Commonwealth To Introduce Misuse of Market Power “Effects Test”
Thursday 24 August 2017 @ 11.03 a.m. | Trade & Commerce
The Competition and Consumer Amendment (Misuse of Market Power) Act 2017 (Cth) ("the Act") was assented yesterday (23 August 2017). The Act introduces a so-called “effects test” into section 46 of the Competition and Consumer Act 2010 (Cth) (“the CCA”), which was recommended by the Harper review into Australia’s competition framework. The Act will commence at the same time as Schedule 1 to the Competition and Consumer Amendment (Competition Policy Review) Act, which is currently still at bill stage and is being considered in Parliament. If the Bill does not pass, the provisions in the Act will not commence.
The Act was originally introduced into Parliament in December 2016 by Minister for Revenue and Financial Services, Kelly O’Dwyer. Introducing the Bill into the House of Representatives, Ms O’Dwyer said:
“As a result of this reform, section 46 will better target anticompetitive conduct and better support procompetitive conduct. Section 46 will be more reliably enforceable and promote strong competition in Australian markets, benefiting both consumers and the economy.
This reform is an important step to ensure Australia has the best possible competition framework to support innovation, enhance competition and boost economic growth and jobs. It is a key part of the government's response to the Harper review, which is all about increasing choice and delivering better services for consumers.”
The Act was opposed in Parliament by the Labor Party, with frontbencher Katy Gallagher telling SBS News the changes were ‘a bad idea’:
"It will have the effect of chilling competition and reducing innovation, and it will effect the prices that Australians pay for goods in a very bad way.”
For more history on the Bill, see TimeBase’s earlier article on the Senate Standing Committee on Economics’ report.
Section 46 Changes
Section 46 of the CCA deals with the misuse of market power and aims to prevent corporations with substantial market power from engaging in conduct that harms the competitive process.
Under the current law, the conduct must have one of three specific purposes, related to damaging an actual or potential competitor. Under the new law, the conduct “must have the purpose, effect or likely effect of substantially lessening competition”. The new law will also require certain pro-competitive and anti-competitive factors to be taken into account when considering “a substantial lessening of competition”.
The reforms to section 46 also remove the requirement that the conduct “take advantage” of it’s substantial market power.
There are new restrictions on the kind of market covered by the section – under the new law, the conduct “must occur in a market where there is an actual or likely supply or acquisition of goods or services, by the corporation or another prescribed entity”.
The new law also removes the express prohibitions on predatory pricing and other specified forms of conduct, in favour of a general provision.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.
Sources:
Competition and Consumer Amendment (Misuse of Market Power) Act 2017 (Cth), Bill, Explanatory Memorandum and Second Reading Speech - available from TimeBase's LawOne service
Competition laws clear the Senate (SBS News, 14 August 2017)
