John Durie: Companies that breach competition law could be fined $50 million under new Labor plan

The federal government has delivered on its promise to boost fines for breaches to the competition laws by a factor of five times to $50 million.

The decision was unveiled by Assistant Treasurer Andrew Leigh this week but is subject to changes to the competition laws.

The government is also committed to introducing a specific rule to outlaw unconscionable contracts.

The present rules simply void the offending provision and the rest of the contract stays in place.

“Competition is key to driving down prices on everything from petrol to a packet of chips,” Leigh said in a statement.

“But it’s hard for small businesses to compete if larger companies use sneaky tactics to try to dominate the market.”

“That’s why Labor is moving to increase penalties for corporations engaging in anti-competitive behaviour from $10 million to $50 million, ensuring the price for misconduct is high enough to deter unfair activity.

“ The $10 million penalty has been in place for 30 years, and higher penalties are now needed to ensure competition and better corporate behaviour,” Leigh added.

“The current turnover-based penalty will also be increased from 10% of annual turnover to 30% of turnover for the period the breach took place, and penalties for individuals will increase from $500,000 to $2.5 million. This ensures those who perpetuated the wrongdoing, either individually or on behalf of the company, are held accountable.”

Leigh added that competition is essential for a thriving economy, with greater competition leading to better prices and more choice as the cost of living continued to rise.

“But we only get increased competition if the big companies play by the rules,” he said 

Consultation on the proposed changes will close next week before the amendments will be introduced into Parliament.