David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

For a supposedly liberal government, this is a shockingly bad piece of legislation. In a breathless rush to claim to be protecting consumers from wicked corporations, this bill seems to reflect a profound misunderstanding of both competition and the operation of the marketplace. The Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 implements some of the recommendations of the Harper review of competition policy. Specifically, the Harper review concluded that section 46 of the competition and consumer laws, dealing with the so-called misuse of market power, should be amended to 'prohibit conduct by firms with substantial market power that has the purpose or likely effect of substantially lessening competition.' In line with these recommendations, the bill amends the Competition and Consumer Act 2010 to strengthen the prohibition of the purported misuse of market power and target supposedly anticompetitive conduct by corporations.

The current provision of the act outlaws conduct that (1) is by someone with substantial market power; (2) takes advantage of that substantial market power; and (3) has the purpose of eliminating or damaging a competitor, preventing entry or deterring or preventing competitive conduct. The new provisions continue to see so-called substantial market power as a problem but change the focus of concern away from eliminating or damaging a competitor to any action which supposedly substantially lessens competition. To add insult to injury, the bill is estimated to generate additional compliance costs of $2.5 million per year over the first 10 years as businesses are expected to seek legal advice on the new law. This cost will, of course, be ultimately passed on to consumers. Not only do we get more interference in the marketplace but consumers also end up having to pay for the privilege. Simply put, the entire approach of this legislation is irredeemably flawed.

In trying to work out when a business has an anticompetitive purpose or effect, the bill deems enhancing efficiency, innovation, product quality or price competitiveness as pro-competitive factors, even though businesses do these things with a purpose of reducing competition. They want the market to themselves, and this motivation is good. What is substantial market power? This simply reflects the success of a business in meeting consumer demand. Big businesses, which this bill seems to see as a root of all uncompetitive behaviour, all began as small businesses. They got to be big by being more competitive, not less, and by satisfying their customers better than their competitors, who remain small. In the free market, if you fail to meet the needs of your customers then, however big you are, you will lose market share and eventually close the doors. So, in order to become dominant, big businesses must be doing some things pretty right.

What the authors of this bill seemingly fail to grasp is what actually causes uncompetitiveness. Uncompetitive markets, including monopolies, are, without exception, caused not by businesses, big or otherwise, but by government policies that overregulate and restrict businesses: anticompetitive labour laws, usurious taxation and restrictions on supply and international trade—the list goes on and on. All inhibit the ability of new players to set up and compete. Invariably, government restrictions and controls tend to favour large, established businesses over small business and start-ups.

Naturally any business, big or small, will and should exploit any advantage that comes its way. However, if this leads to a monopoly or duopoly, big business should not be blamed for this, as the fault lies not with them but with the government. Many in this place have complained about retail market dominance by two players, about the dominance of banking in Australia by just four major banks and about the fact that we still have only two airlines dominating domestic air travel. However, the big retailers, banks and airlines are simply the ones with enough cunning to survive in the heavily regulated, taxed and controlled market created by government policy.

The key premise behind this bill is simply wrong. It was not and should never be the responsibility of businesses to encourage competition. A business enhances efficiency, innovation, product quality or price competitiveness because it wants to beat its competition, not increase it. Instead of banning individual corporate conduct with a purpose or effect of lessening competition, if anything, the bill should make such conduct compulsory. Companies should not be blamed or punished for simply exploiting government created market distortions that limit their competitors. All businesses have a responsibility to their shareholders to maximise profits in any market situation. If the government is stupid enough to distort the marketplace with taxes, labour laws and regulations that favour a few big businesses then it is the government, not the businesses, that is to blame.

This bill would have you believe that lack of competition is the fault of big business and that government legislation is the solution. In fact, the opposite is true. The bill will do nothing to increase competition. Increased competition comes from less regulation, less taxes and less restrictive labour laws. When the government actually comes up with legislative solutions that increase competition, they will have the Liberal Democrats' outspoken and enthusiastic support. In the meantime, I will oppose this bill.