Misuse of market power: How proposed changes to the law will affect the private health insurance sector

Competition and Market Regulation Update


The Turnbull Government recently announced that it will adopt the Harper Review's recommendation to amend section 46 of the Competition and Consumer Act. The Government expects to introduce the relevant legislation into Parliament later in 2016.

What has happened so far?

In 2015, the Competition Policy Review Panel chaired by Professor Ian Harper (Harper Review) completed the most comprehensive review of Australia's competition and consumer laws, policy and institutions in more than 20 years. The Panel made 56 wide-ranging recommendations reflecting its broad terms of reference. One of these recommendations was to amend section 46 of the Competition and Consumer Act, which currently prohibits the misuse of market power. The Harper Review found that the current section 46 was not fit for purpose, not reliably enforceable and permitted conduct that undermined the competitive process.

For more information on the recommended changes to section 46 and the implications for the private health insurance industry, please read our previous updates here and here.

The Government's decision

Having considered the Harper Panel's recommended changes to section 46, the Government engaged in a consultation period with industry, consumers and other levels of government on the recommendation. During this consultation period, the Government considered retaining the current section 46, adopting the Harper recommendation in full or adopting an in-between option. The in between options considered were removing the 'take advantage' element, introducing a 'purpose of substantially lessening competition' test (but not an effects test) in place of the current proscribed purposes test and/or introducing mandatory factors for the Court to consider in section 46 cases.

After finishing its consultation period, the Government has decided to accept the recommendation by the Harper Review in full.  It will now introduce proposed legislation into Parliament which repeals the current section 46 and replaces it with the new recommended form.

Next steps

The Turnbull Government has indicated that it will prepare draft legislation which makes the changes to section 46 recommended by the Harper Review. The Government plans to consult on the draft legislation prior to introducing it to Parliament later in 2016.  At this stage, there are still a number of unknowns, including the precise wording of the new section 46 and how the reforms will be affected by the timing for the upcoming federal election.

In the meantime, if you would like assistance in understanding the potential implications of the planned amendments to section 46 for your business, please contact us.