Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

by leave—I move opposition amendments (2) and (3) on sheet 5344 together:

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

3A  After subsection 46(4A)

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.

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

Firstly, amendment (2) reads:

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 means that, where the form of proscribed behaviour alleged under section 46(1) is predatory pricing, it is not necessary to demonstrate a capacity to subsequently recoup the losses experienced as a result of that predatory pricing strategy.

The courts consider recoupment now. The government’s amendments leave it to the courts to decide whether recoupment is an issue or not. Labor’s amendments explicitly state that recoupment is not a factor, as it should be unnecessary to prove in relation to predatory pricing. Stating that it is not necessary to prove recoupment lowers the bar to predatory pricing and removes the need for the courts to look at the future in determining predatory pricing. Labor’s amendments make it clear that recoupment is not a factor and make it easier to prove predatory pricing for small business. Even though the supplementary explanatory memorandum states that recoupment is not necessary, Labor believes that it is best to state this in the legislation to put the issue beyond doubt.

Labor’s third amendment lists four factors the court must have regard to in determining whether a company with substantial market power has taken advantage of that power for an anticompetitive purpose. The need for clarification of ‘take advantage’ arises from the Rural Press case and the Melway case. In the Rural Press case, the court found a company is not taking advantage of its marketing power if it does something it could do without any market power. This interpretation leaves little conduct which could be construed as taking advantage. This amendment would remove uncertainty about the meaning of ‘taking advantage’ by making clear the link between proscribed conduct and the possession of substantial market power.