Predatory pricing changes: too far or not far enough?

Debate intensified today over Barnaby Joyce’s amendments to better protect SMEs against predatory pricing. The laws were passed by Federal Parliament last week, and now legal experts are divided over whether the laws go too far or not far enough.

Van Moulis, a competition law specialist with McMahons National Lawyers, says criticism by big business lobby groups that new laws will stifle competition amount to little more than hysteria.

“When you get hysteria of that level it really gives you an idea of where the vested interests lie in this country – small business just wants a level playing field, there is nothing anti-competitive in this,” Moulis says.

In fact, Moulis says, on a number of levels the new laws, which have been driven by National Party Senator Barnaby Joyce, do not go far enough in protecting SMEs with real protection from predatory pricing.

“Joyce says it is better to have some reform than nothing at all, but in practice these laws will have a very minimal impact and in terms of small business it will be almost have zero impact because,” Moulis says. “Unless they can harness the resources of the ACCC to bring action, they will still need to go to court and it will remain horrendously expensive for them to do that.”

Moulis says Joyce should have thrown his full weight behind amendments put forward by Family First Senator Steven Fielding, despite the smaller likelihood that those amendments would have received government backing.

But the man who drafted the Joyce amendment, University of NSW competition law expert associate professor Frank Zumbo, says the new law is drafted clearly and provides SMEs with long sought-after protection from predatory pricing.

“This change is absolutely long overdue, the existing s46 [of the Trade Practices Act] was made totally ineffective from early 2003 because of the Boral High Court decision and this change will restore the effectiveness of that key section.”

Zumbo says while he expects big business groups and their members will attempt to mount legal challenges in an attempt to limit the effectiveness of the change, the clear wording of the section should be enough to discourage rogue businesses from even considering predatory pricing.

Zumbo’s defence of the laws follow criticism by former Australian Competition & Consumer Commission head Alan Fels that the reforms will prevent legitimate discounting.

“This provision is clearly pro-small business protection rather than pro-competition. There’s a big difference between harming competition and harming competitors. Just about all competition harms competitors,” Fels told The Australian Financial Review.