Business Council says tough competition rules a global ‘outlier’

ANNABEL HEPWORTH
October 5, 2016
The Australian
The nation’s peak business group is urging the government to ­redraft its proposed tougher ­competition law, revealing advice from a former Federal Court judge that it is an “outlier” compared to similar rules in other countries.
The Australian can reveal the Business Council of Australia has armed itself with advice it sought from competition law barrister Neil Young, QC as it pushes for changes to the drafting of the plan to introduce an “effects test” to make it easier for small business to show a large rival has misused its market power.
The advice by Mr Young, a ­former Federal Court judge, finds the proposed new provision of the Competition and Consumer Act would be an outlier compared to similar provisions in other ­countries and “the risk of over-capture is real and imminent”.
The group has sent the advice to Treasury, which is consulting on the proposals and is expected to meet MPs from the major parties and crossbenchers.
The move sets the scene for a showdown with the small-business lobby, which has long been ­pushing for the reform recommended by the Harper review in 2015.
In a submission sent to Treasury and the competition tsar, obtained by The Australian, the BCA warns the proposed new law could push up prices by allowing less efficient businesses to be ­“protected from the full force of competition”. The submission argues for changes to the wording of the proposed provision, which is significant as until now the focus for big business has been its ­outright opposition to the so-called effects test.
“It will be critical to get the words right … if it is to operate as intended and not discourage the competition it is proposed to protect,” the submission says.
Specifically, the big business group wants the draft provision changed to provide “meaningful” protection for behaviour by big companies “for legitimate ­business reasons”. It is also pushing to have the law limited to prohibiting “exclusionary conduct”, arguing the Australian Competition & Consumer Commission’s chairman, Rod Sims, has said the proposed law “is meant to stop very large ­companies excluding their ­competitors”.
“If there is a concern that clarifying the provision would alienate proponents of the amendment who expect it to apply more broadly, this inconsistency should be aired and addressed now rather than through the courts over the coming decades,” the submission says. “Legislating an inherently ambiguous provision will ultimately cost consumers in the form of higher prices and more cautious competitive responses from larger — and often more efficient and innovative — businesses in markets across the economy”.
Malcolm Turnbull upset big business by announcing earlier this year he would introduce an effects test to ensure it could feel the “hot breath of competition” on its neck. Earlier this month, Mr Sims said some of the arguments against the reform by big retailers were “strange”.