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

I indicate to the House that the government proposes that amendments (1), (3), (4), (6) and (7) be agreed to, that amendments (2) and (5) be disagreed to and that a further six relevant amendments be made. I suggest, therefore, that it may suit the convenience of the House to first consider amendments (1), (3), (4), (6) and (7), then amendments (2) and (5) and, when those amendments have been disposed of, to consider the further amendments. I move:

That Senate amendments Nos 1, 3, 4, 6 and 7 be agreed to.

The Trade Practices Legislation Amendment Bill 2008 amends the Trade Practices Act 1974 and the Australian Securities and Investments Commission Act 2001. The bill promotes competition and fair trading in Australian markets. In particular, it enhances the prohibitions against anticompetitive unilateral conduct and unconscionable conduct contained in the Trade Practices Act. The bill also improves the ability of the act to be effectively enforced.

Following the bill’s introduction into parliament on 26 June 2008, it was amended by the opposition and minor parties in the Senate. The Senate opposed the provisions of the bill which would align the predatory pricing prohibition in subclause 46(1AA) with the longstanding prohibition in clause 46(1). Those amendments would have removed uncertainty in the current drafting of subclause 46(1AA). The government is disappointed in this as it means that this ill-conceived and poorly drafted piece of legislation will continue in place.

However, the bill contains a number of other important amendments including those clarifying the meaning of ‘take advantage’ and the role of recoupment under section 46. These amendments derive from the recommendations of the 2004 report of the Senate inquiry into the effectiveness of the Trade Practices Act 1974 in protecting small business. They are well-overdue amendments which the previous government neglected to introduce and the absence of which would prevent section 46 effectively prohibiting unilateral anticompetitive conduct to the detriment of consumers. Accordingly, the government reluctantly accepts the Senate amendments which will relate to subclause 46(1AA) in the interests of passing the bill. However, the government will continue to monitor the effectiveness of subclause 46(1AA) and reserves the right to revisit this issue given the concerns of the ACCC and the concerns of every expert credible commentator on this issue.

The government has good reason to be concerned about the opposition’s insistence on keeping the Birdsville amendment because the very people who will be enforcing the law are advising that the law is confusing and has unintended consequences. It not only creates confusion but also opens up the possibility of small businesses being prosecuted, which is the very opposite of its intention. It is a poorly drafted, ill-conceived amendment which does not set out what it is intended to set out and it has unintended consequences. The only commentator who thinks that it is good law is the one who drafted it. Every other academic expert and every other practitioner have noted that it is a seriously deficient law. We do, however, accept it. If we did not accept these amendments, then this bill would fail and it would remain in law anyway. We do, however, reserve the right to revisit the issue in the future.

Question agreed to.

I move:

That Senate amendments (2) and (5) be disagreed to.

The Senate moved amendments which purported to prevent the bill conferring jurisdiction on the Federal Magistrates Court to hear section 46 matters in appropriate circumstances. The government does not accept these amendments. The Senate has opposed the consequential amendments which would have been required as a result of any conferral of jurisdiction on the Federal Magistrates Court but has not opposed the actual conferral of that jurisdiction. As a result, the amendments cannot be accepted in their present form.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

We in the opposition believe that competition is the way in which we get the best deal for consumers, and certainly it has always been an issue in this country that we have in many areas highly concentrated markets. The Birdsville amendment has been part of the now opposition’s response to the issue of ensuring that there is strong competition in the marketplace. I note the comments of the Minister for Competition Policy and Consumer Affairs and Assistant Treasurer in relation to that amendment, but this amendment was enacted in September 2007 and during its time of operation, which has been ample time to make its presence felt, there has been no floodgate of litigation on the matter and there has been no measurable concern generated in the community. So in the time that this amendment has been operating there have been no adverse consequences to date. Small businesses that have been in dialogue with the opposition certainly favour the amendment that was put in place in 2007 and they welcome the change in the definition to a definition of market share. They can certainly see that as a benefit to small business rather than a hindrance.

Question agreed to.

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

I move:

That further amendments (1) to (6) be agreed to:

(1)    Schedule 1, page 3 (before line 6), before item 1, insert:

1A  After subsection 46(1)

Insert:

(1AAA)   If a corporation supplies goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying the goods or services, the corporation may contravene subsection (1) even if the corporation cannot, and might not ever be able to, recoup losses incurred by supplying the goods or services.

(2)    Schedule 1, item 4, page 3 (lines 19 and 20), omit the item.

(3)    Schedule 1, page 3 (before line 21), before item 5, insert:

4A  Subsection 46(4A)

Omit “Court” (wherever occurring), substitute “court”.

(4)    Schedule 2, page 5 (before line 6), before item 1, insert:

1A  After subsection 46(1) of the Schedule

Insert:

(1AAA)   If a person supplies goods or services for a sustained period at a price that is less than the relevant cost to the person of supplying the goods or services, the person may contravene subsection (1) even if the person cannot, and might not ever be able to, recoup losses incurred by supplying the goods or services.

(5)    Schedule 2, item 4, page 5 (lines 19 and 20), omit the item.

(6)    Schedule 2, page 5 (before line 21), before item 5, insert:

4A  Subsection 46(4A) of the Schedule

Omit “Court” (wherever occurring), substitute “court”.

I present a supplementary explanatory memorandum to the bill. Accepting the Senate’s amendments necessitates the government moving its own amendments to the bill to ensure that it continues to effectively address predatory pricing. Simply accepting the Senate’s amendments would have had the consequence of removing one of the key amendments of the bill—the clarification of the role of recoupment under section 46. To rectify this, the government’s amendments reinstate the government’s proposed recoupment amendment. The reinstated provision ensures that where an action relies on an allegation of sustained below cost pricing under subclause 46(1), it will not be legally necessary to prove recoupment. This was necessitated by the decision of the High Court in the Boral case. It has been called for for a long time since that case. Almost every expert commentator thinks that these are appropriate amendments. They are amendments that the previous government failed to make despite recommendations from the Senate committee to do so. They are amendments that the previous government abjectly neglected to introduce despite the fact that the failure to do so effectively neutered section 46. This government is not prepared to do that and we are certainly not prepared to accept an opposition amendment which does that now.

Secondly, accepting the Senate’s amendments necessitates amending the bill so that it would no longer repeal section 46(4A). That subsection presently ensures that the court may consider allegations of predatory pricing under section 46(1). The bill would have rendered section 46(4A) redundant by creating a specific prohibition against predatory pricing by corporations with substantial market power. However, accepting the Senate’s amendments necessitates the retention of subsection 46(4A).

Finally, the equivalent amendments to those outlined above are made to the provisions of the bill which amend the Competition Code. The Competition Code contains the version of section 46 that applies to all persons in the states and territories by virtue of application of legislation in those jurisdictions. Despite the Senate’s amendments, the bill continues to improve the overall effectiveness of the Trade Practices Act in protecting the competitive processes in Australian markets. I commend the amendments to the House.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

The opposition is certainly of the view that the need to have recoupment provisions becomes redundant under the Birdsville amendment. There is no need to prove market power; the new definition has become the issue of market share. Whilst an ability to recoup costs after a competitor is removed from the market is a factor, certainly evidence of market power, under the Birdsville amendment that has become redundant.

Question agreed to.

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

I present the reasons for the House disagreeing to Senate amendments (2) and (5) and I move:

That the reasons be adopted.

Question agreed to.