By Frazer Hunt, Partner
The Competition and Consumer Amendment (Competition Policy Review) Bill passed Parliament last week, following the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017 (Cth) which was passed in August 2017, as a result of various recommendations from the 2015 Harper Competition Policy Review. The ACCC hopes that these legislation changes to Australian competition law will make it easier for them to target conduct harming the Australian economy.
The Competition Policy Review legislation contains a broad range of amendments to the Competition and Consumer Act 2010 in areas that include cartels, price signalling and concerted practices, exclusionary provisions, third line forcing, resale price maintenance, merger authorisations and non-merger authorisations, notifications and class exemptions, access and evidentiary provisions.
The Misuse of Market Power legislation is intended to strengthen the prohibition on the misuse of market power by corporations. The current ‘purpose’ test will be replaced with a ‘purpose or effects test’, prohibiting a corporation with a substantial degree of market power from engaging in conduct with the ‘purpose, effect or likely effect’ of substantially lessening competition. For the first time in Australia, corporations will now need to carefully consider whether the conduct they engage in, or propose to engage in, could be said to have the purpose, or have or be likely to have the effect, of lessening competition.
Both the Competition Policy Review legislation and the Misuse of Market Power legislation will commence 6 months after the date of royal assent, so they are likely to come into effect in early 2018.
Overall, these legislative changes are directed to the impact of conduct of corporations in the market vis-à-vis their competitors, but not the impact of the conduct of corporations regarding the amount that they charge their customers. Earlier this year, DP World Australia significantly increased its infrastructure surcharges, which were followed by increases from their competitors and some depots introducing surcharges to ‘follow the leader’. At that time, various transport industry approached the ACCC, raising concerns re the misuse of market power and the inability of downstream service providers in landside logistics to negotiate these surcharges. However, despite the downstream implications in relation to costs being passed down to consumers, the ACCC did not have the legislative power to intervene on competition grounds.
Unfortunately, this new raft of legislative amendments to the Australian competition law fails to address the impact on consumers of corporations using their market power to control pricing of services when they can unilaterally increase prices with the confidence that other competitors will follow suit. However, the ACCC has the power to approach the court to obtain declarations that unfair contract terms are unfair and void. Earlier in the month, the Federal Court of Australia delivered the first judgement under the unfair contract terms provisions of the Australian Consumer Law in proceedings brought by the ACCC, declaring various clauses in a standard form contract for waste management services to be unfair and void.*
Small businesses that employ less than 20 people should to review their agreements with service providers and seek advice as to whether they include unfair contract terms that may be set aside.
For further information, please do not hesitate to contact: