Document Type

Article

Publication Date

1994

Keywords

Australia Trade Practices Act 1974 (Cth), Section 46, S 46, Duty to deal, Vertically related markets, Essential facility doctrine, Queensland Wire Industries Pty Ltd v. Broken Hill Proprietary Co Ltd, Hilmer Report

Disciplines

Antitrust and Trade Regulation | Comparative and Foreign Law

Abstract

The privatisation and restructuring of public monopolies and the deregulation of other essential services in Australia and other countries have focused attention on the need for rules which can foster competition and efficiency in the resulting markets. Australia, of course, already has the Trade Practices Act 1974 (Cth) (the "Act"), and the question that has been raised is whether the Act is adequate to deal with the kind of competitive problems that are likely to arise in such markets. Of particular concern is the situation in which a firm controls the supply of an input that is critical in the production of another "downstream" product, but refuses to supply that input to certain potential suppliers of the downstream product or does so only on terms that render it impossible for those downstream firms to be effective competitors.

Under s 46 of the Act, a "duty to deal" can be imposed on a corporation with substantial market power, and there have been several cases in recent years seeking precisely such a remedy. Hence, it could be argued that s 46 ought to be adequate to deal with whatever problems of access might arise as a result of privatisation and deregulation.

This article attempts to demonstrate that the ability of s 46 to deal effectively with problems of access has been oversold. Indeed, we will claim that, except under special circumstances, any effort to impose a "duty to deal" on a monopolist will at best be ineffective and at worst be counterproductive. If significant pockets of monopoly power are likely to persist in some of the markets affected by recent legislative restructurings, other measures may be necessary if consumers are to enjoy the full benefits of competition. Such measures may or may not be forthcoming. But at the very least, Australian courts should not use s 46 in a way that reduces efficiency and operates to the long run detriment of consumers.

Publication Citation

Published in: University of New South Wales Law Journal, vol. 17, no. 1 (1994).

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