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

I want to take this opportunity to thank honourable senators for their contributions to the debate on the Trade Practices Legislation Amendment Bill (No. 1) 2007. This has had, as honourable senators have pointed out, a long history. It gives me much satisfaction that in this, perhaps final, week of this parliament these reforms which had their provenance in the report of the then Senate Economics References Committee of March 2004 will come into effect.

The bill delivers for small business in a number of important ways, by enhancing, in accordance with the recommendations of the Senate committee, the effectiveness of section 46. The bill addresses the issue of predatory pricing. As a result of the bill, sustained below-cost pricing can be considered when looking to determine whether there has been a breach of section 46, without going too far by attacking legitimate discounting. It clarifies, in accordance with the Senate committee’s recommendations, the threshold for misuse of market power, in a number of important ways. For example, in relation to the leveraging of power from one market into another, it clarifies that more than one corporation may have a substantial degree of power in a single market, and that a corporation may have market power for the purposes of the act without substantially controlling that market.

Further, the bill makes amendments to the unconscionable conduct provisions of the act, by raising the transaction limit from $3 million to $10 million. It provides that a court should consider whether a party can unilaterally vary a contract term or condition when determining whether there has been unconscionable conduct.

The bill also creates a new position, Second Deputy Chairperson of the Australian Competition and Consumer Commission, which—it is the government’s intention—will be held by a person experienced in small business matters. The government amendments which I will move shortly include a new provision in part 4 specifically targeting anticompetitive low-cost pricing by corporations with substantial market share. Consequential changes are also made to the bill.

It should be noted that the amendment is constrained by the conduct of the corporation that has a substantial share of the market. For example, the corporation must have the purpose of damaging a competitor or preventing the entry of a potential competitor in order to be in breach of this section. The conduct must also be carried out for a sustained period. We the government believe that we have the balance right: the balance of promoting competition, consumers and small business. The government will continue to monitor the changes to the act to ensure that there are no unintended consequences for genuine competition. As the supplementary explanatory memorandum to the government’s amendments makes it clear, the below-cost pricing amendments in the bill make no reference to the need for or desirability of finding recoupment or an intention to recoup losses. Whilst a reasonable prospect or expectation of recoupment can provide evidence that below-cost pricing is being carried out in breach of the prohibition in section 46, recoupment alone is not legally required under the below-cost pricing amendments in the bill, nor is it alone a prerequisite for a breach of subsection 46(1).

The government has consulted extensively with small business groups in developing the bill. Following the passage of the government’s Trade Practices Legislation Amendment Act (No. 1) 2006—that is, the legislation which gave effect to the recommendations of the Dawson review—the government met with a number of groups to discuss section 46 and in particular to address the concerns of small business. Those consultations had the close involvement of the Minister for Small Business and Tourism, the Hon. Fran Bailey, as well as Senator Boswell and Senator Barnett, to whom I pay tribute for their substantial contribution to getting the legislation into the shape it now takes. That consultative process has been long and involved and one that the government has worked very hard to get right.

The government would also like me to record my thanks to the Senate Standing Committee on Economics for its report into the provisions of the bill. I would like to thank the committee, under the very able chairmanship of Senator Michael Ronaldson, for its timely consideration of the bill and for its report. The committee’s inquiry attracted a broad range of submissions from groups interested in trade practices reform and recommended, as honourable senators will know, that the bill be passed.

This bill implements a number of important government announcements in relation to the Trade Practices Act and for the protection of competition. It comes about, as I have said, as a result of extensive discussions with key stakeholder groups. It is a bill that has been developed over a period of years, and I am confident that the shape it now takes reflects, as I said before, the right balance and takes into account all of the appropriate and needful amendments which have been recommended to the government by those groups without going so far as to constrain the operation of free enterprise and competition in Australian markets. I commend the bill to the Senate.

Question put:

That the amendment (Senator Stephens’s) be agreed to.