Dominance in Australia: 2022

31/01/2022

This chapter first appeared in Lexology Getting The Deal Through – Dominance 2022.

This quick reference guide includes the Australian general legal framework and sector-specific rules, the definition of collective dominance, and relevance of dominant purchasers; abuse of dominance and related defences; specific forms of abuse, enforcement, sanctions, remedies and appeals; and current trends.

General framework

1. What is the legal framework (eg, legislation, regulation, regulatory guidance) (hereinafter the ‘legislation’) in your jurisdiction covering the behaviour of dominant firms (ie, firms with high market power)?

The Australian competition law proscribes, among other things, certain unilateral conduct of firms with a substantial degree of power in a market, a lower threshold than dominance, pursuant to section 46 of the Competition and Consumer Act 2010 (Cth) (CCA). Specifically, section 46(1) of the CCA prohibits corporations with a substantial degree of power in a market from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition in that or any other market in which the corporation supplies or acquires or is likely to supply or acquire goods or services, or does so indirectly through one or more persons.

This prohibition has applied since 6 November 2017. Prior to this date, firms with substantial market power were prohibited from ‘taking advantage’ of that power for a prohibited anticompetitive purpose (such as damaging a competitor or preventing or deterring entry into a market). The prohibition was amended after a comprehensive review of Australia’s competition laws in 2015 (Harper Review), which recommended reframing section 46 to include an effects test and remove the requirement that a firm ‘take advantage’ of its market power.

Section 46A prohibits the misuse of market power by firms with a substantial degree of market power in trans-Tasman markets, being a market in Australia, New Zealand, or Australia and New Zealand for goods or services. The amendments made to s46 in November 2017 were not extended to s46A, with the consequence that s46A continues to require a firm with the requisite market power to have ‘taken advantage’ of that power for one of three proscribed purposes.

In addition, a telecommunications carrier or carriage service provider that has a substantial degree of power in a telecommunications market is prohibited from taking advantage of that power with the effect or likely effect of substantially lessening competition in a telecommunications market (see Part XIB of the CCA).

Definition of dominance

2. How is dominance (or its equivalent concept under the legislation) defined in the legislation and case law? What elements (eg, market shares, barriers to entry or expansion, buyer power, position of rivals versus incumbent) are taken into account when assessing dominance? (Does the legislation and case law recognise different types of dominance, for example, ‘relative dominance’ or heightened market power falling short of fully fledged dominance?)

The relevant concept under the CCA is a ‘substantial degree of power in a market’, which is a lower threshold than dominance. Market power has been interpreted by the courts to mean the ability of a firm to act without competitive constraint. Such market power may be evidenced by a firm’s ability to:

raise prices to supra-competitive levels for a non-transitory period of time without its rivals taking away customers;
withhold supply; and
determine non-price terms and conditions.

Financial strength alone is not an indicator of market power.

‘Substantial’ has been defined as something ‘considerable’ or ‘large’ but less than ‘commanding a market’ or a ‘monopoly’. The CCA also specifies that a corporation may have a substantial degree of market power even if it does not:

substantially control the market; or
have absolute freedom from constraint by the conduct of competitors, suppliers, and customers (section 46(5)(a) to (b)).

Subsections 46(3) to (8) aid in determining when a firm has a substantial degree of market power. More than one firm may have a substantial degree of power in a market (section 46(7)) and a supplier or an acquirer in that market could have market power (section 46(8)(c)).

The question of whether a firm has a substantial degree of market power is interconnected with the question of market definition and is analysed by the court after the identification of the relevant market.

Purpose of the legislation

3. Is the purpose of the legislation and the underlying dominance standard strictly economic (related to efficiency and consumer welfare), or does it protect other interests (such as industrial policy, small and medium-sized businesses, the prevention of market power for sociopolitical reasons or the general interest)?

The CCA contains an object clause (section 2) that highlights the CCA’s dual role of promoting competition and protecting consumers, stating that ‘the object of the Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection’. The courts have also found that the objective of section 46 is to promote competition rather than the interests of particular persons or corporations. Consistent with this, the recent amendments to section 46 in November 2017 were described by the Australian government as shifting the focus of the prohibition on to the competitive process rather than individual competitors. The Government’s Explanatory Memorandum that accompanied the bill in the Australian parliament makes clear that the objective of section 46 ‘is not to shield inefficient competitors from the natural effects of strong competition in a market’. Section 46 and other provisions in Part IV of the CCA also draw on economic concepts, though, over time, notions of efficiency and consumer welfare may have developed beyond their strict economic meaning.

Sector-specific dominance rules

4. Are there sector-specific dominance rules (eg, for telecommunications, postal services, energy, transport), distinct from the generally applicable dominance provisions? (How do these rules differ from the general dominance rules and are they complementary?)

There is sector-specific regulation of telecommunications and energy. Part XIB of the CCA deals with anticompetitive conduct in the telecommunications industry and Part XIC of the CCA contains a telecommunications access regime. Energy infrastructure at the transmission and distribution level is regulated under the National Electricity Law or the National Gas Law.

Sector-specific regulation applying to the telecommunications and energy industries operates alongside the general misuse of market power prohibition in section 46 of the CCA.

Exemption from the dominance rules

5. To whom do the dominance rules apply? Are any entities (eg, public entities) exempt?

The misuse of market power provisions apply to corporations. This includes foreign, trading or financial corporations, as well as both public and private corporations. No legislation binds the Crown, or public entities such as government departments and public corporations, unless the legislation expressly names the Crown or implies that the Crown is to be bound. This principle is referred to as Crown immunity. The CCA expressly binds public entities only to the extent that they are ‘carrying on a business’, which includes a business not carried on for profit. Collecting taxes, licensing and transactions involving persons who are all acting for the same authority (Commonwealth, state or territory) and non-commercial public authorities are not activities that amount to carrying on a business.

The CCA does not bind the Crown if it is not carrying on a business. However, Crown immunity does not automatically extend to private corporations dealing or contracting with the Crown. Rather, private corporations may benefit from derivative crown immunity in certain limited circumstances. In the trial decision in ACCC v NSW Ports in mid-2021, the Federal Court found that the State of NSW had crown immunity in relation to any alleged competition law breach arising from two Port Commitment Deeds, which it entered into with NSW Ports as part of the privatisation of two ports in NSW (Port Botany and Port Kembla), and NSW Ports benefited from derivative Crown immunity in respect of certain impugned provisions in those deeds, because the State was not carrying on business when engaging in the privatisation, and if any liability under the CCA were to apply to NSW Ports, legal and proprietary rights would be adversely affected. This case is currently on appeal. While derivative immunity may exist in certain circumstances, it would be prudent for a private corporation to consider whether its conduct could contravene section 46 of the CCA when entering into an agreement with the Crown, even if the Crown’s conduct may be subject to Crown immunity.

The telecommunications sector-specific misuse of market power provisions in Part XIB apply to carriers and carriage service providers only.

Transition from non-dominant to dominant

6. Does the legislation only provide for the behaviour of firms that are already dominant? (Or does it cover the conduct of non-dominant companies attempting to become dominant, whether successful or not?)

Section 46 of the CCA only applies to the conduct of a firm with a substantial degree of market power. If a firm does not have a substantial degree of market power, then its conduct is not covered by section 46 of the CCA. This is the case even if the relevant conduct would result in the firm obtaining or acquiring a substantial degree of market power. However, the conduct does not need to have the purpose, effect or likely effect of substantially lessening competition in the same market as that in which the firm has substantial market power. The prohibition extends to conduct that has the purpose, effect or likely effect in any other market in which the corporation or a related body corporate:

supplies or is likely to supply goods or services;
supplies or is likely to supply goods or services indirectly through one or more other persons;
acquires or is likely to acquire goods or services; or
acquires or is likely to acquire goods or services indirectly through one or more other persons (section 46(1)(b) to (c)).

There was some public concern (not universal) that the CCA did not cover situations where firms acquire market power incrementally through small-scale mergers or acquisitions (‘creeping acquisitions’). ‘Creeping acquisitions’ refer to mergers or acquisitions that, individually, do not substantially lessen competition, but collectively may do so. An amendment to section 50 of the CCA, which came into effect in February 2012, sought to address these concerns. The amendment involved two key changes: the removal of the requirement that a market be ‘substantial’ and the replacement of ‘a relevant market’ with ‘any relevant market’. While the changes have not yet been tested in court, the Australian Competition and Consumer Commission (ACCC) has been reviewing (and opposing) small-scale mergers and acquisitions, including the acquisition of single supermarkets or stores.

Collective dominance

7. Is collective dominance (or other coordinated conduct) covered by the legislation? How is it defined in the legislation and case law?

Currently, there is no separate concept of collective dominance in Australia. However, more than one corporation may have a substantial degree of power in a market (section 46(7)). In determining whether a corporation has a substantial degree of market power, a court may: combine the market power of the corporation and its related entities (section 46(3)); and take into account any market power derived from contracts or arrangements with others (section 46(4)(b)).

Dominant purchasers

8. Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?

The legislation applies equally to suppliers and purchasers who have a substantial degree of market power.

Market definition and share-based dominance thresholds

9. How are relevant product and geographic markets defined? (Does the approach of the agencies or courts differ from their approach to market definition in merger control cases?) Are there market-share thresholds (in the legislation or case law) at which a company will be presumed to be dominant or not dominant? (Does this differ for single versus collective dominance?)

The concept of a ‘market’ is used in most of the prohibitions in Part IV of the CCA, including section 46. The test for market definition is consistent across these prohibitions. A ‘market’ is defined in section 4E of the CCA as ‘a market in Australia and, when used in relation to goods or services, includes a market for those goods or services and other goods and services that are substitutable for, or otherwise competitive with, the first-mentioned goods and services’. This definition makes clear that the parameters of a market are governed by the concepts of substitution and close competition. The definition also embodies the ‘small but significant non-transitory increase in price (SSNIP) test’ for defining markets, which seeks the narrowest product and geographical space over which a hypothetical monopolist could impose a SSNIP.

While the definition of ‘market’ refers to a market in Australia, section 46A relates to the misuse of market power in a market in Australia, New Zealand, or in both. This has ramifications for trans-Tasman trade and expressly expands the applicability of the CCA to firms with market power in such markets, although the anti-competitive purpose must be in relation to an ‘impact market’, which is defined as a market in Australia that is not exclusively for services (see s46A).

There is no market-share threshold above which a company will be considered to have a substantial degree of market power. Market power is a question to be determined on a case-by-case basis. In practice, a high market share may be an indicator of market power, but is only one indicator among other factors, such as barriers to entry and expansion. However, there have been cases where a corporation with a 20 to 30 per cent market share has been found to have a substantial degree of market power.

In determining the degree of power that a corporation has in a market, regard must be had to the extent to which the conduct is constrained by that of competitors or potential competitors in that market, or persons to or from whom the corporation supplies or acquires goods or services (section 46(4)(a)).

Abuse of dominance

Definition of abuse of dominance

10. How is abuse of dominance defined and identified? (Does the legislation and case law follow an effects-based or form-based approach to identifying an abuse? In other words, is it the effect on the market or the type of conduct involved that determines whether a practice is abusive?) What conduct is subject to a per se prohibition (ie, regardless of anti-competitive effect)?

Section 46 of the CCA is directed at prohibiting a firm with a substantial degree of market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition. It is not directed at prohibiting the possession of a substantial degree of market power, although the existence of that power is a precondition for section 46. Section 46 was amended in November 2017 to include a competitive effects test. There is no longer a requirement in s46 to show that a firm has ‘taken advantage’ of its substantial market power, for one of three proscribed anticompetitive purposes, for a contravention to be established (although those requirements remain in s46A in relation to trans-Tasman markets).

‘Substantial lessening of competition’ is a concept that is used in other prohibitions in the CCA. ‘Lessening of competition’ is defined to include preventing or hindering competition (section 4G). The courts have found that a lessening of competition means a reduction or loss of competition as a result of the conduct that is ‘meaningful or relevant to the competitive process’ (Stirling Harbour Services Pty Ltd v Bunbury Port Authority (2000), Rural Press v ACCC (2003)) and that it involves considering the future state of competition with and without the impugned conduct (Dandy Power Equipment (1982)). The ACCC’s guidelines on section 46 explains that ‘conduct substantially lessens competition when it interferes with the competitive process in a meaningful way by deterring, hindering or preventing competition’.

As noted above, section 46 is not limited to particular anticompetitive purposes. The assessment of purpose is a subjective inquiry as to what a firm intended to achieve through its conduct. Direct evidence of purpose is not necessary. Purpose can be inferred from a firm’s conduct, the conduct of any other person or the relevant circumstances. The courts have found in Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1989), Boral Besser Masonry Ltd v ACCC (2003) and other cases that meeting competition is a legitimate purpose and have cautioned against confusing aggressive competitive intent with anticompetitive behaviour.

There is no misuse of market power conduct that is subject to a per se prohibition. However, in its guidelines, the ACCC identifies the following types of conduct that may involve a misuse of market power: refusal to deal, restricting access to an essential input, predatory pricing, loyalty rebates, margin or price squeezing, and tying and bundling.

Exploitative and exclusionary practices

11. Does the concept of abuse cover both exploitative and exclusionary practices?

The misuse of market power prohibition will only cover exploitative and exclusionary practices to the extent that those practices are engaged in by a firm with substantial market power and have the purpose, effect or likely effect of substantially lessening competition. It is less common for exploitative practices to be caught under the prohibition as courts have typically distinguished between conduct to meet competition and conduct that is anticompetitive. For example, defensive price cutting or profit maximisation may not be caught by the section 46 prohibition except where it is engaged in with an anticompetitive purpose or has an anticompetitive effect (or likely effect). Exclusionary practices may be caught by the prohibitions against cartel conduct (Division 1, Part IV), concerted practices (section 45), anticompetitive agreements (section 45) and exclusive dealing that substantially lessens competition (section 47).

Link between dominance and abuse

12. What link must be shown between dominance and abuse? (Must there be a causal link?) May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?

Since 6 November 2017, there is no longer a requirement to show that there is a link between a firm’s substantial degree of market power and its conduct. A firm with substantial market power will contravene section 46 if its conduct has the purpose, effect or likely effect of substantially lessening competition in any other market in which it supplies or acquires goods or services, or supplies or acquires goods indirectly through other persons, even though it may not have market power in those markets.

Defences

13. What defences may be raised to allegations of abuse of dominance? (Is it possible to invoke efficiency gains?) When exclusionary intent is shown, are defences an option?

There are no specific defences that may be raised to allegations of misuse of market power, but efficiency gains or other pro-competitive purposes or effects will be considered in assessing if the conduct is pro-competitive rather than anticompetitive overall. A firm may also argue that it does not have a substantial degree of market power.

Since 6 November 2017, it has been possible for firms to apply to the ACCC for authorisation of conduct that might contravene section 46. Authorisation provides the firm engaging in the conduct with legal immunity. Authorisation cannot, however, be sought for past conduct. The ACCC may grant authorisation if it is satisfied that the conduct either does not have the effect or likely effect of substantially lessening competition or meets the ‘net public benefit’ test.

Specific forms of abuse

Indicate to what extent the following types of conduct (questions 14–25) are considered abusive. Mention briefly any leading precedents on, and the relevant tests for, assessing the categories of conduct.

Rebate schemes

(Distinguish between retroactive and incremental rebates.)

Rebate schemes may contravene section 46 if they are used by a firm with substantial market power for the purpose, or with the effect or likely effect, of substantially lessening competition. Under section 46, the form of discounting does not matter; either retroactive or incremental rebates could be a contravention if the elements of section 46 are made out.

In its section 46 guidelines, the ACCC acknowledges that rebates usually do not harm competition and can reduce the overall price consumers pay for goods and services. The ACCC considers that a firm with market power may breach section 46 by offering a rebate that is conditional on a distributor meeting sales targets, such as volume rebates that are based on a customer purchasing a large quantity of its requirements from the firm.

15. Tying and bundling

Tying and bundling may contravene section 46 if they are engaged in by a firm with substantial market power and subject to establishing the other elements for a contravention of section 46. Notably, a firm may contravene section 46 if it bundles a product for which it is the only supplier with another product that it supplies in another market in which it may not have a substantial degree of market power. In ACCC v Baxter Healthcare Pty Ltd (2008), the Full Federal Court found that Baxter had a substantial degree of power in the market for sterile fluids, of which it took advantage by offering bundles of its sterile fluids with its peritoneal dialysis (PD) products, which were subject to competition from imports, for a prohibited purpose. The bundled package was significantly cheaper than the prices for acquiring individual products separately. The court also found that Baxter had the purpose of deterring or preventing competition from rival suppliers of PD products.

16. Exclusive dealing

Exclusive dealing is typically addressed under section 47 of the CCA, which applies to all firms regardless of market power. Exclusive dealing is subject to a competition test and will only be prohibited where it has the purpose, effect or likely effect of substantially lessening competition. The courts have found that exclusive dealing in the form of exclusive distributorships or other non-price vertical restraints may be pro-competitive in that they may restrict intra-brand competition but promote inter-brand competition (see Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001)). However, this is not always the case. In Universal Music v ACCC (2003), the Federal Court found that the restriction on parallel importing that Universal and Warner wanted to impose on distributors was not pro-competitive and was a strategy designed with an anticompetitive purpose in mind.

Non-compete provisions are more likely to be dealt with under the civil or criminal prohibitions on cartel conduct, which apply to market-sharing agreements between competitors (ie, agreements that allocate customers, suppliers or territories). There is no requirement of market power under the cartel prohibitions.

17. Predatory pricing

(Note the most common cost benchmarks and the circumstances in which they have been applied. Is recoupment a necessary element?)

Since 6 November 2017, predatory pricing is no longer specifically prohibited by section 46. However, it may be caught by the general misuse of market power prohibition (section 46(1)). In its guidelines on section 46, the ACCC expressly identifies predatory pricing as a type of conduct that has a greater potential to involve a misuse of market power.

Prior to 6 November 2017, a corporation with a substantial share of a market was prohibited from pricing below the ‘relevant cost’ of supply for a sustained period for one of three proscribed purposes (section 46(1AA)). This specific predatory pricing prohibition was introduced in 2007 but never tested by the courts. The CCA also provided that a corporation that engages in pricing below ‘relevant cost’ for a sustained period may be taking advantage of its market power in breach of section 46(1) even if there is no ability to recoup losses (section 46(1AAA)). These specific provisions, including the removal of recoupment as a necessary element, have been repealed.

The most recent predatory pricing case is ACCC v Cabcharge (2010). The case was settled by admission, in which Cabcharge admitted to contravening section 46(1) by supplying taxi meters and associated fare schedule updates below cost for an anticompetitive purpose. As referred to in question 29, penalties in relation to Cabcharge’s admitted predatory pricing conduct were A$3 million.

18. Price or margin squeezes

A price squeeze by vertically integrated companies with a substantial degree of market power may constitute a breach of section 46 of the CCA if the elements of the prohibition are established. The price squeeze must be accompanied by evidence that the squeeze has the purpose, effect or likely effect of substantially lessening competition. In its section 46 guidelines, the ACCC states that a firm with market power can engage in a margin or price squeeze to disadvantage its competitors in a downstream market, which may prevent an equally efficient competitor from competing on its merits.

For the telecommunications industry, a firm may contravene the CCA by taking advantage of market power even if there is no anticompetitive purpose, provided there is an anticompetitive effect. Part XIB of the CCA prohibits a telecommunications carrier or carriage service provider from engaging in anticompetitive conduct, which is defined to include taking advantage of a substantial degree of power in a telecommunications market. However, this prohibition is a variant of section 46 as it does not require an anticompetitive purpose and is effects-based, that is, under Part XIB, the misuse of market power must have the effect or likely effect of substantially lessening competition.

18. Refusals to deal and denied access to essential facilities

Section 46 is intended to prohibit conduct that restricts competition rather than the interests of particular persons or competitors. A refusal to deal is therefore only prohibited under section 46 if it has an anticompetitive purpose or effect. For example, in Melway Publishing v Robert Hicks Pty Ltd (2001), the High Court emphasised that a firm with substantial market power is under no legal obligation to appoint new wholesale distributors and recognised that non-price vertical restraints in distribution could promote inter-brand competition. There have been other cases where refusals to deal have been found to be justified by a supplier’s legitimate business interests (eg, Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) and Regent’s Pty Ltd v Subaru (Aust) Pty Ltd (1996)). These cases are still relevant even though they involve the previous section 46 prohibition.

The ACCC’s guidelines on section 46 expressly address refusals to deal, considering a situation where an incumbent firm refuses to provide access to an input that it manufactures locally, and is essential to compete downstream. The ACCC notes that transport of the input to the local market would involve a significant cost for a new entrant. The ACCC considers the effect of the refusal to supply to be to prevent the new entrant entering the market and is of the view that the conduct would be likely to breach section 46. It should be noted that this example was heavily criticised in comments on the ACCC’s Interim Guidelines on section 46, as it focused on protecting competitors, rather than the competitive process. Nonetheless, the example was retained in the updated version of the guidelines.

In ACCC v Cabcharge (2010), the ACCC obtained penalties totalling A$14 million, including A$11 million for admissions by Cabcharge relating to its refusal to allow competitor non-cash systems for payment to process Cabcharge cards. On 1 May 2017, the ACCC instituted proceedings against a private hospital operator for allegedly refusing to deal with a group of surgeons who were seeking to establish a competing private day surgery facility. However, this case was dismissed by the Federal Court in March 2020 and the ACCC did not appeal. More recently, on 9 December 2019, the ACCC instituted proceedings against a port owner alleging the port sought to prevent a new entrant from competing with its marine pilotage and towage business by, among other things, failing to provide berths for its tugs and seeking to impose a new tonnage charge on a customer (Grange) when it notified TasPorts that it would switch to acquiring marine services from the new entrant instead of TasPorts.. The parties agreed to settle the proceedings in mid 2021, which settlement included:

TasPorts admitting one instance of misusing its market power in contravention of s46 – with the Court making declarations that TasPorts contravened the ACCC consistent with that admission; and
TasPorts providing a court enforceable undertaking to the ACCC which, among other things, requires it to offer berth space to the new entrant for two tug boats on specified terms (with any dispute to be referred to an independent expert determined by the ACCC) and only impose a tonnage charge with agreement of the port user where the charge has been determined to be reasonable by an independent expert.

There are, however, express prohibitions on refusals to supply in the CCA that apply to all corporations, including those without market power. A refusal to supply may be in breach of the CCA if it can be characterised as:

an agreement that has the purpose, effect or likely effect of substantially lessening competition (section 45);
exclusive dealing (section 47); or
resale price maintenance (section 48).

In relation to access to essential facilities, section 46 does not create an obligation on owners of essential facilities to give third parties access to those facilities. However, if the elements of section 46(1) are made out (see question 10), it may be possible to use section 46 to create a de facto access regime, though there would be some difficulties in framing the appropriate court orders (see NT Power Generation Pty Ltd v Power and Water Authority (2004)) although these difficulties can be overcome, as demonstrated by the court enforceable undertaking provided by TasPorts as part of its settlement with the ACCC. There is also a general access regime in Part IIIA of the CCA for bottleneck infrastructure and a telecommunications access regime in Part XIC, while access to gas and electricity infrastructure are dealt with under the National Gas Law and National Electricity Law respectively. Aside from those access regimes, there is no separate ‘essential facilities’ doctrine in Australia.

20. Predatory product design or a failure to disclose new technology

There has not been a section 46 case in Australia on such conduct, although it may be possible to bring such a case if the requisite elements of section 46 are present. Such behaviour may also be caught by the civil or criminal prohibitions on cartel conduct if it involves an agreement between competitors. There is no requirement of market power under the cartel prohibitions.

21. Price discrimination

(Are there any price discrimination laws that apply outside the context of dominance legislation (eg, the US Robinson-Patman Act)? How do these differ from the rules in the dominance context?)

In general, price discrimination does not of itself necessarily involve a misuse of market power. However, if price or non-price discrimination amounts to conduct by a firm with substantial market power that has the purpose, effect or likely effect of substantially lessening competition, then it may contravene section 46 of the CCA. Price discrimination usually manifests in the form of other conduct such as bundling, price squeezes and refusals to deal.

22. Exploitative prices or terms of supply

Merely charging excessively high prices or putting in place exploitative terms of supply is not a misuse of market power under section 46 unless all the elements of section 46 are made out. The ACCC does, however, have the power to hold price inquiries in relation to the supply of goods or services under Part VIIA of the CCA. This price surveillance power enables the ACCC to declare goods and services to restrict a person’s ability to increase the price of such goods or services during a specified period.

23. Abuse of administrative or government process

(eg, misusing administrative or judicial procedures – such as patent claims or anti-dumping complaints – to exclude rivals from a market or to increase rivals’ costs.)

The use of government process to exclude rivals from a market or to increase rivals’ costs may theoretically involve a breach of section 46 if an anticompetitive purpose or effect (or likely effect) can be demonstrated. Under the previous iteration of section 46, it would have been difficult in practice to establish that the use of a public government process involved ‘taking advantage’ of one’s market power for a proscribed purpose. With the removal of the ‘taking advantage’ requirement, there is potentially more scope for such conduct to be challenged as a misuse of market power, if rivals of a firm with a substantial degree of market power are foreclosed as a result.

24. Mergers and acquisitions as exclusionary practices

Mergers and acquisitions are subject to a substantial lessening of competition test under section 50 of the CCA. Amendments to the CCA in 2012 were intended to address ‘creeping acquisitions’ and the accretion of a substantial degree of market power over time through small, incremental acquisitions.

However, recently, the ACCC (like other regulators) has been considering how to regulate large digital platforms including how to respond to acquisitions by such platforms of start-ups that may be small or nascent at the time of the acquisition, but which may or could evolve into significant competitors.

In August 2021, the ACCC announced the commencement of a debate about potential reforms to Australia’s merger control laws which include (among other things) specific rules for digital platforms, changes to the merger factors to require consideration of whether the acquisition will increase access to or control of data, technology or other significant assets, and the introduction of a provision which deems an acquisition to be anti-competitive if the acquisition either entrenches, materially increases or materially extends the existing substantial market power of a merger party.

In mid-2020, the ACCC launched an investigation into Facebook’s US$400 million completed acquisition of Giphy. Giphy is a web-based animated gif search engine and platform provider. The ACCC’s investigation is considering whether the transaction provides Facebook with access to data about its rivals, and whether access to that data strengthens its market power by entrenching its position in online advertising and /or whether it may impact rivals’ access to Giphy. In the past, the ACCC has usually included reviews of completed acquisitions on its public mergers register. However, the ACCC removed the acquisition from the public register. Media reports in December 2021 indicate the ACCC’s investigation is ongoing. At the time of writing, the ACCC has not made any public statements indicating it has made any decisions or concluded its investigation.

On 14 January 2021, Google closed its $2.1 billion acquisition of Fitbit Inc before the ACCC had completed its public informal merger review, which commenced in February 2020. Google first announced its plans to acquire Fitbit in November 2019, following which it voluntarily engaged with the ACCC regarding the deal (there is no mandatory merger filing process in Australia). The ACCC rejected a long-term behavioural undertaking offered by Google which sought to address competition concerns with the deal (in similar terms to the remedy accepted by the EC in the matter), indicating it continued to have concerns that the acquisition may result in Fitbit’s rivals being squeezed out of the wearables market due to reliance on Google’s Android system and other Google services required to ensure their devices work effectively. The ACCC also indicated it was concerned that the acquisition would further consolidate Google’s leading position in relation to the collection of user data, which supports its significant market power in online advertising and is likely to have applications in health markets. The ACCC was also continuing to investigate the potential impact on wearable operating systems, providing Google the ability to be a gatekeeper for wearables data. As the parties closed the transaction before the ACCC had completed its review, the ACCC confirmed at that time that it was continuing to investigate the matter, but treating it as an enforcement investigation which will be conducted confidentially. At the time of writing, the ACCC has not made any public statements indicating it has made any decisions or concluded its investigation.

25. Other abuses

(eg, strategic capacity construction or underinvestment in capacity; predatory advertising; or excessive product differentiation.)

Section 46 of the CCA does not list particular types of conduct that would be a misuse of market power, and subject to establishing the elements required for a contravention of section 46, the type of conduct that may be proscribed is not closed. The ACCC has identified the following conduct as having a greater potential to involve a misuse of market power: refusals to deal, restricting access to essential inputs, predatory pricing, loyalty rebates, margin or price squeezes, and tying and bundling. However, it also notes that it is not possible to identify with precision particular types of conduct that necessarily involve a misuse of market power, as whether conduct amounts to a misuse of market power will depend on the circumstances.

Enforcement proceedings

Enforcement authorities

26. Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The ACCC is responsible for investigating and prosecuting civil contraventions of the CCA. It has extensive powers of investigation under Part XID of the CCA. These powers include:

the power to compel the production of information and documents that relate to the alleged contravention;
the power to compel particular persons to appear before the ACCC and provide oral or written evidence under oath; and
the power to enter and search premises either with consent or pursuant to a warrant. While on the premises, the ACCC can ask questions of the occupants, make copies of material or seize relevant material (including electronic material).

The majority of prohibitions, including the prohibition on misuse of market power, are subject to judicial enforcement.

Sanction and remedies

27. What sanctions and remedies may the authorities impose? (Do these include structural and behavioural remedies?) May individuals be fined or sanctioned? (What is the highest fine ever imposed for abuse of dominance?)

For a contravention of section 46, the following sanctions and remedies may be imposed by the Federal Court:

a declaration that the conduct contravenes the CCA;
an injunction restraining the parties from engaging in the conduct or a mandatory order that a person engage in particular conduct;
an order disqualifying a person from managing a corporation;
an order for damages for those who have suffered loss or damage from the conduct including individuals; and
ancillary orders.

Only the ACCC may seek pecuniary penalties. The maximum penalty for each contravention by a corporation of section 46 is the greater of the following:

A$10 million;
when the value of the benefit from the conduct is ascertainable, three times the value of the benefit that is reasonably attributable to the conduct; or
when the value of the benefit from conduct is unascertainable, 10 per cent of the annual turnover of the body corporate and its related bodies corporates in the 12 months preceding the conduct.

For individuals, the maximum penalty is A$500,000. In rare circumstances, an individual may be liable as an accessory under section 75B of the CCA, if they have aided or abetted, or been knowingly concerned in, a contravention of section 46.

To assess the size of the penalty to be imposed, the court generally considers a number of factors, including the conduct, the loss or damage caused, the size of the company and the market, the degree of power and whether the conduct was deliberate.

To date, the highest penalty that has been imposed for a breach of section 46 is A$14 million, which was imposed in the ACCC’s proceedings against Cabcharge.

In addition to the sanctions and remedies mentioned above, the court may accept undertakings from parties that they will not engage in particular conduct. The ACCC may also accept court-enforceable undertakings under section 87B of the CCA.

Enforcement process

28. Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The ACCC has extensive powers of investigation. However, the ACCC does not have the power to determine whether section 46 has been contravened or to impose penalties. Rather, the ACCC must institute proceedings in the Federal Court of Australia for an alleged contravention and seek remedies. Those remedies may include a pecuniary penalty, as well as declarations and injunctions.

Enforcement record

29. What is the recent enforcement record in your jurisdiction? (How frequently are the rules on abuse of dominance enforced? Which forms of abuse are most commonly prosecuted? What is the average length of abuse of dominance proceedings, from initial investigation to final decision? What is the most recent high-profile dominance case? Please mention a case from the past year in your jurisdiction, if possible.)

The ACCC receives thousands of complaints annually regarding conduct potentially in breach of Part IV of the CCA. These would include complaints relating to alleged misuse of market power under section 46 of the CCA. While the ACCC would be likely to investigate some of these complaints on a confidential basis, very few cases proceed to court, and of those that do, many cases settle. The section 46 cases that do proceed to a court hearing often take years to resolve. While in the last 10 years, the ACCC has commenced a number of proceedings alleging contraventions of the previous iteration of section 46 (among others) with limited success, since the changes to section 46 in November 2017, the ACCC has only instituted one case whereas there has been a number of private actions (see question 31 below)

The ACCC’s only case to date under the reframed s46 was commenced in December 2019 against Tasmanian Ports Corporation (TasPorts), the owner of all but one of the ports in the State of Tasmania, alleging TasPorts sought to stop a new entrant from competing effectively with TasPorts in the supply of marine pilotage and towage services, with the purpose, effect and likely effect of substantially lessening competition. In bringing the case, the ACCC’s allegations initially centred on TasPorts preventing the new entrant from expanding by failing to provide long term berths for its tug boats, refusing to add it to the shipping schedule (which is necessary to provide towage service), and failing to provide training to the new entrant’s employees (training only TasPorts could provide). The ACCC alleges that TasPorts’ actions are driven by an anticompetitive purpose, and that its conduct has had or is likely to have an anticompetitive effect. As stated above (see question 19), the ACCC and TasPorts agreed to settle the proceedings. While TasPorts admitted one instance of misusing its market power with the Court making declarations consistent with the admission, the ACCC agreed not to press its orders for pecuniary penalties and instead accepted a court enforceable undertaking which effectively created a regime which subjected the tonnage charge and the provision of berth space to the new entrant to ongoing regulation. While the settlement was touted as a win for the ACCC, some may consider it unusual for the ACCC to have not pressed for penalties in order to send a strong enforcement message given this was the first case under the remodelled s46.

The cases referred to below were all brought under the previous section 46 prohibition.

On 1 May 2017, the ACCC instituted proceedings against private hospital operator Ramsay Health Care Australia, alleging it had misused its market power by making threats to reduce a group of surgeons’ access to the only private hospital and private day surgery facilities in the Coffs Harbour region if they were involved in establishing a competing private day surgery facility in Coffs Harbour. The ACCC alleged that Ramsay engaged in this conduct to deter or prevent new entry in the day surgery market in the region or to substantially lessen competition in that market. The Federal Court dismissed the ACCC’s case in March 2020. While the Court considered that Ramsay did hold a substantial degree of market power in the supply of private in-patient surgery services to surgeons in the Coffs Harbour region, the Court found there was insufficient evidence of the alleged “threats” Ramsay made against the surgeons as alleged by the ACCC.

On 13 February 2014, the ACCC instituted proceedings in the Federal Court of Australia against Pfizer Australia Pty Ltd (Pfizer) for alleged misuse of market power and anticompetitive exclusive dealing in relation to the supply of its branded and generic atorvastatin medicines to pharmacies. Atorvastatin is a pharmaceutical drug used to lower cholesterol and at the time of the alleged conduct was the highest selling drug in Australia. The ACCC sought pecuniary penalties, declarations and costs. Part of the ACCC’s case was that prior to the expiration of Pfizer’s patent, Pfizer offered pharmacies discounts if they purchased significant volumes of Pfizer’s branded atorvastatin product (Lipitor) and its own generic atorvastatin, for the purpose of preventing generic companies from competing with Pfizer. The Federal Court handed down judgment on 25 February 2015 (ACCC v Pfizer (2015)) and found that although the patent had not yet expired, Pfizer’s market power was no longer substantial at the time it made the offers to pharmacies in January 2012 owing to the imminent entry of a significant number of generic competitors. The ACCC also failed to establish that Pfizer had a proscribed anticompetitive purpose. The ACCC appealed. In a judgment handed down on 25 May 2018, the Full Court of the Federal Court found that Pfizer did have market power in the lead up to expiry of its patent, and had taken advantage of that market power, but affirmed the trial judge’s findings that at no time did Pfizer have an anticompetitive purpose. The appeal was, therefore, dismissed. The ACCC then sought special leave to appeal the findings to the High Court, for which application was refused on 19 October 2018.

On 4 February 2013, the ACCC instituted proceedings against Visa Inc alleging, among other things, a misuse of market power in relation to payments systems to prevent competition in relation to direct currency conversion services that might otherwise be offered at point of sale or at ATMs, as well as anticompetitive exclusive dealing. The proceedings were settled on 4 September 2015, with Visa admitting a contravention of section 47 of the CCA (exclusive dealing with the likely effect of substantially lessening competition in the market in Australia for currency conversion services on the Visa network). Visa paid an A$18 million penalty and A$2 million in respect of the ACCC’s legal costs (ACCC v Visa (2015)). Visa did not admit the misuse of market power allegation under section 46 and the ACCC agreed not to pursue the claim as part of the settlement.

The ACCC settled two other section 46 cases before the substantive proceedings were heard by the Federal Court. In ACCC v Ticketek Pty Ltd (2011), the penalties totalled A$2.5 million, and in ACCC v Cabcharge Australia Ltd (2010), the penalties totalled A$14 million (including A$3 million for Cabcharge’s admitted predatory pricing and A$11 million for admissions in relation to refusals to supply in breach of section 46).

In ACCC v Cement Australia Pty Ltd & Others (2013), which was initiated by the ACCC in 2008 and heard by the Federal Court in 2010-2011, the court found that Cement Australia did not contravene section 46. While Justice Greenwood found that Cement Australia had market power in the South East Queensland fly ash market, his Honour held that Cement Australia did not take advantage of its market power in entering the sourcing contracts, because another corporation in Cement Australia’s position, but in a workably competitive market, could have entered into the contract on those same terms and conditions.

Contractual consequences

30. Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

Where the court has found a contravention of section 46 or 46A, contracts entered into will not automatically lose their validity. However, the court has discretion to make ancillary orders, including that contracts entered into are void (in whole or in part) or must be varied.

Private enforcement

31. To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority (eg, on application by a private party) to order a dominant firm to grant access (to infrastructure or technology), supply goods or services, conclude a contract or invalidate a provision or contract? (Where applicable, mention any precedents in your jurisdiction.)

Private litigants can institute proceedings for a contravention of section 46 and, since s46 was reframed in November 2017, there has been an increase in private enforcement actions. Private litigants can seek the same remedies and orders as the ACCC can seek, except for pecuniary penalties. Private litigants may proceed as a class action (representative proceedings) in appropriate circumstances.

While the new section 46 remains to be tested substantively in court, in Unlockd Limited v Google Asia Pacific Pte Limited (2018), Unlockd obtained interim injunctive relief in a claim alleging a contravention of section 46. Unlockd, an advertising technology start-up, commenced proceedings against Google in May 2018, alleging (in part) that a threat by Google to ban the Unlockd application from its Google Play Store constituted a misuse of market power. The court made interim orders preventing Google from proceeding with the ban, noting that the likely effect of excluding Unlockd from distributing its app through the Google Play Store would be that the Unlockd business would cease to exist. Subsequently, Unlockd entered voluntary administration, blaming the legal dispute with Google, and thereafter, the liquidators discontinued the action against Google. In November 2019, media reports indicated the ACCC is in the advance stages of preparing evidence to commence proceedings against Google in 2020 in relation to the demise of Unlockd, alleging a breach of the amended section 46. At present, the foreshadowed case has not been commenced. Interim injunctive relief was also obtained in Dialogue Consulting v Instagram (2020), which concerned Facebook and Instagram deactivating Dialogue Consulting’s access when it began offering social media content scheduling to users.

There have been two significant private s46 actions commenced in the last 18 months:

In November 2020, Epic Games, the creator of the popular videogame Fortnite, commenced proceedings against Apple in the Federal Court alleging Apple has a substantial degree of power in the “iOS App Distribution Market” and the “iOS In-App Payment Processing Market”, and that it has misused that power by, among other things, preventing the distribution of iOS Apps to iOS users by any means other than the App Store; restraining app developers from using any in-app payment processing system other than Apple’s system; charging a 30% commission for in-app content; and removing Fortnite and other Epic apps from the App Store in response to Epic allowing Fortnite players to use a direct payment system created by Epic that bypassed Apple’s payment system. Epic is seeking the reinstatement of Epic’s apps and an injunction restraining Apple from engaging in the alleged anticompetitive conduct for five years. In March 2021 Epic brought similar proceedings against Google in relation to the Play Store. Epic has brought similar cases in the US and the UK. During 2021, Apple sought a stay of the proceedings on the basis that, under the licence agreement governing the relationship between Epic and Apple, the claims should be heard in Northern California. The Federal Court initially granted the stay, but the decision was overturned on appeal by the Full Federal Court, and the High Court declined to hear a further appeal. The matter is listed for a 6-week hearing commencing in late November 2022.
Pharmaceutical company Merck Sharpe & Dohme (MSD) commenced proceedings in July 2021 against Bristol-Myers Squibb (BMS) alleging BMS misused its market power in the supply of immunotherapy to patients with stage III and stage IV melanoma to eliminate or substantially lessen competition from MSD. The impugned conduct involves BMS running a treatment program whereby patients that used BMS’s drug, Opdivo, at an earlier stage in their treatment can receive Opdivo for free in combination with another BMS drug, Yervoy at a later stage, but patients who used MSD’s Keytruda drug at an earlier stage are not eligible for the treatment program. The matter has been listed for hearing in April 2022.

Other private actions under the remodelled s46 include:

In November 2019, Qube Ports instituted proceedings against the Port of Newcastle, alleging the Port of Newcastle had market power in the market for port services and that the Port of Newcastle had blocked stevedores from supplying their own equipment and forcing them to use equipment from the Port of Newcastle, with the purpose, effect or likely effect of substantially lessening competition. Qube filed a notice of discontinuation in the Federal Court in November 2020 following a mediation in July 2020.
In February 2018, B&K Holdings commenced proceedings against Garmin Australasia alleging contraventions of s46 for predatory pricing (among other things). Both B&K and Garmin were previously engaged in a mutually beneficial business relationship whereby B&K was the exclusive distributor of certain Garmin products. In 2015, Garmin sought to require B&K to ‘transfer’ its five best customers, seemingly so Garmin could deal directly with the five leading retailers which would increase its revenue. Garmin then later put in place an arrangement where it reduced the prices of some of its products and informed retailers that B&K were no longer a Garmin distributor inviting them to purchase directly with Garmin instead. On 7 February 2019, the Court dismissed an application by Garmin for summary judgment on the basis that B&K did not allege in relation to the section 46 claim that Garmin sold its products below ‘avoidable costs’. The matter was settled in late 2019..

In terms of refusal to supply and refusal of access, there are clear precedents that this conduct could constitute a misuse of market power (see Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1989) and NT Power Generation Pty Ltd v Power & Water Authority (2004)). Private litigants can, therefore, bring an action in these circumstances. Moreover, as noted above, Part IIIA provides a regime by which third parties can seek access to infrastructure owned by another.

Damages

32. Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed? (Please provide leading examples of court or agency decisions granting damages for an abuse of a dominant position.)

Private litigants may institute proceedings seeking damages arising for loss or damage suffered as a result of a contravention of section 46 (section 82). Actions for damages under the CCA must be brought within six years of the accrual of the cause of action (section 82(2)).

Under section 87(1B), the ACCC can bring an action on behalf of people who have suffered damage or loss. Alternatively, a class action can be brought by seven or more persons who have similar claims for damages arising from a breach of section 46 (see section 33C(1) of the Federal Court of Australia Act 1976 (Cth)).

Section 82 does not provide express guidance to the court in assessing the amount of any loss or damage suffered by a company. In Kizbeau Pty Ltd v WG & B Pty Ltd (1995), the High Court suggested that the rules for assessing damages in tort are the appropriate guide in most, if not in all, cases. However, it has also been recognised that the statutory right to damages conferred by section 82 serves a wider purpose and is intended to have a broader ambit than a common law action.

The ACCC has tended in the past to settle many section 46 cases. The two most recent cases that involved settlement in relation to contraventions of the previous section 46 are ACCC v Ticketek Pty Ltd (2011) and ACCC v Cabcharge Australia Ltd (2010). In the penalty judgment for ACCC v Ticketek Pty Ltd (2011), Justice Bennett stated that the agreed figure was ‘meaningful and substantial, serving the objects of general and specific deterrence and serving the public interest in encouraging the cooperation of parties the subject of Part IV investigation and litigation’.

Appeals

33. To what court may authority decisions finding an abuse be appealed? (May the adjudicating court review the facts and the law?)

The ACCC does not have the power to determine whether there has been a contravention of section 46 or impose penalties. Rather, a finding of a misuse of market power can only be made by the Federal Court. The Federal Court hears the matter at first instance and its decision may be appealed to the Full Federal Court on a question of law. A decision of the Full Federal Court may also be appealed to the High Court, with leave.

Unilateral conduct

Non-dominant firms

34. Are there any rules applying to the unilateral conduct of non-dominant firms? (FOR EU COUNTRIES ONLY – Is your national law relating to the unilateral conduct of firms stricter than article 102 TFEU?)

As section 46 focuses on the unilateral conduct of firms with a substantial degree of market power, it is a lesser threshold than dominance and, therefore, may apply to the conduct of a firm that would not be considered dominant. Section 47 (exclusive dealing), which prohibits a firm from imposing conditions on supply or acquisition of goods or services that have an anticompetitive purpose or effect, also applies to the conduct of non-dominant firms that are, or may be, unilateral in character. Further, Australia’s per se minimum resale price maintenance prohibition does not require proof of dominance, market power or the existence of a contract, arrangement or understanding.

The Australian Consumer Law, which is Schedule 2 to the CCA, also regulates the unilateral behaviour of all firms in relation to how they deal with ‘consumers’, which includes businesses. The ACL prohibits unconscionable conduct, misleading or deceptive conduct, false or misleading representations, and provides for unfair consumer contract terms in standard form consumer and small business contracts to be declared void and unenforceable. (Note draft reforms propose to make unfair contract terms illegal and subject to pecuniary penalties).

Update and trends

Forthcoming changes

35. Are changes expected to the legislation or other measures that will have an impact on this area in the near future? Are there shifts of emphasis in the enforcement practice (for example, that enforcement is expected to focus on a particular business sector in the time to come, or that, more generally, economic considerations are given greater weight than in the past)?

Continuing trend towards higher pecuniary penalties

The ACCC is increasingly focused on seeking and securing higher pecuniary penalties for contraventions of antitrust laws (as well as for consumer protection laws), which is now being matched by an increasing willingness of the courts to impose higher penalties. The ACCC chairman Rod Sims has made it clear that penalties should not simply be seen by companies as a cost of doing business and has called for penalties north of A$100 million in appropriate cases. The highest penalty the courts have imposed to date for contraventions of antitrust laws is A$46 million against Japanese corporation Yazaki for civil price fixing conduct (ACCC v Yazaki Corporation (2018)). This penalty was imposed on appeal by the ACCC against the decision at first instance where the Court imposed a penalty of A$9.5 million. In appealing the penalty, the ACCC submitted among other things that the penalty should be between A$42 million to A $55 million to reflect the size of Yazaki’s operations and the nature of the impugned conduct.

In December 2019, following admissions by Volkswagen, the Federal Court imposed a penalty of A$125 million against Volkswagen for contraventions of Australia’s consumer laws for making false representations about compliance with Australian diesel emissions standards. While not an antitrust matter, it reflects this shift in the ACCC’s enforcement approach and the appetite of the courts to impose significantly higher penalties. This penalty decision followed the court’s earlier decision refusing to approve a penalty of A$75 million agreed between the ACCC and Volkswagen. Volkswagen unsuccessfully appealed the penalty decision, and the High Court refused Volkswagen’s leave to appeal . More recently, in December 2021, the Federal Court ordered A$153million in penalties be imposed on an online educational provider, the Australian Institute of Professional Education Pty Ltd (in liq), for unconscionable conduct and misleading conduct when enrolling consumers into online diploma courses, making the penalty the highest ever imposed under the consumer law provisions of the CCA.

Rise in private actions

The recent examples of private actions seeking to enforce section 46 including the recent major cases brought by Epic Games and MSD (see question 31)suggest that the amendments to section 46 may not only assist the ACCC in its enforcement activities but are increasingly been seen as a feasible option for private corporations to pro-actively combat perceived anti-competitive conduct and achieve interim relief and/or commercial outcomes through settlement. This is likely due to the removal of the ‘taking advantage’ element being seen to have lowered the bar for establishing a contravention. While private actions are increasing, it remains to be seen whether this trend will continue given s46 cases remain complex, costly and time consuming to bring, and the remodelled s46 is still yet to be tested substantively by the Courts.

Ongoing focus on digital platforms

As part of its ongoing response to recommendations made by the ACCC in its Final Report on the Digital Platforms Inquiry, in April 2020, the Australian Government directed the ACCC to develop a mandatory code of conduct designed to address bargaining power imbalances between digital platforms and media companies, by providing for platforms to negotiate payments for news content published by Google and Facebook. On 3 March 2021, the News Media Bargaining Code came into effect. The Code applies to digital platforms designated by the Minister. However, no platforms have yet been designated, as Google and Facebook have entered into several commercial deals with news businesses outside of the Code.

Digital platforms will continue to be subject of ongoing scrutiny and regulatory action.

In a media release on 6 August 2020 ACCC Chairman Rod Sims highlighted that the ACCC will continue to address concerns and issues around the Digital Platforms Inquiry, through:

the creation of the Digital Platforms branch within the ACCC, with its ongoing monitoring role, and the new mandatory bargaining code (referred to above);
enforcement cases against Google; and
considering the impacts of digital mergers and why they matter.

The ACCC’s push for merger reform may have implications for firms with market power

In August 2021, the current ACCC Chair Mr Rod Sims announced the commencement of a debate suggesting a number of potential reforms to Australia’s merger control laws. If the ACCC’s calls for reform are heeded, some of the mooted changes will impact firms with market power. Suggested reforms include:

introduction of a mandatory and suspensory regime for all acquisitions above specified thresholds – meaning all acquisitions would need to be notified, and the merger parties would be prohibited from completing them until clearance is granted. The ACCC is also suggesting a “call in” right that would enable it to review problematic proposed acquisitions that fall below the thresholds;
introduction of a deeming provision that acquisitions involving substantial market power will substantially lessening competition – that is, fall foul of the substantive merger test. The proposal is that the deeming provision would apply where one merger party has substantial market power and as a result of the acquisition, that position is likely to be entrenched, materially increased or materially extended; and
specific rules to address acquisitions by large digital platforms. Platforms that meet certain criteria would be subject to a lower threshold for establishing the probability of competitive harm. Under this proposal, a firm’s market power, among other things (such as whether they are a “gateway” firm to consumers), will determine whether they are subject to the specific rules.

Law stated date

Correct on 31 January 2022

36. Give the date on which the information above is accurate.

Expertise Area

Competition, Consumer + Market Regulation

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