David Bushby (Tasmania, Liberal Party) Share this | Hansard source

Exactly, that is right. The other elements of the section also need to be made out. As Senator Brandis has pointed out, there are a number of other doors that you need to go through to get in there. These include a sustained period of selling goods at a price less than the relevant cost to the corporation of supplying goods and, importantly, doing so with the intention of putting competitors out of business. As such, a business with a large market share selling goods at clearance prices will not be caught by the provision—not unless it is able to be proven that it was doing so for a sustained period and with the specific intention of putting competitors out of business.

Coles gave evidence to the ACCC price inquiry that their pricing behaviour had not been changed as a result of the 2007 amendments. They gave no evidence that those amendments frightened them into not discounting but, on the contrary, said their pricing practices had not changed. Similarly, the experience of the ACCC itself since the 2007 amendments were introduced backs the claim that there has been no resultant dampening of competition or any apparent unintended consequences. Earlier this year the ACCC noted that it had received 75 complaints alleging predatory pricing under section 46(1AA) but that of those 75 complaints it considered none represented a provable breach of that section. We heard earlier from Senator Joyce that the number of those complaints is probably now around 100, and still none has presented as a provable breach of that section. That suggests to me quite strongly that the 2007 amendments have not opened the floodgates to litigation and prosecution of corporations which hold substantial market share and which also choose to discount.

The 2007 amendments had the support of small business groups and continue to enjoy that support. For example, the Senate Standing Committee on Economics inquiry into the bill received a submission from the Fair Trading Coalition, which is an informal coalition of small business groups, stating their support for the section as it currently stands and their belief that most of the problems identified by the ACCC in relation to the 2007 amendments will still exist following the passing of this bill’s proposed amendments—problems such as: what is below the relevant cost, what is a sustained period and what is purpose? In addition to having to prove market power, the government, through this bill, is placing a further obstacle in front of small business in the form of the take advantage test. The take advantage test will add extra complications to the process of having to prove predatory pricing. The government has put forward the argument that having both a market power and a market share test in the same act creates uncertainty but, at the same time, it acknowledges that having separate predatory pricing offences is on balance a good thing.

Market share is a well understood concept, and the government’s claim that the test will lead to uncertainty has not taken into consideration the fact that the ACCC will closely review the market share of the entity alleged to have engaged in predatory pricing when assessing pricing claims. The government has also argued that having both market share and market power tests in section 46 means that there is a dual track process under section 46. This may or may not be the case, but I fail to see the problem if each of the tracks presents an opportunity to limit what are ultimately uncompetitive practices that present detrimental outcomes to consumers. In any event, this is nothing new, as dual track processes are contained within other competition law sections of the Trade Practices Act.

It is often argued in relation to the Trade Practices Act that it is there to protect competition and not competitors. That is very true, and I agree. However, if the regulatory scheme designed to do just that fails to stop practices which lead to increased opportunities for the development of oligopolistic and monopolistic markets, then it is not doing its job. The key is not the protection of businesses per se but the protection of efficient, healthy, competitive markets in which consumers are provided with a real choice based on price, service, quality and environment. Failing to ensure we have adequate protection in that regulatory regime against predatory pricing is a failure to protect competition. Rolling back the 2007 amendments and replacing them with the complications and difficulties of the market power and take advantage tests will only serve to exacerbate the problems of making out a case and will ultimately fail in the stated aim of protecting competition. And, in the end, it will be the Australian consumer who wears the cost.