Senator Nick Xenaphon
Senator Nick Xenaphon Wikimedia commons

Legal group urges no change to market power laws

THE Law Council has urged a Senate committee not to go ahead with a private senator's bill to let courts break up companies who misuse their market powers.

A bill from South Australian Senator Nick Xenophon is being examined by the Senate's economics committee, with a hearing this Thursday.

Sen Xenophon, a vocal opponent of the market power wielded by the major supermarkets, proposed changes to the Competition and Consumer Act to allow courts to break up large companies if found to be misusing their market powers.

But a submission from the peak body for lawyers has argued such laws, in place in the United States, Canada and the European Union, are not needed in Australia.

The Council backs existing laws to protect consumers from corporations misusing their market power.

But the submission argued that allowing court-ordered "divestitures" could lead to several less efficient businesses replacing larger companies with a bigger market share.

It also wrote that while the US had such powers, they had only been used "sparingly" and in one such case led to more than 900 court petitions after AT&T was broken up in the 1980s.

It further wrote that such powers, while they existed, had never been used in either the EU or Canada, and the committee should be "cautious" about proposals for such laws in Australia.

While the Abbott government recently completed a review of competition law, that review also did not recommend such powers be created.


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