Effects test legislation introduced in parliament, but SMEs may have to wait years for results

Kelly O'Dwyer

Kelly O'Dwyer supports criminal penalties for serious exploitation. Source: AAP Image/Mick Tsikas.

Legislation to introduce an effects test into Australian competition law made its way into the House of Representatives on parliament’s last sitting day for 2016, but businesses will still have a decent wait ahead to see the law in operation.

Minister for Revenue and Financial Services Kelly O’Dwyer introduced the Competition and Consumer Amendment (Misuse of Market Power) Bill on Thursday, on behalf of Treasurer Scott Morrison, after draft legislation was released on September.

Cabinet confirmed in March it would be proceeding with changes to the competition laws, despite the effects test proposal being shelved at the end of 2015 by Prime Minister Malcolm Turnbull after former Small Business Minister Bruce Billson first brought it to cabinet in September 2015.

The bill acts on a recommendation of the Harper tax review and proposes to change Section 46 the Competition and Consumer Act to prevent businesses with a substantial degree of power from acting with the “purpose, effect or likely effect of lessening competition”. The reform is intended to stop businesses from acting in a way that lessens competition, whether or not a company’s intention was to use market power to have that effect.

The small business community has been waiting on a legislation change for years, with many believing its passing will force big businesses to think about the potential effects of their actions on the rest of the marketplace, rather than claiming they did not foresee the consequences of their actions.

The Greens are expected to support the bill when it enters the Senate in February 2017, according to Fairfax. The Labor Party opposition does not support the introduction of an effects test.

However, experts have previously told SmartCompany that local SMEs will be in for a long wait to see the law in action, because it relies on test cases being played out before the full application of the law is known.

“It’s really going to be up to the Australian Competition and Consumer Commission to take action in test cases before we get any definitive action on case law around the section,” Rohan Harris, principal in corporate and commercial practice at Russell Kennedy, told SmartCompany in September.

“I suppose what the regulator will also be looking at is the new laws’ ability to have an impact on the way in which businesses conduct themselves – and this will be some way off.”


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5 years ago

I do not see this Liberal Government rushing to the aid of the small business community despite the fact that the small business community are one of its at the core of its support base and that it holds power with the slimmest of majorities. After all it took many years to promote the minister for small business to cabinet and one of the first moves by Malcolm Turnbull as Prime-minister was to demote the position of small business minister from cabinet.

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