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Client Update: Amending the misuse of market power prohibition

1 December 2016

In brief: Today, the Federal Government introduced a Bill to Parliament to amend section 46 of the Competition and Consumer Act 2010 (Cth), which prohibits the misuse of market power. The Bill adopts the recommendations of the Harper Review.

Competition and Consumer Amendment (Misuse of Market Power) Bill 2016

The Competition and Consumer Act 2010 (Cth) currently prohibits the misuse of market power. Today, the Federal Government introduced the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 to Parliament. The Bill provides for the current section 46 to be repealed, and replaced with a wider prohibition. This 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. Importantly, the new provision would no longer require a causal connection between a corporation's conduct and its market power – conduct would not need to involve a use of market power in order to be prohibited. The new provision is likely to capture significantly more conduct.

The version of section 46 contained in the Bill is substantially the same as that contained in the Exposure Draft legislation of September this year, with the exception that the provision in the Bill is limited to capturing conduct which affects a market in which the firm with substantial market power participates – being the market in which the firm has market power, or a market in which the firm does, or is likely to, supply or acquire goods or services, directly or indirectly. This contrasts to the Exposure Draft legislation, which applied to conduct which has an effect in any market.

The Bill also provides for the repeal of the telecommunications-specific anti-competitive conduct provisions and the competition notices and exemption order regime, contained in Divisions 2 and 3 of Part XIB of the Competition and Consumer Act.

The Bill has been referred to the Senate Economics Legislation Committee, which is due to report on 16 February 2017.

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