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Firm opposes Harper Review reform to ‘misuse of market power’

Boutique firm Arnold Bloch Leibler has argued against proposed changes to the Competition and Consumer Act 2010 in a submission to the Treasury.

On the back of the Harper Review into competition policy's release last year, the Treasury has invited submissions on the proposed amendments.

Among the recommendations were changes to section 46 of the act, which prohibits the misuse of market power.

The Harper Review recommended removing the “take advantage” test, inserting a “purpose, effect or likely effect” test and shifting focus from “damage to a competitor” to “substantially lessening competition”.

The review also proposed introducing a number of mandatory factors for the court to take into account and “additional measures to reduce uncertainty”.

In a submission on behalf of ABL, partners Zaven Mardirossian and Matthew Lees urged the government to reject the proposed amendments, citing a “lack of evidence of a need to change”.

“It remains unclear what conduct the changes are trying to capture that is not already captured by the current law,” they said.

“It is remarkable that the Discussion Paper proposes six options but does not define the problem those options are seeking to address. This prevents any serious cost-benefit analysis of those options, and means the debate must be conducted at the level of general principles around the drafting of competition laws.”

In Mr Mardirossian’s and Mr Lees’ view, the current law sets out clear parameters for businesses to follow to avoid falling foul of competition rules.

By contrast, the proposed legislation would potentially open “each and every aspect of a business’s unilateral conduct” open to scrutiny by the ACCC, competitors or other commercial players.

“As lawyers, we see clearly the potential for the proposed s 46 to facilitate unmeritorious claims that are designed to hinder, not protect, competitive conduct,” they wrote.

“It would be all too easy to allege that any vigorous competitive conduct that adversely affects competitors would be ‘likely’ to have the effect of substantial lessening competition at some stage in the future.”

Given the “inherent uncertainty” of the test, businesses may find it safer and easier to avoid aggressive competitive strategies, damaging the strength of the market overall, they warned.

“The Harper Review itself acknowledged that the proposed s 46 risked prohibiting legitimate competitive conduct that should not be prohibited.

“It might seem desirable, in theory, to prohibit all conduct that has an anti-competitive purpose, effect or likely effect but this would, in reality, increase uncertainty for businesses, facilitate unmeritorious claims and inhibit legitimate competitive conduct.

"Ultimately, this would be bad for competition and consumers.”

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