Barnaby Joyce (Queensland, National Party) Share this | Hansard source

I move:

(1)    Page 37 (after line 21), after Schedule 1, insert:

Schedule 1A—Amendments to deal with abuse of market power, creeping acquisitions and a divestiture remedy in relation to media markets

Broadcasting Services Act 1992

1 After section 61AZK

Insert:

Subdivision G—Misuse of market power in a media market

61AZL Misuse of market power in a media market

        (1)    A corporation that has a substantial degree of power in a media market shall not take advantage of that power in that or any other marketfor the purpose of:

             (a)    eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; or

             (b)    preventing the entry of a person into that or any other market; or

             (c)    deterring or preventing a person from engaging in competitive conduct in that or any other market.

        (2)    For the purposes of subsection (1):

             (a)    the reference in paragraph (1)(a) to a competitor includes a reference to competitors generally, or to a particular class or classes of competitors; and

             (b)    the reference in paragraphs (1)(b) and (c) to a person includes a reference to persons generally, or to a particular class or classes of persons.

        (3)    In determining for the purposes of this section whether a corporation has a substantial degree of market power in a media market, the Court will at least take into account the following principles:

             (a)    the threshold of a substantial degree of power in a market is lower than the former threshold of substantial control previously used in section 46 of the Trade Practices Act 1974; and

             (b)    the substantial market power threshold does not require a corporation to have an absolute freedom from constraint, it is sufficient if the corporation is not constrained to a significant extent by competitors or suppliers; and

             (c)    more than one corporation can have a substantial degree of power in a market; and

             (d)    evidence of a corporation’s behaviour in the market is relevant to a determination of substantial market power.

        (4)    If:

             (a)    a body corporate that is related to a corporation has, or 2 or more bodies corporate each of which is related to the one corporation together have, a substantial degree of power in a media market; or

             (b)    a corporation and a body corporate that is, or a corporation and 2 or more bodies corporate each of which is, related to that corporation, together have a substantial degree of power in a media market;

                 the corporation shall be taken for the purposes of this section to have a substantial degree of power in that market.

        (5)    In determining for the purpose of this section whether a corporation has a substantial degree of power in a media market, the Court may consider the corporation’s degree of power in a market to include any market power arising from any contracts, arrangements, understandings or covenants, whether formal or informal, which the corporation has entered into with other entities.

        (6)    In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the Court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of:

             (a)    competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or

             (b)    persons to whom or from whom the body corporate or any of those bodies corporate supplies or acquires goods or services in that market.

        (7)    In determining for the purposes of this section whether a corporation:

             (a)    has a substantial degree of power in a media market; or

             (b)    has taken advantage of that power for the purpose described in paragraph (1)(a), (b) or (c);

                 the Court may have regard to the capacity of the corporation, relative to other corporations in that or any other market, to sell in that or any other market a good or service at a price below the cost to the corporation of producing or acquiring the good or supplying the service.

        (8)    In this section:

             (a)    a reference to power is a reference to market power;

             (b)    a reference to a market is a reference to a market for goods or services; and

             (c)    a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.

        (9)    Without extending by implication the meaning of subsection (1), a corporation shall not be taken to contravene that subsection by reason only that it acquires plant or equipment.

      (10)    This section does not prevent a corporation from engaging in conduct that does not constitute a contravention of any of the following sections, namely sections 45, 45B, 47 and 50, of the Trade Practices Act 1974 by reason that an authorization is in force or by reason of the operation of section 93 of the Trade Practices Act 1974.

      (11)    A corporation may be taken to have taken advantage of its power for a purpose referred to in subsection (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.

61AZM Prohibition of acquisitions that would result in a substantial lessening of competition in a media market

        (1)    A corporation must not directly or indirectly:

             (a)    acquire shares in the capital of a body corporate; or

             (b)    acquire any assets of a person;

                 if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a media market.

        (2)    A person must not directly or indirectly:

             (a)    acquire shares in the capital of a corporation; or

             (b)    acquire any assets of a corporation;

                 if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a media market.

        (3)    Without limiting the matters that may be taken into account for the purposes of subsections (1) and (2) in determining whether the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a media market, the following matters must be taken into account:

             (a)    the actual and potential level of import competition in the market;

             (b)    the height of barriers to entry to the market;

             (c)    the level of concentration in the market;

             (d)    the degree of countervailing power in the market;

             (e)    the likelihood that the acquisition would result in the acquirer being able to significantly and sustainably increase prices or profit margins;

              (f)    the extent to which substitutes are available in the market or are likely to be available in the market;

             (g)    the dynamic characteristics of the market, including growth, innovation and product differentiation;

             (h)    the likelihood that the acquisition would result in the removal from the market of a vigorous and effective competitor;

              (i)    the nature and extent of vertical integration in the market.

        (4)    Where:

             (a)    a person has entered into a contract to acquire shares in the capital of a body corporate or assets of a person;

             (b)    the contract is subject to a condition that the provisions of the contract relating to the acquisition will not come into force unless and until the person has been granted an authorization to acquire the shares or assets; and

             (c)    the person applied for the grant of such an authorization before the expiration of 14 days after the contract was entered into;

                 the acquisition of the shares or assets shall not be regarded for the purposes of this Act as having taken place in pursuance of the contract before:

             (d)    the application for the authorization is disposed of; or

             (e)    the contract ceases to be subject to the condition;

                 whichever happens first.

        (5)    For the purposes of subsection (4), an application for an authorization shall be taken to be disposed of:

             (a)    in a case to which paragraph (b) of this subsection does not apply—at the expiration of 14 days after the period in which an application may be made to the Tribunal for a review of the determination by the Commission of the application for the authorization; or

             (b)    if an application is made to the Tribunal for a review of the determination by the Commission of the application for the authorization—at the expiration of 14 days after the date of the making by the Tribunal of a determination on the review.

        (6)    In this section:

market means a substantial market for goods or services in:

             (a)    Australia; or

             (b)    a State; or

             (c)    a Territory; or

             (d)    a region of Australia.

        (7)    For the purposes of the application of this section in relation to a particular corporation, an acquisition by the corporation shall be deemed to have or to be likely to have the effect of substantially lessening competition in a media market if that acquisition and any one or more of the other acquisitions by the corporation or a body corporate related to the corporation in that or any other market during the previous ten years together have or are likely to have that effect.

61AZN Pecuniary penalties

        (1)    If the Court is satisfied that a person:

             (a)    has contravened section 61AZL or 61AZM

             (b)    has attempted to contravene either provision;

             (c)    has aided, abetted, counselled or procured a person to contravene either provision;

             (d)    has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene either provision;

             (e)    has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of either provision; or

              (f)    has conspired with others to contravene either provision;

                 the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate having regard to all relevant matters including the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission, the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part.

        (2)    The pecuniary penalty payable under subsection (1) by a body corporate is not to exceed $10,000,000 for each other act or omission to which this section applies.

        (3)    The pecuniary penalty payable under subsection (1) by a person other than a body corporate is not to exceed $500,000 for each act or omission to which this section applies.

61AZO Injunctions

Where, on the application of the Commission or any other person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

          (a)   a contravention of any of section 61AZL or 61AZM;

          (b)   attempting to contravene either provision;

          (c)   aiding, abetting, counselling or procuring a person to contravene either provision;

          (d)   inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene either provision;

          (e)   being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of either provision; or

           (f)   conspiring with others to contravene either provision;

the Court may grant an injunction in such terms as the Court determines to be appropriate.

61AZP Actions for damages

        (1)    A person who suffers loss or damage as a result of conduct of another person that contravened section 61AZL or 61AZM may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

        (2)    An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct arose.

61AZQ Divestiture for abuses of market power and anti-competitive mergers

        (1)    The Court may, on the application of the Commission or any other person, if it finds that a corporation has contravened section 61AZL or 61AZM, by order, give directions for the purpose of securing:

             (a)    the disposal or divestiture of shares or assets acquired in contravention of section 61AZM; or

             (b)    the reorganisation or division of the corporation into separate and distinct entities including directions for the disposal or divestiture of all or any of the shares in or assets of the corporation to facilitate the reorganisation or division of the corporation.

61AZR Definitions

In this Subdivision:

the Court or the Federal Court means the Federal Court of Australia.

Commission means the Australian Competition and Consumer Commission established by section 6A of the Trade Practices Act 1974.

authorization means an authorization under Division 1 of Part VII of the Trade Practices Act1974 granted by the Commission or by the Tribunal on a review of a determination of the Commission.

Tribunal means the Australian Competition Tribunal established under the Trade Practices Act 1974, and includes a member of that Tribunal or a Division of that Tribunal performing functions of that Tribunal.

The minister put the position that you cannot be subjective. We will take that on board. This amendment gives the capacity to move away from a completely ‘written in the sand’ type of restriction to something that deals with greater powers for those who can have more latitude in making their decision.

One point was clearly made all through the committee hearings: the powers of the ACCC and the ACMA in their current form do not have the capacity to be an effective arbiter of mergers and acquisitions in this process. The fundamental fear that must be dealt with is: what if we get this wrong? What that means is this: if, after passage of this legislation, we find that there is an overcentralisation of the Australian media market which affects our democratic process, there are no powers in this parliament to bring about a divestiture. That is the crucial issue. If there is only a 20 per cent chance that that should come about, then surely we should be bringing about the powers to actually deal with that. Surely we should be able to have the capacity, like they have in the United States of America, to break up an organisation that has become too powerful and that has started to challenge the role of the government.

This amendment deals with the aspect of controls against an organisation that might challenge the role of the parliament. It gives that power in a great breadth so that decisions can be fleshed out and considered. An issue brought up over and over again during the inquiry was that the powers of the ACCC and ACMA are no good once the egg is scrambled. Once an inherent oligopoly or monopoly is present in the market, you cannot retract from that position.

I know this amendment is a magnum opus, but this is a terribly important piece of legislation. The amendment deals with a range of things. On the misuse of market power, currently, if you want to set up a new newspaper there is the capacity for opposing newspapers to just price you out of the market on advertising to put you out of business. When we talk about the ability of entry and exit into the print media, it is just not there. Obviously there is no free entry and exit into the television or radio markets. They are regulated. The government protects them by regulation. It is not a free market. That is why we must be so considerate of this.

You have to remember that the benchmark return of the main media companies in Australia is way beyond what it is overseas. That is because of the inherent protections they have. If we were to remove all forms of regulation in television so you could open up new television licences then we probably would not require this as much. But those protections stay in place. We have to be ever more cautious of making sure that we have the regulatory mechanisms to balance up our own regulatory mechanisms, unless we are envisaging removing all regulatory mechanisms on radio and TV—and I know that that is not the case. We cannot change the Trade Practices Act in this piece of legislation, so we must insert these powers on the misuse of market power so you cannot predatory price someone out of the market.

We must put in place controls for the prohibition of acquisitions that would substantially lessen competition in market. We must have injunctions, pecuniary penalties and, most importantly, that sword of Damocles, if you have everything wrong—the ability to have divestiture powers. That is the parachute that the Australian public want—the parachute whereby, if the intent of the Senate is wrong, we have the mechanism to deal with the issue. It is vitally important, because if we do not and if we get a monopoly that comes into play in Australia, that is it, you are stuck with it. If we do not have the powers now or we are scared, for want of a better word, to take on the major media houses now in trying to scale down some of the things in this bill, then you will be absolutely terrified once they actually arrive at their position of a monopoly or oligopoly of trying to take them on.

We could have the case where the power of this parliament is secondary in our nation to some major media organisation. That is not what we want. America have the benefit of the Clayton act and the Sherman act. They have the benefit of acts to deal with the powers of corporations that challenge the role of government. In Australia we do not have them. The most effective mechanism for controlling the nation is controlling the media. When there is a revolution, they do not announce it over the internet; they take over the radio station, the paper and the television stations. You do not put a Google search out for ‘change in democracy’. Those main mastheads of media are still as powerful as they ever were. That is why it is so important that we deal with this in a cognisant way. That is why, if we are going to go through with this legislation, we must have these powers in there. Otherwise, we are loading the gun for Australia for 10 years time. I do not think that is an honourable outcome for this Senate.