BCA unleashes on Malcolm Turnbull's 'supposed free-market government'

Jacob Greber
Mar 23 2017
AFR
Many companies will simply give up on innovating, cutting prices or opening new stores for fear of being dragged into the courts, said the Business Council of Australia over what it slammed as an “astonishing” last minute amendment to competition laws from a “supposed free-market government”.
Warning that the change would put upward pressure on household bills, BCA president Grant King said the so-called effects test law would become so “broad and ambiguous” that companies risk being sued by competitors merely for offering price discounts to consumers.
“Rather than encouraging competition, the government seems intent on putting a handbrake on it,” said Mr King.
Treasurer Scott Morrison is due to move a last-minute amendment to the Competition and Consumer Act to remove a list of “mandatory factors” that courts would be forced to consider when deciding whether a company’s actions “substantially lessen competition”.
The factors include regard for innovation, product quality or price.
In a broadside echoed by Labor, the BCA scoffed at the government and Australian Competition and Consumer Commission’s argument the change would prevent a lawyer’s picnic as laughable.
“Companies will be tied up obtaining legal advice every time they plan to reduce prices, improve service or expand their business.
“When law is so broad and vague, no amount of legal advice can give a business the certainty it needs to compete vigorously.
“Many businesses will simply give up on innovating, cutting prices or opening a new store because they fear being dragged to court.”
ACCC chairman Rod Sims condemned as “astonishing” the BCA’s claim that stopping anti-competitive conduct would result in higher household bills.
“The BCA’s idea that companies would be sued merely for cutting prices is an astonishing falsehood,” Mr Sims told The Australian Financial Review.
Small business groups, led by the Australian Council of Small Business, as well as the Greens support the government’s changes, saying they will prevent firms with substantial market power from doing things that harm competition.
Potential loopholes
Mr Morrison has defended his decision to remove mandatory factors – which have been described as potential loopholes for dominant companies – saying it would protect more than two million small businesses that make up more than 97 per cent of all businesses.
The move follows the recommendation of a Senate committee report released last month.
Labor slammed the changes, accusing the Treasurer of making it up as he goes along.
“The amendment to section 46 goes further than even the Harper Review’s recommendation and has been announced with zero consultation,” said shadow treasurer Chris Bowen.
“It’s not like the Turnbull government hasn’t had some time to get its act together and consult.
“It has been 723 days since the Harper Review ordered by Tony Abbott was released. It has been 372 days since the Turnbull government bothered to respond to the misuse of market power recommendations.”
“These amendments – made on the run and without consultation – actually make bad legislation worse.
Consumers’ interests
Mr King said the effects test was now at risk of becoming so broad and ambiguous that companies risked being sued by competitors merely for offering discount prices to consumers.
Rather than improving the mandatory factors in the legislation to provide more protection for legitimate business conduct, Mr King chided the government for removing them altogether.
“Under the government’s plan, a judge wouldn’t even need to consider the interests of consumers receiving more efficient, innovative, better or cheaper products and services before cracking down on a competitive business.
“This is an astonishing amendment from a supposed free-market government. It’s now clear that this law is designed to protect inefficient small businesses from their more efficient rivals, rather than providing better outcomes for consumers,” Mr King said.
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