Misuse of market power law must get the words right

11 October 2016

Federal Shadow Treasurer, Chris Bowen, in The Australian Financial Review today, has articulated well the risks to the economy and to consumers if the Harper review recommendation to amend Section 46 is implemented in full, Business Council Chief Executive Jennifer Westacott said.

“Using the right words in the misuse of market power provision really matters if it is not to discourage the competition it is intended to protect,” Ms Westacott said.

“As Mr Bowen says, consumers will not benefit from a law that discourages businesses from lowering prices.

“The wording in the government’s draft legislation remains a concern. The law would no longer be targeted at the deliberate abuse of market power, but could extend to any conduct by a corporation with market power that has the purpose or effect of substantially lessening competition in any market.

“This creates a risk that legitimate competitive conduct could have market impacts that result in a business facing legal action in the courts. It is easy to see why some businesses would think twice before engaging in competitive conduct which is fundamental to a productive economy.

“The types of pro-consumer activity at risk include the opening of new stores, price discounting and new product innovation and development.

“These concerns were set out in a legal opinion by Neil Young QC that was included in the Business Council’s submission to the government’s consultation process on the draft legislation. Mr Young finds that the new provision, as drafted, will be an “outlier” when compared to similar provisions in other countries and that “the risk of over-capture is real and imminent”.

“With the consultation process now concluded we wait to see if these legitimate concerns will be acknowledged and addressed.

“The final version of the legislation must at a minimum provide greater clarity that the new law will only apply to ‘exclusionary conduct’, not any conduct, and that conduct with a legitimate business reason will be protected.

“These changes would be consistent with the ACCC’s draft guidelines and the government’s policy commitment to strengthen the provision.

“For the sake of a competitive economy all members of parliament need to be concerned with getting the words right in this important provision in competition law,” she said.

To view our submission click here.


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