Government legislation targets big businesses crushing the small guys

- September 6, 2016 2 MIN READ

The Federal Government is seeking to strengthen Australian’s competition laws and make sure that small businesses, startups and innovators are protected from bigger companies.

Draft legislation released today looks to change the Competition and Consumer Act 2010 to reform the misuse of market power provision.

In 2015, the Harper Review of competition policy showed that Australia’s misuse of market power law is not highly enforceable and doesn’t effectively target and deter anti-competitive conduct.

Treasure Scott Morrison said this has created a barrier to the entry and expansion of new and innovative firms, delaying the development of new innovative technologies and hindering productivity and economic growth into the future.

“We are interested in receiving comments or suggestions from interested parties regarding the proposed content of the guidelines outlined in this framework,” says ACCC (Australian Competition and Consumer Commission) chairman Rod Sims said.

Kate Carnell has welcomed the release of draft legislation paving the way for stronger competition laws that will ensure the nation’s small business owners can compete on a level playing field.

Carnell said amendments to the Competition and Consumer Act 2010, particularly in relation to section 46, will provide much needed reforms to address the misuse of market power by some businesses.

“The proposed ‘effects test’ is vitally important for the long-term viability of small businesses.  I certainly encourage all MPs and Senators to support the ‘effects test’ to ensure our three million small businesses can compete fairly with the big guys.”

“It’s no secret that bigger players – whether it be in the retail, farm, manufacturing, construction, transport or grocery sector – have the ability to use their dominance to destabilise the marketplace.”

“In these instances, smaller businesses – who are often already struggling to maintain market share – are ultimately squeezed out, which of course leads to less choice, less competition and higher prices,” she said.

It’s not only small businesses that should be concerned about anti-competitive practices.

“When one or two enterprises dominate the market, there’s no incentive to keep prices competitive which can impact consumers and drive household budgets up,” said Carnell.

“Small businesses are critical drivers of competition and diversity so it’s vital Australia has a strong legal framework that allows smaller operators to compete on their merits. The Australian Competition and Consumer Commission therefore needs effective tools to be able to deal with instances of misuse of market power, and the ‘effects test’ will help achieve this.”

“My office will be examining the draft legislation closely and will provide feedback that reflects the best interests of small business and family enterprise,” she said.

The legislative changes seek to simplify the law and better deal with anti-competitive conduct while still supporting pro-competitive behaviour such as broadening the definition of competition to include potential imports of goods and services, to fully reflect the range of competitive pressures facing Australian companies.

The changes confine the cartel conduct provisions to conduct affecting competition in Australia and broadens the exceptions for joint ventures.

Consultation on the draft legislation will take place for four weeks, concluding September 30.

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