In December 2015, the Federal Treasurer released a discussion paper calling for public comment on the need to change the law relating to the misuse of market power. This latest review has been initiated by the Australian Government despite a previous finding by the 2015 Harper Review recommending that these laws be changed to improve their overall effectiveness.

On 31 March 2015, Professor Ian Harper delivered his final report on Australia’s Competition Laws – commonly referred to as the Harper Review.
Billed as the ‘biggest review of Australian Competition Law in more than 20 years’, the majority of the recommendations outlined in the Harper Review were formally accepted by the Federal Treasurer, the Hon. Scott Morrison MP on 24 November 2015.

The principal exception, was the exclusion of the six or so recommendations relating to Section 46 – the Clause specifically used to prevent corporations with significant market power from misusing that market power to the detriment of competition.

While noting the recommendations of the Harper Review on Section 46, the Federal Treasurer indicated that the strong debate about the merits of the proposed changes to this law – and that the continued disagreement between stakeholders warranted further government consideration.

Accordingly, the Federal Treasurer released a further discussion paper on this matter on 11 December 2015.

The Paper, entitled: Options to strengthen the misuse of market power law canvasses 6 options for strengthening the misuse of market power provisions of Australia’s Competition Laws. Five new options, together with the original option recommended by the Harper Review, are discussed in the paper (see http://www.treasury.gov.au/ConsultationsandReviews/Consultations/2015/Options-to-strengthen-the-misuse-of-market-power-law).

“Mindful of the experiences of competition within our own industry over the past decade, ACAPMA is committed to ensuring that Australia’s competition laws provide the best possible protection for all businesses operating in the fuel market in Australia”, said ACAPMA CEO Mark McKenzie.

While some have tried to portray this debate as one of Big versus Small, such a portrayal is too simplistic.

“People seem to forget that the essence of competition is one where businesses compete against each other – generally with one or more businesses being ‘damaged’ in the process – and so the essence of this Clause is not as simple as protecting the interests of small business over big business”, said Mark.

“Rather, this particular aspect of legislation should rightly seek to protect the nature of competition by ensuring that those businesses with substantial market power do not lessen competition by engaging in anti-competitive behaviour”, Mark continued.

Behaviours such as “land banking” – where large businesses pay inflated prices for commercial land in an effort to prevent a competitor buying the site and entering the market – is one such example that needs to be outlawed. Predatory pricing is another.

“Our firm view is that the current legislation does not provide an effective deterrent to this type of behaviour and we therefore believe that the changes proposed by the Harper Review should be implemented in their entirety”, said Mark.

While these changes are not perfect, – as they will continue to allow a degree of uncertainty to occur, ACAPMA believes that the full changes proposed in the Harper Review (identified as Option F) are required to protect the long term interests of both consumers and business – by creating an environment where the market benefits of innovation and capital investment can be realised by both large and small business.

“We can see no reason why the Australian Government should further weaken the recommendations made in the final report of the Harper Review with respect to the future operation of the misuse of market power laws, particularly given that these recommendations were developed following consideration of more than 600 submissions”, said Mark.

ACAPMA is currently finalising its submission and invites any members who wish to provide input to this process to make contact with the ACAPMA Secretariat by calling 1300 160 270 or emailing info@acapma.com.au.

Submissions close on 12 February 2016 with a view to the Australian Government making a decision on this matter by the end of March 2016.

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