Andrew Murray (WA, Australian Democrats) Share this | Hansard source

I thank the minister for his answer; I agree with all that he has said. The media release I saw on 11 September 2007—and there was another one today—stated that ANRA, the Australian National Retailers Association, CEO Margy Osmond said:

… amendments to the TPA put forward by the Nationals Senator Barnaby Joyce—

they are put forward by the government as a result of the advocacy of Senator Joyce—

and being considered by the Government, would deter retailers from offering customers discounts, for fear of being prosecuted.

On the record, I say that I disagree with that. That is not the effect of the law and the minister has confirmed that is not the effect of the law.

Question agreed to.

by leave—I move amendments (2) and (3) together and amendments (4) and (5) together:

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

2A  After subsection 46(3)

Insert:

      (3E)    In determining for the purposes of this section whether a corporation has a substantial degree of power in a 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.

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

             (a)    the substantial degree of power in a market 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

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

      (3G)    For the purposes of this section, without limiting the matters to which the Court may have regard for the purpose of determining whether a body corporate has a substantial degree of power in a market, a body corporate may have a substantial degree of power in a market even though the body corporate does not have the ability to raise prices without losing business to rivals.

(3)    Schedule 2, item 3, page 6 (after line 12), at the end of subsection (4A), add:

   ; and (c)    the capacity of the corporation to supply goods or services at a price below its variable cost.

      (4B)    Where it is alleged that a corporation has contravened subsection (1) by undertaking a strategy of predatory pricing, it is not necessary for the Court to be satisfied that the corporation has the capacity to subsequently recoup the losses which arise from that alleged predatory pricing strategy.

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

3A  After subsection 46(4)

Insert:

      (4C)    In determining for the purposes of this section whether a corporation has taken advantage of a substantial degree of power in a market, the Court will disregard what the corporation could or would have done in the absence of a substantial degree of power in a market.

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

3B  After section 46A

Insert:

46AB  Anti-competitive price discrimination

        (1)    A corporation must not supply or offer to supply goods or services at different prices to different persons for the purposes of:

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

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

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

        (2)    It is a defence to an action under subsection (1) if the different prices are justifiable solely by reference to a difference in the costs of supplying or offering to supply the goods or services to the different persons.

46AC  Anti-competitive geographic price discrimination

        (1)    A corporation must not supply or offer to supply goods or services at different prices in different locations for the purposes of:

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

             (b)    preventing the entry of a person into any location; or

             (c)    deterring or preventing a person from engaging in competitive conduct in any location.

        (2)    It is a defence to an action under subsection (1) if the different prices are justifiable solely by reference to a difference in the costs of supplying or offering to supply the goods or services in the different locations.

I will speak briefly to all four amendments. These amendments have been circulated on sheet 5324 revised. Item (2) that I have raised refers to the misuse of market power. In some respects, I can argue—and those responding to my amendments could argue—that this amendment does not change the law significantly. In my view, that is its virtue, but others may argue that it is not necessary. I am attempting here to provide more guidance to the courts in relation to a substantial degree of power in the market. There are some key words included in my amendment that, in my view, make it slightly more effective than the government’s amendments, which have already been put through the bill.

Although this amendment does look similar to the government’s amendments, it includes additional key words and concepts that the government’s amendments lack. I refer in particular to the phrase ‘at least’, which leaves open to the court to find that there may be other factors that may determine a substantial degree of power in the market. In other words, I seek to give the courts more leg room. My remarks in that regard refer to (3F).

With respect to (3G), this amendment does not elevate the ability to raise prices to being the sole test of substantial market power, because that is already the test used by the courts through the Boral case. The amendment states that a company can have substantial market power, even though it cannot raise prices without losing business. My amendment attempts to oblige the court to look beyond an ability to raise prices to other determinants of market power. Currently, the High Court has become too focused on an ability to raise prices without losing business and this amendment operates to move them away from that focus, in accordance with the parliamentary intention behind the concept of ‘substantial market power’.

Item (3) covers predatory pricing. I have included this amendment as I was unsure whether Labor would be putting forward the amendments they originally proposed in the House of Representatives. I believe that this is an important point to be made and it should be made again: the court does not need to have regard to the ability of a corporation to recoup its losses when determining whether or not there has been predatory pricing. The issue of recoupment is a huge issue in trade practices cases, trade practices theory and trade practices commentary. My own belief—and, in part, it comes from my extensive business experience—is that the ability of a corporation to recoup its losses is not a necessary condition when referring to the issue of predatory pricing. So they are items (2) and (3), which I put.

I will now discuss items (4) and (5), which I will have moved separately. In introducing item (4)(4C), I suggest that some people may again see this as rather nuanced. Currently, the test for taking advantage is whether the company could have engaged in the same conduct without substantial market power. That is, if a company with substantial market power could have engaged in the same conduct without market power, the firm is currently not considered to have taken advantage of its substantial market power. Up until now, the courts have treated ‘take advantage’ as another onerous hurdle to render section 46 relatively weak. This amendment attempts to stop the courts from using the current onerous test for ‘take advantage’. If this amendment were in place, the test would revert to ‘using market power’.

Item (5), 46AB, is the attempted amendment. Although there has been a move away from using the word ‘anticompetitive’ in the Trade Practices Act—I might say, through the chair, that I have always rather liked the word ‘anticompetitive’—I think it is essential that it is made clear that it is only anticompetitive price discrimination that is prohibited. As we all know, not all price discrimination is anticompetitive. In fact, as the minister recently outlined, price discrimination and price competition are to be desired and encouraged and not discouraged. So being able to buy something on special at one store instead of another is what a competitive marketplace is about. That is why the amendment is framed as it is. There may be different costs in supplying, and there is a defence built into the amendment. The amendment also seeks to stop a firm from engaging in price discrimination and, if a person or company were seeking to induce a person to do so, that person or company would be involved in a breach of this amendment through the operation of section 75B(1B).

Item 5 is an attempt to introduce 46AC, anticompetitive geographic price discrimination. People may wonder why you should have anticompetitive geographic price discrimination. The reality is that there can be locations where price discrimination happens to attempt to eliminate the competition in a particular locale, whereas in a different suburb or city there is no price discrimination. In other words, it is particular to a branch or store and not to the chain or organisation. I would point out that ‘location’ here is given its ordinary meaning—that is, Canberra as different from Sydney or from Perth, or it could even be Deakin as different from Belconnen. I think this amendment is potent in looking at situations in suburbs where large supermarket chains charge different prices to try to drive out competitors in the particular suburbs where those competitors still exist.

If prices are different in any location for an anticompetitive purpose—not for a competitive purpose—they will come under scrutiny under this amendment, unless justified by a pro-competitive reason such as clearing perishable or obsolete stock or by higher costs of supplying at different locations. Different prices can therefore fall under this provision. I would point out that this type of behaviour is recognised in Canada and this amendment is modelled on a provision of Canadian law. That is why we have put it up as an idea. From my long experience in these matters, I have no doubt that the government will reject the idea, but I would like to hear on the record why they would reject it.