Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

I move amendment (3) circulated in my name:

(3)    Schedule 2 after item 3, page 6 (after line 12), insert:

3B  After subsection 46(7)

Add:

        (8)    In determining for the purposes of this section whether a corporation has taken advantage of its market power, the Court shall have regard to whether:

             (a)    the conduct of the corporation is materially facilitated by its substantial degree of market power;

             (b)    the corporation engages in the conduct in reliance on its substantial degree of market power;

             (c)    the corporation would be likely to engage in the conduct if it lacked a substantial degree of market power; and

             (d)    the conduct of the corporation is otherwise related to its substantial degree of market power.

This amendment deals with the definition of ‘take advantage’ in the Trade Practices Act. Perhaps I could make it easier for the Minister for Small Business and Tourism by saying that this amendment has been called for by various small business groups in their submissions to the Senate inquiry, and it has also been called for by the ACCC. Section 46 of the act makes it an offence to take advantage of substantial market power. The term ‘take advantage’ has become a controversial one and is in need of definition by the parliament. We regard the failure of the government to define ‘take advantage’ as one of the gross failings in this bill. Nobody disagrees that there should be a connection between market power and allegedly anticompetitive conduct. Of concern, however, is that at least some people have interpreted the High Court’s definition of ‘take advantage’—in the Rural Press case in particular—as being onerous.

There is a view—and it is a view that I share on a close reading of the judgements—that the High Court in the Rural Press case did take the definition of ‘take advantage’ to a more onerous level than had previously been expressed in, for example, the Queensland Wire case and the Melway case. The High Court found in Rural Press that a key test was whether the firm in question could have undertaken the activity in question in the absence of substantial market power. The ACCC, again the watchdog, has described the effect of the court’s ruling as follows:

What this test means is that, so long as it could physically be possible for a firm to engage in the conduct in the absence of its having market power, it will be held not to have taken advantage of its market power, even though it would not on any rational, commercial basis have engaged in the conduct in the absence of market power. In the commission’s view, such a test defeats the parliament’s intention in amending the act in 1986 of lowering the application threshold for the section.

That is entirely and completely in concert with the opposition’s view on this matter. I acknowledge that some jurists—and I am not a jurist—think that the ACCC has that interpretation wrong. On my close reading of the judgements, I think the ACCC has it right. But at the end of the day there is considerable uncertainty about the definition of ‘take advantage’, and the parliament should put an end to that uncertainty.

The ACCC’s concerns about the ‘take advantage’ provision are part of the reason the ACCC has not commenced a section 46 case since the round of High Court decisions which have given the ‘take advantage’ provision the more onerous test. This is a key point. The High Court handed down its Boral decision; the ACCC immediately discontinued four, I think, actions. They immediately discontinued them and have not commenced any more. Not since the Boral case has the ACCC, the consumer watchdog, felt that it has been in a position in which it has a case with which it could be successful in the High Court. This government has ignored that for the past four years.

In order to eliminate the confusion and uncertainty, Labor moves this amendment to clarify that, when considering whether a firm has taken advantage of market power, the court should consider whether the conduct of the corporation is materially facilitated by its substantial degree of market power, whether the corporation engages in the conduct in reliance on its substantial degree of market power, whether the corporation would be likely to engage in the conduct if it lacked a substantial degree of market power or whether the conduct of the corporation is otherwise related to its substantial degree of market power. I say again for the benefit of the minister: small business groups have called for this amendment, in their submission both to the 2004 Senate inquiry and to the 2007 Senate inquiry. So let us not have the minister get up here and say, ‘Oh, we’ve spoken to small business; they don’t want it,’ or ‘They won’t die in a ditch over it.’ They do want it. The Labor Party wants it. It is a sensible amendment. It is supported by the ACCC. The government should at the very least, if they will not accept any other amendment, accept this one.

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