Additional Remarks Senator Andrew Murray: Australian Democrats
The
Trade Practices Legislation Amendment Bill (No. 1) 2007 Bill has two
weaknesses – it is long overdue, and it does not go far enough.
The
Bill
has three strengths – it does not weaken the Trade Practices Act 1974
(TPA); it strengthens the TPA in a number of ways; and, a number of provisions
are not supported by big business and their advisers.
Taking
the last point first: competition law seeks to prevent organisations from
taking full advantage of their market power, where exercising that power is
regarded as contrary to the broader public and national interest. The effect
is therefore to restrain large corporations from behaviour they would otherwise
engage in as a natural extension of their desire to profitably dominate
markets.
Securing
a better deal for smaller or disadvantaged competitors is therefore not in the
best interests of bigger business, and they often strongly resist such
changes. I am therefore somewhat comforted by the negative reaction of those
representing big business to elements of this Bill. It does mean that smaller
businesses can expect to benefit from the provisions of the Bill.
There
is no excuse whatsoever for the delay in bringing this Bill to the
Senate. For the duration of the Howard government, small business organisations, and a
number of inquiries, have pointed to considerable weaknesses in the TPA. Even
although the Government only responded positively to a number of the minority
Government Senators’ recommendations in the Senate 2004 report[1],
the Coalition government could have saved numerous businesses from
anti-competitive conduct, and even from being forced out of business, by at
least passing those minority recommendations earlier.
This
after all is a Government that has been known to write legislation in 24 hours,
or that could specially recall Parliament to change one word in one piece of
legislation (from ‘a’ to ‘the’ – readers, I kid you not), so putting up
amendments to the TPA quickly is not beyond them. Which brings up the question
of motive – just whose interests were served by such a delay? This whole saga
does not reflect well on the Government.
The
Bill
does not go far enough. As an interesting aside, the Bill introduces
a number of amendments which closely mirror those I have introduced and lost
over the years, so it does finally accept concerns I have advanced over the
years. But the Bill’s real weakness is that it does not contain most of
the recommendations in the 2004 report made by the Majority Senators (Labor and
Democrats). I am aware that members of other political parties are supportive
of those recommendations too.
It
seems that only a change of government might see those Majority recommendations
advanced.
In
the Majority 2004 report, Recommendation 10 on secret tenancy terms,
Recommendation 12 concerning creeping acquisitions, Recommendation 13 concerning
divestiture, are particularly worthy.
What
this bill does is propose amendments which reflect the Minority Coalition
Senators’ recommendations, which were not always in agreement with the majority
position, and were not the strongest possible amendments to the Act that could
be implemented.
Although
the amendments which have been proposed are welcome they do not implement
Recommendation 3 and 4.
Recommendation
3
The
Committee recommends that the Act be amended to provide that, without limiting
the generality of s.46, in determining whether a corporation has breached s.46,
the courts may have regard to:
- the capacity of the corporation
to sell a good or service below its variable cost.
The
Committee recommends that the Act be amended to state that:
-
where the form of proscribed
behaviour alleged under s.46(1) is predatory pricing, it is not necessary to
demonstrate an capacity to subsequently recoup the losses experienced as a
result of that predatory pricing strategy
Recoupment
of losses is a matter which has been used in judicial interpretation to
determine whether there is predatory pricing. It is not necessarily a helpful
criterion when attempting to determine predatory pricing behaviour. This was
pointed out in the original report.
Recommendation
4
The
Committee recommends that s.46 of the Act be amended to state that, in
determining whether or not a corporation has a substantial degree of power in a
market for the purpose of s.46(1), the court may have regard to whether the
corporation has substantial financial power.
‘Financial
power’ should be defined in terms of access to financial, technical and
business resources.
The
majority of the committee saw ‘substantial financial power (material and
organisational assets) as being relevant but this was rejected by the
Government Senators, so the amendment proposed in this bill reflects the Govt
Senators minority view, not that of the majority.
The
arguments for the proposed amendment are set out in the original report and
remain valid to extending the interpretation.
The
Committee recommended that s51AC (9) and (10) be repealed, but this legislation
puts a cap on access to this provision, as recommended by the minority view.
Again the argument for not limiting the threshold to $10m was stated in the
original report, and supported by the majority of members.
The
inclusion of the unilateral contracts amendment is welcome especially given
that it is an amendment which I have proposed several times over the years.
The
Australian Democrats support this Bill, but I will be moving a number of amendments in an
attempt to further strengthen the TPA.
Senator
Andrew Murray
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