Government to crack down on misuse of market power

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison have announced that an effects test will be included in Section 46 of the Competition and Consumer Act 2010 (CCA), as recommended by the Harper Review.

The Harper Review recommended that Section 46 – the misuse of market power provision – be replaced by a new provision, which is better able to deal with harm to competition in Australian markets.

Following the review, the Government undertook extensive consultation with stakeholders before deciding to repeal the current Section 46 and adopt the recommended changes.

A joint statement from Mr Turnbull and Mr Morrison said the amendment of Section 46 to deal with unilateral anti-competitive conduct is an important step to ensure Australia has the best possible competition framework to support innovation and boost economic growth and jobs.

“Conscious of the needs of business, the change is deliberately designed to reduce the uncertainty associated with amending a law,” the statement said. “It uses existing legal concepts from within the competition law – such as ‘substantially lessening competition’ – and ensures the focus of the provision remains only on those firms that have substantial market power.

“This reform represents a commercially and legally robust law, preventing firms with market power engaging in behaviour that harms the competitive process. It places Australia’s competition law on the right footing to encourage economic growth and innovation.”

Master Grocers Australia CEO Jos de Bruin said the Government’s decision “represents a truly historic advance for thousands of independent supermarket owners”.

“As an industry, we have been working for years to have the competition laws strengthened and to rein in abuses of market power by the two big chains that dominate the market,” he said.

“This will be a huge boost to all our members and, indeed, to the wider community of small, medium and even large business owners. We are more than happy to compete. It is in our blood. The market can now operate on merit, not just muscle.”

Council of Small Business of Australia (COSBOA) also congratulated the Government on its decision, despite having called for stronger measures during the review.

“COSBOA considers that the measures are not strong enough, but due process has been followed and we will work within the system and assess the impacts of the changes over the next few years,” CEO Peter Strong said.

The Australian Newsagents’ Federation (ANF) has also commended the Government on its announcement.

“The Government has endured a significant lobbying campaign by big business against this reform and we want to recognise the Government’s commitment to small business, that after an exhaustive consultation they are now addressing this long-awaited reform and bringing Australia into line with overseas jurisdictions,” ANF CEO Alf Maccioni said.

“Newsagents simply want the freedom to compete robustly to the extent that we as small businesses can in our relevant markets. We would have liked even stronger measures, but this is an important step in the right direction and we hope that once the amendments are completed, the ACCC will move quickly to test the new laws so we can assess over the next few years the effectiveness of the reforms.”

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