Chris Bowen tells small business “be careful what you wish for” with effects test

Shadow treasurer Chris Bowen has told small business to “be careful what they wish for” regarding the possible introduction of an effects test in Australian competition law, which would make it more difficult for large corporations to squash their small counterparts.

Speaking at the National Press Club yesterday, Bowen said he considered an effects test when the Labor Party was in government but he “looked at it closely and rejected it.”

Big business groups, including the Business Council of Australia, have revolted against the idea of an effects test and have been lobbying the government to scrap the proposal.

Bowen said Wesfarmers group managing director Richard Goyder was right to be concerned about the “possible chilling effects on competition”.

“But I say to people be careful what you wish for because an effects test can apply to everybody,” said Bowen.

“If you’re a business, even a small business and a good small business, doing what you expect small business to do, being aggressively trying to grow, being aggressive on pricing and you have the effect of making business more difficult for another company, you could find yourself at trouble with the effects test.”

Bowen said he and the Labor Party will look at any recommendations made by Professor Ian Harper in the competition review, but “would need a lot of convincing” to change his view “that an effects test is not a good idea for Australia.”

He also said he believed Small Business Minister Bruce Billson was portraying different options about the effects test to different media organisations.

A spokesperson for Billson previously told SmartCompany the government was “committed to creating an economic environment where competition is based on merit, not on muscle”.

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany he was in attendance at yesterday’s event and spoke to Bowen after he made the comments.

“I suggested to Mr Bowen to stop listening to the big end of town and listen to the small end of town,” says Strong, who confirmed he will be meeting with Bowen and the Labor Party in the near future to discuss the matter.

“He knows the big end of town are putting so much time and effort into defeating this and that makes us very wary,” says Strong.

In response to Bowen’s suggestion that small business will be the unintended subjects of an effects test, Strong says the sector is already the victim of poor competition policy.

“An effects test would drop the number of victims of completion law enormously,” he says. 

“It’s the 4% complaining about the removal of something that screws over the other 96%.”

Speaking to SmartCompany, Jos de Bruin, chief executive of Master Grocers, agreed the effects test was simply a measure to deter predatory behaviour by those with unreasonable market power.

“If small business is the backbone of the economy and employs more people and generates more wealth in Australia, why isn’t the government supportive of ways competition can be made fairer?”

De Bruin says we need a mature discussion about what’s right for all Australians, not just big business.

“Big business is obviously concerned, that’s why they are throwing enormous resources behind discrediting the idea, they are walking the halls of Canberra,” says de Bruin.

“But people like you and I, who value entrepreneurial free will, just want a fair go.”

SmartCompany attempted to contact Bowen but did not receive a response prior to publication.