Government to amend Trade Practices Act: small business protection

The Treasurer has announced that the Government intends to introduce the Trade Practices Legislation Amendment Bill (No. 1) 2007 (the Bill) to amend section 51AC and section 46 of the Trade Practices Act 1974 (the Act) on 20 June 2007.

The Bill will improve protection for small business from unconscionable conduct and from the misuse of market power, such as predatory pricing.

The Bill substantially implements the Government’s response to the March 2004 Senate Economics References Committee (SERC) report on The effectiveness of the Trade Practices Act 1974 in protecting small business.

Based on the discussions with small business, the Government will change its legislation, to provide that:

• for the purposes of section 46, more than one corporation can have a substantial degree of power in a market;
• a corporation can have a substantial degree of market power even though it does not substantially control a market;
• a corporation can have a substantial degree of market power in a market even though it does not have absolute freedom from constraint in that market by the conduct of its competitors or persons to or from whom the corporation supplies or acquires goods or services; and
• in regard to below-cost or predatory pricing, the Court may have regard to any conduct that consisted of supplying goods or services for a sustained period at a price that was less than the relevant cost to the corporation of supplying such goods or services, and the reasons for that conduct.

An earlier proposal to insert reference to a reasonable prospect or expectation of being able to recover losses incurred by below‑cost pricing as a factor in section 46 will not be pursued, in light of concerns that it may limit the ability of the court to find breaches of section 46 in cases of predatory pricing.