Labor considers stronger predatory pricing laws

Labor plans to introduce changes that will significantly strengthen laws designed to protect SMEs from predatory pricing, new Competition Policy and Consumer Affairs Minister Chris Bowen says.

The key change to section 46 of the Trade Practices Act being formulated by Labor would make it unnecessary to prove that a big business has recouped losses it sustained from price cutting in order to establish predatory pricing.

The threshold test that a business must be “taking advantage of market power” to be prosecuted under predatory pricing provisions will be made easier to satisfy under Labor’s proposals.

Bowen has also said the Government will push ahead with laws to make it easier to prosecute and jail business executives and owners that engage in criminal cartels.

“There has been a review of the Trade Practices Act. I think we know what the problems are,” Bowen said in a newspaper interview published today. “We intend to put the teeth back into section 46.”

The changes, which appear to largely reflect amendments moved by Bowen and new Small Business Minister Craig Emerson earlier in the year, will help undo the effect of the Boral and Rural Press High Court cases, which many believe have made predatory pricing laws unworkable.

Slater & Gordon competition law expert Van Moulis says if implemented the changes would be of significant benefit to SMEs.

“Labor seems to have recognised the changes made by the Coalition really went no great way to assist SMEs,” Moulis says. It’s been frustrating for advocates for SMEs that it’s taken so long for these commonsense recommendations to become law.”

Labor’s plan to review the so-called “Birdsville” amendment introduced by Senator Barnaby Joyce is also timely, Moulis says.

“My view was Joyce’s amendment did very little to assist SMEs, so its removal plus additional changes as mooted by Labor are sorely needed,” he says.

While it is unlikely the changes would see a rush of litigation by SMEs under s46 – the prices of such litigation remain prohibitive – Moulis says it could make it more likely we will see action by the Australian Competition and Consumer Commission in relation to the retail grocery and service station sectors.

National Association of Retail Grocers of Australia chief executive Ken Henrick says his members would welcome the changes suggested by Labor.

He hopes the changes will remove the focus of the laws from legal technicality to the nature of the anti-competitive conduct being prohibited.

“The issue is to come up with a set of understandings that certain sorts of behaviour are prohibited and ideally that would deter large corporations from engaging in that conduct in the first place – it doesn’t help small business to get involved in long 10 year cases that cost millions; they don’t have the resources and they would go out of business before the finish anyway,” Henrick says.