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Trade Practices Legislation Amendment Bill (No. 1) 2007

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2004-2005-2006-2007

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

SENATE

 

 

 

TRADE PRACTICES LEGISLATION AMENDMENT BILL (No. 1) 2007

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

Amendments Moved on Behalf of the Government

 

 

(Circulated by authority of the Treasurer, the Hon Peter Costello MP)

 



T able of contents

General outline and financial impact............................................................ 1

Chapter 1            Amendments 1 to 3 to Schedule 2 — Anticompetitive below-cost pricing by corporations with substantial market share............................................ 3

Chapter 2            Amendment to explanatory memorandum — Recoupment           5





1     C hapter 1  

Amendments 1 to 3 to Schedule 2 — Anticompetitive below-cost pricing by corporations with substantial market share

Explanation of amendments

Amendment 1

.1       Amendment 1 inserts Items 1A to 1D. Item 1A inserts new subsection 46(1AA), prohibiting a corporation with a substantial share of a market from supplying, or offering to supply, goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying such goods or services, for the same purposes as currently set out in paragraphs 46(1)(a) to (c) of the Act , specifically:

·          eliminating of substantially damaging a competitor of the corporation of a body corporate that is related to the corporation in that or any other market;

·          preventing the entry of a person into that or any other market; or

·          deterring or preventing a person from engaging in competitive conduct in that or any other market.

.2       Item 1A also inserts new subsection 46(1AB), which provides that for the purposes of new subsection 46(1AA), without limiting the matters to which the Court may have regard for the purposes of determining whether a corporation has a substantial share of a market, the Court may have regard to the number and size of the competitors of the corporation in the market.

.3       Items 1B to 1D subjects the new prohibition in subsection 46(1AA), to existing subsection 46(1A). The effect is that for the purposes of the new prohibition:

·          a reference to a competitor includes a reference to competitors generally, or to a particular class or classes of competitors; and

·          a reference to a person includes a reference to persons generally, or to a particular class or classes of persons.

Amendment 2

.4       Amendment 2 inserts Item 8A, which contains a consequential amendment to paragraph 151AJ(5)(c) of Part XIB (the telecommunications industry) of the Act.

.5       Item 8A replaces the reference to ‘paragraph 46(1)(a)’ in paragraph 151AJ(5)(c) with a reference to ‘paragraphs 46(1)(a) and (1AA)(a)’.

.6       Paragraph 151AJ(5)(c) of the Act provides for an amended application of section 46, for the purposes of subsection 151AJ(3), in the case of a carrier or carriage service provider as defined in the Telecommunications Act 1997 , that is not a corporation or a partnership. In particular, it provides that in determining whether such a carrier or service provider contravened section 46 it is to be assumed that the expression ‘or a body corporate that is related to the corporation’ were omitted from paragraph 46(1)(a). Item 8A ensures that the same assumption is made in relation to the new prohibition in subsection 46(1AA).

Amendment 3

.7       Items 9A to 9D of Amendment 3 contain amendments to the version of section 46 found in Part 1 of the Schedule to the Act. This is the version of section 46 that applies in the States and Territories by virtue of application legislation.

.8       The amendments to the schedule version of section 46 correspond to those made to section 46 by Items 1A to 1D except that they are expressed to operate in relation to ‘a person’ as opposed to ‘a corporation’.

 



.1       After Item 3, paragraph 3.35 of the explanatory memorandum to the Bill, add:

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 carried out in breach of the prohibition in section 46, recoupment is not legally required under the below cost pricing amendments in the Bill, nor is it a prerequisite for a breach of subsection 46(1).  In short, the legal position is that recoupment is not required to prove a breach of section 46.