Central to the prohibition on misuse of market power is the concept of a substantial degree of power in a market. In order to determine whether a corporation has a substantial degree of market power it is necessary to:

• first identify the market or markets in which the corporation operates or has, or may have an impact;

• identify the degree of power, if any, which the corporation has in that market. This is done by having regard to the extent to which the conduct of the corporation is constrained in that market by the conduct of competitors, or potential competitors or by the conduct of persons from who it acquires goods or services or to whom its supplies goods or services in that market;

• determine whether any power which the corporation has in the market is substantial, ie considerable or large; and

• determine whether the power, if any, which the corporation has in a market is attributable to something other than market power ie statutory power or financial power.

See The concept of market power.

In order for there to be a breach of the prohibition on misuse of market power there must be conduct undertaken by the corporation for one of the prescribed purposes which conduct occurred or was facilitated by the corporation’s use of its market power.

In determining whether there has been a taking advantage of market power, s 46(6A) sets out a number of factors to which the court may have regard.

The assessment of whether there has been a taking advantage of market power is often a difficult one. It is useful when undertaking that assessment to ask the following questions:

• Could a firm without market power engage in the same conduct? If the answer is “yes” the engagement in that conduct by a firm with a substantial degree of market power is unlikely to amount to a taking advantage: ACCC v Boral Limited .

• Does the source of the ability to engage in the conduct come from a statute, or a contractual right or some other source, eg financial power? If so, the exercise of that power may not amount to a taking advantage of any market power.

See What amounts to a taking advantage of market power?

In order for there to be a breach of the prohibition on misuse of market power, the corporation must have the purpose of either eliminating or substantially damaging a competitor, preventing a person from entering a market or preventing a person from engaging in competitive conduct in a market. In this case, purpose is a reference to an intention to achieve one of these proscribed results. It does not matter that the proscribed purpose may be unattainable — what matters is that the corporation took advantage of its market power for that purpose.

See When will the proscribed purposes be satisfied?

Section 46 of the CCA provides that 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:

• eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that, or any other market;

• preventing the entry of a person into that, or any other market; or

• deterring or preventing a person from engaging in competitive conduct in that or any other market.

In order for the section to be breached, a corporation must:

• have a substantial degree of power in a market in Australia; and

• take advantage of that power in that or any other Australian market for any one of the three proscribed purposes.

See What is the prohibition on misuse of market power?