Misuse of market power
Always a controversial provision (section 46), the Harper review and subsequent consultation produced a plethora of submissions and some heated commentary on the appropriate test to be applied in abuse of power cases.
Senate Economics Committee recommends passage of bill
On 16 February 2017 the Senate Economics Committee recommended passage of the bill (but with removal of mandatory factors contained in the proposed s 46(2))
Government introduces Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 incorporating effects test
On 1 December 2016 (last sitting day of the year) the Government introdcued the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 into the House of Representatives. It will not be debated until 2017.
Government releases Exposure Draft Bill incorporating effects test
On 5 September 2016 the Government released an Exposure Draft Bill incorporating an 'effects test' into s 46 of the Act:
Government agrees to introduce effects test
On 16 March 2016 Prime Minister Malcolm Turnbull announced that the Government would adopt an effects test for section 46:
Options to Strengthen the Misuse of Market Power Laws
The Harper Report (below) recommended fundamental changes to the misuse of market power laws; in particular, it recommended the introduction of an effects test to replace the current 'purpose' test in s 46. The Government responded by indicating it would engage in further consultation on this recommendation - see:
Options to Strengthen the Misuse of Market Power Laws
Treasury Discussion paper released: 11 December 2015
Submissions due: 12 February 2016
Competition Policy Review (Harper Review)
On 1 September 2015 (then) Small Business Minister, Bruce Billson, took the proposed recommendation to cabinet: Bruce Billson, 'Harper review misuse of market power clause would energise enterprise' (AFR, 31 August 2015). The Government's response to the Harper Review indicated it would engage in further consultation on the proposed effects test.
Most of the media debate on the Harper Review surrounded the ACCC's proposal for a competition test for section 46.This as contained in the ACCC's original submission to the review and was defended in a subsequent submission to the Harper Review
Commentary opposing the test includes:
- Stephen King, 'Words matter. That's why the ACCC has got it wrong' (The Conversation, 3 September 2014)
- 'Costello backs Goyder against ACCC' (The Australian, 18 August 2014)
- Sue Mitchell, 'Peter Costello buys into retail debate' (The Age, 18 August 2014)
- Graeme Samuel and Stephen King, 'The effect of the ACCC's ambitions is dangerous' (AFR, 12 August 2014, page 47)
- David Crowe, 'ACCC’s reform plan will chill market forces, Chris Bowen warns' (The Australian, 12 September 2014).
- 'Labor backs big business in opposing effects test' (Australian Financial Review, 12 September 2014, page 4).
In support/defence of the proposed competition test:
- Jill Walker and Roger Featherston, 'ACCC's section 46 change is not anti-competitive' (The Australian Financial Review, 14 August 2014)
- Lucy Barbour, 'Competition watchdog ACCC head Rod Simms (sic) denies claims an 'effects test' would be 'economically dangerous' (ABC Rural, 18 August 2014)
- Peter Strong, 'Why an effects test could help fix our failed competition policy' (Smart Company, 3 September 2014)
- Michael Smith - 'Rod Sims: don't let me be misunderstood' (Australian Financial Review, 12 September 2014, pages 1 and 4)
- Michael Smith, 'Competition Rules' (AFR, 12 Sept 2014, page 36)
- Rod Sims, 'The ACCC wants to keep the playing field open as well as level' (AFR, 12 Sept 2014, page 39)
- 'ACCC boss Rod Sims: Companies locking rivals in change rooms' (news.com.au, 13 September 2014)
- John Durie, 'Turnbull should know better about due process' (The AUstralian, 12 September 2014) (scroll to section headed 'walking the line')
- Fluer Anderson, ''Effects test' to allow scrutiny of big firms' (Australian Financial Review, 11 September 2014) [For online versions see Fluer Anderson, 'Big business 'juvenile', says Billson' (AFR, 10 September 2014 - subscription required) and Fluer Anderson, 'Big business is 'juvenile' for opposing effects test: Small Business Minister Bruce Billson' (BRW, 11 September 2014))
- David Crowe, 'Minister warns on plan to toughen laws ahead of competition review' (The Australian, 11 September 2014)
- John Durie, 'Section 46 focus is a distraction' (The Australian, 11 September 2014)
- Fleur Anderson, 'Business fights tough ACCC rule' (AFR, 2 September 2014, pages 1 and 6)
- ABC, 'Business Council takes on ACCC over competition rules' (Pat McGrath, The World Today)
- Bridget Carter, '"Effects test" will hurt competition' (The Australian, 19 August 2014, p 25 Business)
On 6 March 2014 Senator Nick Xenophon introduced a private members' bill into Parliament - the Competition and Consumer Amendment (Misuse of Market Power) Bill 2014. If passed, the bill would provide the Court with the power to order a corporation to reduce its market share, where the corporation has been found to have contravened subsections 46(1) or 46(1AA) of the Act. The Bill was referred to the Senate Economics Legislation Committee which eventually reported on 26 February 2015 after a number of deadline extensions. The Committee (Senator Xenophon dissenting) recommended that the bill not be passed. See Inquiry page.
Recent case: The Pfizer decision
On 25 February 2015 Justice Flick handed down his decision in ACCC v Pfizer, in which the ACCC alleged that Pfizer had misused its market power and engaged in exclusive dealing in relation to its supply of atorvastatin to pharmacies. Justice Flick dismissed the ACCC's application and awarded costs to the Pfizer. The misuse of market power claim failed largely in relation to the 'purpose' element; in relation to post-2012 conduct it also failed on the 'substantial' market power requirement.
On 18 March 2015 the ACCC filed a notice of appeal in the Federal Court (see press release)
For further information see the misuse of market power page
Images copyright: Image courtesy of watcharakun from FreeDigitalPhotos.net.