Ted O'Brien (Fairfax, Liberal Party) Share this | Hansard source

I found it hilarious that the member for Fenner compared the idea of an effects test to a species that simply will not go away, a species that will outlast any condition and live in any habitat. Well, all I can say in response is that a good idea never dies. But I am not surprised that the member for Fenner and the Labor Party are so adamantly opposed to this legislation, because, at the end of the day, this bill seeks to contain, to curb, misuse of market power. Put in a different way, it seeks to contain any misuse of monopolistic power. Since the union movement effectively controls the Labor Party—the union movement made up of a series of monopolies—it is understandable that, out of principle, the Labor Party will oppose anything that looks, smells and sounds like a restriction of monopolistic misuse of power. But the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 is a good bill, which is why I rise in support of it today.

The bill seeks to deal with one of the fundamental challenges in free market economies everywhere, which is to ensure that competition flourishes. Competition inherently creates winners and losers, and, at a Darwinian level, that is what the free market is all about. Dare I say, it is what makes the problem of dealing with monopoly situations so difficult. As the High Court has said in a passage that is often quoted in this context, because it is just so compelling and clear:

Competition by its very nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective by taking sales away.

Their Honours said:

Competitors almost always try to 'injure' each other in this way …

and such injuries are inevitable consequences of the competitive environment our laws seek to foster.

Herein lies the challenge that this bill seeks to address. The competitiveness of the marketplace—the opportunity to fight, to win, to lose—must be protected. This requires acknowledgement of the fact that, if one misuses the power they accrue as a result of winning in the marketplace, then in doing so they compromise the process of competition itself, thus weakening the competitiveness of the very market in which they operate. This concept of balancing the right of companies to compete with them having a commensurate responsibility not to misuse the power they accrue in the process, to my mind, is an attempt to address what Lord Acton pointed out nearly 130 years ago—that power tends to corrupt, and absolute power corrupts absolutely. Monopolistic power is the antithesis of competition, for it tempts the misuse of power—and that, I hope all members would agree, is something our laws must militate against.

We are of course not the first Australian parliament to grapple with this question. Our first effort to deal with it was in 1915, but it was not until the Menzies era, post World War II, as the pace of the global economy picked up, that major efforts began to reduce the adverse consequences of excessive market concentration. In 1960 the Governor-General, William Morrison, said:

The development of tendencies to monopoly and restrictive practices in commerce and industry has engaged the attention of the Government which will give consideration to legislation to protect and strengthen free enterprise against such a development.

What flowed from that commitment of the Menzies government was a historic piece of legislation, the Trade Practices Act 1965, which sought to establish principles of fairness in business across a very broad canvas, but especially in relation to this issue of appropriate use of market power and constraints on the misuse of market power by the then emerging big operators.

Since 1974 until here and now, section 46 of the act, which has now become the Competition and Consumer Act, has sought to define 'misconduct' in relation to the use of market power through two legal tests. The first involves the question of whether the entity was taking advantage of its market power, and the second involves an entity's intent. That is the question of purpose—whether the purpose of an activity seeks the elimination or the cause of substantial damage to a competitor, or the prevention of another entity entering the market, or the deterrence of a person from engaging in anticompetitive conduct. The legal arguments, and indeed the arguments in this place around the explicit, practical meaning of both the 'take advantage' and the 'purpose' tests of section 46 have been long, complex and, frankly, confusing. But the bottom line in the view of the government, and in the view of a recent root-and-branch review of this issue, is that these tests have ultimately proved to be inadequate. The 'take advantage' test has faltered in the courts, with an effective defence being that a particular form of behaviour that is alleged to be inappropriate for a firm with market power is permissible for a firm without market power. Thus it prompts the reasonable question: how then can it be considered to be taking advantage? If the behaviour is okay and legal for a firm without market power, how can it not be the same for a firm with market power? But it is the 'purpose' test that has really been assessed—

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