Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Hansard source

I am appreciative of the acknowledgement that Senator Stephens has done such good work, and I am sure she will appreciate it as well. The reason that we support the amendment by the Democrats to the extent that it goes is that previous approaches to control the power of major oil companies have involved specifying the number of retail sites oil companies can operate and Labor’s approach is to focus on reform to the Trade Practices Act instead.

In the context of the petrol market, the issue is to ensure that the ACCC has the power to ensure that oil companies are not abusing their market power. The petrol retail market is therefore an excellent candidate for these new pro small business reforms to the Trade Practices Act. These reforms have been stated since 2004 in the Senate report The effectiveness of the Trade Practices Act 1974 in protecting small business. Labor supports all of these recommendations.

We will be introducing our amendment on sheet 5028, with the additional item entitled ‘Directions by Parliament to monitor prices, costs and profits of an industry’, unless I am advised by the chair that we are unable to move it if the amendment before us is defeated. I am advised that that is not the case, so we will proceed to support this amendment and we will move our amendment, or those items that have not been carried—if the government changes its mind about these, of course. We will be pursuing this matter in the way that Senator Murray has pursued it.

The government have agreed to bring forward a bill that includes a small set of these recommendations. This has been held up in the Senate due to an apparent linkage with other major Trade Practices Act amendments—the Dawson bill, which contained merger changes that were deleted from the bill in the Senate. The major changes relate to section 46, which constrains abuse of market power. They seek to toughen section 46 to allow the ACCC to crack down on the abuse of market power.

The amendment to subsection 46(1) to insert the words ‘in that or any other market’ has regard to the Rural Press decision which limits section 46 to the primary market not secondary markets. However, market power, in our view, can be exerted in secondary markets, and this amendment is necessary to ensure that this aspect of the Rural Press case is overturned—in other words, that this chamber expresses a view that the findings in the Rural Press case not apply and that the court have regard to taking advantage in more than a particular market with regard to subsection 46(1).

In relation to adding, after subsection 46(1A), the provisions which I think are best described as the key recommendation of the Senate committee report—and, in fact, amendments which the ACCC has asked for—we have regard to the key outcome of the Boral case, which effectively imposed the old, pre-1986 threshold for anticompetitive conduct: substantial control. This amendment ensures that the lower threshold intended to apply in the current law is preserved. It overrides this aspect of the Boral decision. In other words, by the passage of this amendment we are seeking to give effect to what was understood to be the intent of the law in the first place before that decision. It clarifies the meaning of ‘take advantage’ to ensure that interpretations applied in case law, and especially this in the Boral case, are overridden. The effect of these would be to ensure that an abuse of market power can occur if there is no strong evidence of purposeful intention. So we say that that is an important change that is necessary to this legislation.

Inserting a new subclause (2A) to section 46, in our view, clarifies the uncertainty that may exist after the Boral case in relation to coordinated market actions—that is, cooperating in a price war. It would ensure that undertakings to coordinate market activity can be evidence of an abuse of market power. Again, we say that this is necessary because of the interpretations of the courts. In our view, those interpretations would undermine the original intent of the legislation, and this amendment would restore it.

We regard inserting the new subclause (3A) in section 46 as a recoupment issue. The issue is whether or not predatory pricing—that is, forcing a player out of the market by price wars, such as is believed to have occurred with Compass Airlines—requires that price cutters’ losses need to be recouped. Labor’s amendment ensures that this is just a factor that the courts may have regard to. It is not an obligation, but it empowers the court to use its discretion to decide whether these factors can be considered in the interpretation of an action under these provisions.

The insertion of a new subclause 51AC(3)(aa) would seek to stop unilateral variations of contracts by one party, the more dominant market player, which would have the effect of driving up costs and enhancing the profits of one party. We think that that is an important variation to the law that should take place. Similarly, the insertion of 51AC(4)(aa) would have the same effect.

To that point our amendments are identical, and I will deal with the proposed new section 95ZEA when dealing with the opposition’s amendment. We think it is important not that the Senate wait for as yet uncertain legislative prescriptions that might flow from whatever action the government is considering but that the Senate now has an opportunity, concurrent with dealing with the petroleum retail legislation, to remove barriers to the implementation of the competition intent, if I can put it that way, that the parliament had when the original trade practices legislation was passed and subsequently amended—but subsequently, of course, given a different effect or interpreted differently by the courts. In our view, that would have the effect of strengthening competition in the market and of ensuring that dominant players in the market have less opportunity to impose their presence in the market and to compete unfairly against smaller players.

This is a small business amendment. This is an amendment which, if the government really did support small business, it would easily assent to. From what the minister has said, it is not going to assent to this. We have to wonder what the motivation of this government is—the government which claims to be the protector of small business, at the same time resisting amendments in a way that can only benefit the biggest players in this industry and indeed in all industry.