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Australia is changing competition law in favour of small business

Photo: Pablo Blazquez Dominguez/Getty Images

The Turnbull government has overturned his predecessor Tony Abbott’s position on competition policy and will back small business in changes to misuse of market power laws under Section 46 of the Competition and Consumer Act.

Cabinet has agreed to back the recommendations from last year’s Harper review and will bring in an effects test.

The change is designed to stop a business with substantial market power from “engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition”.

The prime minister said he was “taking long overdue reforms out of the too-hard basket”.

The reversal in government policy caught many by surprise in a busy day of announcements just a day before Parliament rises for the seven week autumn break.

While the changes were welcomed by ACCC boss Rod Sims, who said it was “very good public policy” and good news for competition, Business Council of Australia president Catherine Livingstone said her organisation was “disappointed”.

“If Australia wants to have an innovation-driven economy, this is poor policy,” she said.

However, Council of Small Business Australia CEO Peter Strong said his organisation didn’t think the measures were strong enough, but nonetheless welcomed the changes.

“The government has recognised the importance of competition and due process and this result demonstrates that fact,” he said.

The changes come after the Harper review into competition policy found the current misuse of market power provision is not reliably enforceable and allowed anti-competitive conduct.

But that recommendation sparked anger from big business and as a result, the Abbott government shelved the report.

Under the government’s new plan, the current Section 46 laws will be repealed and the full suite of recommendations by Harper adopted instead.

Here’s how Malcolm Turnbull outlined the changes:

• access to remedies, with the Government supporting the Australian Competition and Consumer Commission to take steps to improve its communications with small business and to more actively connect small businesses to alternative dispute resolution schemes;

• improving the collective bargaining regime under the competition law, to provide more flexibility and increased information for small businesses, to help improve their bargaining position;

• encouraging state, territory and local governments to review their competitive neutrality guidelines, to ensure that their commercial operation do not negatively affect commercial businesses; and

• reviewing the anti-competitive impact of regulations, including standards and licensing, freeing up trading restrictions that apply to many businesses.

Nationals leader Barnaby Joyce said it was a big win for the agricultural industry and small business.

“These reforms will address a long-standing weakness in the existing competition rules and will ensure that we have a more transparent and competitive marketplace that treats all supply chain participants fairly,” he said.

After consultations on the draft legislation, the government plans to introduce it to Parliament later in 2016.

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