Little AndrewCOMMERCE AMENDMENT BILLThird ReadingHon ANDREW LITTLE (Minister of Health) on behalf of the Minister of Commerce and Consumer Affairs: I present to the House a legislative statement on the Commerce Amendment Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon ANDREW LITTLE: I move That the Commerce Amendment Bill be now read a third time. It brings me great pride to rise for this third reading. Although it's primarily focused on implementing two policy changes this bill now comprises a package of reforms I'm confident will support competition law and infrastructure in this country to function more effectively. This House has carefully examined the possible consequences of the changes made by the bill. It has also taken the opportunity to make some further improvements to the Commerce Act such as to the scheme for authorising conduct that is in the public interest. Perhaps the most notable of this bill's achievements is that it consummates along—good grief who wrote this speech? Someone is trying to obviously sex up the Commerce Amendment Bill late on a Thursday afternoon. But anyway according to my notes this bill's achievements—one of the most important ones—is to consummate a long-held desire to make section 36 fit for purpose. Andrew Bayly: Did he use the word sex"?Hon Member: Sexy afternoon!Hon ANDREW LITTLE: I can hear the excitement in the House as the Commerce Amendment Bill makes its way through. The Commerce Act is prohibition legislation; section 36 is one of its central pillars. It stops anti-competitive unilateral conduct. The intention behind section 36 has always been to deter firms with substantial market power from harming competition. When the Commerce Act was first passed in 1986 section 36 did this by prohibiting firms from "using" their position of power in a market to exclude or inhibit their rivals. In 1994 the Privy Council decided the plaintiff in a case would have to construct a hypothetical market for the court in which the defendant firm lacks substantial market power and demonstrate that the defendant would not have undertaken the conduct in that hypothetical market. In 2001 Parliament tried to express its dissatisfaction with this approach by amending section 36. Instead of prohibiting dominant firms from using their market power in anti-competitive ways section 36 prohibited them from taking advantage of their market power. The 2001 amendment did not ultimately spare the prohibition from these thought experiments. With time the complexities involved in satisfying the counterfactual test have become increasingly apparent and obstructive to the effective enforcement of section 36. In 2014 the Productivity Commission recognised these problems with section 36 and the attendant costs to our economy of large firms suppressing competition and innovation from new smaller firms. Of the counterfactual test the Productivity Commission said that it "causes problems because it focuses on the actions of firms in the hypothetical counterfactual world where a firm lacks substantial market power rather than on market outcomes." Now Parliament is finally in a position to resolve this. The new section 36 prohibition inserted by this bill finally dispenses with the counterfactual test. It finally focuses the prohibition on market outcomes. It finally fulfils the original aim of deterring dominant firms from actions harmful to the competitive process. The way the bill achieves this is relatively straightforward. It simply asks whether a firm with substantial market power has acted with purpose effect or likely effect of substantially lessening competition in a relevant market. This test is not a novel one. It operates already in the Act's prohibitions against anti-competitive agreements and anti-competitive mergers or acquisitions. It also operates in Australia's prohibition against anti-competitive unilateral conduct.It's natural that the reforms have raised some concerns but Parliament has had the opportunity to consider these in depth. We have thought carefully about how the new prohibition might be applied in various situations by the courts and by large firms attempting to manage their liability and this has given me comfort that the risks with the reforms are modest.The conclusion I hope we have all reached is that the process of firms competing on their merits for market share and the wallets of consumers would be better protected by these reforms to section 36.I can make similar remarks about the other main policy of the bill which is to get rid of provisions that prevent scrutiny of certain conduct involving intellectual property. So long as there are possible instances—competition harm safe harbours will undermine the Act's promise to protect competition. As I hope I've made clear already I do not believe practices involving intellectual property are always anti-competitive. Intellectual property rights are typically used in ways that advance the aims of competition law. But it's not safe to assume this conduct is never anti-competitive just because it involves intellectual property. The bill repeals these provisions to reflect the Government's view that intellectual property rights should be treated no differently under competition law to any other form of property.There are other improvements to the law however. Far less has been said in this House about some other worthwhile amendments that the bill makes. I wish to highlight just a couple of them—firstly the inclusion of covenants in our cartel regime. In 2017 Parliament made some significant reforms to the cartel regime. The prohibition against cartels is the way the Commerce Act creates direct or per se liability for certain features and agreements between competitors that are generally harmful to competition. The Act now defines cartel provisions as provisions that involve price fixing market allocation or restricting output. The Act also provides a range of exceptions recognising cases in which a cartel is unlikely to be anti-competitive in practice.Cartel provisions can also be found in land covenants. Covenants were overlooked by the 2017 reforms to the cartel regime. This bill proposes to rectify that. No longer will land covenants provide an opportunity to restrict the productive use of land by a competitor. That would be something that no doubt the supermarket chains will be most interested in.Tougher penalties for anti-competitive mergers is the other aspect that I wish to comment on. Another important way that the Act protects the competitive process is through its prohibition against anti-competitive mergers or acquisitions. For this prohibition to be effective it needs to be able to deter entities that may benefit significantly in commercial terms from the merger. The bill ensures this can happen by increasing the monetary penalty the courts can impose if entities are found to have contravened the prohibition. The Act increases the monetary penalty that courts can impose to be in the order of $10 million.I extend my thanks to everyone who has played a part in the development and the scrutiny of these improvements to the Commerce Act. Particularly in relation to section 36 I'd like to acknowledge that I am one among a series of actors who have sought to reform this area—or at least I can say that the Minister of Commerce the respective Ministers of Commerce in this Government and previous Governments have done that. I'm proud of the contribution that this bill will make to the state of competition in the interests of consumers in this country and the general excitement that it has added to a Thursday afternoon sitting of this House. Madam Speaker I commend this bill to the House."