Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004-2005-2006-2007
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TRADE PRACTICES LEGISLATION AMENDMENT BILL (No. 1) 2007
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments Moved on Behalf of the Government
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)
Table of contents
General outline and financial impact....................................................... 1
Chapter 1 Amendments 1 to 3 to Schedule 2 -- Anticompetitive
below-cost pricing by corporations with substantial
market share ................................................................. 3
Chapter 2 Amendment to explanatory memorandum --
Recoupment.................................................................. 5
General outline and financial impact
Amendments 1 to 3 to Schedule 2 -- Anticompetitive
below-cost pricing by corporations with substantial market
share
Amendments 1 and 2 amend the Trade Practices Legislation Amendment
Bill (No. 1) 2007 (the Bill) to include a new prohibition in Part IV of the
Trade Practices Act 1974 (the Act), specifically targeting anticompetitive
below-cost pricing by corporations with a substantial market share. These
amendments also make consequential changes to the Bill.
Amendment 3 makes corresponding changes to the version of section 46
found in Part 1 of the Schedule to the Act. This is the version of the Act
that applies in the States and Territories by virtue of application
legislation.
Date of effect: Amendments 1 to 3 apply in relation to contraventions of
section 46 of the Act (as amended) that occur after the commencement of
the items they amend.
Financial impact: Nil
Compliance cost impact: Nil
1
1 Chapter 1
Amendments 1 to 3 to Schedule 2 --
Anticompetitive below-cost pricing by
corporations with substantial market
share
Explanation of amendments
Amendment 1
.1 Amendment 1 inserts Items 1A to 1D. Item 1A inserts new
subsection 46(1AA), prohibiting a corporation with a substantial share of
a market from supplying, or offering to supply, goods or services for a
sustained period at a price that is less than the relevant cost to the
corporation of supplying such goods or services, for the same purposes as
currently set out in paragraphs 46(1)(a) to (c) of the Act, specifically:
· eliminating of substantially damaging a competitor of the
corporation of a body corporate that is related to the
corporation in that or any other market;
· preventing the entry of a person into that or any other
market; or
· deterring or preventing a person from engaging in
competitive conduct in that or any other market.
.2 Item 1A also inserts new subsection 46(1AB), which provides that for
the purposes of new subsection 46(1AA), without limiting the matters to
which the Court may have regard for the purposes of determining whether
a corporation has a substantial share of a market, the Court may have
regard to the number and size of the competitors of the corporation in the
market.
3
Trade Practices Legislation Amendment Bill (No. 1) 2007
.3 Items 1B to 1D subjects the new prohibition in subsection 46(1AA),
to existing subsection 46(1A). The effect is that for the purposes of the
new prohibition:
· a reference to a competitor includes a reference to
competitors generally, or to a particular class or classes of
competitors; and
· a reference to a person includes a reference to persons
generally, or to a particular class or classes of persons.
Amendment 2
.4 Amendment 2 inserts Item 8A, which contains a consequential
amendment to paragraph 151AJ(5)(c) of Part XIB (the
telecommunications industry) of the Act.
.5 Item 8A replaces the reference to `paragraph 46(1)(a)' in paragraph
151AJ(5)(c) with a reference to `paragraphs 46(1)(a) and (1AA)(a)'.
.6 Paragraph 151AJ(5)(c) of the Act provides for an amended
application of section 46, for the purposes of subsection 151AJ(3), in the
case of a carrier or carriage service provider as defined in the
Telecommunications Act 1997, that is not a corporation or a partnership.
In particular, it provides that in determining whether such a carrier or
service provider contravened section 46 it is to be assumed that the
expression `or a body corporate that is related to the corporation' were
omitted from paragraph 46(1)(a). Item 8A ensures that the same
assumption is made in relation to the new prohibition in
subsection 46(1AA).
Amendment 3
.7 Items 9A to 9D of Amendment 3 contain amendments to the version
of section 46 found in Part 1 of the Schedule to the Act. This is the
version of section 46 that applies in the States and Territories by virtue of
application legislation.
.8 The amendments to the schedule version of section 46 correspond to
those made to section 46 by Items 1A to 1D except that they are expressed
to operate in relation to `a person' as opposed to `a corporation'.
2 Chapter 2
Amendment to explanatory memorandum
-- Recoupment
.1 After Item 3, paragraph 3.35 of the explanatory memorandum to the
Bill, add:
The below cost pricing amendments in the Bill make no reference to the
need for, or desirability of finding, recoupment or an intention to recoup
losses.
Whilst a reasonable prospect or expectation of recoupment can provide
evidence that below cost pricing is carried out in breach of the prohibition
in section 46, recoupment is not legally required under the below cost
pricing amendments in the Bill, nor is it a prerequisite for a breach of
subsection 46(1). In short, the legal position is that recoupment is not
required to prove a breach of section 46.
5
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