This is an extract of our Section 46 document, which we sell as part of our Competition Law Notes collection written by the top tier of University Of New South Wales students.
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Section 46: Corporation with a substantial DEGREE of market power
Misuse of market power Misuse of market power--corporation with substantial degree of power in trans-Tasman market
Section 46(1) begins with: 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...
Definition of 'market power:' QMCA:
* Market power is "the power to raise price and exclude entry. That power may or may not be exercised....The power is sufficiently free from market pressures to 'administer' its own production and selling policies at its discretion." Arnotts merger case (1990):
* the Full Court of the Federal Court, equated 'dominance' with a 'high degree of market power' and quoted the QMCA factors. What degree of market power under s 46(3)?
46(3) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of: a. competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or b. persons to whom or from whom the body corporate or any of those bodies corporate supplies or acquires goods or services in that market.
* (3) provides that: More than one corporation may have substantial market power in a market. It is not essential that for a corporation to have market power, that it substantially controls a market or enjoys absolute freedom from constraint.
* S 46(3) equates market power with discretionary power or an absence of competitive constraints. It requires the courts to have regard to the extent to which a corporation (and any related bodies corporate) is free to determine its own conduct in the market without being consistently inhibited from doing so by others (such as competitors, suppliers or customers). What factors are relevant to determine the degree of market power?
Section 46(3A) - some factors are suggested to show the degree of power a body corporate has: (3A) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the court may have regard to the power the body corporate or bodies corporate has or have in that market that results from: a. any contracts, arrangements or understandings, or proposed contracts, arrangements or understandings, that the body corporate or bodies corporate has or have, or may have, with another party or other parties; and b. any covenants, or proposed covenants, that the body corporate or bodies corporate is or are, or would be, bound by or entitled to the benefit of. Section 46(3B)
* Makes it clear that (3) and (3A) do not limit the factors that may be regarded for determining the degree of market power Section 46(3C)
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