Doug Cameron (NSW, Australian Labor Party) Share this | Hansard source

The Trade Practices Legislation Amendment Bill 2008 strengthens sections 46 and 51AC of the Trade Practices Act as part of the government’s commitment to improve Australia’s trade practices laws. The bill includes a number of measures to improve the enforceability of the Trade Practices Act. The measures in the bill were originally a package of amendments to the former government’s Trade Practices Laws Amendment Bill 2007, known as the Birdsville amendments. Despite being recommended by the Senate inquiry into that bill, the former government refused to adopt what were very sensible amendments. Business, especially small business, is entitled to the protection of effective trade practices laws. Consumers are entitled to the protection of effective trade practices laws. This bill will ensure that there is genuine competition for the benefit of consumers and small business.

The previous government’s amendments were a rushed job, put together in haste as a result of internal political pressure before they went to last year’s election. Those changes introduced confusion into the Trade Practices Act. This bill will clarify the act and undo the mess created last year. This bill will strengthen the power of the Australian Competition and Consumer Commission to identify anticompetitive behaviour.

On the advice of the ACCC, this bill replaces the share of market test with a market power test. Market power is a broader term that captures anticompetitive behaviour from powerful businesses whether that power comes from market share or any other source. The amendments passed by the former government were not supported by the ACCC or its former chair, Professor Alan Fels, or by Bob Baxt, the chair of the former Trade Practices Commission.

The ACCC has publicly stated that section 46(1AA) as it presently stands adds confusion to the law and should be amended. This bill does that by focusing section 46(1AA) on a corporation’s market power as opposed to its market share. The size of a firm, including its market share, will however remain a relevant consideration in establishing the firm’s market power. The present section 46(1AA) operates in relation to firms with a ‘substantial share of a market’. This is inconsistent with the longstanding prohibition in section 46(1), which operates in relation to firms with a ‘substantial degree of market power’. This bill realigns the two subsections.

The concept of market power allows the court to consider a wide range of factors, including all of the characteristics of a market that may contribute to the capacity of a firm to engage in anticompetitive behaviour. The concept of market power has been effective in targeting unilateral anticompetitive conduct. For example, in 2006 the Federal Court imposed penalties totalling $8.9 million on Safeway in relation to four breaches of section 46(1). This was despite Safeway having only around 16 to 20 per cent of the relevant market. Arguably, that prosecution could not have proceeded under the law as it stands following the previous government’s amendments last year.

This bill clarifies the role of recoupment in predatory pricing cases. Presently, section 46 does not expressly provide whether it is necessary to prove recoupment to establish a case based on predatory pricing. Submissions to the Senate Economics Committee inquiry raised concerns about the lack of clarity and its impact on the effectiveness of section 46. In particular, concerns were raised that it may be necessary to establish a predatory pricing case following the High Court’s decision in the Boral case.

The creation of second deputy chair at the ACCC is extremely important. It is important so that small business gets a permanent voice on collective bargaining, on retail tenancy issues, on franchising and on unconscionable conduct. This is an initiative that is long overdue, and it is a positive initiative as part of the government’s package. In addition, small business can also sue in the Federal Magistrates Court, making the courts more accessible under this legislation.

It is fundamental for good law that it provides clarity and certainty. The two-track approach that has emerged has caused confusion between market share and market power.

I would like to take you through some of the views that other people have on the bill. An editorial in the Daily Telegraph on 28 April said the following:

The proposed changes will be music to the ears of small businesses that now stand a chance against much larger and more powerful companies.

Peter Anderson, the chief executive of ACCI, was reported in the Daily Telegraph on 28 April 2008 as saying:

It will make it easier for small business and the ACCC to take action where there is predatory pricing underway or an abuse of market power, and that will generally be welcomed by the small business community.

Peter Burns from the Australian Industry Group was reported in the Australian on 28 April as saying that he was relieved that Senator Joyce’s amendments were being overturned. He said:

They were silly. It is sensible to get rid of them. They have created a lot of uncertainty.

And there was much discussion about the previous government’s amendments. Peter Armitage, the practice head of competition and consumer protection at Blake Dawson Waldron, said that many fine ideas had been conceived in the Birdsville pub, but the predatory amendments to the Trade Practices Act accepted by the government are a mistake. He said:

Make no mistake; this law is bad for consumers and bad for competition.

In the Australian on 19 September 2007 John Durie said:

John Howard has single-handedly destroyed the entire premise of the Trade Practices Act through his predatory pricing amendment, which will have the effect of killing price discounting, to the detriment of small business and consumers.

And Bob Baxt, a partner at Freehills and former chairman of the Trade Practices Commission, said that the legislation, which was introduced in haste and apparently as a result of, among other things, the criticisms made on a certain radio station, will not serve the Australian community well.

This legislation is designed to provide more effective competition policy, it is designed to provide clarity to the Trade Practices Act in this country and it is designed to protect both consumer and small business. It is quite clear that not only has there been a strong voice from the academic analysis of this legislation but the people who have to practically implement it—industry and small business—are saying: ‘This is what we need. This is good legislation that epitomises Labor doing the right thing by small business and doing the right thing by the community.’ This is good policy and it should be adopted by the Senate, and I have been pleased to speak on it tonight.