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Section 46: its purpose and the proposed new effects test

Julie Clarke
(2017) 45(5) Australian Business Law Review 364-386



ABLEThe Competition and Consumer Amendment (Misuse of Market Power) Act 2017 (Cth) will give effect to the Harper Report recommendation to introduce an effects test for Australia’s misuse of market power prohibition to replace the existing purpose-based test. Commencement of the effects test is contingent on the passage of the Competition and Consumer Amendment (Competition Policy Review) Bill 2016. This proposed change has generated more political debate and public commentary than any other aspect of the proposed Harper reforms.

This article examines the convoluted process that has led to the introduction of the effects test, before identifying the object of Australia’s misuse of market power law and examining the existing and proposed laws against that objective. It concludes that the existing law is misdirected as a matter of policy and is ineffective in practice. The proposed law will, by removing the “take advantage” element and shifting the focus from competitors to competition, be more aligned with the object of the provision and with international best practice.