Fast Lane: Changing two words would give the ACCC more firepower to go after companies that misuse market power

This year is shaping up to be a busy year for Rod Sims, chair of the Australian Competition and Consumer Commission.

Speaking to the Australian Financial Review today, Sims shared some of his target list this year.

Large food manufacturers using false or misleading claims to sell health products and training colleges that use taxpayer funds to lure in students are at the top of the list.

But Sims is also pushing for another change that would give the competition regulator great ability to take action against anti-competitive practices and it involves removing two words from Australia’s competition laws.

The words are “take advantage” and they relate to the proof the ACCC must show the courts when going after large companies accused of anti –competitive behavior.

Under the current law, the watchdog must be able to show the company “took advantage” of its market power in a way that a smaller business would not be able to.

According to Sims, these two words dilute the effectiveness of the country’s competition laws against such practices as loss-leading, product bundling and predatory pricing.

“The fact you get Uber and Airbnb and Google and Facebook shows the huge benefits of new technology and how pro-competitive they are,” Sims told the Australian Financial Review.

“It shows why we need effective competition laws and the misuse of market power law is not very effective, because of the focus the courts have put on the word[s] “take advantage”.”

“If I’m a big company, I can use bundling of goods and I can use predatory pricing because a smaller company can do the same.”

Removing the “take advantage” test from Australia’s competition laws is one of the recommendations of the Harper competition review.

The small business community is still waiting to find out if the federal government will introduce an effects test, which is another recommendation of the Harper review.

The government has put off making a decision about the effects test until February, after the reform was effectively put on ice in September last year prior to the change in the leadership of the federal Liberal Party.

Australia needs strong and effective competition laws in order for the competition watchdog to do its job and the Australian small business community to flourish.

The effects test and some changes to the law would go some way to ensuring this happens.