Legal

Competition reform… Seeing red over purple… Domain name change mooted… Petrol prices to soar… Victorian exports fall… Brewers, lawyers float… Economic roundup…

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Competition reform

‘Costello hands win to small business’, screams the headline on the front of today’s Australian Financial Review.

Treasurer Peter Costello will act within weeks to amend competition law to protect small companies against giant competitors that abuse their market power, the article says.

But this is way too premature to call a win. This proposed legislation and debate over competition laws has raged for years, despite valiant attempts by Small Business Minister Fran Bailey to press the small-business case to her colleagues.

This time the reform package is purported to include specific wording to define a big company’s market power as well as stricter rules on predatory pricing (when a company uses long-term pricing below cost when compared to competitors).

This is all welcome news for small business: the SmartCompany SME Opinion leaders poll yesterday shows that competition issues are nominated by 13% of SMEs as their biggest issue.

But everything depends on the wording of the legislation to see if the reforms have any teeth this time – and if it is the big win small business is demanding.

ACCC chairman Graeme Samuel told SmartCompany he’s not even sure he has seen the final wording.

“You have to be a bit cautious about what sub editors and journalists write, so let’s wait and see the final details and then you and lawyers and others can judge it.”

Labor frontbencher Craig Emerson says he hasn’t seen the detail yet either, but looks forward to its introduction into Parliament so he can closely examine whether it does supply effective protection to small business.

But concerns are growing that a number of reforms recommended by Judge Daryl Dawson in 2003 are being ignored.

– Amanda Gome

Hey, that’s my purple

The controversy over getting a trademark for a color has flared again with Cadbury Schweppes barney with Darrell Lea over who can use the color purple taking a new twist.

It all started when Darrell Lea put “purple bullseye” on shop shelves. Cadbury hit a snag in trying to prove that consumers were misled because the purple was deceptively similar to the purple used in its confectionary wrapping.

Now the Federal Court has just ruled that the original judge should not have thrown out Cadbury’s expert evidence, which sought to prove that consumers were misled, and ordered that part of the hearing be conducted again.

Cadbury immediately declared this a win, saying the company had established a connection between its shade of color and its chocolate.

But while the big boys slug it out, a warning to smaller companies. Five years ago it was very difficult to sue on color, shapes, smell or look. It is becoming more commonplace. Trademark lawyer James Omond, of Omond & Co, says to avoid using a similar color to a competitor in your marketing leaves you vulnerable to being sued.

And if you want to trademark a particular color, forget it. Omond says to go for two colors and something distinctive. “Go for something wacky – it is unlikely anyone will want to sue you for that.”

– Amanda Gome

Regulator considers domain name revolution

Australia’s domain name regulator is considering introducing a new generation of “.au” domain names under a policy review process currently under way.

The .au Domain Administrator, or AUDA, issued a discussion paper late last week in which it canvasses several significant changes to the current domain name policy framework including:

  • Removing the current prohibition on .au only domain names. The new names could either exist alongside or instead of current third-tier domain names such as .com.au and .org.au.
  • Changing the current licence-based regime to allow domain name holders to buy and sell domain names on the open market.
  • Creating a complaints process to enable the deletion of malicious or illegal domain names such as those that disseminate spam or are involved with stealing personal information.

If adopted, the changes would see Australia shift from being one of the most tightly regulated domains in the world to one of the least regulated.

Brendan Lewis, the executive director of technology and innovation forum the Churchill Club and a member of AUDA, says, if implemented, the changes are likely to mean cheaper domain names.

“There would be a mad gold rush as people go out and buy domain names, it would be quite chaotic and domain registrars, who are already doing very well, will make even more money.”

But, he says, deregulation could devalue the reputation of .au domain names. “At the moment if you see a domain name from a place like Romania you know are entering dangerous territory, but when international users see a .au name there is a certain level of comfort, and the question is whether we want to preserve that.”

Lewis says a lot of the suggested changes have been driven by the fact that AUDA does not have the power or resources to enforce many of its rules. He says one .au domain name already exists – www.csiro.au – and that loopholes make it possible to circumvent the prohibition on trading domain names.

Submissions can be made to AUDA’s 2007 Names Policy Panel until 15 June 2007.

– Mike Preston

Petrol prices to soar

Small and medium businesses need to factor in a rise in petrol costs, with warnings it could go as high as $1.50 a litre.

Petrol has just hit a nine-month high to $1.30 due to Middle East tensions and refinery problems in the US. However, CommSec equities economist Martin Arnold says while the price rise will continue, spikes are only temporary.

– Amanda Gome

Victorian exports fall

The value of the Victoria’s exports has not grown since 2006, according to Victorian Government figures reported in the Australian Financial Review today.

A government spokesman claims exports have been negatively influenced by the strong Australian dollar and drought conditions. Meanwhile, targets set by the Government to measure the effectiveness of its trade strategy have been cut by 20%. Victorian Industry Minister, Theo Theophanous, is expected to launch the state’s new manufacturing sector plan in the second half of calendar 2007.

Exports totalled about $29 billion for 2006-07 and could reach $35 billion by 2015.

– Mike Preston

Boom market drives brewers, lawyers to float

Until recently, all that boutique micro-beer brewers and law firms had in common was that employees of the latter are quite likely to be customers of the former. But now there is another link between the two: they are latest listers on Australia’s booming stockmarket.

The presence of these unlikely stock market denizens, and many others like them, illustrates the incentive to float created by the record levels achieved by the ASX in recent years.

Slater & Gordon yesterday became the first Australian law firm to float on the ASX. At 12.21 pm shares in the plaintiff law firm were trading at $1.55, a healthy premium on their initial $1 issue price and up on yesterday’s $1.40 close.

Boutique brewers are not quite as new, with the Australian Financial Review reporting that five niche beer makers have pursued ASX listing in the past 18 months. While some, like Little Creatures brewer Little World Beverages, are established businesses, others are more speculative ventures. One such company, Big Island Brewing, is establishing its Perth brewery and won’t put beer on the market until later this year.

The lesson? The prospect of big profits drives big innovation. The challenge for these companies is to keep performance high while managing the transition to a public company. Their share prices will tell the tale of their success or failure in doing so.

– Mike Preston

Economy roundup

New motor vehicle sales for April felll by 1.1% in seasonally adjusted terms, according to Australian Bureau of Statistics figures released today, driven primarily by a 3.1% drop in passenger vehicle sales.

At 1 pm the ASX/S&P 200 was trading at 6364.1 while the Australian dollar is worth US82.06¢, down on last night’s US82.21¢ close.

– Mike Preston

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