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Competition and Consumer Amendment (Misuse of Market Power) Bill 2014

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2013-2014

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

THE SENATE

 

 

COMPETITION AND CONSUMER AMENDMENT

(MISUSE OF MARKET POWER) BILL 2014

 

 

EXPLANATORY MEMORANDUM

 

 

(Circulated by authority of Senator Xenophon)

 

 

 

 

 

 

 

 

 

BACKGROUND

The aim of this Bill is to provide the Court with the power to give directions to order a corporation to reduce its market share, where the corporation has been found to have contravened subsections 46(1) or 46(1AA) of the Competition and Consumer Act 2010 . These subsections contain the Act’s provisions relating to the misuse of market power. The Bill allows the Court to direct a corporation to reduce its market share within two years of the order being made, on the application of the Australian Competition and Consumer Commission (ACCC) or any other person. This application may be made any time within three years after the date on which the corporation contravened subsections 46(1) or 46(1AA). The Court may also accept an undertaking from a corporation to reduce its market share, instead of issuing a direction.

In circumstances where an application for a Court direction has been made, and with the consent of all parties involved, the Court may make an order for a reduction in a corporation’s market power or share, even if the Court has not found that the corporation has contravened subsections 46(1) or 46(1AA).

The provisions in this Bill are a response to the high concentration of many Australian retail markets, including grocery, fuel, liquor and hardware. There are significant concerns that the lack of competition in these markets is leading to higher prices for consumers and putting producers under increasing financial strain. The measures in this Bill would give the ACCC a further option in addressing these issues, as well as creating a new disincentive for corporations to abuse their market share.

 

 

NOTES ON CLAUSES

 

Part 1 - Preliminary

 

Clause 1 - Short Title

This clause is a formal provision and specifies that the Bill, once enacted, may be cited as the Competition and Consumer Amendment (Misuse of Market Power) Act 2014.

 

Clause 2 - Commencement

The Bill’s provisions are to commence the day after the Bill receives Royal Assent.

 

Clause 3 - Schedule(s)

This clause states that each Act specified within a Schedule to this Bill is amended or repealed as set out by the provisions of the Bill.

 

 

Schedule 1 -

 

Amendments to the Competition and Consumer Act 2010

 

Item 1 inserts a new section 80AD into the Act to allow divestiture where there is a contravention of section 46 of the Act.

 

New subsection 80AD(1) specifies where the divestiture provisions can apply; that is, where a corporation has been found to have contravened subsection 46(1) or 46(1AA) in the existing Act in relation to misuse of market power.

 

New subsection 80AD(2) states that a Court may, on the application of the ACCC or any other person, give directions to secure a reduction in that corporation’s market share or market power within two years.

 

New subsection 80AD(3) states that an application under new subsection 80AD (2) must be made within three years after the date on which the contravention occurred.

 

New subsection 80AD(4) allows the Court to make a consent order in relation to the reduction of a corporation’s market share or power, whether or not the Court has found that the corporation has contravened subsection 46(1) or 46(1AA).

 

New subsection 80AD(5) allows the Court to accept an undertaking from a corporation to reduce its market share or market power, rather than issuing an order.

 

New subsection 80AD(6) states that this section does not limit the Court’s power under any other provisions in the Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Compatibility with Human Rights

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

 

COMPETITION AND CONSUMER AMENDMENT (MISUSE OF MARKET POWER) BILL 2014

 

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

This Bill provides the Court with the power to give directions to order a corporation to reduce its market share, where the corporation has been found to have contravened subsections 46(1) or 46(1AA) of the Competition and Consumer Act 2010 in relation to misuse of market power.

 

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

 

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.