Abbott faces down big business over competition law effects test

Prime Minister Tony Abbott has reaffirmed his government’s commitment to introducing an effects test into Australian competition law, defying a push by big business to scuttle the Harper Review proposal.

The federal cabinet is expected to discuss the reform to Section 46 of the Competition Act when it meets today, pushing the change another step closer to becoming law. If adopted, the change would prevent the misuse of market power

Read more: Everything you need to know about the small business effects test

Big business lobby, the Business Council of Australia (BCA), has this week slammed the possible introduction of an effects test, claiming the change would hurt Australian businesses of all sizes.

“Small business needs to understand they will not be quarantined … for example, in regional towns or markets where a small business’s product or service is dominant,” Livingstone said.

But Fairfax reports Prime Minister Tony Abbott stood up to the BCA at a private dinner in Canberra in June.

BCA president Catherine Livingstone reportedly urged the Prime Minister to adopt a “sensible reform” program that does not include introducing an effects test.

However, Abbott told Livingstone the government “will proceed with reforms as we see fit, even if it means changes to competition law”.

Jos de Bruin, chief executive of Master Grocers Australia and Liquor Retailers Australia, told SmartCompany this morning he is encouraged by reports of the Prime Minister’s support for an effects test, which de Bruin says is an “absolute must” for Australian competition policy.

“We have been working very closely with government,” de Bruin says.

“The Prime Minister is well aware of the need to introduce an effects test.”

De Bruin says Master Grocers, which represents independent supermarkets and liquor retailers, “completely supports” the introduction of an effects test, as recommended by Ian Harper and the competition review panel.

“It doesn’t give us everything we want, not entirely… but it will go a long way to improve and strengthen competition law,” he says.

De Bruin also took aim at the BCA, which he says is “out of step” with and is “hell bent on delivering plenty of myths about the chilling of the economy”.

“But it’s untrue,” de Bruin says in reference to claims an effects test would stifle the ability of smaller businesses to grow.

Peter Strong, executive director of the Council of Small Business, agrees, telling SmartCompany “the BCA shouldn’t be talking on behalf of small business because they’re wrong”.

“It’s always a worry when big business starts commenting on small business,” Strong says.

“If their business model is so fragile they are worried about an effects test, they should be looking at their business plan.”

De Bruin says the effects test is “about protecting the competition process, not protecting competitors”.

“It will not stop big businesses, it will not stop Coles and Woolies, it won’t stop them doing business,” he says.

“But it will stop them from land banking, from practices that prevent competitors coming into a market place. It will prevent anti-competitive bundling exercises that can only be done with the misuse of market power.”