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Big business is ‘juvenile’ for opposing effects test

Big business is ‘juvenile’ for opposing effects test

Small Business Minister Bruce Billson says big businesses are “juvenile” for opposing having their decisions scrutinised, and is urging them to adopt a more sophisticated approach to the Abbott government’s review of competition laws.

Large firms, led by the Business Council of Australia, have campaigned against a push for an “effects test” in competition law that they say could make large ­companies responsible for the financial difficulties suffered by smaller competitors.

The inquiry’s draft report will be released at the end of the month and a final report to government is due by March.

Australian Competition and Consumer Commission chair Rod Sims wants the federal government to amend the “misuse of market power law” by introducing an “effects test”, that would allow for more scrutiny of businesses trying to purposefully damage their competitors.

He has the backing of Mr Billson who said there was no suggestion an effects test would replace the current law that requires the regulator to prove there was an intent to misuse market power.

“Those who suggest there is some sort of policy ‘swap-sy’ going on are just wrong,” Mr Billson told The Australian Financial Review.

“It’s juvenile to suggest this is a black and white matter, and to suggest an effects test would substitute the intent or motive of misusing market power misunderstands the issue,” he said.

“We need a far more sophisticated debate and that is why we are having an evidence-based, objective and independent analysis through the Harper review and we encourage those with a view to engage with the inquiry.”

Mr Billson said there was a legitimate question as to whether section 46 of the Competition and Consumer Act was still an “omnipotent” law that could address a misuse of market power.

Review considering changes


The government’s competition review is considering policy changes that could help small businesses, such as supermarket chains being able to offer alcohol and fuel discounts, while convenience stores are prohibited from doing so.

Competition review chair Ian Harper said the competition review panel “is focused not only on what to do but also the best way for government to make it happen”.

Professor Harper told a convenience store and petrol retailers conference at the Gold Coast on Wednesday that many more issues have been brought to the inquiry’s attention including petrol prices in regional areas, access to fuel terminals and the effect of shopper dockets on competition.

Australasian Convenience and Petroleum Marketers Association claims major supermarkets are “prepared to use profits from sales in grocery, liquor, hardware and other channels to pay their customers to take fuel from their service stations”.

The association and small businesses accuse supermarkets of using fuel discount dockets as a predatory tactic to hurt or eliminate independents from the fuel market.

The competition regulator took legal action against Coles and Woolworths over their shopper docket fuel discounts, with mixed results under the current competition laws.

Advocates of introducing an effects test said it could capture big-business tactics, such as product bundling and customer discounts, that have the effect of significantly damaging smaller rivals.

Council of Small Business and Master Grocers of Australia say an effects test was “vital to the survival of thousands of small businesses”.

And convenience store owners, such as the Australasian Association of Convenience Stores, say they are not operating on a level playing field and should be allowed to sell alcohol just like major supermarket chains.

Former competition minister Craig Emerson, former treasurer Peter Costello and former ACCC chair Graeme Samuel all oppose an effects test.

*Original Article by Fleur Anderson: