Predatory Pricing Essay

Words: 16109
Pages: 65

Quo vadis? Towards an effective predatory pricing provision
Garth Campbell*
The level of criticism directed at s 46 of the Trade Practices Act 1974 (Cth) for its inability to capture predatory pricing indicates that smaller businesses are extremely concerned about this practice. Such criticism reached its peak following the High Court’s decision in Boral Besser Masonry Ltd v ACCC (2003) 215 CLR 374, which rejected a claim of predatory pricing. Since then, the Birdsville Amendment and other recent amendments to s 46 have attempted to more effectively capture predatory pricing by defining it more accurately. However, it remains to be seen whether these amendments will be successful. This article assesses the application and effectiveness of
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This certainty would presumably also apply when businesses assess their own or their competitors’ pricing conduct. The central provision of the Birdsville Amendment is a new subs (1AA) which provides that any corporation with: (a) “substantial share of a market”; (b) must not price its product below its “relevant cost”; (c) for a “sustained period”; and (d) for any of the same proscribed purposes as s 46(1). There has been some criticism that these new terms have not been defined in the TPA as yet, despite the Birdsville Amendment as a whole providing a more detailed definition of predatory pricing than section 46(1). Certainly, the lack of definition of these new terms is most likely a short-term problem and should be remedied once the courts have had a chance to consider the new provision. However, the Birdsville Amendment has also attracted criticism for its perceived ability to capture legitimate competitive pricing conduct,4 and it is yet to be seen whether it can comprehensively capture predatory pricing conduct. The success or effectiveness of this new provision, as with all provisions, can be assessed on whether or not its application satisfies its objects.

Victorian Egg Marketing Board v Parkwood Eggs Pty Ltd (1978) 33 FLR 294; ACCC v Eurong Beach Resort Ltd