Competition policy review terms of reference: Small business to be given “mechanisms” to enforce their rights

The Coalition’s review of competition policy is set to focus on boosting productivity and tightening regulations to crack down on the misuse of market power, pleasing the small business community.

In the draft terms of reference obtained by SmartCompany, it’s expected the review will look particularly at the grocery, petrol and electricity industries.

The terms of reference include suggestions of new mechanisms for small employers to “enforce their rights” and the possibility of strengthening the powers of the Australian Competition and Consumer Commission.

The document asks people to consider “the extent to which new enforcement powers, remedies or enhanced penalties might be necessary and appropriate to prohibit anti-competitive conduct.”

It also says to consider competition in relation to emerging markets and across new technologies, “particularly e-commerce environments, to promote entrepreneurship and innovation”.

The last comprehensive review of competition policy, the Hilmer Review, took place in 1993.

Prime Minister Tony Abbott said in a statement last week the review was necessary because “much has changed in Australia’s economy” since the last review.

“This review is long overdue and will help identify microeconomic reforms and long-term improvements to build strong foundations for a more productive and competitive 21^st century Australian economy,” he says.

When the last competition review took place, it added 2.5% to national growth, and business experts are hoping this latest review will also boost national productivity.

The terms of reference says the review will look at “alternative means of addressing anti-competitive market structure, composition and behaviour”, which is currently outside the scope of legislation.

It will also review legislative frameworks and whether or not they adequately address the behaviour of markets with “natural monopoly characteristics”.

Council of Small Business of Australia executive director Peter Strong told SmartCompany the terms of reference for the review were comprehensive.

“It’s excellent and has a good focus on productivity which is what we wanted to see,” he says.

“The competition review isn’t about big and small business, it’s about productivity. If we don’t get it right, the economy will go backwards.”

Strong says the next issue is to ensure the voice of small business is heard in the review.

“We’re really quite pleased, but the next issue is that traditionally the big end of town will send in highly paid, skilled lobbyists and we need to make sure whoever is involved in the review is strong-willed and will see through the rubbish presented by the big end of town and focus on productivity,” he says.

Speaking to SmartCompany when Abbott’s Business Advisory Council was announced, Strong says he was concerned the review panel would be dominated by big business.

“You obviously can’t get the local newsagent to head it, although they’d do a better job, but you need someone who will understand the difference between big and small business and aren’t stuck in the policies from the 1990s,” he says.

Australian Chamber of Commerce and Industry chief executive Peter Anderson said in a statement the review is a “once in a generation” chance to “build economic strength by tapping into the competitive instincts of private enterprise, especially small and medium sized businesses”.

“The terms of reference are very welcome because they encourage high ambition within the private sector and in markets where competition has diminished as the Australian economy transitions from the financial crisis and the high dollar,” Anderson says.

“At the heart of the review is the need to enhance the competitive position of small and medium business, especially in supply chains where competition has extended beyond the fierce into the realm of the unconscionable, and where small and medium business is as vulnerable as consumers to monopolistic or near monopolistic behaviour.”