TRADE PRACTICES LEGISLATION AMENDMENT BILL 2008 Explanatory Memorandum
TRADE PRACTICES LEGISLATION AMENDMENT BILL 2008
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TRADE PRACTICES LEGISLATION AMENDMENT BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Assistant Treasurer and Minister for Competition Policy and Consumer Affairs,
the Hon Chris Bowen MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Misuse of market power................................................ 7
Chapter 2 Other amendments ..................................................... 19
Chapter 3 Regulation impact statement ...................................... 27
Index ..................................................................................................... 49
iii
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
ACCC Australian Competition and Consumer
Commission
Act Trade Practices Act 1974
ASIC Act Australian Securities and Investments
Commission Act 2001
Bill Trade Practices Legislation Amendment
Bill 2008
Federal Court or Court Federal Court of Australia
FMC Federal Magistrates Court
Senate Inquiry Senate Economic References Committee's
inquiry into the effectiveness of the Trade
Practices Act 1974 in protecting small
business
TPLA Act 2007 Trade Practices Legislation Amendment Act
(No. 1) 2007
TPLA Bill 2007 Trade Practices Legislation Amendment Bill
(No. 1) 2007
1
General outline and financial impact
Outline of Bill
The Trade Practices Legislation Amendment Bill 2008 (the Bill) amends
the Trade Practices Act 1974 (the Act) and the Australian Securities and
Investments Commission Act 2001 (the ASIC Act) to further the objectives
of those Acts.
Misuse of market power
Schedules 1 and 2 of the Bill promote competition in Australian markets
by enhancing the prohibitions against anticompetitive unilateral conduct
contained in the Act and the competition code.
Schedule 1 of the Bill amends the Act to:
· address predatory pricing in section 46;
· clarify the role of recoupment in predatory pricing cases
under section 46;
· clarify the meaning of the term `take advantage' for the
purposes of section 46; and
· confer jurisdiction on the Federal Magistrates Court (the
FMC) in matters arising under section 46.
Schedule 2 of the Bill makes amendments to the version of section 46
found in the competition code, which is the version of section 46 that
applies to all persons in the States and Territories by virtue of application
legislation in those jurisdictions, to correspond to the amendments made
to section 46 by Schedule 1 of the Bill.
Date of effect: The amendments commence the day after the Bill receives
Royal Assent.
Proposal announced: The measures were announced in the Assistant
Treasurer's Press Release No. 27 of 2008, dated 28 April 2008. An
exposure draft of the measures was publicly released on 1 May 2008.
3
Trade Practices Legislation Amendment Bill 2008
Financial impact: The measures have no significant financial impact.
Compliance cost impact: Low. There is no ongoing compliance cost
impact and a minimal transitional impact.
Summary of regulation impact statement
Regulation impact on business
Impact: These measures apply to all businesses in Australia.
Main points:
· The amendments to section 46 of the Act reduce uncertainty
as to its operation and improve its ability to target
anticompetitive unilateral conduct.
· The amendments to section 86 of the Act enable parties to
utilise the simpler and less costly jurisdiction of the FMC in
matters arising under section 46, in appropriate
circumstances.
Other amendments
Schedule 3 of the Bill amends the Act and ASIC Act to:
· require that one of the Australian Competition and Consumer
Commission's (the ACCC's) Deputy Chairpersons have
knowledge of, or experience in, small business matters;
· repeal the thresholds for unconscionable conduct cases under
section 51AC of the Act and section 12CC of the ASIC Act;
and
· clarify the ACCC's information gathering powers under
section 155.
Date of effect: The amendments commence the day after the Bill receives
Royal Assent.
Proposal announced: The measures were announced in the Assistant
Treasurer's Press Release No. 27 of 2008, dated 28 April 2008. An
exposure draft of the measures was publicly released on 1 May 2008.
4
General outline and financial impact
Financial impact: The measures have no significant financial impact.
Compliance cost impact: Low. There is no ongoing compliance cost
impact and a minimal transitional impact
Summary of regulation impact statement
Regulation impact on business
Impact: The amendment to the ACCC's information gathering powers
applies to all persons capable of furnishing information, producing
documents or giving evidence in relation to a prescribed matter.
Main points:
· The measure allows the ACCC to fully investigate suspected
breaches of the law after it has applied for an injunction.
· The measure reduces uncertainty as to when the ACCC's
powers under section 155 cease.
5
Chapter 1
Misuse of market power
Outline of chapter
1.1 Schedules 1 and 2 of the Bill promote competition by enhancing
the prohibitions against anticompetitive unilateral conduct contained in
the Act and the competition code.
1.2 Schedule 1 of the Bill amends the Act to:
· address predatory pricing in section 46;
· clarify the role of recoupment in predatory pricing cases
under section 46;
· clarify the meaning of the term `take advantage' for the
purposes of section 46; and
· confer jurisdiction on the FMC in matters arising under
section 46.
1.3 Schedule 2 of the Bill makes amendments to the version of
section 46 found in the competition code, which is the version of
section 46 that applies to all persons in the States and Territories by virtue
of application legislation in those jurisdictions, to correspond to the
amendments made to section 46 by Schedule 1 of the Bill.
Context of amendments
1.4 On 25 June 2003, the Senate passed a motion requiring its
Economics References Committee to inquire into and report on whether
the Act adequately protects small businesses from anticompetitive or
unfair conduct (the Senate Inquiry). The Senate Inquiry's terms of
reference required it to consider the misuse of market power and
unconscionable conduct provisions of the Act.
1.5 The Senate Inquiry's report was tabled on 1 March 2004. It
made 17 recommendations, including 9 recommendations related to the
prohibition in the Act against the misuse of market power.
7
Trade Practices Legislation Amendment Bill 2008
1.6 The Trade Practices Legislation Amendment Act (No.1) 2007
(the TPLA Act 2007) implemented the majority of the former
government's response to the Senate Inquiry's report. Insofar as it related
to the misuse of market power provision of the Act, the TPLA Act 2007
implemented, in part or full, recommendations 3, 5 and 6 of the report.
Those recommendations related to predatory pricing and the leveraging
and coordination of market power.
1.7 The TPLA Act 2007 did not, however, address concerns raised
by business and the ACCC during the inquiry regarding the role of
recoupment in predatory pricing cases and the meaning of the term `take
advantage', under section 46 of the Act. Nor did it address the concerns
raised by business related to the accessibility and costs associated with
pursuing actions relying on section 46 of the Act.
1.8 The Bill addresses these concerns. By doing so, it implements,
in part or full, recommendations 2 and 17 of the Senate Inquiry's report.
It also implements aspects of recommendation 3 of the report which were
not accepted by the former government.
1.9 The TPLA Act 2007 also inserted subsection 46(1AA) into the
Act. That subsection created a new prohibition in section 46, which
prohibits a corporation with a substantial `share of a market' (as opposed
to `degree of market power') from engaging in sustained below-cost
pricing conduct for the purpose of: eliminating or substantially damaging
a competitor; preventing the entry of a person into a market; or deterring
or preventing a person from engaging in competitive conduct in a market.
1.10 The present prohibition in subsection 46(1AA) has given rise to
uncertainty. Further, it is inconsistent with the pre-existing prohibition in
subsection 46(1) and may reduce pro-competitive price competition in
markets by operating in relation to `market share' as opposed to `market
power'.
1.11 Section 46 applies to the full range of business structures across
the Australian economy. Should concerns relating to that section's ability
to effectively and efficiently address unilateral anticompetitive conduct
remain unresolved, both existing firms and potential new entrants might
be deterred from competing as vigorously in Australian markets.
Summary of new law
1.12 Schedules 1 and 2 of the Bill promote competition by enhancing
the prohibitions against anticompetitive unilateral conduct contained in
the Act and the competition code.
8
Misuse of market power
1.13 Schedule 1 of the Bill:
· amends the prohibition on predatory pricing in
subsection 46(1AA) of the Act to align it with the prohibition
on the misuse of market power in subsection 46(1);
· amends section 46 to provide that a corporation may
contravene subsection 46(1AA) even if the corporation
cannot, and might not ever be able to, recoup losses incurred
by predatory pricing;
· amends section 46 to clarify that in determining whether a
corporation has taken advantage of its market power under
section 46 of the Act, the court may have regard to whether
the corporation's conduct was:
- materially facilitated by its substantial degree of market
power;
- engaged in, in reliance on its substantial degree of market
power;
- likely to have been engaged in if the corporation lacked a
substantial degree of market power; or
- otherwise related to its substantial degree of market
power;
· amends section 86 of the Act to confer jurisdiction on the
FMC in matters arising under section 46 in respect of which
a proceeding is instituted by a person other than the Minister
or the ACCC.
1.14 Schedule 2 of the Bill makes amendments to the version of
section 46 found in the competition code, which is the version of
section 46 that applies to all persons in the States and Territories by virtue
of application legislation in those jurisdictions, to correspond to the
amendments made to section 46 by Schedule 1 of the Bill.
9
Trade Practices Legislation Amendment Bill 2008
Comparison of key features of new law and current law
New law Current law
Under subsection 46(1AA) a Under subsection 46(1AA) a
corporation that has a substantial corporation that has a substantial share
degree of power in a market is of a market is prohibited from
prohibited from taking advantage of supplying, or offering to supply,
that power in that or any other market goods or services for a sustained
by supplying, or offering to supply, period at a price that is less than the
goods or services for a sustained relevant cost to the corporation of
period at a price that is less than the supplying such goods or services for a
relevant cost to the corporation of prescribed purpose.
supplying such goods or services for
one of the purposes currently
prescribed by subsection 46(1AA).
A corporation may contravene No current equivalent.
subsection 46(1AA) even if the
corporation cannot, and might not
ever be able to, recoup losses incurred
by supplying the goods or services at a
price less than the relevant cost to the
corporation of the supply.
In determining for the purposes of No current equivalent.
section 46 whether a corporation has
taken advantage of its substantial
degree of market power, the court may
have regard to whether the
corporation's conduct was:
· materially facilitated by its
substantial degree of market
power;
· engaged in, in reliance on its
substantial degree of market
power;
· likely to have been engaged in if it
lacked a substantial degree of
market power; or
· otherwise related to its substantial
degree of market power.
Jurisdiction is conferred on the FMC The Federal Court of Australia (the
in any matter arising under section 46 Federal Court) has exclusive
in respect of which a proceeding is jurisdiction in respect of section 46
instituted by a person other than the matters.
Minister or the ACCC.
10
Misuse of market power
Detailed explanation of new law
Amendments relating to predatory pricing
1.15 The Bill improves the operation of section 46 in matters
involving anticompetitive below-cost pricing strategies, referred to in this
memorandum as `predatory pricing'.
Amendments to subsection 46(1AA)
1.16 The Bill aligns the predatory pricing prohibition in
subsection 46(1AA) with the general prohibition against the misuse of
market power in subsection 46(1), as it relates to predatory pricing.
[Schedule 1, item 1, subsection 46(1AA)]
1.17 Prior to the enactment of the TPLA Act 2007, subsection 46(1)
contained the only prohibition in section 46. That provision, as amended
by the TPLA Act 2007, prohibits a corporation with a substantial degree
of power in a market from taking advantage of that power in any market
for a prescribed purpose.
1.18 The TPLA Act 2007 incorporated a second prohibition into
section 46. This prohibition, contained in subsection 46(1AA), prohibits a
corporation that has 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 one of the same purposes prescribed in subsection 46(1).
1.19 The Bill aligns the two prohibitions by amending
subsection 46(1AA) so that it prohibits a corporation with a substantial
degree of power in a market from taking advantage of that power in any
market by supplying, or offering to supply, goods or services for a
sustained period at a cost that is less that the relevant cost to the
corporation of supplying the goods or services for a prescribed purpose.
[Schedule 1, item 1, subsection 46(1AA)]
1.20 Aligning the two prohibitions removes the inconsistency that
presently exists in the regulation of predatory pricing under section 46. In
particular it removes the reference to `a substantial share of a market' in
subsection 46(1AA). The use of this term has given rise to uncertainty
and may reduce pro-competitive price competition in markets. Market
share, by and of itself, may not accurately indicate a firm's actual power,
or the level of competition, in a market. [Schedule 1, item 1,
subsection 46(1AA)]
1.21 The Senate Inquiry considered that the Act would be
strengthened by making predatory pricing a clearer target of section 46.
11
Trade Practices Legislation Amendment Bill 2008
The revised prohibition achieves this objective by specifically targeting
predatory pricing. However, the amendments made by the Bill ensure that
it is consistent with the prohibition in subsection 46(1), except to the
extent that it specifically targets predatory pricing. [Schedule 1, item 1,
subsection 46(1AA)]
1.22 To this end, conduct constituting below-cost pricing for the
purposes of subsection 46(1AA) remains unchanged. That is, below-cost
pricing consists of a corporation supplying, or offering to supply, goods or
services at `a price that is less than the relevant cost to the corporation of
supplying such goods or services'. As noted in the explanatory
memorandum to the Trade Practices Legislation Amendment Bill
(No. 1) 2007 (the TPLA Bill 2007), this formulation provides courts with
the flexibility of deciding the most appropriate measure of costs on a
case-by-case basis. [Schedule 1, item 1, subsection 46(1AA)]
1.23 Similarly, the requirement that below-cost pricing continue for
`a sustained period' is retained. Price reductions that occur for only a
short period of time may be a consequence of competitive behaviour
rather than a misuse of market power. [Schedule 1, item 1, subsection 46(1AA)]
Repeal of existing subsection 46(1AB)
1.24 The Bill repeals existing subsection 46(1AB). That subsection
presently provides a non-exhaustive list of factors to which the Court may
have regard in determining whether a corporation has `a substantial share
of a market' for the purposes of subsection 46(1AA). The subsection is
redundant as a result of the above-mentioned amendments to
subsection 46(1AA), which remove the reference to `a substantial share of
a market' from that subsection. [Schedule 1, item 2, subsection 46(1AB)]
Amendments clarifying the role of recoupment under section 46
1.25 The Bill clarifies the role of recoupment in predatory pricing
cases under subsection 46(1AA). [Schedule 1, item 2, subsection 46(1AB)]
1.26 Submissions were made to the Senate Inquiry that the role of
recoupment in predatory pricing cases under section 46 was uncertain. In
particular, concerns were expressed that following the High Court's
decision in Boral Besser Masonry Ltd v ACCC1 it may be necessary to
demonstrate that a corporation is able to recoup losses incurred from
predatory pricing before a misuse of market power can be established.
1 [2003] HCA 5
12
Misuse of market power
1.27 The Bill addresses these concerns by providing that a
corporation may contravene subsection 46(1AA) even if the corporation
cannot, and might not ever be able to, recoup losses incurred by supplying
the goods or services at a price less than the relevant cost to the
corporation of the supply. [Schedule 1, item 2, subsection 46(1AB)]
1.28 This amendment clarifies that it is not necessary to prove that a
corporation has an ability to recoup losses incurred from predatory pricing
to establish a breach of subsection 46(1AA). A court may still, however,
consider recoupment as a relevant factor in establishing a breach of
subsection 46(1AA). On the particular facts of a case, an ability to recoup
losses incurred from a particular pricing strategy may be an indicator of
predatory pricing. [Schedule 1, item 2, subsection 46(1AB)]
1.29 The Bill also makes it clear that the predatory pricing specific
prohibition in subsection 46(1AA) does not by implication limit the
general prohibition against the misuse of market power in
subsection 46(1). [Schedule 1, item 2, subsection 46(1AC)]
1.30 While it is envisaged that the majority of predatory pricing cases
under section 46 would rely on subsection 46(1AA), it is important that
the prohibition in subsection 46(1) continues to apply to such conduct.
This would be particularly so in cases where it is alleged that a
corporation has misused its market power by engaging in a combination
of predatory pricing and other conduct. [Schedule 1, item 2,
subsection 46(1AC)]
Repeal of existing subsection 46(4A)
1.31 The Bill repeals existing subsection 46(4A). [Schedule 1, item 4,
subsection 46(4A)]
1.32 Subsection 46(4A) presently includes two factors that the Court
may consider when determining whether a corporation has contravened
subsection 46(1), namely:
· conduct of the corporation that involves selling goods or
services for a sustained period at a price that is below cost;
and
· the corporation's reasons for engaging in below-cost pricing.
1.33 The repeal of subsection 46(4A) does not limit the factors to
which a court may have regard in determining whether a corporation has
breached section 46. As noted in the explanatory memorandum to the
TPLA Bill 2007, the enactment of subsection 46(4A) clarified a
pre existing ability of the Court to examine matters related to below-cost
13
Trade Practices Legislation Amendment Bill 2008
pricing when determining whether a corporation had misused its market
power under subsection 46(1). [Schedule 1, item 4, subsection 46(4A)]
1.34 Furthermore, subsection 46(4A) was enacted in response to the
Senate Inquiry's finding that the Act would be strengthened by making
predatory pricing a clearer target of section 46. This objective is achieved
by the predatory pricing specific prohibition in subsection 46(1AA).
[Schedule 1, item 4, subsection 46(4A)]
1.35 Consequently, subsection 46(4A) is redundant. [Schedule 1, item 4,
subsection 46(4A)]
Amendment relating to the meaning of `take advantage'
Clarification of the meaning of `take advantage'
1.36 The Bill clarifies the meaning of the term `take advantage' for
the purposes of section 46. [Schedule 1, item 5, subsection 46(6)]
1.37 During the Senate Inquiry concerns were expressed that the
interpretation given to `take advantage' by the High Court in Rural Press
Ltd v ACCC2 may prevent section 46 from adequately addressing
anticompetitive unilateral conduct.
1.38 In Rural Press the High Court endorsed a `take advantage' test
which inquires whether a corporation could have undertaken the conduct
in question without possessing a substantial degree of market power. The
Senate Inquiry considered that this test focuses on a corporation's physical
or business capacity to engage in conduct rather than its rationale or intent
for doing so. The Inquiry found that the test appeared to result in a
situation where corporations may use their market power to engage in
proscribed conduct with impunity, so long as they could also engage in
that conduct in the absence of market power.
1.39 The Senate Inquiry recommended that the Act be amended to
address this situation so as to make the Act clearer and reduce uncertainty
with regard to the meaning of `take advantage'.
1.40 Consistently with the Senate Inquiry's recommendation, the Bill
amends the Act to provide that for the purposes of section 46 in
determining whether, by engaging in conduct, a corporation has taken
advantage of its substantial degree of power in a market, the court may
have regard to any or all of the following:
2 [2003] HCA 75
14
Misuse of market power
· whether the conduct was materially facilitated by the
corporation's substantial degree of power in the market;
· whether the corporation engaged in the conduct in reliance
on its substantial degree of power in the market;
· whether it is likely that the corporation would have engaged
in the conduct if it did not have a substantial degree of power
in the market;
· whether the conduct is otherwise related to the corporation's
substantial degree of power in the market. [Schedule 1, item 5,
subsection 46(6)]
1.41 These factors clarify the meaning of `take advantage' for the
purposes of subsections 46(1) and 46(1AA). They also address the Senate
Inquiry's concerns deriving from the Rural Press case by ensuring that a
court may consider whether a corporation would have had an incentive to
engage in the relevant conduct if it lacked substantial market power.
[Schedule 1, item 5, subsection 46(6)]
1.42 The amendment refers to a corporation `engaging in conduct'.
That term is defined by existing subsection 4(2) of the Act. That
subsection provides that:
· a reference to engaging in conduct shall be read as a
reference to doing or refusing to do any act, including the
making of, or the giving effect to a provision of, a contract or
arrangement, the arriving at, or the giving effect to a
provision of, an understanding or the requiring of the giving
of, or the giving of, a covenant; and
· a reference to refusing to do an act includes a reference to:
refraining (otherwise than inadvertently) from doing that act;
or making it known that that act will not be done. [Schedule 1,
item 5, subsection 46(6)]
1.43 The amendment makes it clear that the inserted list of `take
advantage' factors is non-exhaustive. They do not limit the other matters
to which a court may have regard when determining whether a
corporation has taken advantage of its substantial degree of market power
for the purposes of section 46. [Schedule 1, item 5, subsection 46(6)]
Amendment to subsection 46(7)
1.44 The Bill amends existing subsection 46(7) so that it applies to
the amended prohibition in subsection 46(1AA). [Schedule 1, item 6,
subsection 46(7)]
15
Trade Practices Legislation Amendment Bill 2008
1.45 Subsection 46(7) currently provides that a corporation may be
found to have taken advantage of its power for a purpose referred to in
subsection 46(1) notwithstanding that evidence of the existence of that
purpose is only ascertainable by inference from the conduct of the
corporation or of any other person or from other relevant circumstances.
This provision does not in any way limit the manner in which the purpose
of a person may be established for the purposes of any other provision of
the Act.
1.46 As discussed above, the Bill amends the prohibition in
subsection 46(1AA) to make it consistent with the prohibition in
subsection 46(1), except to the extent that it specifically targets predatory
pricing. Those amendments include the incorporation of the term `take
advantage' into subsection 46(1AA). Consequently, to facilitate the
consistent operation of the prohibitions in subsections 46(1) and 46(1AA),
the Bill amends subsection 46(7) so that it applies equally to both
prohibitions. [Schedule 1, item 6, subsection 46(7)]
Amendments to the competition code
1.47 Schedule 2 of the Bill makes equivalent amendments to the
version of section 46 found in the competition code to those made to
section 46 detailed above. The competition code contains the version of
section 46 that applies to all persons in the States and Territories by virtue
of application legislation enacted in each of those jurisdictions.
[Schedule 2, items 1 to 6]
1.48 The competition code consists in part of the Schedule version of
Part IV of the Act contained in Part 1 of the Schedule to the Act. Part IV
contains the competition provisions of the Act, including section 46.
1.49 The preamble to the 1995 intergovernmental Conduct Code
Agreement provides that it is the intention of every jurisdiction in
Australia to achieve and maintain consistent and complementary
competition laws and policies which apply to all businesses in Australia
regardless of ownership. To this end, clause 6 of that agreement provides
that it is the intention of the parties that where modifications are made to
the provisions of Part IV of the Act or the Schedule version of Part IV of
the Act, similar modifications will be made to the corresponding
provisions of the other.
1.50 The amendments contained in Schedule 2 are made in
accordance with the Conduct Code Agreement in order to maintain
consistent and complementary competition laws throughout Australia.
[Schedule 2, items 1 to 6]
16
Misuse of market power
Conferral of jurisdiction on the Federal Magistrates Court
1.51 The Bill confers jurisdiction on the FMC in matters arising
under section 46. [Schedule 1, item 7, subsection 86(1A)]
1.52 Currently, under section 86 of the Act the Federal Court has
jurisdiction in any matter arising under section 46. This jurisdiction is
exclusive of any other court, other than the jurisdiction of the High Court
under section 75 of the Constitution.
1.53 During the Senate Inquiry, submissions expressed concerns
about the costs and delays associated with bringing section 46 matters,
particularly for smaller businesses. If the costs associated with enforcing
section 46 are prohibitively high, then it will not be effective in addressing
anticompetitive conduct no matter how well it is otherwise suited to doing
so.
1.54 The Bill addresses these concerns by amending
subsection 86(1A) of the Act to confer jurisdiction on the FMC in any
matter arising under section 46 in respect of which civil proceedings are
instituted by a person other than the Minister or the ACCC. This is
consistent with the FMC's objective to provide a simpler and more
accessible alternative to litigation in the superior courts. [Schedule 1, item 7,
subsection 86(1A)]
1.55 Under subsection 86(1A) the FMC currently has jurisdiction
under Part IVA (unconscionable conduct), Part IVB (industry codes),
Part VA (liability of manufacturers and importers for defective goods) and
the consumer protection provisions of Part V, Division 1 (unfair
practices), Division 1AAA (pyramid selling), Division 1A (product safety
and product information) and Division 2A (actions against manufacturers
and importers of goods). However, the FMC does not have jurisdiction in
any such matter in respect of which a proceeding is instituted by the
Minister or the ACCC.
1.56 Existing section 86AA provides for monetary limits on the
jurisdiction of the FMC in relation to actions for damages. Presently, that
limit is $750,000. This limit applies to section 46 matters instituted in, or
transferred to, the FMC in the same way as it currently applies to any
other matter in relation to which the FMC has jurisdiction under the Act.
1.57 Part 5 of the Federal Magistrates Act 1999 permits the FMC to
transfer proceedings to the Federal Court when appropriate.
17
Trade Practices Legislation Amendment Bill 2008
1.58 As a result of the conferral of jurisdiction on the FMC, the Bill
replaces all references to `the Court' in section 46 with references to `the
court'. The term `the Court' is defined in section 4 of the Act to mean the
Federal Court. As the Bill confers jurisdiction on the FMC in addition to
the existing jurisdiction of the Federal Court, the references to `the Court'
are changed to `the court' to clarify that the relevant provisions apply
equally to the FMC as they do to the Federal Court. [Schedule 1, item 3,
subsections 46(3), (3A) and (3C)]
18
Chapter 2
Other amendments
Outline of chapter
2.1 Schedule 3 of the Bill amends the Act and ASIC Act to:
· require that one of the ACCC's Deputy Chairpersons have
knowledge of, or experience in, small business matters;
· repeal the thresholds for unconscionable conduct cases under
section 51AC of the Act and section 12CC of the ASIC Act;
and
· clarify the ACCC's information gathering powers under
section 155 of the Act.
Context of amendments
Deputy Chairperson with experience in small business matters
2.2 There are a number of trade practices issues that tend to confront
small business in particular. These include issues relating to collective
bargaining, retail tenancy, franchising, unconscionable conduct, and the
misuse of market power.
2.3 The TPLA Act 2007 amended the Act to create a second Deputy
Chairperson for the ACCC. As noted in the second reading speech to the
TPLA Bill 2007, it was intended that this position be filled by a candidate
with experience in small business matters. However, the TPLA Act 2007
did not include any legislative requirement to that effect.
Unconscionable conduct
2.4 The Senate Inquiry recommended that the price thresholds
applicable to unconscionable conduct cases under section 51AC of the Act
be repealed. This recommendation was partially accepted by the former
government in deciding to increase the threshold from $3 million to
$10 million. The TPLA Act 2007 gave effect to that decision.
19
Trade Practices Legislation Amendment Bill 2008
2.5 As noted by the Senate Inquiry the removal of the thresholds
will not reduce the current protection for small business, and will enhance
protection for businesses involved in transactions over the prescribed
threshold, which are nevertheless subject to unconscionable conduct
within the terms of section 51AC.
ACCC's information gathering powers
2.1 Section 155 of the Act empowers the ACCC to require a person
to provide information, produce documents, or appear before the ACCC in
relation to a suspected contravention of the Act and certain other matters.
2.2 The ACCC has expressed concerns that its ability to enforce the
law has been significantly hindered by its inability to fully investigate
matters through the use of section 155 after it has applied for an interim
injunction. The seeking of such an injunction requires the ACCC to
initiate proceedings, which may prevent it from continuing to utilise
section 155.
2.3 There is also uncertainty as to when the ACCC's section 155
powers cease. In particular, recipients of section 155 notices have argued
that it is unlawful for the ACCC to exercise its section 155 powers after it
has decided to institute proceedings. Alternatively, the position may be
that the ACCC can use its powers after it has decided to commence
proceedings but not after it has instituted them, or that whether or not the
ACCC has decided to institute proceedings is a factor to be weighted in
considering whether the ACCC has exercised its powers appropriately.
2.4 For the Act to meet its objectives it is essential that the ACCC is
able to effectively enforce it. If the ACCC's section 155 powers are not
clarified, the ACCC's ability to investigate suspected contraventions of
the law may be frustrated.
Summary of new law
2.5 Schedule 3 of the Bill contains amendments to the Act and ASIC
Act. In summary, Schedule 3 of the Bill:
· amends section 10 of the Act to require that one of the
Deputy Chairpersons of the ACCC have knowledge of, or
experience in, small business matters;
· amends section 51AC of the Act and section 12CC of the
ASIC Act to remove the monetary thresholds that currently
20
Other amendments
apply to claims of unconscionable conduct under those
sections; and
· amends section 155 of the Act to provide that a member of
the ACCC may exercise, or continue to exercise, a power
under subsection 155(1) to obtain information, documents or
evidence, until:
- the ACCC commences proceedings in relation to the
matter (other than proceedings for any injunction); or
- the close of pleadings in relation to an application by the
ACCC for a final injunction in relation to the matter.
Comparison of key features of new law and current law
New law Current law
Under the Act, before the There is no requirement that a Deputy
Governor-General appoints a person Chairperson of the ACCC has
as a Deputy Chairperson of the knowledge of, or experience in, small
ACCC, the Minister must be satisfied business matters.
that, immediately after the
appointment, there will be at least one
Deputy Chairperson who has
knowledge of, or experience in, small
business matters.
The prohibitions on unconscionable The prohibitions on unconscionable
conduct under section 51AC of the conduct under section 51AC of the
Act and section 12CC of the ASIC Act and section 12CC of the ASIC
Act apply regardless of the price of a Act do not apply in relation to a
transaction. supply or acquisition of goods or
services at a price in excess of
$10 million.
A member of the ACCC may No current equivalent. The Act is
exercise, or continue to exercise, a silent as to when an ACCC member's
power under subsection 155(1) to powers under subsection 155(1)
obtain information, documents or cease.
evidence, until:
· the ACCC commences
proceedings in relation to the
matter (other than proceedings for
any injunction); or
· the close of pleadings in relation
to an application by the ACCC for
a final injunction in relation to the
matter.
21
Trade Practices Legislation Amendment Bill 2008
Detailed explanation of new law
Amendments relating to Deputy Chairpersons
2.6 The Bill amends the Act to expressly require that one of the
Deputy Chairpersons of the ACCC have knowledge of, or experience in,
small business matters. [Schedule 3, item 7, subsection 10(1A)]
2.7 The Act establishes the ACCC (section 6A), comprising a
Chairperson and other members appointed under the Act (section 7) for a
period not exceeding five years (section 8).
2.8 Presently, the Governor-General may appoint up to two
members to hold the office of Deputy Chairpersons (section 10), one of
whom will act as Chairperson when the Chairperson is absent from duty
or from Australia (section 11). Prior to the TPLA Act 2007 only one
Deputy Chairperson of the ACCC could be appointed.
2.9 The TPLA Act 2007 amended the Act to allow for a second
Deputy Chairperson to be appointed. As noted in the second reading
speech to the TPLA Bill 2007, it was intended that this position be filled
by a candidate experienced in small business matters. However, the
TPLA Act 2007 did not include any legislative requirement to that effect.
2.10 The Bill amends section 10 to require that before the
Governor-General appoints a person as a Deputy Chairperson, the
Minister must be satisfied that, immediately after the appointment, there
will be at least one Deputy Chairperson who has knowledge of, or
experience in, small business matters. [Schedule 3, item 7, subsection 10(1A)]
2.11 This amendment complements existing requirements applicable
to the appointment of members of the ACCC and its Chairperson. Under
existing paragraph 7(3)(b) the Minister must consider whether a person
has knowledge of, or experience in, small business matters before the
Governor-Governor appoints them as a member of the ACCC or as its
Chairperson.
Amendments relating to unconscionable conduct
2.12 The Bill removes the price thresholds that are currently
applicable to actions for unconscionable conduct in business transactions
under the Act and the ASIC Act. [Schedule 3, item 12,
subsections 51AC(9) to (11)]
2.13 Section 51AC of the Act prohibits corporations from engaging
in unconscionable conduct in their transactions with business consumers
22
Other amendments
and suppliers. Section 51AC is duplicated in the ASIC Act in relation to
financial services.
2.14 Section 51AC proscribes unconscionable conduct in connection
with the supply of goods or services to, or the acquisition of goods or
services from, a corporation. The protection offered by section 51AC is
subject to two limitations. Firstly, listed public companies are not
protected by section 51AC. Secondly, the section does not apply where
the supply or acquisition of goods is at a price greater than $10 million.
2.15 The Senate Inquiry recommended that the price thresholds
applicable to unconscionable conduct cases under section 51AC of the Act
be repealed.
2.16 Consistent with the Senate Inquiry's recommendation, the Bill
repeals the $10 million price thresholds applicable to actions under
section 51AC of the Act. [Schedule 3, item 12, subsections 51AC(9) to (11)]
2.17 The amendment enhances the protection of non-listed businesses
involved in transactions over $10 million, which are nevertheless subject
to unconscionable conduct within the terms of section 51AC. It focuses
the operation of the section on the wrongdoing as opposed to the manner
in which a person structures their affairs. [Schedule 3, item 12,
subsections 51AC(9) to (11)]
2.18 Section 12CC of the ASIC Act applies the unconscionable
conduct rules of section 51AC of the Act to the supply and acquisition of
financial services. The Bill also repeals the $10 million price thresholds
applicable to section 12CC, to maintain consistency between it and
section 51AC of the Act. [Schedule 3, item 5, subsections 12CC(8) to (10) of the
ASIC Act]
2.19 Finally, the Bill replaces all references to `the Court' in
sections 51AB and 51AC of the Act, and sections 12CB and 12CC of the
ASIC Act, with references to `the court'. This reflects that courts other
than the Federal Court have jurisdiction in relation to matters arising
under those sections. By doing so the amendments clarify the existing
law. [Schedule 3, items 1 to 4 and 8 to 11, subsection 12CB(2), paragraphs 12CB(4)(a)
and (b), subsections 12CC(2) and (3), and paragraphs 12CC(5)(a) and (b) of the ASIC
Act, subsection 51AB(2), paragraphs 51AB(4)(a) and (b), subsections 51AC(3) and
51AC(4), and paragraphs 51AC(6)(a) and (b) of the Act]
Amendments to the ACCC's information gathering powers
2.20 The Bill clarifies the timeframe in which the ACCC's powers
under section 155 can be exercised. [Schedule 3, item 14, subsections 155(3A)]
23
Trade Practices Legislation Amendment Bill 2008
2.21 Subsection 155(1) of the Act enables the ACCC to require a
person to provide information, produce documents, or appear before the
ACCC in relation to a suspected contravention of the Act and certain other
matters.
2.22 During the Senate Inquiry the ACCC expressed concerns that it
may not be able to effectively investigate contraventions of the law and
prevent the subjects of the investigation from continuing to contravene the
law by obtaining an interim injunction.
2.23 In Korean Air Lines v ACCC3 Jacobson J held that the ACCC's
powers under section 155 must only be used for the performance of the
ACCC's administrative function of determining whether proceedings
should be instituted.
2.24 Under the Act and other laws, the ACCC is required to institute
proceedings for a final injunction before it can make an application for an
interim injunction. Consequently, applying for an interim injunction may
result in the loss of its ability to use its section 155 powers.
2.25 In addition, there is uncertainty as to when the ACCC's powers
under section 155 cease. In particular, private litigants have argued that it
is an abuse of process for the ACCC to exercise its section 155 powers
after it has decided to institute proceedings. Alternatively it has been
argued that the ACCC may use those powers until it institutes
proceedings, or that whether or not the ACCC has decided to institute
proceedings is a factor to be weighed in considering whether the ACCC
has exercised its section 155 powers appropriately.
2.26 The Bill clarifies the ACCC's section 155 powers by providing
that a member of the ACCC may exercise, or continue to exercise, a
power under subsection 155(1) in relation to a matter referred to in that
subsection until: the ACCC commences proceedings in relation to that
matter (other than proceedings for an injunction, whether interim or final);
or the close of pleadings in relation to an application by the ACCC for a
final injunction in relation to the matter. [Schedule 3, item 14,
subsections 155(3A)]
2.27 The amendment ensures that the ACCC does not exceed the
limits of its power to issue or require compliance with a notice under
section 155 by reason that the notice is issued at any time prior to it
commencing proceedings, or in the case of any injunction prior to the
close of pleadings in its application for final relief. [Schedule 3, item 14,
subsections 155(3A)]
3 (No 3) [2008] FCA 701 (15 May 2008)
24
Other amendments
2.28 Each of commencement of proceedings and close of pleadings
are defined within the Federal Court Rules. [Schedule 3, item 14,
subsections 155(3A)]
Application provisions
Application of amendments relating to unconscionable conduct
2.29 The Bill makes it clear that the repeal of the thresholds in
section 51AC of the Act and section 12CC of the ASIC Act apply in
relation to conduct engaged in after the amendments commence, including
conduct in relation to contracts for the supply or acquisition of goods or
services whether made before or after that commencement. [Schedule 3,
items 6 and 13]
Application of amendments to the ACCC's information gathering powers
2.30 The amendments made to section 155 of the Act by the Bill
apply in relation to a matter referred to in subsection 155(1) whether the
matter arose before or after the commencement of the item. In addition,
the Bill makes it clear that, without limiting the above, the amendments
apply even if an interim injunction has been granted in relation to the
matter. [Schedule 3, item 15]
25
Chapter 3
Regulation impact statement
Background
Scope of the Regulation Impact Statement
3.1 This Regulation Impact Statement addresses proposed
amendments to the Trade Practices Act 1974 (the Act) relating to the
misuse of market power and information gathering power provisions of
the Act. The proposed amendments suggest changes to legislation or
regulations affecting business. Hence, these changes are addressed in this
Regulation Impact Statement.
Promoting competition and fair trading
3.2 The object of the Act is to enhance the welfare of Australians
through the promotion of competition and fair trading and provision for
consumer protection.
3.3 Competitive markets are an important mechanism for achieving
the advances in efficiency and productivity that enhance economic
welfare. Maximising the competitiveness of a market will usually
maximise efficiency and lead to the greatest enhancement in economic
welfare.
3.4 Effective competition can be reduced through changes to the
market structure or by firms behaving, either independently or with other
firms, in ways that reduce rivalry in the market, or prevent or deter the
entry of new firms. The competition laws in Part IV of the Act promote
competition by prohibiting anticompetitive conduct.
The Dawson Review
3.5 The Review of the Competition Provisions of the Trade
Practices Act (the Dawson Review) reported to Government in
January 2003. At that time, the Dawson Review concluded that there was
no need to amend section 46 of the Act, which prohibits the misuse of
market power.
27
Trade Practices Legislation Amendment Bill 2008
3.6 The Dawson Review also considered the use and scope of
section 155 of the Act. It concluded that the Australian Competition and
Consumer Commission's (the ACCC's) investigatory powers are essential
for the proper administration of the Act, and that the power provided to
the ACCC under section 155 is integral to its enforcement function.
The Senate Inquiry
3.7 Soon after the Dawson Review provided its report to
Government, several important Trade Practices Act cases were considered
by the courts, particularly in relation to the misuse of market power. In
particular:
· the High Court considered the application and interpretation
of section 46 in Boral Besser Masonry Ltd v ACCC [2003]
HCA 5 (Boral) and in Rural Press Ltd v ACCC [2003]
HCA 75 (Rural Press); and
· the Full Federal Court considered section 46 in Universal
Music Australia Pty Ltd v ACCC [2003] FCAFC 193 and in
ACCC v Australian Safeway Stores Pty Ltd [2003]
FCAFC 149.
3.8 These cases raised questions about the adequacy of the Act to
protect small businesses from anticompetitive conduct, including the
misuse of market power.
3.9 On 25 June 2003, the Senate passed a motion requiring its
Economics References Committee to inquire into and report on `whether
the Trade Practices Act 1974 adequately protects small businesses from
anticompetitive or unfair conduct' (the Senate Inquiry).
3.10 The Senate Inquiry's terms of reference required it to consider
the misuse of market power, unconscionable conduct in business
transactions and industry code provisions of the Act.
3.11 The Senate Inquiry's report into The Effectiveness of the Trade
Practices Act 1974 in Protecting Small Business (the Senate Report) was
tabled on 1 March 2004 and made 17 recommendations, including
9 recommendations related to the misuse of market provisions of the Act.
The Trade Practices Legislation Amendment Act (No. 1) 2007
3.12 The Trade Practices Legislation Amendment Act (No. 1) 2007
(the TPLA Act 2007) made amendments to the Act and the Australian
Securities and Investments Commission Act 2001 (the ASIC Act) that
28
Regulation impact statement
implemented the majority of the former government's response to the
Senate Report. Included were amendments which implemented, in whole
or in part, 3 out of the 9 recommendations of the Senate Report relating to
the misuse of market power provisions of the Act, namely
recommendations 3, 5 and 6 of the Senate Report.
3.13 In particular, the TPLA Act 2007 amended the misuse of market
power provision of the Act to:
· provide that a corporation must not take advantage of a
substantial degree of market power, either in the market in
which the power is held or in any other market;
· provide that, for the purposes of determining the degree of
power that a corporation has in a market, the Court may have
regard to any market power the corporation has that results
from contracts, arrangements or understandings with others,
or results from covenants that the corporations is bound by or
entitled to the benefit of; and
· emphasise that courts may take into consideration below-cost
pricing when determining whether a corporation has misused
its market power.
3.14 During the passage of the TPLA Act 2007, the former
government introduced the so-called `Birdsville amendment' in the
Senate. The Birdsville amendment created a new prohibition in
section 46, which prohibits a corporation with a substantial `share of a
market', as opposed to `degree of market power', from engaging in
sustained below-cost pricing conduct for the purpose of eliminating or
substantially damaging a competitor, preventing the entry of a person into
a market, or deterring or preventing a person from engaging in
competitive conduct in a market.
3.15 The TPLA Act 2007 also made amendments to the version of
section 46 found in Part 1 of the Schedule to the Act, which is the version
of the Act that applies in the States and Territories by virtue of application
legislation in those jurisdictions, to correspond to the above-mentioned
changes.
3.16 The TPLA Act 2007, including the Birdsville amendment, was
passed by Parliament on 19 September 2007 and commenced on
25 September 2007.
3.17 The amendments which are now proposed to the misuse of
market power provisions of the Act implement recommendation 2 and
aspects of recommendations 3 and 17 of the Senate Report which were not
29
Trade Practices Legislation Amendment Bill 2008
accepted by the former government, and amend the Birdsville amendment
so that it is consistent with the prohibition contained in subsection 46(1).
Section 46 of the Act
3.18 As a consequence of the TPLA Act 2007, section 46 of the Act
contains two prohibitions. A general prohibition against anticompetitive
misuses of market power is contained in subsection 46(1), and a
prohibition specifically targeting predatory pricing is contained in
subsection 46(1AA).
Subsection 46(1)
3.19 Subsection 46(1) of the Act prohibits corporations with a
substantial degree of market power from taking advantage of that power
for a prescribed purpose; that is, for the purpose of eliminating or
substantially damaging a competitor, preventing the entry of a competitor,
or deterring or preventing a person from engaging in competitive conduct.
3.20 Under subsection 46(1) only firms with a substantial degree of
market power are prohibited from taking advantage of that power for a
prescribed purpose. This is because firms that lack substantial market
power are rarely, if ever, able to unilaterally harm competition in an
enduring way. The prohibition therefore applies only to firms that meet
the threshold requirement of possessing substantial market power.
3.21 The subsection focuses on the purpose of the firm's conduct
because this is considered to be the best way of distinguishing between
pro-competitive and anticompetitive behaviour. Purpose may be inferred
from a firm's behaviour or from relevant circumstances. A firm's purpose
must be substantial but it need not be the sole or dominant purpose for
engaging in the conduct. The subsection does not look to the effect of the
firm's behaviour. If it did, there is a serious risk that pro-competitive
conduct by firms with substantial market power would be deterred, with
consequentially reduced gains in efficiency and productivity and hence
economic welfare.
3.22 The subsection was amended in 1986 to lower the threshold
from a requirement that a corporation be `in a position substantially to
control a market' to a requirement that a corporation have `a substantial
degree of power in a market'. The type of power being referred to is
`market power'.
3.23 Market power was discussed in Queensland Wire Industries Pty
Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177. In that case,
alternative, but complementary, definitions of market power were
30
Regulation impact statement
provided. Thus, market power is the ability to behave persistently in a
manner different from the behaviour that a competitive market would
enforce on a firm. Alternatively, it involves the ability of a firm to raise
prices above the supply cost without rivals taking away customers in due
time, the supply cost being the minimum costs an efficient firm would
incur in producing the product or service.
3.24 The change to the lower threshold in 1986 was motivated by a
concern that the previous threshold caught conduct only by a monopolist
or monopsonist, and that a lower threshold was necessary to capture
corporations with a sufficient degree of market power to seriously harm
competition. As the Second Reading Speech noted, the threshold was
thus intended to capture not only monopolists, but also major participants
in oligopolistic markets and, in some cases, leading firms in less
concentrated markets.
Subsection 46(1AA)
3.25 Subsection 46(1AA) prohibits a corporation with a substantial
`share of a market', as opposed to `degree of market power', from
engaging in sustained below-cost pricing conduct for the purpose of
eliminating or substantially damaging a competitor, preventing the entry
of a person into a market, or deterring or preventing a person from
engaging in competitive conduct in a market.
3.26 There have been no cases in which subsection 46(1AA) has been
argued and the scope and effect of the prohibition are uncertain.
Section 155 of the Act
3.27 Section 155 of the Act provides the ACCC with powers to
obtain information, documents and evidence in the course of investigating
possible contraventions of the Act and for use in proceedings under the
Act. Section 155 has been included in the Act since its inception in 1974
and is consistent with the need for enforcement of the Act to be supported
by the availability of strong investigative powers.
3.28 It is an offence for a person not to comply with a section 155
notice to the extent that they are capable of complying with it.
3.29 A person is not excused from furnishing information or
producing or permitting inspection of a document on the grounds that the
information or document may tend to incriminate the person. The
evidence is not admissible in criminal proceedings other than proceedings
under section 155 or, in the case of a corporation, proceedings under the
Act.
31
Trade Practices Legislation Amendment Bill 2008
Analysis of proposed amendments to section 46 of the Act
Assessing the problem
3.30 In light of recent Court decisions, such as Boral and Rural
Press, there is some uncertainty about the ability of section 46 to
effectively address the misuse of market power. This is especially evident
with respect to predatory pricing and the meaning of the term `take
advantage'.
3.31 In a competitive market, rival firms vie for customers by
offering different product price quality packages. Firms sometimes seek
greater market share by setting a price for their goods or services at a level
that is sufficiently low to prevent their rivals from making an adequate
return. Pricing in this way may drive competitors out of the market, or
prevent new firms from entering the market. When firms set their prices
in this way, they do so either intending to harm their rivals or, at the very
least, in the knowledge that their competitors will be harmed.
3.32 This behaviour may ultimately benefit consumers because less
efficient firms are driven out of the market, ensuring prices for goods and
services are set at a level equivalent to the costs of supply for an efficient
firm. Even if there are only a small number of remaining firms in the
market, prices are likely to be kept at an efficient level because of rivalry
between the remaining firms and the threat of new firms entering the
market.
3.33 In contrast, consumers will be harmed if efficient firms are
driven out of, or prevented from entering, the market, thus weakening
competition. This result could be achieved through predatory pricing.
Predatory pricing is where a firm abuses its market power by lowering its
prices far enough and for long enough to drive away or deter its rivals.
The firm is then left with greater market power, enabling it to earn
supra-competitive profits by reducing output and raising prices. The
supra-competitive profits may allow the short-term losses to be recovered
or recouped.
3.34 As noted above, section 46 presently contains two provisions
which prohibit predatory pricing.
3.35 Subsection 46(1) contains a general prohibition against the
misuse of market power, which prohibits predatory pricing where a
corporation with substantial market power takes advantage of that power
to below-cost price for a prescribed anticompetitive purpose.
32
Regulation impact statement
3.36 Subsection 46(1AA) specifically targets predatory pricing by
prohibiting a corporation that has a substantial share of a market from
supplying, or offering to supply, goods or services below cost for one of
the same prescribed anticompetitive purposes as are applicable to
subsection 46(1).
3.37 The Boral case was the first opportunity for the High Court to
consider the issue of predatory pricing under subsection 46(1). In light of
the High Court's decision, submissions were made to the Senate Inquiry
expressing concern about the ability of section 46 to address predatory
pricing.
3.38 Further, the enactment of subsection 46(1AA) has introduced
ambiguous terms into section 46 and has resulted in substantial
uncertainty regarding its operation. The provision targets corporations
with a `substantial share of a market', a term that is not defined.
Uncertainty is also created by the interaction of subsections 46(1AA) and
46(1). This interaction creates a two-track process for considering
allegations of predatory pricing, without necessarily providing any
increased protection to the competitive process.
3.39 Subsection 46(1AA) also poses a real risk of reducing price
competition in markets, to the detriment of consumers, if it is left in its
present form. In a small open economy like Australia, where reasonably
concentrated markets do exist in some areas, there can still be real
competition between large market participants, keeping prices low for the
benefit of consumers. There is also competitive pressure from imports,
which puts downward pressure on prices. Accordingly, market share is
often not determinative of a lack of competition in a market.
3.40 In addition, uncertainty also exists as to what constitutes a taking
advantage of market power for the purposes of subsection 46(1).
3.41 In Rural Press the High Court endorsed a `take advantage' test
which inquires whether a corporation could have undertaken the conduct
in question without possessing a substantial degree of market power.
Concerns have been expressed that under this test if it is possible for a
firm to engage in the relevant conduct without having a substantial degree
of market power, that conduct will not constitute a taking advantage of the
firm's market power for the purposes of section 46. This would be so
even in circumstances where a firm, if lacking in market power, would
have lacked incentive to engage in the relevant conduct.
3.42 As a result of the decision in Rural Press concerns have been
expressed that the interpretation given to `take advantage' prevents
subsection 46(1) from adequately addressing anticompetitive misuses of
market power.
33
Trade Practices Legislation Amendment Bill 2008
3.43 Concerns have also been expressed by business about the costs
and delays associated with bringing section 46 matters. If the costs
associated with section 46 are prohibitively high, then businesses may not
be able to enforce section 46 no matter how well it is otherwise suited to
tackling anticompetitive unilateral conduct.
3.44 Section 46 applies to the full range of business structures across
the Australian economy. If the concerns relating to the ability of
section 46 to effectively and efficiently address unilateral anticompetitive
conduct were to remain unresolved, both existing firms and potential new
entrants might be deterred from competing as vigorously in Australian
markets.
Objective
3.45 The objective of the proposed amendments is to enhance the
protections in the Act against the misuse of market power, which will
increase competition and consequently consumer welfare. The
amendments achieve this by strengthening the prohibition against the
misuse of market power in subsection 46(1) of the Act and by reducing
uncertainty as to the operation of subsections 46(1) and (1AA) in
predatory pricing cases.
Options
3.46 Six options have been considered in response to the
above-mentioned problems.
· Option 1: Status quo.
· Option 2: Repealing subsection 46(1AA).
· Option 3: Amending subsection 46(1AA) so that it
prohibits a corporation with a substantial degree of power in
a market from taking advantage of that power in any market
by predatory pricing, for one of the anticompetitive purposes
currently prescribed by subsection 46(1AA).
· Option 4: Amending the Act to clarify that a corporation
can contravene section 46 of the Act by predatory pricing
even though there is no proof that the corporation is able, or
will be able, to recoup losses incurred from pricing below
cost.
· Option 5: Amending the Act to clarify the meaning of
`take advantage' in section 46.
34
Regulation impact statement
· Option 6: Amending the Act to allow section 46 cases to
be heard, in appropriate circumstances, in the Federal
Magistrates Court (FMC).
Analysis of option 1
3.47 Option 1 proposes no change to the law.
3.48 Without addressing the problems identified above it is unlikely
that businesses will have confidence in the ability of section 46 to address
anticompetitive unilateral conduct, including predatory pricing. If this
lack of confidence leads businesses to exit particular markets or deters
others from entering, the level of competition in those markets will be
reduced.
3.49 Any reduction in competition may lead to reduced choice and
higher prices for consumers. It may also lead to smaller gains in
efficiency and productivity, less innovation and fewer employment
opportunities. This may result in smaller enhancements to economic
welfare which, in turn, may flow through to lower taxation revenue for
government.
3.50 To the extent that there are businesses that engage in predatory
pricing, those businesses would benefit from the existing uncertainty
surrounding the application of section 46 to predatory conduct. This is
because both the ACCC and private litigants may be unwilling to pursue
litigation while the uncertainty about section 46 persists.
Analysis of option 2
3.51 Option 2 proposes the repeal of subsection 46(1AA) which
presently prohibits a corporation with a substantial share of a market from
engaging in sustained below-cost pricing for a prescribed purpose.
3.52 Repealing subsection 46(1AA) would result in there being no
prohibition specifically targeting anticompetitive predatory pricing. This
may lower businesses' confidence in the ability of section 46 to address
predatory pricing and underscores the importance of addressing such
conduct for the betterment of all Australians.
3.53 The problem identified with subsection 46(1AA) is its
ambiguous and uncertain operation, not that it specifically prohibits
anticompetitive predatory pricing.
35
Trade Practices Legislation Amendment Bill 2008
Analysis of option 3
3.54 Option 3 proposes that subsection 46(1AA) of the Act be
amended so that, rather than prohibiting a corporation with a substantial
share of a market from engaging in sustained below-cost pricing for a
prescribed purpose, it would prohibit a corporation with a substantial
degree of power in a market from taking advantage of that power in any
market by predatory pricing, where the conduct is engaged in for one or
more of the anticompetitive purposes presently prescribed in
subsection 46(1AA).
3.55 Both the existing subsection 46(1AA) and the amendment
envisaged by option 3 specifically target predatory pricing. However, the
envisaged amendments would result in subsection 46(1AA)'s operation
being more certain and reduce its potential to adversely affect welfare
enhancing economic activities.
3.56 Option 3 would replace subsection 46(1AA)'s reference to a
`substantial share of a market' with a reference to `market power'. The
element of `market power' is presently used in subsection 46(1), a
well-established section of the Act.
3.57 While market share may be a factor in determining whether
market power exists, it is not determinative. As noted above, it is possible
that a firm with a substantial share of a market may nonetheless be
operating in a competitive market, therefore not having a substantial
degree of market power. The adoption of option 3 would prevent such a
firm being unduly subject to an additional prohibition which others with
similar market power may not be.
3.58 Option 3 would also require that a corporation `take advantage'
of it substantial market power before a breach of subsection 46(1AA)
could be established. This would ensure that a connection is required
between a firm's market power and the act of predatory pricing under
subsection 46(1AA).
3.59 Option 3 would also have the effect of making
subsection 46(1AA) consistent with the long-standing prohibition in
subsection 46(1). The same elements would need to be established in
relation to both prohibitions. Further, existing subsection 46(4A) would
be repealed, ending the two-track process for considering allegations of
predatory pricing by clarifying that predatory pricing cases are ordinarily
to be brought under subsection 46(1AA), with other anticompetitive
misuses of market power to be dealt with under the general prohibition in
subsection 46(1).
36
Regulation impact statement
3.60 The adoption of option 3 would necessitate the repeal of existing
subsection 46(1AB). That subsection provides a number of
non-exhaustive factors which a court may have regard to in determining
whether a corporation has a substantial share of a market for the purposes
of subsection 46(1AA). The subsection would be redundant if option 3
was adopted as the need to establish the existence of a `substantial share
of a market' would be replaced with the need to establish that a
corporation had a `substantial degree of market power', for the purposes
of establishing a breach of subsection 46(1AA).
Analysis of option 4
3.61 Option 4 proposes that the Act be amended to clarify that a
corporation can have a substantial degree of market power under
section 46 of the Act even though there is no proof that the corporation is
able, or will be able, to recoup losses incurred from pricing below cost.
3.62 As noted by the Senate Inquiry the question of whether
recoupment is a necessary element of predatory pricing, or simply a useful
indicator, remains a contentious issue which was not resolved by the High
Court's decision in Boral.
3.63 Option 4 would remove any uncertainty as to the role of
recoupment in predatory pricing cases by expressly providing on the face
of the Act that an ability to recoup losses is not legally necessary in
establishing a case of predatory pricing pursuant to subsection 46(1AA) of
the Act as amended under option 3. Recoupment would still be able to be
considered as a relevant factor in a court's consideration of a predatory
pricing case.
Analysis of option 5
3.64 Option 5 proposes that the Act be amended to clarify the
meaning of `take advantage' in section 46, along the lines of the
amendment proposed by the Senate Inquiry. It would incorporate into the
Act a non-exhaustive list of four factors to which the court may have
regard in making a determination as to whether a corporation has taken
advantage of a substantial degree of market power.
3.65 Option 5 would include amending the Act to include as a factor
that a court may consider whether a corporation `would be likely to
engage in the conduct if it lacked substantial market power'. Such an
amendment would expressly permit a court to consider whether the firm,
not possessing market power, would have engaged in the conduct. It
would also enable the court to consider how the corporation would have
37
Trade Practices Legislation Amendment Bill 2008
been likely to behave in a competitive market, including whether it would
have had any incentive to engage in the relevant conduct in such a market.
3.66 The final three factors which would be incorporated into the Act
would expressly permit the court to have regard to whether:
· conduct was `materially facilitated' by a corporation's
substantial degree of market power. This factor has been
used by the courts in existing case law on section 46. The
term was used by the High Court in its Rural Press judgment,
stating that the ACCC failed to show that the conduct `was
materially facilitated by the market power in giving the
threats a significance they would not have had without it';
· conduct was engaged in, in reliance on a substantial degree
of market power. This would emphasise the need for there to
be a causal connection between the conduct and the
substantial market power; and
· the conduct was `otherwise related to' a corporation's market
power. This will provide a clear message to the courts of
Parliament's intention for `take advantage' to be interpreted
more broadly than prior to the amendment.
3.67 These factors would clarify the meaning of `take advantage' on
the face of the Act so as to permit the court to consider a corporation's
incentive in engaging in conduct, as opposed to only considering its
capacity to engage in conduct, in contravention of section 46. The
advantage of such an amendment would be its focus on the causal
connection between the conduct and the substantial market power. It
would focus on whether a corporation would have engaged in conduct
contravening the terms of section 46 without possessing substantial
market power, as opposed to whether a corporation could have so acted.
Analysis of option 6
3.68 Option 6 would extend the jurisdiction of the FMC to hear
matters arising under section 46 in appropriate circumstances. Presently,
the FMC lacks jurisdiction to hear any matter arising from Part IV of the
Act.
3.69 One of the objectives of the FMC is to provide a simpler and
more accessible alternative to litigation in superior courts.
3.70 At present businesses may be deterred from taking action in
response to a misuse of market power by a business due to the expense
and delay of bringing proceedings in the Federal Court of Australia.
38
Regulation impact statement
Small businesses in particular may not have the time or resources to
commence proceedings through the Federal Court and may benefit from
the less complex and lower cost of the FMC jurisdiction.
3.71 Extending the jurisdiction of the FMC to hear section 46 cases
will enable business to utilise the simpler and less costly jurisdiction of
the FMC in appropriate cases. The FMC has lower filing and hearing fees
than the Federal Court and generally has less formal rules and procedures.
Matters are also generally heard more quickly in the FMC.
3.72 The Senate Inquiry recommended that the FMC be provided
with jurisdiction to determine section 46 matters, but that the jurisdiction
be confined to cases relying on section 83 of the Act. Section 83 allows
parties to rely on findings in certain previous proceedings, as prima facie
evidence in an action for loss or damage.
3.73 While a section 46 matter relying on section 83 of the Act may
be an example of an appropriate matter to be heard by the FMC, there is
no justification for so limiting its jurisdiction. The Federal Magistrates
Act 1999 permits the FMC to transfer proceedings to the Federal Court
when appropriate. Such a transfer may occur in complex and resource
demanding cases or where the amount being claimed is beyond the
$750,000 jurisdictional limit of the FMC.
Conclusions and recommendations
3.74 The costs of Options 1 and 2 significantly outweigh their
benefits.
3.75 Option 3 would amend subsection 46(1AA) of the Act so as to
remove any ambiguity in that subsection and so as to make it consistent
with subsection 46(1). Although option 3 would retain dual prohibitions
on predatory pricing this option is preferred to option 2, repealing the
subsection in its entirety. Having a separate prohibition on predatory
pricing emphasises the economic harm associated with such conduct and
prohibits it clearly on the face of the Act.
3.76 Option 4 would clarify the role of recoupment in predatory
pricing cases. The amendment would make it clear that whereas
recoupment may often be an important factor in predatory pricing cases,
recoupment is not an essential requirement to a finding of predatory
pricing. Option 4 would not be akin to declaring recoupment irrelevant to
a finding of predatory pricing. Option 4 would allow the court to consider
recoupment as a relevant factor in appropriate circumstances.
39
Trade Practices Legislation Amendment Bill 2008
3.77 Option 5 would enable the courts to consider a non-exhaustive
list of factors in considering whether a corporation had abused substantial
market power for the purposes of section 46 of the Act. This provides
guidance to the courts and to business as to what may constitute taking
advantage of substantial market power, and would clarify that a court may
consider whether a corporation would have had an incentive to engage in
the relevant conduct in the absence of such market power, rather than the
court being confined to considering whether the corporation could have
engaged in the relevant conduct. Option 5 would also clarify the causal
nexus between the conduct and the substantial market power.
3.78 Option 6 would enable businesses to bring actions for breaches
of section 46 in the FMC in appropriate cases. The FMC would provide a
simpler and more accessible alternative to bringing such proceedings in
the Federal Court.
Consultation
3.79 The issues underlying options 3, 4, 5 and 6 above have all been
previously examined in public reviews, parliamentary inquiries and other
forums.
3.80 Under the Conduct Code Agreement 1995 the Commonwealth is
required to seek the approval of the States and Territories in relation to
any amendments to Part IV of the Act or a related provision. This
involves a three-month consultation period on the proposal, followed by a
35-day voting period on the text of the legislation.
3.81 As the issues underlying the proposed amendments have already
been widely examined in many forums, it is proposed that the
Commonwealth seeks the agreement of the States to dispense with the
three-month consultation period required under the Conduct Code
Agreement 1995. The Commonwealth would, however, seek the approval
of the States and Territories to make the amendments to the Act as
required by the Conduct Code Agreement.
3.82 It is also proposed that the draft text of any amendments to
section 46 would be publicly exposed following the drafting of the
relevant amendments.
3.83 The following sensitivities to implementing options 3, 4, 5 and 6
have been identified.
3.84 Option 3 -- amendments to subsection 46(1AA)
3.85 Any move to amend the Birdsville amendment is expected to be
unpopular with some small businesses. This is due to the perception by
40
Regulation impact statement
small business that the existing subsection 46(1AA) is likely to be more
effective at protecting them than the proposed changes. However, it is
doubtful that the existing subsection would achieve such protection.
Further, the Birdsville amendment was not proposed in any small business
submission to the 2003 Senate Inquiry or to the 2007 Senate Economics
Committee's inquiry into the pre-Birdsville version of the TPLA Bill.
3.86 There is likely to be support for the amendments proposed to the
Birdsville amendment by option 3 from the legal profession and other
business groups. For example, The Australian National Retailers
Association (ANRA) has issued a media release stating that the Birdsville
amendment would have adverse economic consequences and would result
in increased litigation and commercial uncertainty for retailers which may
jeopardise discounting to the detriment of consumers. (ANRA media
release, 11 September 2007).
3.87 However, it is also likely that many stakeholders would prefer
the Birdsville amendment to be repealed in its entirety rather than being
amended as proposed. Consequently, such groups may call for
subsection 46(1AA) to be repealed rather than amended.
3.88 Medium sized businesses may also support the proposed
amendments. Law firms have cautioned that the Birdsville amendment's
application to corporations with a `substantial share of a market' could
encompass businesses with a market share as low as 20 per cent. This
could include, for example, some independent grocery outlets.
3.89 Option 4 -- Recoupment
3.90 No sensitivities.
3.91 Option 5 -- Take advantage
3.92 Some members of the legal profession and business groups may
oppose the amendment to clarify `take advantage' on the basis that it will
create uncertainty and introduce terms not previously considered in the
case law on section 46. In its submission to the 2003 Senate Inquiry, the
Law Council of Australia argued that the ACCC's proposed amendments
(which are substantially the same as the amendments proposed by
option 5) could `remove the filter in section 46 which requires a link
between the conduct and the market power'.
3.93 Option 6 -- FMC jurisdiction
3.94 An amendment to section 86 of the Act to extend the jurisdiction
of the FMC to include section 46 proceedings may be criticised on the
grounds that the FMC does not have the expertise, resources and
41
Trade Practices Legislation Amendment Bill 2008
experience to deal with section 46 cases. Section 46 proceedings involve
complex concepts such as market definition, market power and corporate
purpose, with which the Federal Court and the High Court have extensive
experience.
Analysis of proposed amendments to the ACCC's information
gathering powers
Assessing the problem
3.95 Section 155 of the Act empowers the ACCC to require a person
to provide information, produce documents, or appear before the ACCC in
relation to a suspected contravention of the Act and certain other matters.
Courts have held that this power may only be exercised by the ACCC
before it initiates legal proceedings.
3.96 The ACCC has informed the Government that its success in
substantive proceedings under the Act has been significantly hindered by
its inability to fully investigate matters through the use of its section 155
powers once it has applied for an injunction to stop suspected breaches of
the Act.
3.97 Where the ACCC deems it appropriate to take court action to
enforce the Act with respect to particular conduct, the alleged contravener
may not agree to discontinue the subject conduct while the issue of
whether it breaches the Act is heard and determined. In such
circumstances, the ACCC may seek an interlocutory court order for the
firm to cease the alleged conduct until the matter is finally determined by
the court. Where necessary, the ACCC can seek such interlocutory
injunctions on an urgent basis in order to attempt to quickly put a stop to
the conduct in question.
3.98 However, the seeking of an interim injunction would require the
ACCC to initiate proceedings, preventing it from being able to utilise its
section 155 powers to fully investigate the matter. As a result the ACCC
is left in the difficult position of deciding whether or not to seek such an
injunction. On the one hand, it has a disincentive to take action early,
because it then loses the ability to fully investigate the matter, which may
prejudice an investigation allowing a wrongdoer to escape liability. On
the other hand, a failure to seek interlocutory relief may allow the firm to
continue to breach the Act to the detriment of businesses and consumers.
3.99 There is also uncertainty as to when the ACCC's powers under
section 155 cease. In particular, private litigants have argued that it is an
abuse of process for the ACCC to exercise its section 155 powers after it
42
Regulation impact statement
has decided to institute proceedings. Alternatively, the position may be
that the ACCC can use its powers after it has decided to commence
proceedings but not after it has instituted proceedings, or that whether or
not the ACCC has decided to institute proceedings is a factor to be
weighed in considering whether the ACCC has exercised its section 155
powers for an improper purpose.
Options
3.100 Four options have been considered in response to the
above-mentioned problems.
· Option 1: Status quo.
· Option 2: Amending section 155 to provide that the
ACCC cannot use its powers under section 155 after it has
decided to institute proceedings.
· Option 3: Amending section 155 to provide that the
ACCC may use its section 155 powers until it commences
proceedings.
· Option 4: Amending section 155 to provide that the
ACCC may continue to utilise its powers, notwithstanding
the commencement of proceedings for an injunction
(including under section 80), until the close of pleadings in
an application for final injunctive relief.
Analysis of option 1
3.101 Option 1 proposes no change to the law.
3.102 The ACCC would continue to be unable to utilise its section 155
powers after seeking an interim injunction. As noted above, this may
hinder the ACCC's ability to investigate a matter and ultimately allow
harmful conduct to continue to the detriment of businesses, consumers
and the economy.
3.103 The scope of the ACCC's power would also remain uncertain.
Whether or not the ACCC can use its powers after deciding to institute
proceedings would remain uncertain, potentially leading to otherwise
unnecessary litigation.
43
Trade Practices Legislation Amendment Bill 2008
Analysis of option 2
3.104 Option 2 proposes to amend section 155 to provide that the
ACCC cannot use its powers under section 155 after it has decided to
institute proceedings.
3.105 This option would remove the uncertainty which presently exists
as to whether the ACCC may exercise its powers after it has decided to
institute proceedings.
3.106 However, such an amendment may be inconsistent with the
threshold which is currently applicable to the ACCC's use of its
section 155 powers. Section 155 provides that the ACCC may only utilise
its powers under the section if it `has reason to believe' that a person is
capable of furnishing information, documents or evidence of a
contravention of the Act or other relevant breach. In many cases the
ACCC may not have such a `reason to believe' until it has considered
whether the circumstances of the case have breached the law and whether
it may institute proceedings.
3.107 Option 2 may also hinder the ACCC's ability to fully investigate
matters. The ACCC may be required to undertake extensive
investigations between deciding to institute proceedings and in fact
commencing those proceedings. The ability to conduct such
investigations might be unduly hindered if the ACCC were unable to
utilise its section 155 powers in such circumstances. This may impact
upon businesses' and consumers' confidence in the law, and result in
prohibited conduct escaping liability to the detriment of social welfare.
Analysis of option 3
3.108 Option 3 proposes that section 155 be amended to provide that
the ACCC may use its section 155 powers until it commences
proceedings.
3.109 This option would expressly allow the ACCC to exercise its
powers under section 155 until it commences proceedings. This would
remove the uncertainty which presently exists in relation to the ability of
the ACCC to exercise its powers after it has decided to institute
proceedings. This should result in increased certainty for businesses and
the ACCC and reduced litigation.
3.110 The option is also broadly consistent with the factual findings of
most cases which have considered this issue. Courts have generally found
on the facts of cases before them that the ACCC is able to utilise its
section 155 powers after deciding to institute proceedings. Some cases
44
Regulation impact statement
have, however, held that whether or not the powers are exercised after the
ACCC has decided to institute proceedings may be a factor relevant to
determining whether the ACCC has utilised its powers for an improper
purpose.
Analysis of option 4
3.111 Option 4 proposes amending section 155 to provide that the
ACCC may continue to utilise its powers, notwithstanding the
commencement of proceedings for an injunction (including under
section 80 of the Act), until the close of pleadings in an application for
final injunctive relief.
3.112 Option 4 would allow the ACCC to bring an urgent interim
injunction without losing its section 155 powers. Interim injunctions are
an important means by which the ACCC is able to prevent economic harm
to consumers, businesses and the economy pending a final hearing.
Option 4 would ensure that the decision to apply for an interim injunction
does not affect the ACCC's ability to fully investigate matters, and
therefore successfully prosecute breaches of the law.
Conclusions and recommendations
3.113 The costs of Options 1 and 2 significantly outweigh their
benefits.
3.114 Option 3 would amend the Act to provide certainty as to when
the ACCC's ability to utilise its section 155 powers ceases. Unlike
option 2, option 3 will ensure that the ACCC continues to be able to fully
investigate matters until it commences proceedings. It will also institute a
`bright line' rule governing the use of section 155, thereby preventing
uncertainty, unnecessary litigation and the costs associated with both.
3.115 Option 4 would allow the ACCC to continue to use its
section 155 powers to fully investigate matters after it has applied for an
interim injunction (or other interlocutory injunction), until the close of
pleadings in an application brought by it for final injunctive relief. For the
reasons noted above, it is desirable that the ACCC's decision to apply for
an interim injunction be able to be made independently of its ability to
utilise its powers under section 155.
Consultation
3.116 As with the amendments to section 46 of the Act, it is proposed
that the Commonwealth seek the approval of the States and Territories for
45
Trade Practices Legislation Amendment Bill 2008
the amendments to section 155 of the Act, and their agreement to dispense
with the three-month consultation period required in relation to them,
pursuant to the Conduct Code Agreement 1995. Likewise, it is proposed
that the draft text of the amendments be publicly exposed once drafted.
3.117 Some members of the legal profession may oppose the extension
of the ACCC's powers under section 155. Both the Senate Inquiry and
the Dawson Review examined this issue and did not recommend the
amendment proposed in option 4, which would allow the ACCC to
continue to utilise its section 155 powers after the commencement of
injunction proceedings. The Dawson Review stated that to allow the
powers to continue would involve one party to proceedings (the ACCC)
having compulsive powers to extract information from its opponent
without court supervision. The Dawson Review found that this would be
a serious inroad upon the court's ability to maintain a balance between the
parties during the pre-trial stages of the action and would risk one party
being placed at an unfair disadvantage to the other.
Implementation and review
Changes to the Trade Practices Act
3.118 The changes to the Act will need to be implemented by passing
amending legislation through the Commonwealth Parliament.
3.119 Under the terms of the intergovernmental Conduct Code
Agreement, at least three States and Territories must vote in favour (or be
deemed to have voted in favour) of the proposed amendments to
section 46 during a 35-day voting period, before they can be introduced
into the Commonwealth Parliament.
Enforcement
3.120 The ACCC would have responsibility for enforcing the amended
Act. Penalties for a breach of section 46 currently include pecuniary
penalties for corporations of up to the greater of $10 million or three times
the benefit obtained by the prohibited conduct, or where that value cannot
be determined, 10 per cent of the firm's annual turnover.
3.121 In addition, a range of orders can be made against a corporation
that contravenes section 46, including injunctions (section 80), community
service orders, probation orders (enabling compliance programs to be
established and internal processes to be revised), disclosure orders and
publications orders (section 86C). Where a pecuniary penalty has been
46
Regulation impact statement
imposed, the Court may also impose an adverse publicity order
(section 86D). A range of other orders may also be made, including
orders for compensation (sections 82 and 87).
Review
3.122 The effectiveness of the proposed amendments would be
informally reviewed by Treasury after a sufficient period of time had
elapsed.
47
Index
Schedule 1: Misuse of market power by corporations
Bill reference Paragraph
number
Item 1, subsection 46(1AA) 1.16, 1.19, 1.20,
1.21, 1.22, 1.23
Item 2, subsection 46(1AB) 1.24, 1.25, 1.27,
1.28
Item 2, subsection 46(1AC) 1.29, 1.30
Item 3, subsections 46(3), (3A) and (3C) 1.58
Item 4, subsection 46(4A) 1.31, 1.33, 1.34,
1.35
Item 5, subsection 46(6) 1.36, 1.40, 1.41,
1.42, 1.43
Item 6, subsection 46(7) 1.44, 1.46
Item 7, subsection 86(1A) 1.51, 1.54
Schedule 2: Misuse of market power by persons
Bill reference Paragraph
number
Items 1 to 6 1.47, 1.50
Schedule 3: Other amendments
Bill reference Paragraph
number
Items 1 to 4 and 8 to 11, subsection 12CB(2), 2.19
paragraphs 12CB(4)(a) and (b), subsections 12CC(2) and (3),
and paragraphs 12CC(5)(a) and (b) of the ASIC Act,
subsection 51AB(2), paragraphs 51AB(4)(a) and (b),
subsections 51AC(3) and 51AC(4), and paragraphs
51AC(6)(a) and (b) of the Act
Item 5, subsections 12CC(8) to (10) of the ASIC Act 2.18
49
Trade Practices Legislation Amendment Bill 2008
Bill reference Paragraph
number
Items 6 and 13 2.29
Item 7, subsection 10(1A) 2.6, 2.10
Item 12, subsections 51AC(9) to (11) 2.12, 2.16, 2.17
Item 14, subsections 155(3A) 2.20, 2.26, 2.27,
2.28
Item 15 2.30
50