Senator Joyce, today, welcomed the acceptance of the ‘Birdsville Amendment’ by the Government which will bring about a new chapter in the assessment of Australian predatory pricing cases and make Australia's predatory pricing law a world leader.

This amendment brings to a realisation the 28 June 2007 media release constructed in the far western Queensland town of Birdsville. The Birdsville Amendment to s 46 of the Trade Practices Act was drafted to ensure that Australia has a clear and enforceable law against predatory pricing.

"After working closely with the Treasurer’s Office, I am pleased that the Treasurer has today accepted my proposal for reform. I acknowledge the Treasurer’s efforts on behalf of small business and would like to thank him for his support. Small business will now benefit from having a strong and effective law against predatory pricing by major corporations.

The new amendment is as follows:

Trade Practices Legislation Amendment Bill (No. 1) 2007

(Government)

(1) Schedule 2, page 5 (after line 5), after item 1, insert:

1A After subsection 46(1)

Insert:

(1AA) A corporation that has a substantial share of a market must not supply, or offer to supply, goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying such goods or services, for the purpose of:

a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; or
b) preventing the entry of a person into that or any other market; or
c) deterring or preventing a person from engaging in competitive conduct in that or any other market.

(1AB) For the purposes of subsection (1AA), without limiting the matters to which the Court may have regard for the purpose of determining whether a corporation has a substantial share of a market, the Court may have regard to the number and size of the competitors of the corporation in the market.

"The passage of this legislation will also put to rest the conjecture with regard to the recoupment test, i.e., the belief you have to prove that a major corporation will put up their prices to recoup the money they lost while putting a smaller business out of business by selling below cost.

"The explanatory memorandum of the legislation and the second reading speech by the Minister clearly indicate that recoupment does not have to be proved for a successful case to be taken forward by the ACCC or a small business. Recoupment will no longer stand in the way of a successful prosecution under s 46.

The explanatory memorandum is as follows:

Chapter 2
Amendment to explanatory memorandum
- Recoupment

2.1 After Item 3, paragraph 3.35 of the explanatory memorandum to the Bill, add:

The below cost pricing amendments in the Bill make no reference to the need for, or desirability of finding, recoupment or an intention to recoup losses.

Whilst a reasonable prospect or expectation of recoupment can provide evidence that below cost pricing is carried out in breach of the prohibition in section 46, recoupment is not legally required under the below cost pricing amendments in the Bill, nor is it a prerequisite for a breach of subsection 46(1). In short, the legal position is that recoupment is not required to prove a breach of section 46.

"The Birdsville amendment and the clarification of recoupment restore small business as a cornerstone freedom of our nation. This clearly demonstrates the Coalition and National Party’s attention to addressing predatory pricing by the major retailers, the major oil companies and other substantial market players who exert their power in a belligerent and anti-competitive manner at the expense of small business.

"This goal has been tirelessly pursued by the Nationals and supported by so many within the Coalition in order to bring about a better deal for small businesses, not only in Queensland, but across Australia.

“I hope in the future when people are having a beer at the Birdsville Pub they can reflect that this was the place in Australia which gave birth to a law which redefines the assessment of unreasonable market power and ensures that abuses of such power are outlawed to the benefit of small business and consumers."

"These changes are ground breaking, not only in Australia, but take us to a new position in the prevention of predatory pricing as compared with other OECD countries. This will be good for competition, small business and consumers." Senator Joyce said.