SME groups reject big business claims over Effects Test

The ‘Effects Test’ may be back on the government’s agenda with the election of new Prime Minister Malcolm Turnbull, who reportedly agreed to support the effects test as part of a new agreement with the National Party. This is despite big business group the Business Council of Australia saying that a competition law Effects Test would harm competition, hurt shoppers and lead to higher prices.

Most business groups that represent SME enterprises, including the Australian Chamber of Commerce and Industry, Australian Retailers Association, Master Grocers Australia, and Council of Small Business of Australia, called in September for more rational thinking and competition laws that are beneficial to all businesses nationally.

CEO of COSBOA, Peter Strong, slammed the latest argument used by the BCA and its belief that businesses will all be suing each other non-stop.

He pointed out that under the proposal for an Effects Test, instead of a “purpose” test, there will be a “substantial lessening of competition” effect assessment – in other words, did a big firm misuse its market power in a way that had the effect of a substantial lessening of competition?

Kate Carnell, CEO of Australia’s peak national/state-based business group the Australian Chamber of Commerce and Industry, said the Effects Test proposal was a moderate test that would not stop companies from being competitive, but would allow companies with significant market power to push down prices with a particular supplier.

MGA CEO, Jos de Bruin, said: “Introducing an Effects Test, along with other changes, will increase real competition because it gives the ACCC the power it needs to crack down on anti-competitive practices which have been used by some of Australia’s biggest businesses.

“This represents real, structural change to our economy, a change which will benefit business of all sizes, not just small business.”

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