ACCC chief warns small businesses could be prosecuted for predatory pricing

Australian Competition and Consumer Commission chairman Graeme Samuel has warned the regulator could be forced to prosecute a small business for predatory pricing after the Senate rejected changes to the controversial Birdsville amendment to the Trade Pra

Australian Competition and Consumer Commission chairman Graeme Samuel has warned the regulator could be forced to prosecute a small business for predatory pricing after the Senate rejected changes to the controversial Birdsville amendment to the Trade Practices Act.

The Birdsville amendment was drafted by University of New South Wales associate professor Frank Zumbo and introduced into Parliament by maverick Queensland Senator Barnaby Joyce in the last months of the Howard government. The amendment specified that a business could be judged to have engaged in predatory pricing if it had “substantial market share” rather than “substantial market power”.

Critics of the amendment – including Samuel and several competition experts – say the amendment could catch out small businesses. These critics give the example of a major supermarket chain entering a rural market, where a small grocery business is the only player in town. Critics say the supermarket chain could take action against the small grocery business under the “substantial market share” test.

“Everyone that has any knowledge in this area say it will have unintended consequences,” Samuel says. “It will be very unfortunate when a small business that probably doesn’t know better breaches the amendment and we are bound to prosecute them.

“Do not come to me in a year or two years’ time when the ACCC prosecutes a small business for breaching this amendment and say, ‘you should not be doing this’.”

Samuel has criticised Joyce and Zumbo for what he calls a “silly law”.

“We want to do everything we can against misbehaviour by businesses and we will do everything we can to assist against harsh and oppressive actions by big businesses. The last thing we want to do prosecute a small business under these laws.”

But Frank Zumbo says Samuel has overstepped the mark by talking about policy, which is the preserve of the Parliament, not regulators.

“Parliament has spoken and says it wants to stick with Birdsville. Samuel should respect that and leave policy development to Parliament,” Zumbo says.

He also rejects concerns about small businesses being caught out under the market share test, arguing that it is only one of four tests that need to be satisfied to prove predatory pricing.

“Even if a business is caught under the market share test, it must also be proved they sold at prices below-cost for a sustained period of time for anti-competitive purpose,” Zumbo says.

“The reality is that small business does not have the deep pockets to maintain predatory pricing. Mr Samuel has been mischievous by just focusing on the market share test.

“I don’t believe for a moment that there is ever going to be a case against small business. It’s pure scaremongering.”

Zumbo says the ACCC should get on board. “The ACCC should have done that from day one. It’s time that they move on that very quickly and respect the wishes of Parliament.”

Read more on the Birdsville amendment