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Misuse of market power

Shopping cartAlways 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:

See my Harper Review Misuse of Market Power page for comparisons of the current and proposed law. For media and commentary following the Government's announcement, see my Harper Media Page.

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)

The Harper Review Final Report recommended an effects test for section 46. Details about the recommendation can be found in my misuse of market power overview.

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:

In support/defence of the proposed competition test:

See also

Other inquiries

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)

More information

For further information see the misuse of market power page

 

Images copyright: Image courtesy of watcharakun from FreeDigitalPhotos.net.