The Council of Small Business Organisations of Australia (COSBOA) has welcomed a new Bill before parliament, which it said protects small business from the misuse of market power by big business. The Trade Practices Legislation Amendment Bill (No 1) 2007 amends ss 51AC and 46 of the Trade Practices Act 1974 (Cth), to provide that:
- for the purposes of s 46, more than one corporation can have a substantial degree of power in a market;
- a corporation can have a substantial degree of market power even though it does not substantially control a market;
- a corporation can have a substantial degree of market power in a market even though it does not have absolute freedom from constraint in that market by the conduct of its competitors or persons to or from whom the corporation supplies or acquires goods or services; and
- in regard to below-cost or predatory pricing, the Court may have regard to any conduct that consisted of supplying goods or services for a sustained period at a price that was less than the relevant cost to the corporation of supplying such goods or services, and the reasons for that conduct.
The Bill also introduces penalties for corporations of up to $10 million for each contravention.
And while COSBOA CEO Tony Steven applauded the Bill as signifying “the ongoing relationship between the Government and small business,” many have described it as too little, too late for consumers.
Shadow Federal Competition Policy Minister Chris Bowen said “[i]t has been three years since the Senate Economics Committee’s report into the effectiveness of the TPA in protecting small business which recommended that the TPA be significantly strengthened."
During this time there has been almost no legal disincentives to prevent big business undertaking predatory pricing activities. Four years ago, the decision in Boral Besser Masonry Limited v Australian Competition and Consumer Commission ([2003] HCA 5), raised uncertainties about the level of the threshold of a substantial degree of market power, which lead ACCC to discontinue its pursuit of market power abuse.
Mr Bowen said the Government’s proposed reforms do not include the much promised and long awaited criminal sanctions for cartel conduct, unders 45(2) of the Trade Practices Act 1974 (Cth).
"Criminal sanctions are required to discourage collusion to protect consumers and small business from anti-competitive conduct,"Mr Bowen said.
The Government has allowed ACCC investigate petrol prices, after ACCC failed to prove a cartel amongst Geelong retailers in Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd([2007] FCA 794).
Despite witness statements, admissions by a number of respondents that they had reached understandings in breach of the Trade Practices Act, and extensive petrol price movements and telephone call records, Justice Ian Gray found that the parties did not come to an 'arrangement or understanding' for the increase of petrol prices to agreed amounts.
And even if the investigation is successful, it will not shift the high burden of proof required under the s 45(2) as it applies to other industries.
Cartel conduct is an important matter for the entire economy and not just in relation to petrol prices,” Mr Bowen said.
If ACCC continues to fail in its pursuit of cartel activity, in particular its high profile case against Visy Group, the Government will have to respond to Mr Bowen’s calls.Until then, COSBOA supports the Government’s response to cartels, saying the Bill is enhanced by a number of provisions in relation to cartel conduct.