The Treasurer has announced that the Government will legislate to change competition policy in Australia through implementation of the Harper Review’s recommendation to amend Section 46 of the Competition and Consumer Act – the misuse of market power provision.

Background

The Harper Review recommended that the prohibition against misuse of market power in section 46 be changed to
prohibit a corporation with a substantial degree of power in a market from engaging in conduct if it has the purpose, or would have or be likely to have the effect, of substantially lessening competition in that or any market (the “effects test”).

Currently section 46 prohibits businesses with a substantial degree of market power from taking advantage of that power for the purpose of:

• eliminating or substantially damaging a competitor;
• preventing the entry of a business into a market; or
• deterring or preventing a business from engaging in competitive conduct.

The new provision would not require a causal connection between a firm’s conduct and its market power.

The Government will consult on Exposure Draft legislation before introducing it to Parliament later in 2016, most likely after the election.