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

Thank you, Senator Murray, for that question and thank you for your acknowledgement. I actually have run predatory pricing cases under the old section 46 in the old Federal Court, in fact, on several occasions. I was of the view—which I think we share, Senator Murray, though it is not shared by everyone—that the decision of the High Court in Boral did change the ground somewhat by reading section 46 too narrowly and, in fact, more narrowly than it had hitherto been read. It was really, as I think you know, Senator Murray, the High Court’s reasoning in the Boral case, the judgements which were handed down on 7 February 2003, which did provoke me and others—including your good self—to agitate for reform of section 46 and the reference to the Senate Economics References Committee, which has been referred to earlier in the debate.

On the other hand, one must, in seeking to deal with and amend a provision as delicate as section 46, be particularly conscious that we do not, as it were, kill the goose that laid the golden egg. The basic proposition that cannot be recited often enough about section 46, Senator Murray—and I think it is shared by both sides of politics—is that the purpose of section 46 is to protect competition, not to protect competitors. It is about process, not individual companies. As the courts both before and after the Boral case have said time beyond number, the fact that an individual firm may as a result of competition go out of business is not of itself a bad thing. Often that is the clearest proof that the competitive process is working and that resources are being allocated efficiently. The necessary condition—as you, Senator Murray, better than most people know—is the consumer getting the best possible deal. The vice is where the conduct which drives a corporation out of a market features some of the maligned purposes which the existing section 46(3)(a) to (c) proscribe and which it is the purpose of this provision to apply more particularly to the issue of predatory pricing.

As I said earlier on, there are different minds as to whether the existing section 46 deals with predatory pricing sufficiently and it is one of the problems in this area of discussion that predatory pricing is not a defined term. Different people throw this term around and it means different things to different people. But it has never been the understanding of either the economists who write about this area or the lawyers who practise in the area that predatory pricing means discounting per se. It is plainly the intention of the government in drawing this amendment to ensure that it is not so widely drawn that it would have a chilling effect on discounting per se. That is why the language of the amendment is hedged in the various ways, as you can read from the terms of it.

So, Senator Murray, I hope that addresses your question in a somewhat longwinded way, for which I apologise. But let me make it as clear as can be that it is not the government’s intention—nor would it be good policy, nor, in my view, would it be the effect of these words properly construed by a court—to read them as constraining the practice of discounting per se.