Gas Week

EWN Publishing

Howard and Costello throw principles of TPA “out the window” with predatory-pricing amendment

Posted by gasweek on 5 October, 2007

The Federal Government was of course a team effort, so while Howard was said to be the brains of the radical change to the [Trade Practices] law, it was actually done under the name of Treasurer Peter Costello who, by definition, deserved equal condemnation, wrote John Durie in The Australian (19/9/2007, p.48).

Spectacular failure: The amendment passed the Senate on 18 September including some modifications designed to put more certainty into the abuse of market power provisions, and including the oddball notion of a new deputy ACCC chair responsible for small business. The Joyce amendment meant Howard agreed to support the overall changes, which allowed the government to go to the electorate saying it has done something for small business, while failing spectacularly to introduce key amendments proposed by the Dawson review, such as criminal prosecutions for cartel behaviour.

Hurting consumers: “The Howard/Joyce/Jones amendment throws these principles out the window by introducing a ban on predatory pricing that applies when a company has substantial market share and sells something for a sustained period at less than the relevant cost. The amendment is destined to prevent price-cutting wars, with the end result of hurting consumers and small business. Just who is meant to be the beneficiary? The present law is about market power, its abuse and the effect of that behaviour.

What’s the point? “So let’s suppose a petrol station started discounting prices by selling petrol below cost. The biggest dealer in the market with 30 per cent market share can’t match those prices because by definition it would breach the Howard/Joyce/Jones amendment. Who does that help: the consumer in the town, or the small business person who runs the biggest petrol station in town?,” he asked.

The Australian, 19/9/2007, p. 48

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