Ex ACCC Chairman worried effects test could limit access to cheap groceries

Posted by AFN Staff Writers on 13th January 2016

LawThe former Australian Competition and Consumer Commission (ACCC) Chairman Graeme Samuel has criticised the ACCC’s plans to replace the concept of “misuse of power” with “effects test” in the Competition and Consumer Act.


Samuel, who chaired the ACCC between 2003 – 2011, told the ABC that the proposed change in the law could leave consumers worse off and “we shouldn’t have big businesses being penalised for engaging in pro-competitive behaviour.”


The proposed changes relate to Section 46 of the Competition and Consumer Act which currently deals with misuse of market power by big businesses acting alone. As presently stands, Section 46 stipulates that to be found guilty of misuse of power, a business with substantive market power must have planned to and acted in a way that misused its power in an anti-competitive manner.


By contrast, if an “effects test” is used instead, the ACCC would only have to prove the large business acted in an anti-competitive manner, but would not have to prove the large business had the intention to misuse market power.


Samuel said that ultimately this change would give smaller businesses an unfair advantage and that bigger companies may be afraid to lower prices – which could leave consumers at a disadvantage.


The ACCC responded with no comment when contacted by Australian Food News on this matter but in September 2015 current ACCC Chairman Rod Sims told the ABC that the reason for the change was due to the way the courts have been interpreting the words “take advantage”.


“They’ve interpreted it to mean that a firm with substantial market power can take whatever steps it likes to exclude its competitors, say by buying up all the land or all the inputs to production,” Sims told the ABC. “It can do that, provided that the steps it takes are ones that a firm without substantial market power could also have undertaken,” said Sims.


The Australian Federal Government is yet to finalise a decision as to whether it will proceed with the “effects test” change into the Competition and Consumer Act.