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

I move amendment (1) as circulated in my name:

(1)    Schedule 1, after item 3, page 3 (after line 11),

insert

3A  After subsection 10(1A)

Insert:

      (1B)    At least one of the deputy chairpersons must have a small business background.

The Trade Practices Legislation Amendment Bill (No. 1) 2007, as the Minister for Small Business and Tourism said in her summing up, creates the position of a second deputy chair of the ACCC. The government has indicated that this will be filled by a person with a small business background. Indeed, the minister emphasised that it will be filled by somebody who has experience in small business—experience at the coalface. I welcome that. If that is the case, why not put it in the legislation? The government already has a similar provision in the legislation under section 7 of the act, which provides that one commissioner must be a person with a consumer background. It is difficult to see why a similar arrangement could not be reached in relation to the position of the second deputy chair. If the government says that it intends to appoint somebody with small business experience as a second deputy chair, we take that at face value. But why not put it in the legislation to ensure that this government and future governments are obliged to do so? I would welcome the minister providing an explanation to the House.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

In fact, I can say to the member that he is absolutely right. Section 7 of the Trade Practices Act requires that:

the Minister must:

(a)

be satisfied that the person qualifies for the appointment because of the person’s knowledge of, or experience in, industry, commerce, economics, law, public administration or consumer protection; and

(b)

consider whether the person has knowledge of, or experience in, small business matters ...

We have already announced that the additional deputy chair position will be filled by a candidate who is experienced in small business matters. I cannot give a clearer explanation than that. I would suggest that the member for Prospect stops wasting the time of the House and accepts the government’s explanation.

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

If the Minister for Small Business and Tourism thinks that a debate about small business is a waste of the time of the House, we are in very big trouble and have a very big problem.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

If the member for Prospect wants to debate this, fine. I am not going to be verballed by him or anyone else in this place.

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

I know that the Minister for Small Business and Tourism has somewhere else to be, but these are important matters and the explanation given by the minister was completely unacceptable. She well knows that part 7 of the act has a specific clause which deals with a commissioner with a consumer background. There is no good or valid reason not to have a similar clause relating to a second deputy chair with a small business background. This side of the House will support this amendment on that basis. We find the explanation from the minister completely unacceptable.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Once again, I say to the member for Prospect that if he is serious about standing up for small business then, instead of coming in here and pretending that he is and arguing about some word in part 7 of the Trade Practices Act, he should not reinstate unfair dismissal and not abolish AWAs. That is the real test for whether or not you support small business.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

I was not going to be provoked, but if we are going to widen the debate during this consideration in detail then I will enter the debate. I say to the Minister of Small Business and Tourism that this is a serious point that the opposition makes. The operation of the ACCC—indeed, the operation of the Trade Practices Act—is something that small business in general looks upon with great suspicion. The Trade Practices Act has been one of those acts that has been discussed by parliaments in great detail since it came in. We are talking about credibility at the moment and yet the minister and the Treasurer only had the support of one member of the coalition in this debate. That interests me. It is very important that we clarify this and make sure that the deputy chair that will be created by this amendment to the act will be of a small business background, as was indicated. That is why the opposition put this amendment forward: to make that certain and to give confidence to all those in small business who are hoping that the changes to the Trade Practices Act and the changes to the power given to the ACCC give them some protection.

Question negatived.

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

I move amendment (2) as circulated in my name:

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

3A  After subsection 46(4)

Insert:

      (4B)    A corporation can have a substantial degree of market power even though there is no proof that the corporation has the ability to or will have the ability to recoup losses from pricing below the relevant cost to the corporation supplying the goods or services.

This amendment makes clear the wish of the parliament that, in assessing the market power of a firm, it not be necessary to establish that the firm in question is able to raise prices to supracompetitive levels in the future to recoup losses sustained by predatory behaviour. I believe that this was clearly the wish of the parliament back in 1986 when it passed the Lionel Bowen reforms. On any objective reading, when the then Attorney-General introduced those amendments to lower the threshold from ‘control’ to ‘substantial power’ it was not the wish of the parliament to have the firm being able to recoup its losses as the test.

The need for this amendment rises primarily out of the Boral case. I will share with the House some excerpts from the judgement of one of the majority judges, who ruled that Boral did not abuse its market power because it did not have a substantial degree of market power. His Honour Mr Justice McHugh said:

Nor was it—

Boral—

in a position to recover the losses it made by pricing below relevant cost when and if the price-cutting finished. Accordingly, irrespective of the purpose of its pricing, it did not have a substantial degree of market power of which it could take advantage.

So in this case there was substantial evidence that Boral was acting with the specific purpose of damaging a competitor. There were, if you like, ‘smoking gun’ memos. It was trying to force a competitor out of business and yet the court found there was no breach of section 46 because it was impossible to abuse a market power that the firm did not have. The court ruled that the firm did not have that market power because it could not be proved that it was in a position to recoup its losses. It was a concentrated but still fairly competitive market. There were other players in the industry. Even if the target firm were forced out of business there would still be others—from memory I think it was Pioneer—in the industry. Therefore, it could not be proved that Boral would eventually be able to recoup their losses, even though it was clearly in their best interests to drive one of their competitors out of business.

More eminent commentators than me have commented on the unfortunate implications of the High Court’s decision in this case. Former ACCC chairman Professor Allan Fels said:

It should be made clear in the Act that the so-called ‘recoupment’ requirement is not necessary.

Alan Fels has called for the amendment that this side of the House has moved. The ACCC, under its current chair, Mr Samuel, who was appointed by this government, said:

The ACCC takes the view that s.46 requires amendment to provide that in cases involving allegations of predatory pricing, a finding of expectation or likely ability to recoup losses is not required to establish a contravention of s.46.

The eminent practitioners Smith and Trindade said:

The High Court has introduced what amounts to a threshold dominance test and failed to provide a proper framework for distinguishing between conduct which the act is designed to foster and that which the community expects it to prevent.

Indeed, as is pointed out by Justice Kirby in the dissenting judgement:

… the majority have effectively created a cogent case for reform of s 46.

So this amendment acts on those reforms. While it is of course entirely up to Their Honours how they interpret the law, it is incumbent on this parliament to make the law as clear as possible and this amendment not only makes it very clear to the courts that ‘substantial degree of power in the market’ is a lower test than the ‘dominance’ test but shows how. This is a key point of difference, and unless the government accepts this amendment its bill will be nothing but a sham.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Under the government’s amendments, the courts are free to consider whether a corporation has a reasonable prospect of recouping its losses from below-cost pricing. However, the amendments do not make specific reference to recoupments, so a finding of predatory pricing can be made even if there is no prospect of recoupment. The government is convinced—the law is clear—that recoupment is not a necessary element to prove predatory pricing.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

My interest in the Trade Practices Act started last century when I was on the inquiry of the House of Representatives Standing Committee on Industry, Science and Technology, the Reid inquiry, into retail tenancy and then on the Joint Select Committee, the Baird committee, which brought down the report Fair market or market failure? I have either the advantage or the disadvantage of not having a legal background. What interested me in the discussion on the Trade Practices Act was that it became apparent that the way in which the courts were interpreting the Trade Practices Act—by developing case law outcomes based on the act—could be considered to be different to the intent of the legislators in the way in which they had put the act together. I believe that the Minister for Small Business and Tourism should reconsider the opposition amendment. If she is in agreement, as she says, that the court may look at a case where there is no chance of recoupment, then we should put that as our intent in the legislation. The Boral case that is referred to is a very interesting one, because where it was apparent that there were arrangements put in place to squeeze competitors—and these competitors were probably not what you would consider your small business type competitors—there was a problem.

Since this legislation has been put forward there has been comment made by Associate Professor Frank Zumbo. He followed intently both the retail tenancy inquiry and the joint select committee inquiry and he has developed a great expertise in trade practices matters. He has worked in conjunction with the ACCC from time to time—he may have been an associate—and he has stated on this point that, for small or medium business, the High Court’s decision appears to mean that they will ordinarily have little if any recourse under section 46 for allegations of predatory pricing and, whilst being large and economically powerful, are unable to set prices unilaterally. These are the problems that we confront. There is this disjunct with the developing case law and the way in which the parliament has tried to indicate its intent that there should be protection for small business. I think that this is again a classic case of putting in the legislation what we absolutely mean.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

The Minister for Small Business and Tourism made a statement in her previous contribution that recoupment under the current law is not necessary as a precondition for establishing that predatory pricing has occurred. If she believes that under the present law it is not necessary for recoupment to be a condition, why not pass our amendment? Our amendment simply makes the point that it is not necessary. If she thinks it is not necessary, our amendment does no harm and, even by her judgement, some good. The real answer I think is that the ACCC, under the current chair, Mr Graeme Samuel, has said:

The ACCC takes the view that s46 requires amendment to provide that in cases involving allegations of predatory pricing a finding of expectation or likely ability to recoup losses is not required to establish a contravention of the act.

I will repeat that. He said that it takes the view that section 46 requires amendment to provide so. That is what Labor is doing. You are saying it is not necessary, but the chairman of the ACCC says it is necessary. We are backing the ACCC. We are backing competition. Who are you backing, Minister? It sounds to me that you, as the small business minister, are backing bigger businesses because you want predatory pricing to be able to continue under section 46 of the Trade Practices Act.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

The government has made its position very clear. The government does not agree with the amendment.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

It is very embarrassing, is it not, Mr Deputy Speaker, that the Minister for Small Business and Tourism is just sticking to the rehearsed line that this amendment is not necessary? That is what she has been told to say by the Treasurer, because the Treasurer is not interested in giving teeth to the competition watchdog in relation to predatory pricing? It is very intriguing to ask why that is the case. If this amendment is not necessary in your view, then it will do no harm, but it can do some good. We have the Chair of the ACCC saying it is necessary. The ACCC takes the view that this amendment is necessary. Where are you getting your advice, Minister? From the Treasurer, obviously. It is terrific that you now have a briefing note. You now might be able to say something informative about the true motivation of the Howard government in indicating that it will not give the ACCC teeth in relation to predatory pricing. Now she has got a brief she can read it and enlighten us not as to the real views of the minister but as to the views of the government. It will be fascinating to hear the answer.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

The member for Rankin will probably regret asking me that question because, as I indicated during the earlier debate, the government has reached its position on all of these amendments after very long and detailed discussions with all of the small business groups. The government’s amendment is as a result of the unanimous agreement of the small business groups. The member for Rankin can use an unsourced quote from Graeme Samuel—I have not seen that quote—but what I am—

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Dr Emerson interjecting

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

Member for Rankin, you have had your go. If you wish to speak again, you may seek to call.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

They do not want to listen to small business; they just want to railroad small business all the time. As I said, the member for Rankin will not want to hear that response, but these amendments—and let me repeat it for the member for Rankin and the member for Prospect and everyone else on the opposition benches—are the result of detailed discussions and consultation with the small business groups.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

I do not regret at all asking these questions. The Minister for Small Business and Tourism would be aware—and it is true—that the small business community have accepted that the amendments that the government is making are better than none at all, but they have said to us that they do not go far enough. That is the fundamental point. We support your amendments, to the extent that they make any improvements. They have just passed the House. That is why we backed them. But they do not give effective teeth to the competition watchdog—

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Only in your opinion.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Who is Mr Graeme Samuel? I remember Graeme Samuel. Just remind me. He is the Chair of the ACCC—I remember now! The minister is the minister for small business. She is unaware of this statement. This statement is on the public record. This is evidence, and now she has admitted that she did not know that the Chair of the ACCC has called for the amendment that Labor has moved and the government is about to vote against. She did not know that. Why doesn’t she talk to the ACCC? Why doesn’t she talk to the competition watchdog and ask their opinion? Whose opinion does she ask for? Only the Treasurer’s. The Treasurer has got his own motivations in this. It is amazing that here in this parliament tonight the minister for small business has admitted that she did not know that the chair of the ACCC has indicated on the public record, in the quotations I gave, that he wants this amendment—that the ACCC needs this amendment, that small business needs this amendment, that the consumers of Australia need this amendment. With that evidence, I now call on the government to reconsider its opposition and support our amendment here and now.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Let me once again put on the record for the opposition that the government has listened to small business. You may listen to whoever you like, but this government listens and responds to the needs of small business and all of their associations. I read out earlier in this debate all of the small business organisations that the government dealt with extensively over a long period and it should come as no surprise that this government actually listens and responds to small business.

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

This is almost embarrassing. I almost feel embarrassed for the Minister for Small Business and Tourism. She says, ‘We listen to small business.’ I wonder whether she read the submissions of small business to the Senate inquiry. Did she read the submission of the Coalition for Fair Trading which called for this amendment? Did she read the submission of NARGA—the organisation which represents small grocers—which called for this amendment? Did she read the submission of various small business groups which called for this amendment that she is rejecting? She says, ‘We listen to small business.’ She has not even read the submissions of small businesses to the Senate inquiry. I could go back and check. I could quote more. I do not want to mislead the House. I am not certain of some of the other small business organisations, but the Coalition for Fair Trading, NAGA, I think COSBOA—although I am not 100 per cent sure—and several small businesses groups called for this amendment. She says, ‘We listen to small business.’ No, she does not; she ignores them. I will give the minister the benefit of the doubt. It is possible that she argued for this amendment within government, but she does not have the clout.

That is unlike our side, where the shadow minister for small business and I developed our amendments in close consultation over a period of time. Clearly, on the other side, the Minister for Small Business and Tourism goes in and mounts an argument, the Treasurer slaps her down, and that is the end of the story. That is the end of the story because the government do not care about small business. They hide under the masquerade of consultation when clearly the small business advocate in the ministry has not even read the submissions by small business to the Senate inquiry. It is a disgrace.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

I can reassure the member for Scullin that this will be my last contribution on this matter. I want to make a contribution by way of a question. The question is: Minister, are you asserting here in the parliament that small business organisations do not want this amendment—yes or no?

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

I am happy to answer the member for Rankin’s question on behalf of my colleague from the neighbouring electorate of McEwen. The answer, of course, is that small business did want this amendment. It is clear from the Senate inquiry. It is in the report of the inquiry of the Senate Economics References Committee, The effectiveness of the Trade Practices Act 1974 in protecting small business , from March 2004, on pages 17 and 18 about recoupment, at paragraphs 2.39 and 2.45 and recommendation 3. Let us have a look at the summary of what NARGA wanted. At paragraph 2.42 the report says:

NARGA argued that recoupment is not currently a component of s.46, since s.46 relates strictly to a corporation’s purpose.

NARGA said:

All that is required by the wording of s 46 and the parliamentary intention behind s 46 is that the corporation has a substantial degree of market power and has taken advantage of that power for one of the anti-competitive purposes identified in the provision. To require proof of recoupment is to add a new element to s 46, a state of affairs certainly not contemplated by the parliamentary intention ...

So it needs to be added. That is clearly what NARGA said. At paragraph 2.44 the Senate committee report says:

The ACCC’s submission agreed with NARGA’s view that recoupment should not be necessary under s.46:

The ACCC has been quoted during this debate. It said:

The ACCC takes the view that s.46 requires amendment to provide that in cases involving allegations of predatory pricing, a finding of expectation or likely ability to recoup losses is not required to establish a contravention of s.46. Such an amendment would ensure that the application of s.46 is consistent with Parliament’s stated intention.

That was from the submission of ACCC, submission 30 to the inquiry of the Senate Economics References Committee. I seek leave to table pages 17, 18 and 19 of this report.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Is leave granted?

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

The report is already published.

Leave not granted.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

It not being granted I just suggest that my colleague from the neighbouring electorate of McEwen please read it as I need her to read the Melway about a dispute that we have about a road.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Fran Bailey interjecting

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

Every time I think I am not going to make another contribution the minister says something that I just have to respond to. The minister has put the vehicle into reverse and gone down the road at 100 miles an hour. To start with she said: ‘Small business do not want this amendment. We have consulted with small business and they do not want it.’ The Labor Party provided the evidence and across the table she says, ‘Well, they’re not going to die in a ditch for the amendment.’ The situation has changed. Now she is saying that maybe they want it but they are not going to die in a ditch for it. They might not but we will.

Question put:

That the amendment (Mr Bowen’s) be agreed to.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to 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.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

The government are of the view that the law is very clear that ‘take advantage’ has been interpreted in the case law in section 46 to simply mean ‘use’. This interpretation does not hinder the operation of section 46 and there is not a sufficient level of ambiguity to warrant an amendment. Again I say to those members of the opposition, as I said in my summing-up speech: the government have consulted widely over a long period of time and have listened very carefully to what all of the small business groups have been saying, and we do believe that we have the balance right—balancing the needs of small business operating in a competitive environment and ensuring that consumers benefit from that competitive environment.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

The minister has just said that there is no ambiguity here. That is my interpretation of what the minister has said.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

Yes.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

That is now confirmed by the minister. Again the ACCC does not concur. The amendment that has been moved by the shadow competition minister, the member for Prospect, is precisely the wording of an amendment advocated by the ACCC in a public document. We could also obtain that document and seek leave for it to be tabled, if that would be of any benefit, but the ACCC disagrees with the government. It does not agree with the proposition that there is no ambiguity; it is very concerned about ambiguity. This amendment would remove that ambiguity. It is written by the ACCC and, on that basis, there is no decent, sensible policy reason for the government to do anything but to vote for Labor’s amendment.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

I do not think anyone in this building would regard the Trade Practices Act as a simple or straightforward document. It is the best that we have to work with. The government genuinely believe that we have got the balance right. But let me just say that the amendments that the ALP have moved, the government believe, would extend the scope of ‘take advantage’ to an undesirable level.

We also believe that these amendments give insufficient guidance to courts as to what is meant by engaging in conduct in reliance on market power, conduct that would be likely to be engaged in if the corporation lacks substantial market power and conduct that is otherwise related to the corporation’s substantial market power. These amendments moved by the member for Prospect do not ensure a sufficient causal connection between the conduct and the substantial market power. If there is no sufficient connection between the conduct and the substantial market power, section 46 could outlaw or discourage beneficial pro-competitive conduct to the detriment of consumers. Again I say to the member for Prospect and the member for Rankin: even if I gave you the greatest benefit of the doubt, your amendment will not deliver the benefits that you are claiming it will for small business.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

That the ACCC is claiming!

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

The member for Rankin constantly interjects about the ACCC. Let me tell him that, when it comes to delivering for small business, the government will listen, will go out and will interact directly with small business. We believe that the experience of small business people is paramount, and we make absolutely no apology for that whatsoever. The member for Rankin can quote Frank Zumbo, the ACCC or whoever he likes, but the government will always stand up for small business. We will always listen to them, and we will deliver for them.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

The minister’s explanation comes to the core of the problem, because it is about what people might consider to be normal competition rather than the misuse of market power. The minister is right: the opposition’s amendment is to give guidance to the courts so we do not get into these arguments about cause and conduct or the intention of conduct. That is the important thing because, for small business, the degree of market power of some of their competitors and the way in which that market power is used leaves small business with no ability to survive. Some people would then argue that that is the way the market operates—and it is a fine line; we understand that it is about balance—but there has been a Senate inquiry and people have made submissions. The Trade Practices Act is a developing beast not only in the way the legislation is framed but in the way it is interpreted in the courts. The minister should not dismiss the fact that one of the real problems is that very few cases are being put before the courts. There is a limitation on the way the case law has developed, either on the basis of deficiencies in the law or on the basis that the ACCC has insufficient resources. Small business is looking to government—governments of any persuasion—for some further guidance. The parliament has indicated that market power should not be misused—and ‘misuse’ may be considered by big business as being about the way they play in the market—but that does not deliver outcomes for small business.

I heard the minister say that she felt that the way we had moved on retail tenancy matters sufficiently covered that, but there are still too many things that happen—for instance, when shopping centres are redeveloped, the market power that is used against tenants creates a great difficulty. We should be attempting to make sure that by amending the Trade Practices Act we are giving definite guidance to the courts in respect of interpreting our intentions of this act.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

I seek leave to table the submission from the ACCC to the Senate Economic References Committee’s inquiry into the effectiveness of the Trade Practices Act 1974 in protecting small business. The submission contains the amendments that are faithfully reflected in the shadow minister for competition’s amendments.

Leave not granted.

Question put:

That the amendment (Mr Bowen’s) be agreed to.

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

by leave—I move amendments (4), (5) and (6) circulated in my name:

(4)    Schedule 3, item 7, page 11 (line 4), omit

                 ‘Omit “$3,000,000”, substitute “$10,000,000”.’,

                 substitute

                 ‘Repeal the subsection.’

(5)    Schedule 3, item 8, page 11 (line 6), omit

                               ‘Omit “$30,000,000”, substitute “$10,000,000”.’,

                               substitute

                               ‘Repeal the subsection.’

(6)    Schedule 3, after item 8, page 11 (after line 6), insert:

8A Subsection 51AC (11)

Repeal the subsection.

These amendments deal with the threshold for actions under section 51AC of the Trade Practices Act. Section 51AC prohibits unconscionable conduct in business transactions between companies, particularly between a large company and a small business. The section only applies to transactions that are less than $3 million; the figure was originally $1 million and it was increased to $3 million in 2001 on the recommendation of a Senate committee. This bill increases the threshold to $10 million.

After some consideration, the opposition has come to the view that the threshold is not appropriate. The evidentiary hurdle to jump when it comes to unconscionable conduct is high, and appropriately so. An act must be particularly egregious to satisfy the court that it was unconscionable. An act can be unfair, it can be harsh, without being unconscionable. An unconscionable act is one which offends the conscience, one which would make any decent person not be able to sleep at night. The Trade Practices Act, at subsection (4) of 51AC, outlines the factors that a court may have regard to when considering section 51AC cases. First amongst these is ‘the relative strengths of the bargaining positions of the acquirer and the small business supplier’. This makes it clear that this section deals with the relationship between big business and small business, so if the threshold is removed we are not going to see actions between, for example, BHP and Rio Tinto—two large companies of equal or similar bargaining power. The act will still apply to big business doing business with small business exclusively.

The ACCC, the government’s watchdog, believes that the threshold should be removed, as we do. Small business can engage in large transactions. The government seem to think that small business only has small transactions, but a small business can engage in a large, one-off transaction. Small businesses should have this section available to them. The government thought that $10 million was an appropriate figure back in 2004. Three years later, they still think that $10 million is the appropriate figure, when inflation would indicate that $11 million or $12 million would be the appropriate figure now. In other, similar arrangements—in other policy areas but related to the Trade Practices Act—the government have said $20 million is the appropriate threshold. Well, let us be done with it. Let us not have Senate committees recommending increases every three or four years; let us abolish the threshold. It makes no good policy sense, it serves no purpose and it should go.

Fran Bailey (McEwen, Liberal Party, Minister for Small Business and Tourism) Share this | Link to this | Hansard source

The government does not agree with uncapping this. The government agrees that the $3 million threshold was too low, but the government believes that $10 million is the appropriate level.

Question negatived.

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

I move amendment (7) circulated in my name:

(7)    After schedule 3, page 11 (after line 11), insert

Schedule 4 - Other matters

1  After subsection 155(1)

Insert:

     (1A)    The power under subsection (1) can be exercised at any time prior to the commencement of substantive proceedings in a matter before the courts.

2  Subsection 86(1A)

After “any matter arising under “insert” section 46”.

Section 155 of the act provides the ACCC with powers, under certain circumstances, to obtain information relevant to its decisions under the act by issuing a notice requiring a person:

(a) to furnish to the Commission ... within the time and in the manner specified in the notice, any such information;

(b) to produce to the Commission ... in accordance with the notice, any such documents; or

(c) to appear before the Commission ... at a time and place specified in the notice to give any such evidence, either orally or in writing, and produce any such documents.

There are similar powers available to ASIC, APRA, the Australian Customs Service and the Australian Taxation Office. Currently, the courts have ruled that these powers cease when the ACCC begins an action. The ACCC has consistently argued for the act to be strengthened to enable it to retain these powers when seeking an injunction and for them to continue until the substantive case begins.

In evidence before the committee, the ACCC argued that the revocation of section 155 powers is a disincentive to begin court actions and seek injunctions for anticompetitive behaviour to stop, thus delaying the provision of relief to affected businesses and consumers. As the ACCC argued:

At the moment, we have a trade-off between either getting an interim injunction and therefore losing the ability to use our section 155 powers thereafter, or not getting an interim injunction until the point where we have ... got our case together and finished using our 155 powers. But that can be a reasonable way down the track and the conduct continues in the meantime.

The need for this trade-off is unacceptable. The amendment I have moved will extend the ability of the ACCC to keep its section 155 powers after it has sought an injunction but before a substantive action commences. The ACCC should not be forced to choose between seeking an injunction to stop anticompetitive behaviour and getting more information to prove its case. My amendment will strengthen the ACCC’s powers whilst protecting the rights of a defendant in a substantive court case. I commend the amendment.

Question negatived.

Bill agreed to.