substantially lessening competition and be the subject of the penalties provided by this Act unless such contract provides that a reseller is entitled to purchase at least as much motor fuel of each kind or grade from other suppliers as he or she purchases from his or her supplier.