Competition and Consumer (Price Inquiry—Water Markets in the Murray-Darling Basin) Direction 2019

This instrument directs the Australian Competition and Consumer Commission (the Commission) to hold a price inquiry into markets for tradeable water rights relating to water in the Murray‑Darling Basin (the inquiry). The direction is made under the Competition and Consumer Act 2010 (the Act) (see s 3). It prescribes the legal basis for the inquiry, the subject-matter (what is inside and outside scope), the matters the Commission must take into consideration when conducting the inquiry, procedural directions about how the Commission must conduct the work, reporting deadlines and limits on publication of an interim report.

Mechanically, the instrument:

• Requires the Commission to hold the inquiry under the Act (s 5(1)).
• Limits the scope by expressly excluding (a) identification of social and economic impacts on Basin communities, (b) consideration of the effectiveness of water buy‑backs for environmental purposes, and (c) supply of goods or services that are an exempt supply (s 5(1)(a)-(c)).
• Prescribes the goods and services to be covered: tradeable water rights, services that facilitate trading including services of water market intermediaries, and infrastructure services in relation to tradeable water rights (s 5(2)).
• Prohibits the inquiry from being directed at the supply of goods or services by a particular person or persons (s 5(3)).
• Directs the Commission to take a specified list of matters into account when holding the inquiry, including market trends since 2012, carryover arrangements, practices of market participants (brokers, exchanges, funds), public availability and quality of information (including true trade price reporting and trade types), barriers to entry and exit, transaction costs, and management of storage/delivery constraints and intervalley transfers (s 6(a)-(g)).
• Directs the Commission to seek and consider views of participants and persons directly involved in water markets, to recommend options to enhance markets’ operations, transparency, regulation, competitiveness and efficiency, and to deliver an interim report to the Treasurer by 30 June 2020 (s 7(1)(a)-(c)).
• Limits publication of the interim report until authorised in writing by the Treasurer (s 7(2), citing s 95P(3) of the Act).
• Fixes completion and final reporting of the inquiry to the Treasurer by 26 February 2021 (s 8, citing s 95K(1) of the Act).

Definitions used in the instrument are cross‑referenced to the Competition and Consumer Act 2010, the Basin Plan 2012, the Water Act 2007, the Murray‑Darling Basin Agreement and related instruments (s 4). The instrument therefore operates by directing the Commission’s exercise of powers and duties under the Act and by framing the inquiry’s terms through cross‑statutory definitions and temporal limits.

The instrument relies on a small set of interlinked statutory concepts taken from the Act, the Basin Plan 2012 and the Water Act 2007. The definition clause instructs the reader to use those source definitions: tradeable water rights, services, goods, exempt supply, water market intermediary, carryover arrangement, infrastructure service, Murray‑Darling Basin, Murray‑Darling Basin Agreement, trade, and tradeable water rights are all defined by cross‑reference (s 4). The instrument does not redefine these terms.

Key conceptual points set out in the instrument text are:

• Inquiry subject‑matter: the focal economic objects are tradeable water rights and the market for those rights, plus associated facilitation services and infrastructure services (s 5(2)). This frames the inquiry as examining market mechanics rather than social effects or particular regulatory programmes.
• Scope exclusions: the instrument excludes specified matters from the inquiry. It explicitly excludes analysis of the social and economic impacts of water trading on communities (s 5(1)(a)) and analysis of the effectiveness of water buy‑backs for environmental purposes (s 5(1)(b)), and it excludes consideration of goods and services that qualify as an exempt supply (s 5(1)(c)). The instrument attaches a note that the excluded matters fall within other inquiries; the instrument itself does not define or overlap those other inquiries.
• Market participant focus, not person‑specific probes: the inquiry is to be held in relation to goods and services generally (s 5(2)) and is expressly not to be held in relation to the supply by a particular person or persons (s 5(3)). This channels the inquiry towards market structure and practices rather than enforcement against an identified supplier.
• Evidential lens and timeframe: the instrument directs the Commission to examine market trends since 2012 (s 6(a)). That date is a boundary for the temporal scope of market trend analysis the Commission must take into account.
• Information and transparency as focal issues: several directed matters relate to public information , availability, timeliness, accuracy and completeness of information on market activities and holdings, and true trade price reporting including types of trade (s 6(d)-(e)). These items make information architecture and disclosure quality core concepts for the inquiry.
• Operational frictions and infrastructure: the instrument directs attention to transaction costs, barriers to entry/exit and the management of storage/delivery constraints, adjustments to give effect to trades and intervalley transfers (s 6(f)-(g)). This places infrastructure performance and market frictions on the agenda.

The instrument targets water markets in the Murray‑Darling Basin and, through that subject matter, a range of market actors and public bodies. The text identifies or implies the following categories of affected parties:

• Market participants: tradeable water right holders, buyers and sellers of allocations and entitlements, and those involved in trading activity (s 5(2)(a)-(b); s 6(c)). The instrument refers to "participants" and directs the Commission to seek their views (s 7(1)(a)). The accompanying note lists examples of such participants including irrigation farmers, investors, water brokers, water exchanges, water registries, other service providers facilitating trading, environmental water holders, urban water authorities, infrastructure operators, market advisors and analysts (s 7 note).
• Market intermediaries and service providers: water market intermediaries, brokers, exchanges and registries are in scope (s 4 definitions; s 5(2)(b)). Infrastructure operators who provide storage, delivery or related services are in scope via "infrastructure services" (s 5(2)(c); s 4 definition of infrastructure service).
• Investors, funds and significant traders: the instrument explicitly directs consideration of investment funds and significant traders of water allocations (s 6(c)). These participants may be affected by any recommendations concerning transparency, reporting or regulation.
• Public authorities: the Treasurer is the recipient of interim and final reports (s 7(1)(c); s 8). The Commission is required to deliver the interim report to the Treasurer by 30 June 2020 and the final report by 26 February 2021 (s 7(1)(c); s 8). The Treasurer also controls public release of the interim report (s 7(2), citing s 95P(3)).
• Persons directly involved in water markets more broadly: the Commission is directed to seek and consider views from "other persons directly involved in water markets" in addition to market participants (s 7(1)(a)). The instrument’s note gives examples extending to a broad range of commercial and public entities (s 7 note).

Who pays: the instrument itself does not specify a funding source or fees. It places obligations on the Commission to undertake and complete the inquiry (s 5(1); s 8), and it requires engagement with participants (s 7(1)(a)). In practical terms, affected participants can expect to incur the ordinary costs of participation , preparing submissions, providing requested information to the Commission, and attending consultations , because the Commission is directed to seek and consider their views (s 7(1)(a)). The instrument does not create penalties for non‑participation or specify compulsory information‑gathering powers in this text; any compulsory powers would arise, if at all, from the Act’s inquiry provisions referenced here.

The instrument imposes duties on the Commission, and by implication creates participation expectations for market actors. It does not create individual legal rights or private causes of action in the text supplied; rather it establishes the Commission’s duties in conducting and reporting an inquiry.

Duties imposed on the Commission

• To hold an inquiry into markets for tradeable water rights relating to water in the Murray‑Darling Basin (s 5(1)). This is a mandatory duty "required" under subsection 95H(1) of the Act as cited.
• To confine the inquiry’s subject‑matter consistent with the exclusions listed (s 5(1)(a)-(c)). The Commission must not use this inquiry to identify social and economic impacts on Basin communities, to assess the effectiveness of water buy‑backs for environmental purposes, or to examine exempt supplies (s 5(1)).
• To limit the inquiry to the categories of goods and services listed (s 5(2)), and to avoid holding it in relation to supply by particular person(s) (s 5(3)).
• To take into consideration the specific matters listed at s 6(a)-(g) when holding the inquiry. The text directs the Commission "to take into consideration" these matters under subsection 95J(6) of the Act, which makes these items mandatory considerations in the Commission’s analysis.
• To seek and consider the views of participants and other persons directly involved in water markets (s 7(1)(a)).
• To recommend options to enhance markets’ operations, transparency, regulation, competitiveness and efficiency (s 7(1)(b)). This is a substantive deliverable duty: the Commission must go beyond description to recommending options.
• To give the Treasurer an interim report of the inquiry by 30 June 2020 and to complete and give a final report to the Treasurer by 26 February 2021 (s 7(1)(c); s 8). The interim report has a non‑publication constraint until Treasurer’s written authorisation (s 7(2)).

Rights and expectations for participants and other persons

• Right to be heard: the Commission must "seek and consider" views of participants and persons directly involved in the water markets (s 7(1)(a)). That duty creates a procedural expectation that affected parties will have an opportunity to make submissions or be consulted.
• No express private rights: the instrument does not create express private rights, remedies or compensation mechanisms for participants. It does not, in the text provided, alter property or contractual rights in tradeable water rights; it confines itself to inquiry and recommendation functions.

The instrument itself does not create criminal offences, civil penalties or enforcement provisions. It operates as a direction under the Competition and Consumer Act 2010 requiring the Commission to conduct an inquiry and specifying matters the Commission must consider and report on (s 3; s 5-8). The text contains administrative requirements for the Commission and procedural constraints regarding publication, but it does not purport to impose penalties on market participants for particular conduct.

Specific points from the text:

• The instrument is a direction to the Commission made under the Act (s 3). It therefore prescribes how the Commission must exercise its inquiry powers under the Act, but the instrument as supplied does not itself specify enforcement powers or sanctions.
• The only explicit restriction that affects publication is the direction that the Commission is not to make available for public inspection copies of any interim report until the Treasurer authorises this in writing (s 7(2), citing s 95P(3) of the Act). That is an administrative limitation, not a penal sanction, and applies to the Commission’s publication practices.
• There is an express prohibition on directing the inquiry at supply by a particular person or persons (s 5(3)). That is a jurisdictional limit; it precludes the Commission using this inquiry as a vehicle to target an individual supplier within its terms of reference. The instrument does not, however, specify what steps the Commission must take if evidence of unlawful conduct by a person arises during the inquiry. Any enforcement action in response to unlawful conduct would arise under the Act or other relevant statutes, not under this direction itself.
• The instrument requires the Commission to recommend options to enhance markets (s 7(1)(b)). Recommendation is an output; any subsequent regulatory changes or enforcement actions by other agencies would be separate and would depend on further legislative or administrative steps.

Implications for compliance and enforcement risk:

• Participants should not infer from this direction alone that non‑compliance with any information request will attract statutory penalties; the instrument does not create compulsory information‑gathering powers or sanctions in its terms. If the Commission exercises statutory information‑gathering or compulsory powers under the Act in the course of the inquiry, those powers and any associated sanctions would derive from the Act itself (the instrument cites the relevant Act provisions but does not reproduce them).

This direction is explicitly framed by and interacts with several other instruments and statutes through cross‑references and imported definitions. The instrument is made under the Competition and Consumer Act 2010 and repeatedly cites specific inquiry provisions of that Act (for example, subsection 95H(1), 95J(1) and (2), 95J(6), 95P(3), and 95K(1)) as the statutory hooks for the Commission’s obligations (s 5-8). It also imports definitions from the Basin Plan 2012, the Water Act 2007, the Murray‑Darling Basin Agreement and the Competition and Consumer Act itself (s 4). The instrument also refers to the Legislation Act 2003 for the principle that expressions have the same meaning in the instrument as in the Act as in force from time to time (s 4, and the note referring to paragraph 13(1)(b) of the Legislation Act 2003).

Concrete interactions:

• Competition and Consumer Act 2010: The direction relies on and modifies the exercise of the Commission’s functions under the Act. The instrument cites multiple Act provisions that form the legal power and procedural constraints for holding the inquiry (s 5 references subsection 95H(1), s 6 cites subsection 95J(6), s 7 cites subsection 95J(6) and subsection 95P(3), s 8 cites subsection 95K(1)). The direction therefore must be read in tandem with those sections of the Act which set out the Commission’s inquiry powers, powers to obtain information, and reporting obligations.
• Basin Plan 2012 and Water Act 2007: Several important terms are defined by reference to those instruments, for example "carryover arrangement" (subsection 1.07(1) of the Basin Plan 2012), "trade" (subsection 1.07(2) and (3) of the Basin Plan 2012), "tradeable water rights" (Water Act 2007) and "infrastructure service" (subsections 12.47(5A) of the Basin Plan 2012) (s 4). Because the instrument adopts those external definitions "as in force from time to time" (s 4), changes to the Basin Plan or Water Act could alter the legal scope of the inquiry’s subject matter without amending the direction itself.
• Murray‑Darling Basin Agreement: The instrument imports the definition of "intervalley transfer" from subclause 3(1) of Schedule D to the Murray‑Darling Basin Agreement (s 4). The instrument also notes that the text of the Agreement is set out in Schedule 1 to the Water Act 2007. Where the inquiry is directed to consider adjustments made to give effect to trades and intervalley transfers (s 6(g)), it will therefore engage provisions and operational practices governed by that Agreement.
• Exempt supply and s 95A(1) of the Act: The instrument excludes exempt supplies from the inquiry (s 5(1)(c)). The definition of "exempt supply" is cross‑referenced to subsection 95A(1) of the Act (s 4). Whether a supply is "exempt" for the purposes of exclusion will therefore be determined by the Act’s definition at the relevant time.

The instrument, titled the Competition and Consumer (Price Inquiry,Water Markets in the Murray‑Darling Basin) Direction 2019, contains no express amendment notes, schedules of prior versions, or modification history in the text provided. The Parts and sections presented (Parts 1-2, ss 1, 3-8) constitute the instrument as made.

Two structural features relevant to amendment and temporal interaction are stated in the text:

• Definitions are expressly tied to outside instruments "as in force from time to time" (s 4 and the note referencing paragraph 13(1)(b) of the Legislation Act 2003). This means the instrument’s definitional references will automatically follow changes to the definitions in the Competition and Consumer Act 2010, the Basin Plan 2012, the Water Act 2007, and related instruments unless the direction itself is amended. That design reduces the need to formally amend the direction when external statutory definitions are updated, but it makes the direction's scope contingent on those external amendments.
• The instrument sets temporal reporting deadlines that are specific calendar dates: interim report to Treasurer by 30 June 2020 (s 7(1)(c)) and completion and report to the Treasurer by 26 February 2021 (s 8). Those dates are fixed in the instrument and would require amendment to extend or change the timetable.

The instrument does not list prior versions, repeal provisions, or amendments. No later amendment history, legislative instrument identifiers, or modification dates are included in the supplied text. For users tracking amendments, the relevant interpretive point is that definitional changes in the external instruments are expressly accommodated, but any change to the Commission’s duties, the inquiry’s scope exclusions, reporting deadlines or the non‑publication constraint in this direction would require a further formal direction or amendment instrument under the Act.

The instrument contains no record of litigation, judicial consideration, or case citations. The text makes no reference to judicial decisions, court orders, or legal challenges affecting the direction. There is no litigation history provided in the instrument itself.

Where litigation could be relevant in practice, it would have to arise from:

• administrative law challenges to the Commission’s conduct of the inquiry or to the Treasurer’s decisions on publication, or
• subsequent regulatory changes or enforcement actions taken on foot of the Commission’s recommendations.

None of those scenarios are reflected in the text provided. The instrument itself does not create a mechanism for judicial review within its wording; standard avenues of administrative law and judicial review in Australia would apply to actions taken by the Commission or the Treasurer in administering the direction, but that is a general observation about administrative action and is not set out in the instrument.

Users should therefore treat the instrument as a statement of administrative direction without recorded litigation. Any litigation history arising from the inquiry would be external to this document and is not contained in the supplied text.

This instrument is concise but contains several precise constraints and cross‑references that can produce notable practical effects. The following are concrete, source‑grounded points to watch for when advising clients or preparing submissions. Each point is tied to the instrument’s text.

1. Scope exclusions are explicit and limited (s 5(1)(a)-(c))

• The inquiry is not the vehicle to examine social and economic impacts on Basin communities or the effectiveness of environmental water buy‑backs. Parties seeking analysis or findings on those issues should not expect them from this inquiry (s 5(1)(a)-(b)). The instrument’s note states those matters fall to other inquiries; counsel or clients looking to have those matters considered should identify the other forums.

2. Exempt supplies excluded (s 5(1)(c); s 4)

• The exclusion of "exempt supply" depends on the Act’s definition (s 4). Whether a particular supply is "exempt" for these purposes will turn on the Act, not on Commission discretion under this direction. Advice and submissions should address whether a given service or transaction is within the non‑excluded categories.

3. No person‑specific inquiries (s 5(3))

• The direction bars the Commission from holding the inquiry in relation to supply by a particular person or persons. This prevents the instrument being used as a targeted fact‑finding inquiry into an identified firm or individual supplier under these terms. Evidence of specific misconduct revealed during the inquiry may still be handled under other statutory powers, but the direction itself precludes framing the inquiry around a named supplier.

4. Definitions are imported and dynamic (s 4)

• The instrument adopts external statutory definitions "as in force from time to time" (s 4 and the Legislation Act note). Changes to the Basin Plan, Water Act or the Act could change the meaning of core terms for the inquiry without amendment to this direction. Parties should track those external instruments.

5. Timebound deliverables create tight deadlines (s 7(1)(c); s 8)

• The interim report deadline (30 June 2020) and final report deadline (26 February 2021) are fixed dates. These deadlines may compress consultation and evidence‑gathering windows. Participants should prepare to respond promptly to any requests or calls for submissions to ensure their views are considered within the statutory timetable.

For market participants, intermediaries, infrastructure operators, investors and public bodies who wish to engage effectively with this inquiry, the instrument sets a clear agenda. Compliance here means preparing to participate substantively in the Commission’s fact‑finding and to structure submissions and supporting materials in direct response to the matters the Commission is directed to consider.

Practical steps aligned to the instrument’s directions:

1. Prepare submissions focused on the directed matters (s 6)

• Assemble empirical evidence and analysis on market trends since 2012: demand for water, geographic shifts in use, volumes traded, changes in availability, participant composition (s 6(a)). Provide time‑series data where available and explain any structural breaks.
• Document the role and quantitative impact of carryover arrangements and trading of carried‑over allocations (s 6(b)). If your region or operations use carryover, supply operational details and outcomes.
• Explain the role and practices of different classes of market participant: brokers, exchanges, investment funds, significant traders and others (s 6(c)). Provide organisational diagrams, standard contracts, fee structures and examples of trading products.
• Address public information availability and quality: where market data is published, the frequency, latency, coverage and known gaps (s 6(d)-(e)). If there are discrepancies between reported prices and transaction prices, document them and provide reconciliations.
• Detail transaction costs and barriers to entry, expansion and exit, including registration, compliance, transaction fees, matching, settlement frictions and any contractual constraints (s 6(f)). Provide costings and, where possible, comparisons to alternative markets.
• Provide technical documentation on how constraints on storage or delivery are managed, including protocols for adjustments to give effect to trades and handling of intervalley transfers (s 6(g)). Supply operational flow charts, settlement rules and any historical examples of trade adjustments.

2. Adopt the Commission’s recommended structure for submissions where possible (s 7(1)(a))

• The Commission is required to "seek and consider" views (s 7(1)(a)), so prepare written submissions that are concise, evidence‑based and aligned to the specific questions likely to arise from the directed matters. Include executive summaries, datasets, and a clear statement of the submitter’s interests.