Effects Test

Big business tries to scupper competition reform before it gets off the ground

Cara Waters /

Big business lobby groups have set out to crush the reform of Australia’s competition law spearheaded by Small Business Minister Bruce Billson.

The Business Council of Australia is preparing to campaign against the proposed competition law reform, particularly the “effects test”, which would make it more difficult for large corporations to squash their small counterparts.

The BCA says the impact of the reform would be wide-ranging and damaging to the economy. 

Danny Gilbert, the BCA’s competition inquiry taskforce chair told Fairfax the proposed changes would be a “legal minefield”.

“This sort of legislation causes uncertainty, inefficiency and discourages innovation”, he said.

The attack on the proposed reform comes while Billson is overseas in China and Singapore promoting Australia’s small business interests.  

SmartCompany contacted Gilbert for comment but he did not respond prior to publication.

Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany it is not surprising there is panic from the big businesses “that dominate our markets”.

“Why are they panicking?” he says.

“What could happen to them is that it becomes a much more transparent place for small business to do business.”

Strong says at the moment the economy is dominated by a very small number of big businesses.

“They have come to dominate so much that they think they dominate competition policy,” he says.

Strong says the Australian Competition and Consumer Commission’s review of competition policy is not limited to the effects test and also includes a review of unconscionable conduct and the operation of the legal system.

“It is not a level playing field and the effects test is just one part of the solution,” he says.

Strong says the big end of town is demanding protection despite the current system stifling innovation and productivity.

“Innovation will not come from any of those people on the front page of the Fin [The Australian Financial Review] it will come out of the millions of small business people,” he says.

“If we are going to increase productivity we have to give small business people room to move.”

Strong says “96%” of businesses in Australia back the reform, but they are the small businesses nobody cares about.

“The fact the BCA is coming out means the big end of town is upset,” he says.

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Cara Waters

Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times' website and worked for The Sunday Times in London.

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