The Australian government’s Competition Policy Review, also known as the Harper Review, released its final report on March 31.
A key purpose of this review was to identify which regulations are restricting competition in the current economy and acting as a barrier to productivity. A further goal was to examine the Competition and Consumer Act 2010 (CCA) to assess its efficiency and performance in light of Australian businesses expanding into increasingly global markets.
Amongst the 56 recommendations made by the report, one included a change to Section 46 of the CCA. This section currently regulates unilateral conduct between businesses.
At present, Section 46 only deems misuse of power as an illegal conduct if the “purpose” is proven to be stopping a new competitor from entering the market or trying to eliminate them altogether.
The report found this law was deficient and outdated, failing to take into account international approaches to similar competition laws. It underscored small businesses struggle with the current definition in the legislation, especially the “taking advantage” clause that is used to distinguish competitive from anti-competitive unilateral conduct.
Their recommendation for resolving this issue is to amend the legislation by broadening the definition to include the effects and consequences of a company’s behaviour.
The proposal is to add the phrase “the purpose, effect or likely effect of substantially lessening competition” into the legislation to widen the scope of the definition, and to have some recourse for the negative impact small businesses suffer from being removed from a market. The review also suggested removing the “taking advantage” clause completely.
As a result of this new definition, companies with significant market power will be obliged to prove in court how their conduct was either pro- or anti-competitive. If the federal government adopts this change to Section 46, it will mean small businesses gain more power to take legal action against larger competitors who misuse their market power.
If small businesses feel they are being mistreated in the market, they can consider seeking legal advice to resolve the issue.