Win for David against Goliath on misuse of market power

Wednesday 16 March, 2016 | By: Darrell Giles | Tags: Harper Review, competition, supermarkets, misuse of power;

The Chamber of Commerce and Industry Queensland (CCIQ) says the state’s 406,000 small business battlers have had a major win over big business.

CCIQ Director of Advocacy Nick Behrens was delighted that the Turnbull Government will legislate to fix competition policy in Australia by amending the Competition and Consumer Act’s misuse of market power provision.

Mr Behrens said the Federal Government announced today it will repeal the current Section 46 and adopt the changes recommended by the Harper Review.

“This will result in a new provision that prevents firms with substantial market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition,” he said.

The Harper Review found Australia’s current misuse of market power provision had not been reliably enforceable and permits anti-competitive conduct.

“It was virtually impossible to prove intent or purpose unless you find a smoking gun. Today’s announcement is a massive win for small business in Queensland,” he said.

“Market power is not a crime in itself. However, the misuse of that power to drive out smaller competitors is and it must be stopped to ensure a level playing field for all businesses.” 

Mr Behrens said examples of predatory pricing included the major supermarkets’ $1 litre of milk and 85 cent loaf of bread, which had effectively decimated competition.

“There are numerous examples as detailed by the ACCC identifying predatory pricing practices driving small competition out of the market,” he said.

“CCIQ’s membership has vocally communicated its discontent with the numerous tactics of Woolworths and Coles and the negative impact on small business in the food retailing and supply chain sectors specifically.

“We are well aware of the tensions between SMEs and large businesses in the marketplace, particularly when the practices of the latter distort competition.

“Independent grocers are struggling to compete in a sector where the two major players engage in price wars to sell goods at the lowest price.

“Major retailers are moving into local regional Queensland centres, charging significantly lower prices for groceries and driving small and local businesses, such as butchers and fresh food grocers, out of the market.”

Mr Behrens said an effective misuse of market power provision was an important and necessary part of competition law, particularly for small business, which makes up more than 97 per cent of all businesses.

“We are delighted that the Federal Government has resisted the lobbying from the big end of town in Canberra and has instead gone into bat for small business,” he said.

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