Significant Change - Australian Government’s effect on competition
It is not an exaggeration to say that this is the most
substantial reform of Australia’s competition law since the introduction of the
Trade Practices Act in 1974.
McCullough Robertson advocated for a change to the law in
the consultation on the proposed changes. Most Australian firms have
lobbied for there to be no change.
The current section 46 requires that the company with market
power have ‘taken advantage’ of its market power for particular purposes.
The High Court has interpreted that obligation so that it is very difficult to
prove a misuse of market power where the company could have engaged in the same
conduct even if it did not have market power. In practice, this has
proved to be a very high hurdle, with courts usually finding that the firm’s
conduct did not need and rely on the market power. Despite widespread
concerns about the power of large suppliers/customers in various industries,
the ACCC has rarely succeeded in any prosecutions it has brought under the
section.
The proposed section 46 will lower that hurdle
substantially. In many of the cases the ACCC has lost, the court has
still found there to be a collective arrangement that substantially lessened
competition (breaching other provisions of the Act). Now, there will be
no need to prove the existence of an agreement. Any unilateral conduct by
a firm with market power will be illegal if it has the effect of substantially
lessening competition in a market (or is likely to): even where the effect is
an unintended consequence, and even if the conduct was conduct that small firms
can and do engage in.
This will bring Australian law much closer to the way
competition law applies to single firm conduct in the European Union. The
experience in the European Union is that cases based on abuse of dominance are
common (both by the European Commission and by private litigants) and have a
strong success rate.
The reform implements the recommendations of last year’s
Harper Review in full, after a further consultation by the Australian
Government on this change specifically. It recognises that when firms
with market power engage in conduct, it can have vastly different effects on
competition than when small firms engage in the same conduct. Australian
law has never recognised that distinction to date.
Please contact Paul, John or Alex for any information or discussion
on this or any other competition issue.
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| Alex Hutchens |
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| Paul McLachlan |
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| John Kettle |
