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IPA welcomes changes to section 46

Changes to section 46 of the Competition and Consumer Act 2010 have been applauded by the Institute of Public Accountants as they will help address existing non-competitive behaviour in the market.

IPA welcomes changes to section 46
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  • mbrownlee
  • October 12, 2016
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The changes, which were proposed by the Harper Panel, relate to section 46, misuse of market power provision in the Competition and Consumer Act 2010, including direction to the court and development of ACCC guidance.

IPA chief executive Andrew Conway said the misuse of market power provision has not adequately protected small business, and by extension consumers, from the predatory actions of companies with substantial market power.

“The IPA is not advocating for special protection for small business from the ordinary rigours of competition but more has to be done to counter incidences of market power misuse,” said Mr Conway.

“Australia’s concentrated market structure means that some markets are not competitive and, where collective bargaining is not possible or sufficiently expeditious, small or medium sized businesses are especially vulnerable to exploitation or exclusion by firms with substantial market power.”

Mr Conway said the IPA continues to advocate for an ‘effects test’ to be introduced and said the IPA is pleased the exposure draft is consistent with the Harper Review in relation to misuse of market power.

Importantly, he said, it also states that a corporation with substantial market power must not engage in conduct having the purpose or likely effect of substantially lessening competition in that or any other market.

“We believe that the risk of over-deterrence is overstated by those who oppose the change.  We also agree that it is necessary to distinguish between pro-competitive conduct such as successful product innovation and, anti-competitive conduct made possible only by virtue of a party’s power in the market,” said Mr Conway.

“Successful innovation which may temporarily enhance market power should not be viewed as anti-competitive, notwithstanding the effect it may have on other individual market participants. While successful rigorous competition may reduce the number of competitors or deter entry; it is not the same as substantially lessening competition in the market.”

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