Big business should “hang their head in business shame” as cabinet crumbles under pressure on effects test, Peter Strong says

The peak body representing Australian small businesses has come out swinging against the big end of town amid reports key members of the federal cabinet have indefinitely postposed debate on introducing an effects test into Australian Competition Law.

Peter Strong, executive director of the Council of Small Business of Australia (COSBOA), told SmartCompany this morning he believes the apparent opposition among cabinet members for the reform is due to cabinet “being harassed and stalked by a small number of big businesses” and the powerful big business lobby groups should “hang their head in business shame”.

But Strong says he understands the adoption of an effects test, which would strengthen the provisions in competition law against the misuse of market power, has not been completely rejected by cabinet.

This was confirmed by small business Minister Bruce Billson, who told SmartCompany this morning the proposal, which is based on a recommendation from the Harper competition review, is still on the table.

“It is a part-heard matter before cabinet,” Billson says.

“I will be providing additional information to my colleagues as they address more specific issues about the proposal.”

Billson says further discussions about the effects test will take place in cabinet “over coming weeks” as the federal government finalises its response to the entire Harper review and its 56 recommendations.

“We are part way through the deliberation,” he says.

But Billson indicated he won’t shy away from continuing to advocate for section 46 of the Competition Act to be amended, saying SMEs are disadvantaged under the current application of the law.

“I see great policy merits and benefits for the economy and consumers by ensuring efficient businesses, both big and small, have a genuine opportunity to thrive and prosper in our economy,” the minister says.

“The way in which the courts interpret the current law allows for anti-competitive conduct by dominant businesses to fortify established positions with breaking the law at a time when we want greater dynamism, productivity growth, innovation and new investment.”

“The opportunity to compete against established businesses is very important for our economic future and the prospects of enterprising men and women.”

Strong says he has already held meetings with COSBOA members who are “very disappointed and quite concerned” about the delay in discussing the reform.

“The message is about productivity and the economy,” he says.

“If dominant businesses want someone, you know why they want it, it’s because they are greedy.”

While Strong says the small business community has “appreciated and enjoyed” the government’s recent focus on small business as the “engine room of the economy”, he says if the big business lobby groups are successful, “the best petrol will only go to the first class lounges”.

Strong is particularly critical of the Business Council of Australia and says he is concerned the BCA is putting pressure on members of the government to move away from the reform.

“Something must have happened for them [cabinet members] to backtrack” he says.

Strong says small business “knows better than anyone” the lengths large corporates will go to in pursuit of their agenda and at the end of the day, that is the motivation behind introducing an effects test.

“Big business believe their business models will suffer unless they bankrupt and screw over as many small businesses as possible,” he says.

A spokesperson for the Business Council of Australia told SmartCompany this morning the council believes the effects test proposal that was recommended by the Harper review would be damaging to competition and the Australian economy, which is a position the council outlined in a statement at the start of August.

“Small business needs to understand they will not be quarantined from the impact of this change which will apply equally to all business, for example, in regional towns or markets where a small business’s product or service is dominant,” the council said in the statement.

“In these circumstances, small businesses could be the instigator of actions against other small businesses, who would bear the unintended consequences of additional cost and uncertainty.”