Misuse of Market Power: Should the test change?

The recent Competition Policy Review has prompted proposals to change legislation relating to the Misuse of Market Power – and Ai Group wants to hear what our members think.

As part of its response to the Competition Policy Review Final Report (the Harper Review), the Government announced it would consult further on a controversial proposal to change the Misuse of Market Power (MMP) provisions of the Competition and Consumer Act. The consultation process was launched with the release of a Discussion Paper on 11 December.

Section 46 of the Competition and Consumer Act 2010 (CCA) bans a business which has a substantial degree of market power from taking advantage of that power for the purpose of eliminating or substantially damaging a competitor, preventing a new entrant from competing or stopping another business from engaging in competitive conduct.

The Government is looking for input about a range of possible changes to Section 46 that were recommended by the Harper Review:

  • Should the “take advantage” test be dropped?
  • Should the current test which bans actions with the “purpose” of damaging competition be replaced with a test that bans actions which have “the purpose, effect or likely effect” of damaging completion?
  • Should the focus change from damage to a competitor to damage to the competitive process?
  • Should there be a set of factors that are mandatory for courts to consider when assessing possible breaches of Section 46?
  • Should authorisation from the ACCC be made available to businesses in specific circumstances?

The proposed change to the MMP provisions would involve the introduction of an “effect test” under which a business with substantial market power would be prohibited from taking advantage of that power if the effect of a course of action embarked on by the business was caused anti-competitive harm.

The Discussion Paper provides a very concise and fair overview of the issues involved.  Another source of discussion of these issues can be found in the Misuse of Market Paper pages of the Australian Competition Law website.

Ai Group will make a submission and we’d like to hear from members about their attitudes to the proposal to change the MMP test.

In addition to any specific views that you would like Ai Group to include in our submission, it would also be very useful to hear about the sorts of market behaviour that you think should be included as a “misuse of market power”.

Similarly, we would be very interested if you have views about how the current law or the changes to the law might promote or stifle the efficient and fair operation of the market.  As always, Ai Group will treat all proposals and suggestions confidentially.

Submissions are due by 12 February 2016. Please contact Ai Group’s Head of Public Policy, Peter Burn, for further information or if you would like to have your views heard, or leave a comment below.

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Peter Burn
Head of Influence and Policy at Ai Group, Peter is responsible for policy development on a wide range of issues relevant to members. He also represents Ai Group on various Advisory Councils and as a Director at Standards Australia and AustralianSuper. Previously Director – Policy at the Business Council of Australia, Peter also held academic positions in Economics Departments at the University of Queensland and the University of Newcastle after starting his career at the Commonwealth Treasury.

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