Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

Of course competition and small business are very important in our society. We need small business to provide services and to provide that competition to keep the big operators on their toes and to make sure that they do have competition in prices. People are able to take-advantage of competition to get lower prices. Competition ensures that we do not have only a few players in the market who can charge prices that are well above their profit margin and that people do not end up paying more than they should for goods and services.

The Labor Party is concerned that Australia has an environment where competition is encouraged and flourishes. The essential difficulty that any government faces when making sure that there is not unfair use of market power to force out small businesses is ensuring that it does not also put in place legislation which discourages competition. That is the balancing act that we have here. As has been outlined by previous speakers on this Trade Practices Legislation Amendment Bill 2008, it is not only a matter of government and business, whether big or small, and the consumers; it is also a matter of the interpretation of the courts. That is what makes trade practices legislation difficult, expensive and intricate.

Now the Rudd government has put forward a package of measures which it believes will crack down on anticompetitive behaviour by big business. We all know what can happen. The larger businesses in an area, a region or indeed a country can reduce their prices, take action that undercuts their competitors and force them out of business—because of course people will tend to shop where they get the cheapest prices. Once their competitors have been forced out of business the company with more market power can then safely raise their prices and, without competition, have no resistance to those price rises. Standard economics will have it that once that business with the market power reaches a certain stage of profits then that will encourage other businesses to come into that lucrative market. Standard economics does not always work so wonderfully, and probably does not always work so wonderfully in rural and remote areas where it is often very difficult to start up a business and where there are greater difficulties involved.

So, recognising the importance of this, the government has put together a carefully constructed package of measures that it believes deals with the key issues of anticompetitive behaviour. It deals with the tendency of the courts in several key cases to take a very narrow interpretation of the Trade Practices Act and it deals with the costs and the barriers in the way of even taking action in the first place. The government has demonstrated in this bill that it does want to defend small business from predatory pricing and ensure that many of the barriers to actually taking action if there is predatory pricing are removed. There are three major thresholds that must be proved before predatory pricing can be proved. These are: that the business has sufficient market power and/or market share to do this, that it has taken advantage of that market power or market share and that it is able to recoup those costs in taking that action.

I can understand Senator Joyce’s attachment to the Birdsville amendment, because it was something that he worked hard for and lobbied hard to achieve, but the government argues that, in addressing the take advantage threshold and in addressing the recoupment threshold, it has addressed those court cases that have given quite a narrow definition in those areas. The government has put in place other measures, such as giving the ACCC wider powers to gather information, and has ensured in this bill that cases can be taken to the Federal Magistrates Court to reduce cost and to hopefully make things a bit speedier. What this bill puts in place is the ability for small business to make a speedier approach, and it reduces a lot of the barriers to this.

Going back to the market power definition, the government have said, ‘We have rectified the thresholds around that, so we are putting market share back to a market power definition because then it is fully consistent with the rest of the legislation and will not lead to a whole new body of law which addresses the issue of what is market share rather than market power.’ Now the argument there is that we already have a body of law that addresses market power and we know the attitude of the courts to that definition of market power. Therefore if we address all of the issues around it then we will have put in place the ability for the courts to deal with that. Whether that is the case or not we will just have to wait and see.

Hopefully, where there are cases of predatory pricing the ACCC will be able to deal with it—hopefully outside of the courts because it does cost everyone a lot of money to go to court and most lawyers in fact will recommend that you do not do that. But if there is a case of predatory pricing that does go to court then the steps are in place to address that. If that does occur and if market power is still interpreted by the courts, even with the other changes, in such a narrow way that it is incredibly difficult to bring a predatory pricing action in the courts then possibly we will need to have a look at this again. This was addressed in the report by the Senate Standing Committee on Economics.

The Senate Standing Committee on Economics has a history of pushing for small business to be protected from predatory pricing. As the current chair of that committee, I certainly am pleased that the government has responded with this package of legislation that does indeed address those ills of predatory pricing. A key part of this is the take advantage test, and this bill clarifies what is meant by the term ‘take advantage’. The bill says that a corporation must take advantage of the substantial market power that it has for the purposes of eliminating or damaging a competitor or preventing the entry of another company or entity into the market or other markets, and it must deter or prevent a person from engaging in competitive conduct. I cannot see how Senator Joyce is not persuaded that that does not clarify the term and get over the narrow interpretation of that term ‘take advantage’ by the High Court.

In its report in 2004 the Senate Standing Committee on Economics supported the ACCC view that this should be broadened, and the Rudd Labor government has done that in this bill. The Rudd Labor government has also addressed the other key area: recoupment. This modification was required in response to the High Court making a ruling which frustrated the very intent of the legislation by setting an unrealistically high barrier to proving predatory pricing—and this was the Boral case that Senator Joyce referred to. That Boral case meant that the ability to recoup losses incurred from below cost pricing was a necessary precondition to establishing that a corporation had engaged in predatory pricing and, as Senator Joyce said, that is an extremely difficult thing to prove. This bill means that that is no longer required. I think what Senator Joyce has focused on is simply the Birdsville amendment, and indeed his initial proposal for the Birdsville amendment was amended by the Howard government and it has been amended again—on advice—as part of this total package of legislation. That is what is important to look at. It is not only those three thresholds that are addressed here but also an ability by the ACCC to strengthen its information-gathering powers, which is critical. It has greater powers to go in and gather information about the conduct of companies involved in a predatory pricing case and that will be critical to ensuring a successful outcome where that case is taken to court.

The government has also said that the case can be dealt with in the Federal Magistrates Court and this—despite Senator Brandis’s view—should provide a simpler and more accessible alternative to litigation than the superior courts. Of course, if a company chooses to hire lawyers they should indeed be lawyers with the required expertise in this area but, let us face it, in most cases small businesses are not going to employ lawyers anyway. It will be something that the ACCC will deal with on behalf of a small business. We have had strong evidence from the ACCC that this is the legislation that they require in order to strengthen their ability to take cases forward. This is the legislation that they require to ensure that small businesses will get a fair hearing in the courts, whether it is the Federal Magistrates Court or the High Court. I completely reject Senator Joyce’s cynicism about Graeme Samuel and the ACCC. The ACCC did not get the kind of support from the previous government that it needed to deal with these and a range of other cases, but they have now indicated, in the strongest terms, that this is the kind of legislation that they need to go forward. I see no reason that they would reject their charter and make that sort of statement about legislation that they did not believe in.

In any case, regardless of this, this legislation also provides for another commissioner for the ACCC who has expertise in small business. This is something that has been welcomed by small business. We will now have an ACCC deputy chairperson who has knowledge and experience of small business matters. This will ensure that small business interests are front and centre in the ACCC. Small businesses and peak groups representing small business have welcomed this measure. It is one that will give them some certainty that their interests will be paramount. The ACCC is now focused much more strongly on small business. I am sure that the deputy chairperson’s focus will be very much on predatory pricing because that is something that does indeed affect small businesses greatly—and the ACCC has welcomed this. It is a useful signal to the ACCC and the small business sector that the general community and the parliament acknowledge the role of small business in keeping markets competitive and that the trade practices legislation has an important role in preventing large businesses unfairly reducing competition in markets at the expense of small business. We all know that small businesses are under great stresses, yet they are a very important and innovative element of the market. In this area of global competition and of goods moving around freely and with the general pressures of pricing on business, large businesses do—even more—have an advantage over small business. I certainly welcome having a deputy chairperson in the ACCC who has that working knowledge of small businesses and who knows the kind of pressures they are under—one who will have some solutions to bring to the table at the ACCC on how to address those issues.

I find it strange that the opposition, in looking at this bill, would seek to eliminate several key clauses of it. I think that we should look at this bill as a whole and acknowledge that it puts together a package that will assist small businesses and improve the Trade Practices Act. It will hopefully create an environment in our markets where it is acknowledged that big businesses are not given permission to act in a way that disadvantages small businesses—that they must not engage in predatory pricing and that they must not act in a way that forces out small business and leaves the market much more to big business. I commend this bill to the Senate in the strongest terms. I hope that we see the entire package put forward so that we can go forward with legal certainty. I hope we can go forward on the advice that the government has given and see these strong improvements to the Trade Practices Act.