NEWS

Misuse of market power: Debate to even the playing field

In the wake of the upcoming elections, the Competition Policy Review final report released in March 2015 (CPR Report) has sparked further interest agitated by the shadow small business minister, Michelle Rowland.

While the CPR Report addressed a range of matters, the focus of the recent announcement by Ms Rowland appears to be in relation to a proposal by the CPR Report known as the “effects test”.

The CPR Report proposed that section 46 of the Competition and Consumer Act 2010 (CTH) (the Act) be revised to prohibit conduct by firms with substantial market power that has the purpose, effect or likely effect of substantially lessening competition.  It further recommended that the Courts be directed to weigh the pro-competitive and anti-competitive impact of the conduct. The aim of this proposal is to lower the threshold set by the current provision requiring proof of an anti-competitive purpose, i.e for the purpose of damaging a competitor.

The proposed effects test is reported to be under review by the Coalition and may be the subject of further consideration at the Cabinet meeting scheduled on Tuesday, 22 March 2016.

In the meantime, concerns regarding the proposed effects test have been expressed on behalf of the Labor party. According to Ms Rowland, ‘The greatest barrier to private litigation under the Competition and Consumer Act is the potential cost. Small businesses and their representatives are often in a “David versus Goliath” struggle given the costs and expertise required for these cases.’

Having reframed the issue as ‘access to justice’ Ms Rowland has communicated the Labor party’s alternative, specifically, Ms Rowland proposes to:

  1. permit judges to waive the liability of litigants in some private competition cases in an effort to empower small businesses to tackle anti-competitive behaviour without fearing the cost burden of big business’ legal fees; and
  2. provide the Small Business Ombudsman with additional funding to provide an assessment to small Business as to whether costs liability is likely to be waived by the Court in an effort to assist small businesses in the lead up to taking action under the Act.

While the changes to the Act are not anticipated to gain further traction until after the election, the present discussions signal further change in the coming term that will affect both big and small businesses. The extent and effectiveness of the debated change to improve access to justice remains to be seen.

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