Misuse of Market Power Bill Fends Off Attacks to Reach the Senate

Published On 05/05/2017 | By Rahul Arora | Reform

On 28 March 2017, the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017 passed the House of Representatives after heated debate on the House floor.

After receipt of the Harper Report in 2015, the Government consulted with interested parties (see our blog post here), released its response (see KWM’s insights here) and then on 1 December 2016 introduced the Misuse of Market Power Bill 2016 (see our blog post here). This Bill proposes to amend section 46 to prohibit conduct by a corporation with substantial market power that has the purpose, effect or likely effect of substantially lessening competition. Most recently, the Senate Economics Legislation Committee considered the proposed amendments and released its report (see our blog post here).

As expected, the proposed amendment in section 46 was hotly contested during Parliamentary debate with controversy continuing to surround the proposed ‘effects test’. It was the Hon. Andrew Leigh MP who provided the most colour, beginning his speech upon second reading with a curious discussion of tardigrades. For those unfamiliar with the species, tardigrades – also known as water bears or moss piglets – are a highly resilient organism, capable of surviving in outer space and living without food or water for more than thirty years. These microscopic animals can endure freezing temperatures of minus 200 degrees Celsius and blistering heat of 150 degrees Celsius. They are, in essence, indestructible.

The link was finally drawn by Leigh when he described the ‘effects test’ in section 46 as the tardigrade of economic policy – “a bad economic idea” which, like the tardigrade, has managed to survive the pressure, the cold, and attacks from all sides.

Despite the scathing comparison, Coalition members remain in vehement support of their Bill. As Ted O’Brien MP said in his second reading speech, “a good idea never dies”.

Changes since the Bill was introduced

Consistent with the Harper Committee’s recommendation, the version of section 46(2) initially proposed had included mandatory factors to be considered when determining whether conduct has the purpose, effect or likely effect of substantially lessening competition. That provision would have required the Court to have regard to whether the conduct:

  • has the purpose or likely effect of increasing competition, including by enhancing efficiency, innovation, product quality or price competitiveness;
  • has the purpose or likely effect of lessening competition, including by preventing, restricting or deterring the potential for competitive conduct or new entry.

The amended Bill removes these mandatory factors. This change stems from the recommendation of the Senate Economics Legislation Committee and submissions by a number of parties (including the ACCC) which suggested that these factors could lead to uncertainty and protracted litigation, particularly the mandatory factor relating to efficiency and innovation.

Further, the commencement of the Bill has also been changed so that it will not take effect until and unless authorisation is available from the ACCC for conduct that might otherwise breach section 46. This authorisation is found in Schedule 9 to the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, which was introduced into the House of Representatives on 30 March 2017.

Next steps

While it has passed the House of Representatives, the Bill’s journey may still be slow, as Parliament does not sit again until 9 May 2017 for the Budget sitting.

Even if the Bill passes the Senate, its commencement will be tied to the progress of the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, on which debate has been adjourned after the second reading speech by Treasurer Scott Morrison.

We will continue to monitor the progress of this Bill as it moves through the Senate.

Picture: Courtesy Pixabay

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About The Author

Rahul Arora is a law clerk in the competition litigation team in the Sydney office of King & Wood Mallesons

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