Options to strengthen the misuse of market power law

Proposed changes to the misuse of market power provisions

This submission is made on behalf of the Institute of Public Accountants (IPA), one of Australia’s oldest professional bodies with over 35,000 members in Australia and in over 65 other countries. It responds to the Government’s discussion paper on Options to strengthen the misuse of market power law, of 11 December 2015.

We gratefully acknowledge that the submission was prepared by Associate Professor Julie Clarke, Deakin University, as part of the IPA Deakin University SME Research Partnership.

The submission that follows arises out of the IPA’s concern that the existing misuse of market power provision does not adequately protect small business, and by extension consumers, from the predatory actions of companies with substantial market power.

The IPA accepts that the best form of protection against anti-competitive conduct is for small and medium businesses to face competitive markets when they enter into acquisition or supply transactions, or for them to seek to establish countervailing market power through authorised collective bargaining. The IPA does not seek special protection for them from the ordinary rigours of competition. However, Australia’s concentrated market structure means that many markets are not competitive and, where collective bargaining is not possible or sufficiently expeditious, small or medium size businesses are especially vulnerable to exploitation or exclusion by firms with substantial market power.

The current prohibition on misuse of market power, embodied in section 46 of the Competition and Consumer Act 2010 (CCA), continues to be deficient in addressing exploitative and exclusionary anti-competitive conduct by dominant firms.

Implementation of the Harper Report1 recommendation in relation to misuse of market power would correct the two key deficiencies in the existing legislation:

The ‘take advantage’ element, which has been interpreted in such a way as to excuse conduct even where its purpose is to deliberately harm a competitor or the competitive process; and

The focus on ‘purpose’ alone, which fails to capture conduct having the effect of substantially lessening competition.

The IPA supports the full set of changes recommended in the Harper Report (Option F) designed to address these key deficiencies.

If you have any queries or require further information, then please don’t hesitate to contact Vicki Stylianou, IPA Executive General Manager, Advocacy & Technical, on either vicki.stylianou@publicaccountants.org.au or mob. 0419 942 733.

Vicki Stylianou
Institute of Public Accountants