INSIGHT

House of Representatives passes misuse of market power Bill

By Jacqueline Downes
Consumer law Government Risk & Compliance Industrials

In brief

The House of Representatives yesterday passed the Government's Bill to broaden the misuse of market power prohibition and the Bill will be introduced to the Senate shortly. The Bill, as passed, removes the mandatory factors the courts would have had to consider in determining whether conduct was anti-competitive (as opposed to vigorous, competitive conduct). The new prohibition, if passed by the Senate, will not commence unless the ACCC has the power to authorise conduct that may otherwise breach the new prohibition. The Government proposes to introduce a further Bill shortly giving the ACCC this power. Partner Kon Stellios and Senior Associate Lisa Lucak report.

House of Representatives passes the Bill

The Federal Government introduced the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 to Parliament on 1 December 2016, following public consultation. The Bill provides for the current section 46 to be repealed, and replaced with a wider prohibition. The amended s46 will prohibit a corporation with a substantial degree of power in a market from engaging in conduct which has the purpose, effect or likely effect of substantially lessening competition in that market, or any other market in which the corporation does or is likely to acquire or supply goods or services. (See our previous updates on the Bill here, the Senate Economics Legislation Committee report on the Bill here, and the Government's announcement here.)

The House of Representatives yesterday passed the Bill, adopting the three amendments proposed by the Government in its Supplementary Explanatory Memorandum. Two amendments to the Bill remove the mandatory factors, adopting recommendations by the Senate Committee last month. The mandatory factors were intended to provide guidance to the courts to differentiate between vigorous, competitive conduct and conduct which has the purpose, effect or likely effect of substantially lessening competition. The Government considered the mandatory factors should be removed on the basis that it would reduce:

  • the complexity of the new prohibition;
  • the uncertainty as to how the courts may interpret and weigh the factors; and
  • the risk that the substantial lessening of competition test would unintentionally take on a different meaning in the context of s46 compared to other provisions which use the same concept but do not contain mandatory factors.

The third amendment to the Bill changed the commencement date of the new prohibition. The new prohibition was originally planned to commence on a date to be fixed by proclamation, and no later than six months after Royal Assent. Now, the new prohibition will commence at the same time as (yet to be introduced) laws permitting the ACCC to authorise conduct that may otherwise breach the prohibition. This means that if the new authorisation laws do not commence, the new misuse of market power prohibition will not come into effect. The new authorisation laws will be part of the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, which the Government has stated is 'intended for imminent introduction' to Parliament.

The Bill also seeks to repeal the telecommunications-specific competition rules in Part XIB of the Competition and Consumer Act 2010 (Cth).

Next steps

We expect that the Bill, in its amended form, will be introduced to the Senate shortly. The Senate finishes its Autumn sittings on 30 March 2017. If the Bill is not introduced to the Senate by that date, the Senate will not have the opportunity to consider the Bill until its Winter sittings which commence on 9 May 2017. 

Allens' view on the proposed amendment to s46 is set out in our submissions to Treasury, available here and here.

We will keep you closely informed of developments.