Big retailers in push to quash competition reform

Australia’s biggest retailers have made their first high profile public move to lobby the government over proposed changes to Australia’s competition law, with the release of a report damning reforms recently recommended by the Harper Review.

The report’s release coincided with an ANRA meeting held in Canberra yesterday, attended by representatives from major retailers Coles, Woolworths, David Jones and Harvey Norman, as well as Small Business Minister Bruce Billson and ACCC boss Rod Sims.

The Australian National Retailers Association-commissioned report argues there is little evidence to support the recommendations by the review to change section 46 of Australian competition law, which regards the misuse of market power.

“The authors are concerned that no case nor evidence has been presented by the Panel as to why the scope of section 46 should be fundamentally expanded,” the report reads. It also argues the addition of an ‘effects test’ to section 46 will “undermine” competition.

“The authors believe the inclusion of an effects test will irredeemably undermine the crucial role currently served by the purpose test in distinguishing anti-competitive conduct from pro-competitive.”

The current “purpose” test used by the Australian Competition and Consumer Commission considers the purpose of a company’s conduct when deciding on its misuse of market power. The conduct is only illegal if its purpose is to eliminate a competitor or stop a new competitor coming into the market.

The Harper Review’s proposed new “effects” test would mean the watchdog would consider the effects of conduct, as well as their purpose to misuse market power.

“The problem arises because the effect of exclusionary conduct looks very similar to the effect of competition with both ruinous of competitors,” said the report, which was undertaken by economics consultancy Pegasus Economics.

“In this case, it is extremely difficult to distinguish between conduct that is pro-competitive and that which is anti-competitive.”

The report also argued the proposed reforms would require organisations to demonstrate “a causal connection” between its market power and its conduct.

“This would require companies to exhibit near perfect foresight on the effect of competition when considering opening a new enterprise in a particular jurisdiction,” said ANRA chief executive Anna McPhee in a statement

Peter Strong, executive director of the Council of Small Business of Australia, has hit back at the report this morning, telling SmartCompany he wasn’t surprised by any of its content.

“There’s no need to even read it, we know what they are saying and that’s that the whole world revolves around Coles and Woolies,” says Strong.

“Australia competition law should take into account productivity and culture, as they’re destroying both.”

Strong believes the report will have little sway with the Small Business Minister, who he says “gets” that the economy relies on small business.

“He knows we don’t want protection, we just want a level playing field.

But Strong says the ANRA will likely have influence over other politicians, including the Treasurer.

“Joe Hockey is the problem… he’s very much in bed with the big end of town,” says Strong.

“The money the ANRA has… They have good quality lobbyists; we know they will pull out all stops to be able to continue to do what they want.”

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