The Federal Government recently announced its intention to strengthen the misuse of market power provisions of the Trade Practices Act 1974 (Cth) (TPA).
Currently, section 46 of the TPA prevents companies from using market power for the purposes of
- damaging competitors,
- preventing new competitors entering into the market;
- and deterring others from engaging in competitive conduct.
Predatory pricing is a form of misuse of market power.
However, the proposed reforms are aimed at addressing concerns that several recent High Court rulings, such as the ACCC cases against Boral Limited and Rural Press Limited have weakened and narrowed the scope of Section 46 to render it almost ineffective.
There are two significant proposed amendments which small-medium business owners need to be aware:
- Stricter rules on predatory pricing which are to state that a company has engaged in the practice when it has used “long-term pricing below cost” in comparison with its rivals.
- Specific wording will be adopted to define market power. It is presently difficult to establish that a company is dominant in its market, but it is anticipated that the new wording will make it easier to find that a company has market power.
We will report further following the release of the proposed amendments to the TPA which are expected in the next few weeks.
For further information, please contact: