IPA COMMENDS SECTION 46 CHANGES
The Harper Panel’s proposed changes to section 46, misuse of market power provision in the Competition and Consumer Act 2010, including direction to the court and development of ACCC guidance, will help address existing non-competitive behaviour in the market, according to the Institute of Public Accountants (IPA).
“To date, the misuse of market power provision has not adequately protected small business, and by extension consumers, from the predatory actions of companies with substantial market power,” said IPA chief executive officer, Andrew Conway.
The IPA is not advocating for special protection for small business from the ordinary rigours of competition but more has to be done to counter incidences of market power misuse,” said IPA chief executive officer, Andrew Conway.
“Australia’s concentrated market structure means that some markets are not competitive and, where collective bargaining is not possible or sufficiently expeditious, small or medium sized businesses are especially vulnerable to exploitation or exclusion by firms with substantial market power.
“The IPA continues to advocate for an ‘effects test’ to be introduced. So we are pleased that the Exposure Draft Bill is consistent with the Harper Review in relation to misuse of market power and importantly, provides that a corporation with substantial market power must not engage in conduct having the purpose or likely effect of substantially lessening competition in that or any other market.
“We believe that the risk of over-deterrence is overstated by those who oppose the change. We also agree that it is necessary to distinguish between pro-competitive conduct such as successful product innovation and, anti-competitive conduct made possible only by virtue of a party’s power in the market.
“Successful innovation which may temporarily enhance market power should not be viewed as anti-competitive, notwithstanding the effect it may have on other individual market participants. While successful rigorous competition may reduce the number of competitors or deter entry; it is not the same as substantially lessening competition in the market.
“The concern that the Harper Review’s proposal could stifle innovation and deter other pro-competitive activity is significantly overstated.
“The proposed changes to section 46 as reflected in the Exposure Draft Bill, represent a sensible and long over-due improvement to Australia’s misuse on market power laws.
“Importantly, the shift of the focus to competition rather than competitors will help ensure that unilateral conduct by firms with market power cannot be permitted whether its design or effect is to substantially lessen competition,” said Mr Conway.