‘Taking Advantage’ of Substantial Market Power, and Other Profit-Focused Tests for Unilateral Anticompetitive Conduct

Posted by Social Science Research Network

‘Taking Advantage’ of Substantial Market Power, and Other Profit-Focused Tests for Unilateral Anticompetitive Conduct

Katharine Kemp (University of New South Wales)

Abstract:     In 2015, the Australian Competition Policy Review Panel controversially recommended substantial changes to the prohibition against misuse of market power in s 46(1) of the Competition and Consumer Act 2010 (Cth). One critical change recommended by the Panel was that the long-standing requirement that a firm ‘take advantage’ of its substantial market power be removed from the provision, on the basis that it does not effectively fulfill its purpose of identifying unilateral anticompetitive conduct. In March 2016, the Prime Minister announced the government’s intention to adopt this recommendation. This article examines the Australian ‘take advantage’ test in the context of the broader international debate over unilateral anticompetitive conduct rules, arguing that it can be viewed as a ‘profit-focused’ test, with important similarities to other profit-focused tests proposed by United States antitrust agencies and commentators, including the ‘no economic sense’ and ‘profit sacrifice’ tests. It makes a comparative analysis of these tests, and concludes that the ‘take advantage’ standard is less certain and less inclusive than its counterparts in this category.