House debates

Monday, 27 March 2017

Bills

Competition and Consumer Amendment (Misuse of Market Power) Bill 2016; Second Reading

4:29 pm

Photo of Llew O'BrienLlew O'Brien (Wide Bay, National Party) Share this | Hansard source

I am really pleased to rise to speak on this bill today. It certainly is an important, fair and much anticipated proposal by the coalition government in regard to competition law. It is certainly much anticipated in the seat of Wide Bay.

In my maiden speech, I highlighted the need for big business to play fair, particularly when it comes to markets and particularly when it comes to monopolies and duopolies. Where there is an abuse of market power, there needs to be a capacity for regulators to step in to ensure there is a level, competitive playing field, so that we give a better and more competitive choice to consumers and allow new participants to enter the market. I support the changes proposed in this bill because they will deliver reforms to strengthen the economy, encourage business to grow, and improve opportunities for creativity and innovation, which in turn will look after the little guy.

A report authored by Australian Competition and Consumer Commission chair Rod Sims outlined the problem with the current section 46 of the Competition and Consumer Act and the need for it to be reformed, when he warned that the current law is fatally flawed and impedes competition. In 2003, Justice Kirby said in a dissenting judgment in the High Court's Rural Press decision that in his view:

… the approach taken by the majority is insufficiently attentive to the object of the Act to protect and uphold market competition. … The outcome cripples the effectiveness of s 46 of the Act. … The victims are Australian consumers.

The coalition's changes proposed to competition law are based on a recent, thorough and in-depth analysis of competition law in modern Australia. In 2014, the newly elected coalition government commissioned a root-and-branch review of Australia's competition framework, known as the Harper Review. The Harper Review fulfilled a 2013 election commitment and delivered the first comprehensive review of Australia competition laws in 20 years. A key focus of the review was to identify impediments across the economy that restricted competition and reduced productivity.

Considering the importance and significance of this reform and the potential impact on competition, the government extensively engaged with all stakeholders through the review process. There were almost 350 written responses received on the Harper report issues paper; around 600 written submissions were received on the draft report; around 140 submissions were made to the government's response to the final report; 86 submissions were received in response to the discussion paper on the misuse of market power that was released for public consultation; and 34 submissions were received on the exposure draft legislation in relation to section 46. Submissions focused on whether section 46 sufficiently deterred anticompetitive conduct by firms with a substantial market power and whether it created commercially predictable outcomes.

The Harper Review found that, while the provisions of the act were sound, section 46 was unfit for purpose, unnecessarily complex, imposed costs on the economy, was not reliably enforceable and burdened business. The Harper Review found that the current section 46 permits anticompetitive conduct that impedes and slows the entry of new and innovative firms to the market, delays the entry of new technologies into Australia and slows productivity growth. The Harper Review recommended refocusing section 46 so that it would prohibit a firm with a substantial degree of power in a particular market from engaging in conduct with the purpose, effect or likely effect of substantially lessening competition in any market.

So, on 16 March 2016, the government announced it would adopt in full the Harper Review recommendations relating to the misuse of market power. Schedule 1 of the bill amends section 46 of the Competition and Consumer Act so as to prohibit

A corporation with a substantial degree of power in a market must not engage in conduct that has the purpose, or has or is likely to have the effect of substantially lessening competition in:

that market; or

any other market in which that corporation, or a body corporate that is related to that corporation:

supplies goods or services, or is likely to supply goods or services; or

supplies goods or services, or is likely to supply goods or services, indirectly through one or more other person; or

any other market in which that corporation, or a body corporate that is related to that corporation:

acquires goods or services, or is likely to acquire goods or services; or

acquires goods or services, or is likely to acquire goods or services, indirectly through one or more other person.

The reform to section 46 will provide a commercial and legal framework that prevents firms with market power engaging in behaviour that harms the competitive process. This reform is particularly important for more than two million Australian small businesses, which make up more than 97 per cent of all businesses. Wide Bay has over 13,000 small businesses, and many of these operate in the agricultural sector which in Wide Bay contributes over a billion dollars to the economy. This sector comprises both small and large businesses competing in the same commercial territory. From fruit growers to dairy farmers, there is much anticipation regarding these changes to the completion law. They hope that, through enabling a fairer and more competitive environment, this reform will also see great growth in the local economy.

The new provision will more effectively address anticompetitive conduct to protect competitive processes, rather than individual competitors. Implementation of the provision will be undertaken jointly by the Australian Competition and Consumer Commission and the Australian government. This bill will deliver on a key election commitment made by the Nationals and the coalition to address misuse of market power by introducing an effects test. This reform equips us with an important tool that will: help to sustain and grow businesses; create an environment in which innovative firms can enter new markets; assist the introduction of new technologies into Australia; and supply the best quality products at the lowest prices for consumers. I commend the bill to the House.

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