Twitter Posts, page-265

G'day,

If that's the case, then why isn't the misuse of market power provision (Section 46 of the Consumer and Competition Act) being invoked by the ACCC? From the anecdotal evidence, there seems to be a compelling argument. It came into effect in November 2017. I'd be interested in "the discussion that is happening" for several reasons: First, what are the fruits of the discussion so far?; Secondly, is it a continuing multi-party work in progress?; Thirdly, who are the parties involved?; and, Fourthly, what are the objectives that those involved in the discussions are seeking to attain?

The following passage is straight out of the ACCC Guidelines published August 2018:

Markets function well where firms strive to develop and offer products that are more attractive to customers than the products offered by their rivals. A firm with substantial market power may be able to damage this competitive process by preventing or deterring rivals, or potential rivals, from competing on their merits. That is, a firm with substantial market power may maintain or advance its position by restricting or undermining its rivals’ ability to compete, rather than by offering a more attractive product. Sometimes this is referred to as ‘exclusionary conduct’. Such conduct undermines the effective operation of markets and the economy.

I've emphasized the word 'preventing' as nothing could be more accurate, apropos the conduct of ASX, than by sidelining a potential competitor and preventing them from competing on their merits. The timing may be a bit early as there is no direct competition (so to speak) yet, but something seems amiss and people will no doubt draw their own conclusions.

Section 46 (attached), is couched in terms of 'purpose', 'effect', and 'likely effect'. Again, this is straight out of the ACCC Guidelines:

Even with a substantial degree of market power, a firm will only contravene s. 46 if its conduct has the purpose, effect or likely effect of substantially lessening competition in a relevant market.

‘Purpose’ refers to a firm’s intention to achieve a particular result. It can be established by direct evidence or by inference. The purpose specified in s. 46 need not be a firm’s only purpose, but it needs to be a substantial purpose.

‘Effect’ refers to the direct consequence of a firm’s conduct. This is determined objectively by examining the actual impact on the competitive process within the relevant market. Although not determinative, evidence of consumer or competitive detriment will be relevant to the ACCC’s consideration of whether to pursue a matter.

‘Likely effect’ refers to the likely consequences of a firm’s conduct, including its potential impact on the competitive process. ‘Likely’ means that there is a real chance or a possibility that is not remote.

When assessing a firm’s conduct, the ACCC considers the nature and extent of that conduct, including the firm’s commercial rationale. For example, whether the conduct is likely to be profitable for the firm because it improves its customer offer or because it restricts rival firms from improving their customer offers. A firm’s commercial rationale may be relevant to understanding the conduct in question and assessing its purpose and/or effect on competition. However, it will not amount to a defence. Conduct engaged in by a firm with substantial market power may still have the effect or likely effect of substantially lessening competition even where the firm did not have the purpose of substantially lessening competition.

When assessing effect or likely effect on competition, the ACCC may undertake a ‘with or without test’. This compares the likely state of competition ‘with’ the conduct, to the likely state of competition ‘without’ the conduct, to determine whether any lessening of competition would be the effect or likely effect of the firm’s conduct.

Again, it's premature as ISX are strictly not an ASX competitor, but it's certainly something that the ACCC (based on their Guidelines) should be keeping an eye on, given the noise that others are making.

Cheers.

http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/caca2010265/s46.html