Section 46(1) and 46(1AA) of the TPA : the struggle of the small against the large

The purpose of this article is to highlight the conflict in the policy objectives of subs 46(1) and subs 46(1AA) of the Trade Practices Act 1974 (Cth) (TPA). The policy objective of subs 46(1) is to promote competition and efficient markets for the benefit of consumers (consumer welfare standard). It does not prohibit corporations with substantial market power using cost savings arising from efficiencies such economies of scale or scope, to undercut small business competitors The policy objective of 46(1AA), on the other hand, is to protect small business operators from price discounting by their larger competitors.. Unlike subs 46(1), it does not contain a ‘taking advantage’ element. It is argued that subs 46(1AA) may harm consumer welfare by having a chilling effect on price competition if this would harm small business competitors.

Section 46 of the Trade Practices Act-has the High Court made a "u-turn" on "taking advantage"?

Examination of High Court decisions on misuse of market power in regard to the element of "taking advantage" reveals inconsistency of application. Whilst being consistent regarding the need for a connection between the market power and the impugned conduct, the High Court has not been consistent regarding the degree of connection required. Two streams have developed, one supporting a high degree of connection, the other a lower degree before a firm is found to have "taken advantage" of its market power. Added to this has been the development of the "rational business explanation" which, it is argued, is either used as a defence to a s 46 action or is premised on the higher threshold of connection. Initially the high Court supported the lower threshold. In later decisions, whilst expressing support for the earlier decisions, in application the High Court favoured the higher threshold and at one point the rational business explanation. This trend appears to have been reversed with the most recent High Court decision which indicates substantive support for the earlier s 46 decisions.

Strategic entry deterrence : does it constitute a misuse of market power?

A challenge for regulators and the courts has been establishing the boundary between behaviour is exclusionary and should be condemned under s 46 of the then Trade Practices Act 1974 (Cth) (TPA), now s 46 of the Competition and Consumer Act 2010 (Cth) (CCA), and behaviour that is not exclusionary and might even be pro-competitive. This boundary can be especially difficult to draw in the case of entry deterring strategies. Section 46(1) prohibits corporations with a substantial degree of market power from taking advantage of that market power for one of the statutorily proscribed purposes which include preventing the entry of a person into that or any other market. Section 45(2) separately prohibits corporations from making and giving effect to contracts arrangements and understandings that have the purpose, effect or likely effect of substantially lessening competition in a market. The latest case in which the ACCC has failed to satisfy the s 46 criteria is the decision of Greenwood J in ACCC v Cement Australia Pty Ltd [2013] FCA 909 (Cement Australia case). Final orders were published in a separate judgment, in ACCC v Cement Australia Pty Ltd [2014] FCA 148 (28 February 2014). The case concerned an entry deterring strategy, namely the pre-emptive buying of input factors in an upstream market to protect an incumbent with substantial market power in a downstream market and to prevent new entry in the downstream market. Greenwood J found that while Cement Australia Pty Ltd, formerly known as Queensland Cement Ltd (QCL), had substantial market power, its conduct in entering into the pre-emptive contracts was not a contravention of s 46, because Cement Australia had not “taken advantage” of its market power. However, since Cement Australia’s purpose in entering into the pre-emptive contracts was anti-competitive, they were held to contravene s 45(2) of the TPA. The purpose of this Note is to consider only the reasons for judgment in the Cement Australia case in relation to the “taking advantage” element. The judgment was handed down on 10 September 2013. The final hearing date was 15 July 2011, so it was long-awaited. At 714 pages, it is carefully drafted.

The desirability of criminal penalties for breaches of part IV of the trade practices act

Following the introduction of criminal sanction, including jail terms, for hard core cartelisation in the United Kingdom, the Dawson Review has recently recommended that criminal penalties be introduced in Australia for individuals and corporations found to have engaged in hard core cartels. A number of reasons have been advanced to justify the introduction of criminal sanctions for this type of conduct, the most common of which are that it would bring Australia in line with other competition regimes and that criminal sanctions are more likely to provide an effective deterrent. This article evaluates those reasons, and others, to determine whether there is any adequate justification for the proposed criminal regime.

Players, clubs, events and the Trade Practices Act : a primer for sporting clubs

The Trade Practices Act (TPA) has had an enormous impact on how corporations in Australia may conduct their business. In relation to sporting clubs, it limits the freedom of clubs to deal with players, each other and the public. While previously many clubs may have escaped the ambit of the TPA because they were not “corporations”, state equivalent Fair Trading legislation and the introduction of the national competition policy in 1995 have effectively expanded the scope of consumer and competition regulation to include individuals and associations. Consequently, an understanding of the nature and scope of trade practices regulation is now important for any sporting organisation—regardless of size or structure. This paper identifies the legislative provisions most likely to impact upon sporting clubs and examines some possible circumstances in which clubs might find themselves exposed to liability.

University marketing and the law: applying the trade practices Act to universities` marketing and promotional activities

Application of the Trade Practices Act and its State equivalents to the  marketing by universities of the courses they teach - ramifications of the Act  are not understood within the wider university community, importantly by   those responsible for marketing courses - the Act prescribes many forms of  conduct not instantly recognised as morally reprehensible and are not  automatically avoided on the ground that they are inconsistent with  acceptable behaviour - the Act creates significant proscriptions, applicable to universities and their staff, which can have serious consequences.

Criminal penalties for contraventions of Part IV of the Trade Practices Act

In 2003 the Dawson Committee, commissioned by the Government, recommended that criminal penalties should be introduced for cartel conduct. The Government accepted this recommendation in principle and set up a working party to consider the implementation difficulties that had been identified in the Dawson Report. Nothing further was heard from the Government until February 2005 when the Government announced that it would introduce criminal penalties for serious cartel conduct. This paper evaluates the Government proposals and makes suggestions for their implementation.