For the first time in Australia, firms with market power will now need to carefully consider whether the conduct they engage in, or propose to engage in, could be interpreted as being designed to lessen competition.
The changes are part of the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017 approved by the Senate on 14 August 2017. Implementation is not expected until early 2018.
Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, welcomed the passing of an “effects test” saying it would level the playing field for small businesses and safeguard competition.
“The legislation will stop large businesses with significant market power from using that power to impact broadly upon a market with adverse consequences for competitors," she said.
“It doesn’t stifle price discounting or loss-leading behaviour.
“The introduction of an effects test that lowers the threshold for establishing misuse of market power enhances fairness and effective competition.”