The IPA’s chief executive officer Andrew Conway said the misuse of market power provision has failed to protect small businesses from “the predatory actions of companies with substantial market power”.
“Australia’s concentrated market structure means that some markets are not competitive and, where collective bargaining is not possible or sufficiently expeditious, small or medium-sized businesses are especially vulnerable to exploitation or exclusion by firms with substantial market power,” Mr Conway said.
“The IPA has continued to advocate for an ‘effects test’ to be introduced. So we are pleased that the bill is consistent with the Harper Review in relation to misuse of market power and, importantly, provides that a corporation with substantial market power must not engage in conduct having the purpose or likely effect of substantially lessening competition in that or any other market.”
Despite the IPA voicing its support for the bill, Mr Conway said the proposed changes to section 46(1) are “significantly more convoluted” than those proposed in the Harper Review.
“In particular, it specifies that the substantial lessening of competition must occur in the market in which substantial market power is held, or any other market in which it, or a related body corporate, supplies or acquires goods or services,” Mr Conway said.
“The IPA believes this amendment to be unfortunate and that it unnecessarily complicates the law. However, as it is not envisaged that this change will significantly diminish the scope of the provision, it does not alter the IPA’s support for the bill.”
Mr Conway said the Harper Review recommendation corrected two key deficiencies in the existing legislation: removing the “take advantage” element and expanding the focus of the provision to capture conduct that substantially lessens competition in a market.
The proposed changes to section 46, as reflected in the bill, represent a “sensible and long-overdue improvement to Australia’s misuse of market power laws,” Mr Conway said.