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Safeway decision not be-all-and-end-all on s46 effectiveness.



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SENATOR RON BOSWELL PARLIAMENTARY SECRETARY TO THE MINISTER FOR TRANSPORT AND REGIONAL SERVICES LEADER OF THE NATIONAL PARTY IN THE SENATE

SENATOR FOR QUEENSLAND

8 July 2003

B2003/74

M E D I A

R E L E A S E

Safeway decision not be-all-and-end-all on s46 effectiveness

National Party Senate Leader, Ron Boswell, said today that the recent Safeway federal court decision on price-fixing of bread could not, in isolation, be construed as confirmation that Section 46 of the Trade Practices Act (TPA) was working effectively in dealing with misuse of market power.

While welcoming the decision, Senator Boswell pointed out that the basis of the Safeway case was a refusal to sell another company’s product unless anti-competitive conditions were met, not a case of predatory pricing, and that the decision may still be appealed in the High Court.

The Business Council of Australia have argued that the current Section 46 is effective in light of the Safeway decision. However, the recent High Court Boral decision, in which it was held that companies could not be punished for predatory pricing unless there is a monopoly or near monopoly, sheds considerable doubt on this argument.

“To directly compare the Safeway case in the Federal Court to the recent Boral case in the High Court is like comparing chalk and cheese,” Senator Boswell said.

“Although both cases have been dealt with under Section 46 of the TPA, they deal with two different courts and totally different issues which happen to be bulked together in the Act under the subheading of misuse of market power,” he said.

“The National Party promised TPA reform and initiatives like collective bargaining in the lead up to the 2001 election and we have delivered on this,” Senator Boswell said. “But there may still be further changes required to fine-tune the Act for the future.”

“The Business Council of Australia has made it clear that they believe the outcome of any further TPA reform would be unfavourable for the companies they represent, even to the extent that they have said they may withdraw support for all of the changes proposed by Dawson, if Section 46 is re-examined,” he said.

He called on the BCA to maintain support for the implementation of the Dawson initiatives and accept any prospective further scrutiny of the TPA aimed at encouraging fair and healthy competition in the Australian marketplace.

“Section 46 is clearly intended to stop such practices as predatory pricing - selling below cost price with the intention of putting smaller, less capitalised competitors out of a market or out of business,” Senator Boswell said.

The then Attorney General’s Second Reading speech on the Trade Practices Revision Bill 1986, which established Section 46 as we know it, clearly stated its intent, saying that the Section

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“… is not aimed at size or at competitive behaviour as such of strong business. What is being aimed at is the misuse by a business of its market power. Examples of misuse of market power may include in certain circumstances, predatory pricing or refusal to supply.”

Senator Boswell also took the opportunity to congratulate new ACCC Chairman, Graeme Samuel, on his first week in the job, saying that he had started off on the right foot.

“Mr Samuel is showing all the signs that he will continue where Professor Fels left off in defending business from unfair practices of competitors and making sure all businesses adhere to the Trade Practices Act, regardless of size or market share.”

“I have been particularly impressed with his comments on Safeway, in which he defended the role played by the ACCC in the case, despite self-serving claims by Woolworths that it had cost taxpayers and shareholders more than the decision was worth.”

“Mr Samuel was swift to confirm that such cases are less about the cost than about ensuring the Trade Practices Act is adhered to by all those who operate under it - big or small,” Senator Boswell concluded.

ENDS