SMEs may have a better chance of winning lucrative government contracts after a landmark High Court ruling confirmed that public sector work is subject to the Trade Practices Act.
The Australian Competition & Consumer Commission brought the case against Baxter Healthcare, a multinational company that contracts to supply medical supplies to public hospitals across much of the country.
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The ACCC alleged that Baxter told the state governments it supplied that it would only give them a bulk discount on sterile medical fluids if they agreed to purchase a range of other medical products.
The High Court ruled this arrangement was anti-competitive. The decision sets a new precedent because the court found that a historic government privilege known as Crown immunity does exclude the deal from scrutiny under the Trade Practices Act.
The decision could have huge implications for SMEs because it means big business will no be able to leverage strong market positions across different sectors to bully there way into government contracts.
“If you’re smaller business able to supply a particular product, this decision may help you get win a government contract,” says Lin Enright, the ACCC’s media unit director.
The decision means there will now be a more level playing field in the competition for government tenders, Enright says. “Baxter is a big multinational company that was able to leverage its position as a monopoly provider of a particular product to give it an advantage. Companies will no longer be able to get away with that.”
– Mike Preston