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Some Economics of a “Misuse of Market Power”
31 October 2017
Mr. James Mellsop and Dr. Craig Malam
NERA Managing Director, James Mellsop and Senior Consultant, Dr. Craig Malam look at changes to Australia’s law on the misuse of market power in the article, “Some Economics of a ‘Misuse of Market Power,” published in the October 2017 issue of the Competition and Consumer Law Newsletter.
Key points in the article include:
Likely changes to the law will mean that certain types of business conduct by larger businesses will be assessed in a new way.
Conduct will be prohibited if it has the effect of “substantially lessening competition,” though the legal test for this is uncertain.
The new test might “catch” business conduct that appears to be anti-competitive but actually promotes competition. There are economic techniques that can distinguish between conduct that is likely to be anti-competitive from that which is pro-competitive.
The portion of the economic tests that determine whether a price increase occurred or was made likely following a change in competitive conditions is similar to current legal tests used to evaluate mergers.