Misuse of Market Power in Australia: Early Assessment of the Amended Section 46 of the Competition and Consumer Act

Mel Marquis and Rhonda Smith

CPI Columns

Mel Marquis and Rhonda Smith, ‘Misuse of Market Power in Australia: Early Assessment of the Amended Section 46 of the Competition and Consumer Act’ (CPI Columns, September 2022)

Abstract

In this paper we express some misgivings regarding the 2017 amendments of Section 46 of Australia’s Competition and Consumer Act 2010, i.e., the abuse of dominance or “misuse of market power” provision. We suggest that, while the previous version of Section 46 may have been flawed, possibly leaving gaps that failed to prevent anticompetitive conduct in some instances, the 2017 reform may have overshot the mark in addressing such deficiencies. The fundamental problem is that the former Section 46 appears to have been more capable than the new version of distinguishing between socially desirable aggressive competitive conduct on the one hand and genuinely harmful conduct on the other. The broader new test focuses on whether a given practice adopted by a firm with substantial market power has the purpose, effect or likely effect of substantially lessening competition. We suggest below that, if the Australian courts do not develop an interpretation of the test ensuring that clearly efficient behavior that would be likely to occur under competitive conditions will not breach the prohibition even if competition is incidentally lessened, the risk of type I errors may perversely discourage socially beneficial conduct.