Australia
© Springer-Verlag Berlin Heidelberg 2015
Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_22. Australia
(1)
TC Beirne School of Law, The University of Queensland, St Lucia, QLD, Australia
(2)
School of Law, Deakin University, Burwood, VIC, Australia
The authors would like to thank Mr Alan Ducret and Ms Iolani Brady from the ACCC in Brisbane for their help with searching for the most recent information.
2.1 Economic Background
The Australian grocery retail market is concentrated, with two major competitors, Coles and Woolworths, holding a market share of approximately 80 %. In 2010, Coles had a market share of 37 % and Woolworths of 43 %. The third largest grocery stores in Australia, IGA and FoodWorks, unify independently owned supermarkets with a market share of 15 %. ALDI, the fourth largest grocery store, entered the Australian market in 2001 and currently has a market share of 3 %. The remaining 2 % of the market belongs to small local grocery stores and other supermarket chains, which have only entered the Australian market recently.1 For instance, in 2008, Costco Wholesale Corporation entered the Australian market commencing sales in 2009 and targeting small food businesses and individuals.
The concentration of the two major competitors, Coles and Woolworths, significantly increased between 2007/2008 and 2010, accounting for approximately 50 % of fresh products such as meat, fruit and vegetables, and 70 % of packaged grocery sales in Australia in 2007 and 2008.2 The number of supermarkets owned by the above-mentioned supermarket chains has been increasing every year.3
Coles, Woolworths, ALDI and Franklins are vertically integrated retailers operating at both the retail and the wholesale levels. While nearly all independent grocery stores are supplied by Metcash, the two major retail stores, Coles and Woolworths, purchase their fresh products directly from farmers and other producers.4 Although the two retail chains concerned can have strong bargaining power in some cases, this power is lowered by producers’ alternative selling means, such as exporting.5 Indeed, agriculture is extremely important for Australian exports as roughly two-thirds of Australia’s agricultural products are exported.6
Nevertheless, Coles, Woolworths and Metcash possess significant bargaining power in the packaged grocery market, leaving almost no option for suppliers to sell to anyone else.7 Coles, Woolworths and Metcash also have options other than purchasing products from independent producers of packaged groceries, such as importing goods or selling their own label products, to negotiate the best conditions for themselves. These options increase their bargaining power and influence the first level of the vertical chain. The farmers and other primary producers producing products, such as sugar and wheat, make very low profits, as the price for their products is set by international demand and the low price of packaged products in general.8 Furthermore, Coles’ recent selling campaign, followed by Woolworths’ campaign, initiated more intensive price competition that led to even lower retail prices, placing pressure on producers and suppliers to lower their prices.9
2.2 Legal Background
2.2.1 Core Provisions
Australia’s competition laws are contained in the Competition and Consumer Act 2010 (Cth) (the ‘CCA’).10 The Australian Competition and Consumer Commission (the ‘ACCC’) is entrusted with the task of enforcing the Act. It has significant investigatory powers and can itself institute proceedings in respect of conduct that, in its view, contravenes Part IV of the Act. It remains for the courts to determine whether there has been a contravention.
The core competition provisions are contained in Part IV of the CCA, and for constitutional reasons11 there exists a ‘schedule’ version of this Part, enacted in consultation with Australia’s states and territories, which ensures that Australia has a nationally consistent and broadly operating competition law. The competition provisions in the Act apply to the grocery sector in the same way they apply to other sectors.12
Several forms of conduct are expressly subject to per se prohibition:
Since 2009, the cartel provisions of the Act have been subject to criminal penalties, including up to 10 years of imprisonment, as well as to civil penalties and sanctions. To date, there have been no criminal prosecutions in relation to cartel conduct. Although per se prohibited, all of these forms of conduct may be authorised, in advance,17 if the parties can demonstrate that there are public benefits arising from the conduct that would outweigh the likely anti-competitive detriment. In practice, third line forcing conduct involving supermarkets regularly benefits from immunity on public benefit grounds,18 and collective bargaining arrangements by small business groups in relation to their dealings with supermarkets, which would otherwise contravene the strict cartel laws, have benefitted from this immunity in a number of cases.19
In addition, various forms of conduct are prohibited where it can be demonstrated that they had either the purpose or likely effect of substantially lessening competition:
As with conduct that is prohibited per se, it is possible to seek authorisation, in advance, for all of these forms of conduct on public benefit grounds.23
Australia’s competition laws also prohibit the misuse of market power. This now takes two forms.24 The first is a general prohibition against a corporation with substantial market power taking advantage of that power for a prohibited purpose, including eliminating or substantially damaging a competitor, preventing entry or deterring or preventing a person from engaging in competitive conduct.25 The second is a specific prohibition against predatory pricing. It applies where a company with substantial market share supplies, or offers to supply, goods or services for a sustained period at a below-cost price for a prohibited purpose.26 The predatory pricing provision was introduced in 2007 and remains controversial. It was driven largely by concerns of low-cost pricing in the grocery market destroying small business.27
Australia has adopted unit pricing laws specifically targeting supermarkets.28 This was introduced, in part, to promote competition between supermarkets by ensuring that consumers are able to make informed choices. The unit pricing laws take the form of a mandatory industry code under the CCA.29 This Code applies to grocery retailers with more than 1,000 m2 of floor space and that sell a minimum range of food based groceries. The Code also applies to online grocers. Once a retailer falls under the Code, all grocery items must have a unit price displayed unless the item is exempt (for example, bundled items). The unit price must be prominent, close to the selling price, legible and unambiguous and must be displayed in dollars and cents. The ACCC is responsible for providing guidance on the Code and taking enforcement action where appropriate.
In addition, a supermarket and grocery industry working group, which includes the major supermarket chains, the Australian Food and Grocery Council, National Farmers Federation and the ACCC, is in the process of negotiating an industry code that would be enforceable under the Competition and Consumer Act. On November 2013, they drafted an industry code of conduct: the Food and Grocery Prescribed Industry Code of Conduct. Although this code may assist in improving relationships between the major retailers and their suppliers and provide a more effective dispute resolution forum, it would not involve additional competition law prohibitions.
There are no specific national laws aimed at controlling the structure of the grocery retail market outside competition laws. However, some state, territory and local planning and zoning laws may impact on local structures by restricting the ability of the major supermarkets to obtain leases or zoning approvals. Until May 2013, the Australian Capital Territory operated a Supermarket Competition Policy,30 which aimed to achieve a competitive and diverse supermarket sector, principally through strict and selective application of zoning laws.31 This policy has now been abandoned.
Following concerns identified by the ACCC in its 2008 Grocery Report about restrictive leasing provisions, the major supermarket chains voluntarily provided court enforceable undertakings to the ACCC to the effect that they and their subsidiaries will not give or threaten to give effect to a restrictive provision in an existing lease after a 5-year period from its commencement and that they will not enter into a future lease including one or more restrictive provisions.32
General consumer protection laws also apply to the grocery sector and prohibit, for example, unfair terms in consumer contracts, unconscionable dealing (including with other business), misleading conduct and false advertising.33 These are based on principles of fair dealing and, to a degree, in correcting asymmetry of bargaining power. They are not designed to prevent inflationary pressure of grocery retail prices or other principles.
2.2.2 Exemptions
The retail sector is not exempted in part or in full from competition law. It is possible for the grocery sector (as with any sector) to seek approval to engage in activity that would otherwise contravene the competition provisions. Broadly, approval to engage in conduct may be granted by the ACCC34 (or, in the case of merger, the Australian Competition Tribunal) where it can be demonstrated that there is a likely public benefit that will outweigh any likely anti-competitive detriment. For example, in some cases, supermarkets have been permitted to agree on fees to charge for plastic bags on the basis that there is a public benefit associated with reducing landfill waste.35 These exemptions take one of two forms: an ‘authorisation’ or a ‘notification’ of the relevant conduct.
Authorisation provides a mechanism by which a party proposing to engage in conduct that will or may contravene the competition law provisions can receive immunity, on public benefit grounds, against action under the Act.36 It is available only in relation to proposed conduct; there is no ability to authorise conduct that has already occurred.37 It is also provided on a case-by-case basis; there is no facility for ‘block’ authorisation of certain forms of conduct. The precise public benefit test varies slightly depending on the conduct involved, but in practice the tests will be applied in a similar way.38 For cartels, anti-competitive agreements and exclusive dealing (other than third line forcing), the test is whether the public benefit outweighs anti-competitive detriment associated with the conduct.39 For all other forms of conduct (exclusionary provisions, third line forcing, resale price maintenance and mergers), the test is whether the proposed conduct would result in such a benefit to the public that it should be allowed to take place.40
The notification process is a faster, cheaper41 and simpler way for obtaining immunity, which is available for a limited range of conduct. Until recently, only exclusive dealing conduct could be notified. It is now also possible for small businesses to notify collective bargaining conduct.42 Once notified, immunity will apply immediately in the case of exclusive dealing (other than third line forcing) or after 14 calendar days for third line forcing and collective bargaining notifications, unless the ACCC objects within that time.43 The ACCC can only remove immunity if it is satisfied that the public benefit will not outweigh the potential detriment associated with the conduct.44
There are a large number of exclusive dealing notifications involving supermarkets, primarily relating to the offering of discounts conditional on purchases made elsewhere. For example, the ACCC has, in the past, permitted the major supermarkets to engage in exclusive dealing in the form of offering petrol discounts contingent on purchasing a certain amount of groceries from their supermarkets.45 These are generally referred to as ‘shopper docket’ schemes. In a 2004 Report, the ACCC observed that it considered that there were significant benefits to consumers from shopper docket petrol discount schemes, in particular, lower petrol prices and increased non-price competition.46 Subsequently, a 2007 Petrol Report47 also found that the schemes benefited consumers and promoted competition, observing that there had been over 600 notifications received by the ACCC since 2004 (to 30 September 2007), although not all of these involve the major supermarkets. The 2007 Report acknowledged, however, that ‘most industry participants consider that the introduction of shopper docket arrangements has made it harder for small independents with low volume sites to compete’.48
Coles and Woolworths combined now account for approximately 50 % of national petrol sales, and there has been a recent revival of concerns about the impact of shopper docket schemes involving fuel discounts and the major supermarket chains. The ACCC commenced an investigation ‘into the effects of shopper docket discounting schemes on competition and long term consumer welfare’ in the middle of 2012. This investigation culminated in both Coles and Woolworths providing the ACCC with enforceable undertakings pursuant to which they each agreed not to make fuel savings offers that were funded by any part of their business other than their fuel retailing business and to limit discounts linked to supermarket purchases to a maximum of 4 cents per litre.49 Despite these controversial undertakings,50 concerns about the impact of shopper docket schemes continue.
2.3 Advocacy
The Commonwealth has undertaken investigations into the grocery retail market on a number of occasions, indicating that this market has raised a number of concerns,51 with the most extensive report being published in 1999.52 In 2008, the ACCC held a public enquiry ‘into the competitiveness of retail prices for standard groceries’ as required by the Minister for Competition Policy and Consumer Affairs under s 95H of Part VIIA of the CCA. This was followed by a report published by the ACCC on July 2008.53 The main issue analysed and the primary reason for this enquiry was increased grocery prices and the extent to which a lack of competition had contributed to this phenomenon.54
The report analysed the grocery market, excluding products not essential for households such as liquor, stationary and cigarettes, and the causes for food price increases in the Australian grocery market at the time. It surveyed the competitive process, focusing on the bargaining power of the two main, vertically integrated retailers, Woolworths and Coles, and Metcash, the major wholesaler of the independent retailers.
The ACCC found that the grocery market was competitive; however, this competition was limited by high barriers to entry and a market structure where the two major retailers shared significant market power. Moreover, Coles, Woolworths and Metcash had significant buyer power in the packaged grocery market; however, its benefits were partially shared with consumers.55
The report concluded that, although the grocery market and its vertical chain included several factors limiting competition, these competitive imperfections played only a secondary role in the increased grocery prices. The increased consumer prices were significantly influenced by such factors as natural disasters and the increased cost of production reflecting an increased cost of inputs, including the price of petrol and fertilisers.56 Furthermore, price competition had improved since ALDI entered the Australian market. The price competition among the two main retailers was at its most intense in the market with products that consumers determine as key products to assess values.57
The ACCC recommended, among other things, that the government carefully considers space for supermarkets in planning applications, where appropriate, to attract supermarket operators not currently trading in the relevant geographical markets.58 It also recommended unit pricing (displaying the price by unit of measure) as a mandatory standard for the ‘significant supermarket stores’ in Australia.59
2.4 Merger Control and Grocery Retail Networks
2.4.1 Merger Control
Australia’s competition laws contain a general prohibition on mergers that have the effect of substantially lessening competition.60 It applies equally to all industries; there are currently no special thresholds for merger control in the retail sector. Australia operates a voluntary pre-merger notification system. Coles and Woolworths are, however, both signatories to the voluntary Produce and Grocery Industry Code of Conduct, which states that industry participants will notify the ACCC of acquisitions61 and, in practice, they do so in the vast majority of cases.
Concerns about the level of concentration in the grocery market have led some politicians to call for limits on the extent to which the major grocery chains should be permitted to merge, beyond the existing competition test in the CCA.62 To date, however, no such modifications to the merger laws have been made.
2.4.2 Local Mergers and Market Definition
The ACCC is responsible for controlling mergers at both local and national levels. Until recently, there was some legislative uncertainty about the extent to which a market, for the purposes of merger analysis, could be defined as a local market. This was because legislation defined market, for purposes of the merger provision, as a ‘substantial market’ for goods or services in Australia or a state, territory or region of Australia. Although the ACCC had always taken the view that small geographic market could be a ‘substantial market’ for purposes of this definition,63 concern that a court might, in future, interpret the word ‘substantial’ as excluding ‘local’ markets led to the passage of the Competition and Consumer Legislation Amendment Act 2011 (Act 184 of 2011). This removed the word substantial with the result that ‘market’ is now defined in s 50(6), for purposes of the merger provision, as ‘a market for goods or services in (a) Australia; or (b) a State; or (c) a Territory; or (d) a region of Australia’.64 It was clear that Parliament was principally concerned about the ACCC’s ability to assess local supermarket acquisitions when passing this legislation.
However, as the ACCC had already taken the view that it could capture these mergers, this change has brought some legislative clarity but otherwise has not altered existing practice.65
In addition to the market definition contained in s 50(6) of the CCA, s 4E of the CCA states:
For the purposes of this Act, unless the contrary intention appears, market means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.
The clear focus has, therefore, been on substitutability for purposes of defining the scope of product and service markets. In applying this test, reference is frequently made to the Trade Practices Tribunal’s decision in Re Queensland Co-Op Milling Association Limited and Defiance Holdings Limited,66 in which the Tribunal defined market as ‘the area of close competition between firms’ or the ‘field of rivalry between them’, determined by reference to the substitution that occurs in response to changing prices, and further stated that the market ‘is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive …’.67
The current ACCC’s 2008 Merger Guidelines reflect this view, noting that, in defining the market, the ACCC begins by ‘selecting a product supplied by one or both of the merger parties in a particular geographic area and incrementally broadening the market to include the next closest substitute until all close substitutes … are included’.68 When making this determination, the ACCC applies the hypothetical monopolist test (HMT) and assesses the exercise of market power by the hypothetical monopolist utilising the small but significant and non-transitory increase in price SSNIP test.69 The ACCC’s Merger Guidelines provide that an SSNIP ‘usually consists of a price rise for the foreseeable future of at least 5 % above the price level that would prevail without the merger’.70 Acknowledging the onerous data requirements required for the HMT, the ACCC notes that it is ‘rarely strictly applied to factual circumstances’,71 with the ACCC generally taking a qualitative approach to market definition, using the HMT as an ‘intellectual aid to focus the exercise’.72
The issue of market definition in the grocery sector has been a difficult one, particularly because of the level of vertical integration. At times markets have been confined to a single functional level, and at other times the Court has taken a broader view and considered both wholesale and retail activity to be in the same market because of the extent to which one constrains the other where there is extensive vertical integration.
For example, in QIW Retailers Ltd v Davids Holdings,73 involving a proposed merger between two existing wholesalers of grocery products to independent retailers, the Court rejected the argument that there was no difference between the wholesale and retail functional level in this market, instead finding that the relevant market was the market ‘for the supply of grocery products by independent wholesalers to independent retailers in Queensland and northern New South Wales’.74 This approach was accepted on appeal to the Full Federal Court.75 However, the difficult nature of market definition where key participants are vertically integrated was reflected in the economic evidence. Some of the experts argued that there should not be a distinction between wholesale and retail levels of distribution, while others considered they should be separate and, in this case, confined to wholesaling.76
More recently, the Federal Court in Metcash 77 rejected a narrow and functionally limited market definition. This case involved a proposed acquisition by Metcash Trading Limited (Metcash) of several Franklins stores. Metcash is Australia’s largest wholesale supplier to independent retailers and also operates some stores at the retail level. Franklins operated a number of retail stores and also supplied wholesale groceries, both to its own retail stores and to Franklins franchise stores. The Court found, however, that it was ‘essentially a supermarket retailing business’.78
The ACCC had argued that the relevant market for purposes of assessing the acquisition was the ‘Independent Wholesale Grocery Market’ in New South Wales and the Australian Capital Territory. This definition was rejected by the Court, which stated that in applying the HMT test ‘it is unrealistic to speak in terms of an increase in the margin added on by wholesalers to their cost of acquiring goods from manufacturers and primary suppliers. It is meaningful … only to speak in terms of an increase in the price charged by wholesalers to their customers, the retailers’.79 Once that is accepted, it becomes clear that the position of the major supermarkets is such that they provide a ‘very significant constraint on the capacity of independent retailers to increase price or decrease other services without the likely loss of business’, which also ‘constrains the capacity of the wholesaler to increase its prices to independent retailers’.80
In terms of store sizes, Justice Emmett in Metcash placed stores in three categories: supermarkets, with a floor space exceeding 1,200 m2; ‘top-up stores’, which are smaller and have a less diverse product range; and ‘convenience stores’ of less than 350 m2.81 It was not necessary for the Court in Metcash to reach a concluded view about whether all three categories of store were in the same market, though it was clear that at least in some respects the smaller stores, including convenience stores, saw themselves in competition with the major supermarkets and looked for non-price mechanisms to remain competitive with them.82 In a recent Statement of Issues for a proposed supermarket merger, the ACCC posited a local supermarket market as including smaller format independent supermarkets.83 Regardless of whether smaller operators are included in the market definition, any competitive constraint they impose will be considered in the necessary competition analysis.84
Online grocery retail activity is subject to the same laws as brick and mortar food retail stores. However, the issue of whether online grocery sales fall share the same market as brick and mortar stores has not arisen as a decisive issue in Australia to date. This is largely because Australia has not embraced online grocery shopping to any significant extent so that it currently does not make up an important part of the retail grocery sector in Australia.85 The issue has, however, been considered in the context of the liquor acquisitions involving supermarkets. In 2011, the ACCC announced that it would not oppose Woolworths’ proposed acquisition of the Cellarmasters Group (Cellarmasters). Cellarmasters is a ‘direct to home’ wine retailer and provides contract bottling and wine making services. It sells online and via catalogues and has no bricks and mortar outlets. By contrast, until 2011, Woolworths sold liquor almost exclusively through bricks and mortar; on 8 March 2011, Dan Murphys, which is part of Woolworths’ Liquor Group, began selling liquor online. As part of its assessment of the acquisition,86 the ACCC considered whether bricks and mortar retailers and online/direct retailers were close substitutes. The ACCC observed that it received conflicting information on the issue87 but concluded that while there was some substitution between them, ‘bricks and mortar and online/direct retailers were not close substitutes’.88
2.4.3 Merger Remedies
The ACCC has the power to accept ‘court enforceable undertakings’ from parties proposing to merge that are designed to alleviate any competition concerns.89 The ACCC does not have the power to ‘impose’ remedies on parties. Where competition issues arise, the ACCC has expressed a strong preference for structural remedies.90 Mergers in the retail sector involving major supermarkets generally take the form of single acquisitions, and where opposed, they tend to be opposed outright, so the issue of remedies does not arise.91
The issue has, however, arisen in a limited number of cases where a significant number of stores have exited the relevant market at one time. For example, in 2001, Dairy Farm Management Services Limited, through its then subsidiary Franklins, proposed to undertake a managed exit from grocery retailing in Australia and to sell nearly 300 stores. It was proposed that some of these would be sold to Coles and Woolworths. The ACCC expressed concern that the acquisition of a substantial number of these stores by the major supermarkets, in cases where they might otherwise be acquired by independent operators, might substantially lessen competition in contravention of the CCA. To address these concerns, the sellers provided an enforceable undertaking to the ACCC not to sell Franklins stores to Woolworths or Coles other than those specifically identified in the undertaking or in cases where the ACCC provided prior consent.92
There have not been any instances of concluded mergers that have subsequently been challenged by the ACCC or of cases in which remedies have been imposed by the courts in the food sector in the last 5 years.
2.4.4 Grocery Retail Networks
Grocery retail networks have not been considered problematic in Australia. For instance, the Australian National Retailers Association (the ‘ANRA’), which represents the country’s leading retailers, has not been officially investigated in connection with anti-competitive practices. The two main retail corporations, Woolworths and Coles, have not established a formal network. Although IGA and FoodWorks form two networks of independently owned supermarkets, this is not recognised as problematic due to their low market share of 15 %. On the contrary, such cooperatives can enhance rather than restrict competition in the market as the networks of small independent retail stores are better placed to compete with the two major supermarket chains than conducting their business on their own.
Grocery retail networks, such as franchising and cooperatives, are not directly regulated in Australia. However, franchising systems, which could potentially include any grocery retail franchising, are regulated by a mandatory Code of Conduct under Part IVB of the CCA, giving the ACCC the power to investigate and observe their compliance.93 The ACCC considers this Code to be effective, with its major strengths being the receipt of pertinent information prior to potential franchisees making decisions and requiring parties to undertake certain steps to resolve any potential disputes.94
2.5 Abuse of Power
2.5.1 Abuse of Buying Power, Abuse of Dependency
The Competition and Consumer Act 2010 (Cth) prohibits the misuse of market power in s 46.95 The general clause on a misuse of market power, s 46(1), provides:
A corporation that has a substantial degree of power in a market shall not take advantage of that power in that or any other market 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;
(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.
It follows from this provision that three conditions must be satisfied to prove a misuse of market power. Firstly, the corporation must have substantial power, including both horizontal market power and buying power, as will be explained below. Secondly, the corporation in question must take advantage of this power. Lastly, it must take advantage of its power for one of three anti-competitive purposes, as stated in s 46(1)(a), (b) and (c).
Misuses of market power that occur on the vertical chain are included under s 46(1)(b) and (c). Section 46 subsection(4)(c) expressly refers to buying and selling power as it provides that for the purposes of a misuse of market power under s 46, any reference to ‘power’ includes ‘a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market’. Furthermore, buying and selling power must be considered when determining the degree of power that the person concerned has, as stated in s 46(3)(b). Therefore, usage of the term ‘power’ for the purposes of misuse of market power also includes buying power, as stated above.
The definition of ‘buying power’ is not provided in the CCA. Nevertheless, in the case of Safeway,96 the Full Court of the Federal Court of Australia made reference to monopsony power and stated that buying power can be determined by a firm’s ability to secure more favourable terms of purchase than competing buyers, including the best prices from its suppliers.97 For s 46(1) to be contravened, a firm does not have to be absolute or almost monopsonist; it is enough for it to have a substantial degree of buying power. Therefore, it must be able to substantially control a market. To determine buying power and its significance, it must be shown whether, and to what extent, a firm is constrained by its competitors and potential competitors and by its suppliers and customers. Therefore, the number of competitors, their strength and size and the barriers to entry must be taken into account.98
Subsections 46(1) and 46(6A) explain what constitutes a misuse of power that includes buying power. This has three aspects, as follows from s 46(1) and as noted above. Firstly, a person99 must have a substantial degree of power, which can be buying power, in a market. Secondly, it takes advantage of its buying power in that or any other market. Thirdly, the advantage is taken for at least one of three purposes where the second and the third purposes would apply to buying power or dependency. That is, the purpose of ‘preventing the entry of a person into that or any other market; or deterring or preventing a person from engaging in competitive conduct in that or any other market’.100
Section 46(6A) provides a number of tests that courts can apply to assist in determining whether the person concerned took advantage of their power for one of the prescribed anti-competitive purposes.101Section 46(6A) was implemented in 2008.102 Prior to the implementation of this provision, the courts had focused on the counterfactual test, asking whether the corporation concerned would have acted in the same way if it operated in a more competitive environment.103 Despite the introduction of s 46(6A), it is not anticipated that it will have any significant impact on the way the courts assess the ‘take advantage’ requirement in s 46.104
Cases based on claims of misuse of buying power are not common in Australia. Recently, on February 2013, the ACCC publicly expressed the view that the buying power held by the major supermarket chains is an important matter that has been investigated by the ACCC in connection with the misuse of this buying power.105 Nevertheless, a case dealing with the major supermarket chains’ misuse of buying power has not been officially lodged yet.
The Australian Federal Court has dealt with two cases where buyer power contributed or caused the misuse of market power. The older case, Carlton United Breweries,106 dealt with the combination of the abuse of horizontal market power and buying power to stop competitor’s activities. The case of Safeway 107 involved a claim of the misuse of buying power.