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Competition and Consumer Amendment (Strengthening Rules About Misuse of Market Power) Bill 2013

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2010-11-12-13

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

COMPETITION AND CONSUMER AMENDMENT (Strengthening Rules About Misuse of Market Power) BILL 2013

 

 

 

EXPLANATORY MEMORANDUM

and

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

 

 

 

 

 

Circulated by authority of

Robert Oakeshott MP



COMPETITION AND CONSUMER AMENDMENT (Strengthening Rules About Misuse of Market Power)  BILL 2013

 

OUTLINE

 

The current provisions of the Competition and Consumer Act 2010 are either not sufficient, or are perceived to be not sufficient for the protection of participants in supply chains, and for the long term protection of consumers.

 

Debate and discussion around these concerns has been seen on numerous issues, including $1 litre milk prices, petrol discounting, and own label packaging by large supermarkets. Many are concerned that a win for consumers in the short term will cost consumers in the long term.

 

The identified issue addressed in the Competition and Consumer Amendment (Strengthening Rules About Misuse of Market Power) Bill 2013 (the Bill) is the failure to consider the impact on competition of a decision by “a corporation that has a substantial degree of power in a market” in a broader context than the direct consumer affected or the direct supplier affected.



For example: consideration of the impact of $1 litre milk prices confirmed that: the consumer was the winner with cheaper milk; and that the supermarkets were bargaining with large processors and therefore there was not an abuse of market power. However, the people concerned about this pricing were the dairy farmers. Their concern is that in the long term the processors would look to dairy farmers to deliver the fresh product at lower prices and prices. Anecdotally, the prices expected at the farm gate to allow the consumer to purchase milk for $1 per litre may not cover the basic on farm costs of production for all but the largest dairies. Taking a long term view, a reasonable perception would be the win for consumers now may result in higher prices as more and more dairy farmers leave the industry. If dairy farmers do leave the market it could result in less competition in a small pool of dairy producers, or the fresh milk needing to be sourced from international markets.

 

This Bill, by extending the test for restrictive trade practice to lessening of competition in the supply chain, and adding a ‘reasonably likely’ provision to the considerations of abuse of market power will allow long term and broader effects to be considered by the Commissioner.

 

A lack of ‘evidence’ other than anecdotal or perception has been cited by stakeholders as a major barrier to pursuing corporations with a substantial degree of market power. The issue is that the evidence that would confirm or rebut the existence of restrictive trade practices is actually held by the corporation being questioned.

 

It is for this reason the Bill includes provisions to allow the Commissioner to obtain documents and information relating to the broader supply chain and “reasonably likely” impacts. It allows the Commission to compel creation of a supply chain impact statement that can be published. This statement has a two-fold effect:

 

1.     Opening up the ability to receive the ‘evidence’ from the holder of the documents; and

2.     Compelling corporations to proactively consider the impact on a supply chain in the whole in their decision making.

 

 

 

FINANCIAL IMPACT

 

The bill will have no financial impact.

 

NOTES ON CLAUSES

 

Clause 1-3

 

1.     Clauses 1-3 specify the mechanics of the Bill with the short title, commencement arrangements and schedule provisions.

 

Schedule 1 Amendments

 

Clause 1

 

2.     Clause 1 inserts a new subdivision A - Restrictive Trade Practices.

 

Subdivision A

 

3.     Clause 2 (subsection 46(1)(1AAAA)) creates a subsection of restrictive trade practices that include conduct that does, or is reasonably likely to cause elimination, damage, prevent entry into a market or a lessening of competition both in the market in which the conduct takes place, or any other market affected by the conduct, and extends the test to the supply chain servicing any of those markets.

 

4.     Clauses 3 - 8 extends the test created by s 46(1)(1AAAA) to the existing mechanisms and definitions of the Act.

 

Clause 9

 

5.     Clause 9 inserts a new subdivision B - Investigation Power.

 

Clause 50AA

 

6.     Clauses 50AA (1)-(2) provide investigative powers to the Commission where there is a reasonable belief that any of the provisions of 46 have been breached, including compelling production of documents, answering of questions, or preparation of a supply impact statement.

 

7.     Clause 50AA (3) defines the requirements of a supply chain impact statement.

 

8.     Clauses 50AA (4) - (6) provide operative provisions for the nature of information produced and notice provisions.

 

Clause 50AB - AC

 

9.     Clauses 50AB - AC provide operative provisions for complying with notices.

 



 

Clause 50AD - 50AE

 

10.  Clauses 50AD - 50AE provide the mechanics of prohibiting false and misleading information and answers in responding to an investigation of the Commission.

 

Clause 50AF

 

11. Clause 50AF provides the disclosure framework for information received by the Commission where most information provided to the Commission is protected unless otherwise required by law, but where a supply chain impact statement provided is a document required to be published by the Commission.

 



 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

COMPETITION AND CONSUMER AMENDMENT (Strengthening Rules About Misuse of Market Power) BILL 2013

 

This bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Overview of the bill

 

The purpose of this Bill is extend the existing provisions relating to restrictive practices in  the Competition and Consumer Act 2010 to markets and supply chains impacted by decisions of corporations with significant market power.

 

Human rights implications

 

The Bill does not engage any of the applicable freedoms beyond those currently engaged by the existing Competition and Consumer Act 2010 (Cth ).

 

Conclusion

 

This Bill is compatible with human rights because it does not raise any human rights issues beyond those engaged by the existing Competition and Consumer Act 2010 , an Act of the Commonwealth.

 

 

Robert Oakeshott MP