George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Hansard source

The government does not support this amendment on the grounds that it is otiose, for all the reasons which Senator Murray, who has brought his penetrating intellect to bear upon the issue, has just recited. I draw Senator Sherry’s attention, with respect, to the existing provisions of section 7 subsection 3B of the act, which requires consideration of the small business knowledge or experience of any potential appointee to the Australian Competition and Consumer Commission. As I have said, it is otiose and the government has already indicated that it will be amending the legislation to provide for a second deputy chairperson. The government will have regard to the small business background and experience of such a person in making the appointment, as I set out when summing up the second reading debate.

Question negatived.

by leave—I move government amendments (1) to (3) on sheet PF441:

(1)    Schedule 2, page 5 (after line 5), after item 1, insert:

1A  After subsection 46(1)

Insert:

  (1AA)    A corporation that has a substantial share of a market must not supply, or offer to supply, goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying such goods or services, for 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.

  (1AB)    For the purposes of subsection (1AA), without limiting the matters to which the Court may have regard for the purpose of determining whether a corporation has a substantial share of a market, the Court may have regard to the number and size of the competitors of the corporation in the market.

1B  Subsection 46(1A)

Omit “subsection (1)”, substitute “subsections (1) and (1AA)”.

1C  Paragraph 46(1A)(a)

Omit “paragraph (1)(a)”, substitute “paragraphs (1)(a) and (1AA)(a)”.

1D  Paragraph 46(1A)(b)

After “paragraphs (1)(b) and (c)”, insert “and (1AA)(b) and (c)”.

(2)    Schedule 2, page 7 (after line 26), after item 8, insert:

8A  Paragraph 151AJ(5)(c)

Omit “paragraph 46(1)(a)”, substitute “paragraphs 46(1)(a) and (1AA)(a)”.

(3)    Schedule 2, page 7 (after line 28), after item 9, insert:

9A  After subsection 46(1) of the Schedule

Insert:

  (1AA)    A person that has a substantial share of a market must not supply, or offer to supply, goods or services for a sustained period at a price that is less than the relevant cost to the person of supplying such goods or services, for the purpose of:

             (a)    eliminating or substantially damaging a competitor of the person or of a body corporate that is related to the person 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.

  (1AB)    For the purposes of subsection (1AA), without limiting the matters to which the Court may have regard for the purpose of determining whether a person has a substantial share of a market, the Court may have regard to the number and size of the competitors of the person in the market.

9B  Subsection 46(1A) of the Schedule

Omit “subsection (1)”, substitute “subsections (1) and (1AA)”.

9C  Paragraph 46(1A)(a) of the Schedule

Omit “paragraph (1)(a)”, substitute “paragraphs (1)(a) and (1AA)(a)”.

9D  Paragraph 46(1A)(b) of the Schedule

After “paragraphs (1)(b) and (c)”, insert “and (1AA)(b) and (c)”.

The government is moving these amendments to include a new prohibition in part IV of the Trade Practices Act that will specifically target anticompetitive, below-cost pricing by corporations with a substantial market share. The reason for this is that, although there was a view held by many, including many with expertise in this field, that the existing provisions in section 46 were in their current terms sufficiently broad to deal with the problem, nevertheless out of a sense of abundant caution the government has decided to agree to the proposition that there ought to be more specific provision made in relation to the issue of below-cost pricing. Amendment (1) amends this bill to introduce a new subsection—subsection 46(1AA). That provision will prohibit a corporation with a substantial share of a market from supplying or offering to supply goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying such goods or services for the same purposes as currently set out in subsection 46(1A) to (1C) of the act. In other words, the existing proscribed purposes will apply but the courts will be given direction to apply them specifically, rather than in the generic framework of the existing section 46, to the particular case of a corporation with a substantial share of market power in the circumstances that I have just recited.

Amendment (1) also introduces subsection 46(1AB). That subsection provides that the court, in determining whether a corporation has a substantial share of a market for the purposes of the prohibition, may have regard to the number and size of competitors of the corporation in the market. This provision is expressed so that it does not limit the matters to which the court may otherwise have regard in determining whether a corporation has a substantial share of a market. To assist with the interpretation of this new provision, consequential amendments are included to ensure that it is subject to existing subsection 46(1A). As a result, for the purposes of the new prohibition, a reference to a competitor will be deemed to include a reference to competitors generally or to a particular class or classes of competitors, and a reference to a person will include a reference to persons generally or to a particular class or classes of person. These consequential amendments will assist in ensuring coherency between the existing prohibition contained in section 46(1)—that is, what I have described as the generic prohibition—and the more particular application envisaged by the new prohibition.

The second set of amendments deal with the application of section 46 to the telecommunications industry. They are consequential amendments to part XIB of the act. Subsection 151AJ(5)(c) of the act presently provides for an amended application of section 46 for the purposes of section 151AJ(3) in the case of a telecommunications carrier or carriage service provider that is not a corporation or a partnership. In particular, the act currently provides that, in determining whether such a carrier or service provider is in contravention of section 46, it is to be assumed that the expression ‘or a body corporate related to the corporation’ is to be omitted from subsection 46(1)(a). The second set of amendments ensures that the same assumption is made in relation to the prohibition which is contained in the first set of amendments—that is, the amendments which will introduce subsection 46(1A)(a) and 46(1A)(b) to provide ongoing consistency between section 46 and part XIB.

The amendments in the third set of amendments are amendments to the scheduled version of section 46. The purpose of these amendments is to make corresponding changes to the version of section 46 found in part 1 of the schedule to the act. That is the version of the act that applies in the states and territories by virtue of the application legislation. The changes in the third set of amendments are identical to those in the second set of amendments, and they ensure that the new prohibition in subsection 46(1)(1AA) and the provisions of section 46(1)(1AB) apply to all businesses in Australia, regardless of their structure—that is, whether they are governed by Commonwealth or state or territory law.

It should be noted that the amendment is constrained by the conduct of the corporation that has a substantial market share. For example, the corporation must have the purpose of damaging a competitor or preventing the entry of a competitor or potential competitor in order for it to be in breach of the new prohibition, and the conduct must also be carried out for a sustained period. In other words, the test in subsections 46(1)(a) to (c) of the existing section 46—the generic provisions about motive—will apply in relation to the amendments to the scheduled version of section 46 as they do to the specific low-cost pricing provisions which I have outlined.