Home World Business Misuse of market power laws ‘almost unusable’, ACCC chairman Rod Sims says

Misuse of market power laws ‘almost unusable’, ACCC chairman Rod Sims says

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Rod Sims, chair of the ACCC Rod Sims, chair of the ACCC Photo: Jessica Hromas

The competition tsar has warned that current laws are “almost unusable” in preventing misuse of market power by dominant corporations.

The Australian Competition and Consumer Commission, independent supermarkets, the government, the Greens and Nick Xenophon are pushing for a strengthening of section 46 of the Competition and Consumer Act.

The changes will prohibit a corporation with substantial market power from engaging in conduct that has the purpose or likely effect of substantially lessening competition.

The Labor Party, the Liberal Democrats, former ACCC chairman Graeme Samuel and Australia’s largest retailers, Woolworths and Wesfarmers, have criticised the insertion of a so-called “effects test”.

With the support of the Greens, the government needs the vote of at least one crossbencher to get the changes through the Senate as early as next month.

Under current laws, a corporation with substantial market power is prohibited from taking advantage of that power for the purpose of eliminating or substantially damaging a competitor.

The ACCC argues the wording “taking advantage” of that power is a brake on prosecutions, because a big company can’t fall foul of section 46 if the offending behaviour can also be undertaken by a small company.

ACCC chairman Rod Sims said strengthening the act would be “unambiguously good news for the consumer” and one of the “top few” changes the regulator would like to see.

It would also bring Australia in line with the view overseas that “big companies are more likely to substantially lessen competition in a market than small companies”, he said.

Woolworths and Wesfarmers had argued against the changes on the grounds they would create uncertainty that would then “chill” investment and put at risk billions of dollars of investments in new stores.

Both retailers had now gone quiet on the issue. Neither responded to whether it expected the bill to pass the senate, or what the changes would lead to.

Mr Sims dismissed their earlier comments as “ludicrous” and perhaps based on “very strange legal advice”. 

“Obviously big firms don’t want these laws being made more effective,” he said, adding that Australia’s concentrated markets meant it was even more important to have laws stopping big players from misusing their power.

Mr Sims said, while the importance of this law would be getting “companies to think twice before they take steps to block a competitor”, it would also enable the ACCC to take on one or two extra cases a year.

“We will put a special focus on looking around to see whether the new law is being complied with,” he said.

With Labor and the the Liberal Democrats opposed, the government needs at least one other senator to support the bill. Jacqui Lambie has yet to decide if she will support and Derryn Hinch could not be contacted. 

Nick Xenophon has pushed for the introduction of an effects test but will seek to allow courts to order companies to divest assets as punishment for “serious or repeat market power abuse”.

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