Australia adopts new predatory pricing prohibition

Recent amendments to the Australian Trade Practices Act have created a separate offence of predatory pricing which is not dependent upon a corporation having a dominant position in a market or substantial market power.

Traditionally the prohibition on misuse of market power has required that three distinct, but related elements, be established:

• a substantial degree of power in a market;
• the taking advantage of that power; and
• that the taking advantage be for a proscribed purpose, for example, eliminating a competitor.

In determining whether a corporation has a substantial degree of market power a corporation’s market share is a relevant, but not determinative, factor. Rather, Australian courts will consider all relevant market dynamics to determine whether a corporation is able to act largely unconstrained by its competitors or potential competitors, for example, by increasing its price without fear of losing market share. In order to demonstrate a taking advantage