Effects test draft bill proposed

Posted by AFN Staff Writers on 5th September 2016

The Australian Federal Government has today released its draft bill to change the Competition and Consumer Act and introduce the controversial ‘effects test’.

Prime Minister Malcom Turnbull announced in March 2016 that his government would be introducing the effects test, changing Section 46 of the Competition and Consumer Act which addresses misuse of market power by big businesses acting alone.

Under the current legislation, Section 46 stipulates that to be found guilty of misuse of power, a business with substantive market power must have planned and acted in a way to misuse its power in an anti-competitive manner.

Under the effects test the Australian Consumer and Competition Commission (ACCC) will only be required to prove the large business acted in an anti-competitive manner. It will not have to prove intention.

Since the effects test was first proposed, a number of organisations and individuals have spoken out against the effects test including the Productivity Commission and ex-ACCC Chairman Graeme Samuel who thinks it will limit access to cheap groceries.

ACCC responds

The ACCC has responded to the draft bill by releasing  guidelines proposing how it intends to approach the legislation changes.

Chairman of the ACCC, Rod Sims, is calling for feedback on the proposed guidelines.

“In particular, the ACCC is inviting feedback from consumers, businesses, and other stakeholders about the issues and topics the ACCC can provide guidance on to assist them understand how the amended misuse of market power prohibition, and the prohibition on anti-competitive concerted practices are likely to operate and how we’ll approach those provisions,” Sims said.

The proposed frameworks can be viewed on the ACCC’s website. Feedback closes 3 October 2016.