Under the Competition and Consumer Act 2010, a business with a substantial degree of market power is prohibited from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition in a market. Where this takes place, it is called a ‘misuse of market power’.

It is not unlawful to have, or to seek to obtain, substantial market power. For example, a business may seek to grow its position in a market and win customers at the expense of its rivals by being more innovative and offering the better products or services. This is part of the competitive process.

However, once a business has substantial market power the law places certain restrictions on the businesses’ actions to ensure this power is not misused.