Allens

Competition, Consumer & Regulatory

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Client Update: Senate Committee supports proposal to broaden the misuse of market power prohibition

17 February 2017

In brief: The Senate Economics Legislation Committee has published its report supporting the Government's proposed reforms to broaden the misuse of market power prohibition, but recommended that the mandatory factors be removed. It is expected that the Government will now seek to expeditiously progress the Bill through Parliament.

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 The Bill provides for the current section 46 to be repealed, and replaced with a wider prohibition.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 (Client Update: Amending the misuse of market power prohibition) and the Government's announcement (Client Update: Federal Government amends section 46).

The Senate Economics Legislation Committee yesterday released its report on the Bill, which states that the current s46 is unfit for purpose and deficient in its current form. The Senate Committee recommended that the Bill be passed but that the mandatory factors be removed. 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 Senate Committee recommended the removal of these factors on the basis that they were unnecessary. The Government has not yet released its response in relation to this recommendation.

The Senate Committee also recommended that the Government undertake a post-implementation review of the s46 reforms. The Senate Committee recognised that the reforms represent a significant change to competition law enforcement, and that the impacts and outcomes of the reforms would need to be assessed.

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

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.

 

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