The proposed new rules for misuse of market power have
serious implications for business. Big fellas, your compliance
costs are going up. Little guys, you and the ACCC will have a much
easier time reining in the market leaders.
In short, a whole heap of conduct that does not amount to misuse
of market power under the current law will fall foul of the new
laws. Given that maximum penalties start from $10M, that makes the
new laws kind of a big deal.
A business with market power will no longer have to
'misuse' that market power to get in trouble. Purpose and
intent won't matter. And there won't need to be any
connection between the market power and the conduct. Any conduct
that substantially lessens competition (or is likely to), will get
the business in hot water.
An example is $1 milk in the big supermarkets. Let's assume
Coles and Woolies have market power (which isn't a given).
For the supermarkets, $1 milk is a great way to get customers
in the door. And so long as that is their purpose (as opposed to
destroying their competitors), they're not engaging in misuse
of market power under the current laws.
For the dairy farmers and competing dairy brands, the situation
pretty much sucks. It's literally impossible to compete on
price. And you can forget new market entrants. Why buy the cow when
you can get the milk for $1.
The ACCC struggles to help them because the current test for
misuse of market power is so hard to satisfy. It's forced to
look to other causes of action like unconscionable conduct which
have their own challenges and shortcomings.
Under the new law, the big supermarkets selling $1 milk would
be a misuse of market power. It doesn't matter if their motives
aren't evil. All that matters is that they're substantially
lessening competition by pricing the milk so cheaply that nobody
can compete with them.
That's why the ACCC and the little guys are celebrating the
changes. Big fellas, not so much. All their business activities
will need review, and in a lot of cases they'll have to change
how they do things. For lawyers, the picnic baskets are being
packed as we speak.
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The ACCC's view is that this will increase competition between major online travel sites for hotel bookings in Australia.
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