Scott Morrison to amend effects test legislation to remove hurdles for proving misuse of market power

SmartCompany, March 23, 2017:

Treasurer Scott Morrison will seek to add an amendment to the government’s effects test legislation [on 23.3.17] that will remove the “mandatory factors” a court would have to consider when deciding whether a business has misused its market power, in a move small business groups say will hopefully pivot big business towards a mindset of corporate responsibility.

The latest development comes two years after the Harper Review recommended Section 46 of the Competition and Consumer Act should be changed to prevent companies with substantial market power from misusing this

Following more than a year of consideration, and at one point, a shelving of a so-called possible effects test, the government introduced the Competition and Consumer Act (Misuse of Market Power) Bill into the House of Representatives last December.

The legislation, which is still before Parliament, proposes to change competition law to ensure businesses cannot act with the “purpose, effect or likely effect of lessening competition”, regardless of whether they intended that outcome from their actions.

While long-championing the introduction of the bill, small and independent business groups, including the Council of Small Business Australia and Master Grocers Australia, have suggested the planned effects test did not go far enough, pointing out that the policy still presented a number of hurdles to finding in court that a company had misused its power. A number of mandatory considerations remained in the proposed legislation, including whether the business was acting with “innovation” in mind, or to “enhance efficiency”.

However, in a planned amendment to be moved to the legislation today by Treasurer Scott Morrison, the list of “mandatory factors” a court must consider would be removed.

A treasury spokesperson told SmartCompany the amendment “will further strengthen laws that prevent firms with substantial market power engaging in conduct that harms competition in Australian markets”.

“The Turnbull Government continues in its commitment to reforms that will benefit consumers, businesses and the economy by boosting innovation, opening new markets and increasing choice for communities,” the spokesperson says.

The Labor Party has long opposed the introduction of an effects test, with former shadow treasurer Chris Bowen claiming in 2015 the policy would create a “lawyers’ picnic” when handed to the courts.