The Federal Treasurer, Scott Morrison, has released a Discussion Paper on ‘Options to strengthen the misuse of market power law’. The Discussion Paper does not make any recommendations, but sets out a number of optionsand seeks submissions from interested parties. 

Submissions close on 12 February 2016, with the Treasurer proposing to submit a proposal for Cabinet consideration by the end of March 2016, at which time the Government will announce a final position.

Background 

As previously reported, in March 2015, the Harper Committee handed down its report following its wide-ranging review into Australia’s competition policy and laws. One of its key recommendations  was the amendment of themisuse of market power provision in section 46 of the Competition and Consumer Act 2010 (Cth). Section 46 currently prohibits corporations that have a substantial degree of power in a market from taking advantage of that power for the purpose of eliminating or substantially damaging a competitor, preventing entry into, or deterring/preventing competitive conduct in, a market. 

The Harper Committee proposed that section 46 be amended in a number of key respects: 

  • removing the requirement that a person ‘take advantage’ of substantial market power;
  • the introduction of an ‘effects test’, which would mean that conduct would be also be prohibited if it had a proscribed effect or likely effect;
  • changing the prohibition to one against ‘substantially lessening competition’, rather than focusing on damage to a competitor;
  • including mandatory factors for the Courts to consider in determining whether conduct has the relevant purpose, effect or likely effect; and
  • making authorisation available, such that the ACCC could authorise conduct that would otherwise be in breach of section 46.

It is the second of these proposed amendmentsthat has been particularly controversial. While the ACCC supports the introduction of an effects test, the proposal has been less popular in the business community, many members of which consider it to represent an unnecessary restriction on competitive behaviour.

Choose your own section 46 adventure

The Discussion Paper presents a number of options for reform and seeks commentary on the desirability of these options. The options, as set out in the table below, are essentially different permutations of the various amendments proposed in the Harper Report:

Click here to view the table.

The Discussion Paper also:

  • poses a number of specific questions that are directed at the various types of proposed reform and their advantages/disadvantages, and
  • invites interested parties to suggest other options.

As expected from a paper that essentially introduces a further consultation process, the Government generally gives very little away about what position it might ultimately take. While it sets out arguments and views for and against various types of reform to section 46, it does show that the government is taking seriously the question of reform to section 46 and, possibly, the introduction of an ‘effects test’. 

Submissions on this discussion paper must be received no later than 12 February 2016