Noting the importance of both competition and small business to the economy, the Prime Minister Malcolm Turnbull, the Treasurer Scott Morrison and the Small Business Minister and Assistant Treasurer Kelly O’Dwyer today announced that the Government would move to implement the Harper Review’s recommendation to replace the current section 46 of the Competition and Consumer Act 2010 (the Act) with a new provision that would add an “effects” test, remove the requirement to show that a business had taken advantage of its market power, and adopt the substantial lessening of competition test found in some other sections of the Act.

The new section 46 recommended by the Harper Report would provide that:

(1) A corporation that has a substantial degree of power in a market shall not engage in conduct if the conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any other market.

(2) Without limiting the matters that may be taken into account for the purposes of subsection (1), in determining whether conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in a market, the court must have regard to:

(a) the extent to which the conduct has the purpose, or would have or be likely to have the effect, of increasing competition in the market including by enhancing efficiency, innovation, product quality or price competitiveness in the market; and

(b) the extent to which the conduct has the purpose, or would have or be likely to have the effect, of lessening competition in the market including by preventing, restricting or deterring the potential for competitive conduct in the market or new entry into the market.

While a number of variations of the Harper recommendation were canvassed in a Treasury Discussion Paper earlier this year, the Government appears to have adopted the “full Harper”.

Consultation draft legislation implementing the Harper recommendations accepted by the Government late last year is expected to be released prior to the Budget, but it is not yet clear whether the section 46 amendment will form part of that draft package.  The States and Territories must be given 3 months’ notice and must give their consent to any change to the Act.