Is anyone really standing up for small business?
While politicians are always quick to say “feel good” things about small businesses being the “engine room” of the economy, few MPs from either side of politics are ready to act to ensure that we have a vibrant small business sector.
Why? Simply because the big end of town is very quick to shoot down any proposal that puts the spotlight on attempts by the big players to drive small businesses out of business in any way they can. Similarly, any MP that dares suggest such proposals is dismissed by the big end of town as some sort of heretic or “maverick.”
Clearly, big business and their hired guns always want their way and they will whinge loudly when they don’t get it. Sadly, they are also very good at making self interested and, even personal, attacks on those proposing stronger competition laws.
Now let’s not get confused between businesses competing on their merits for customers and businesses acting anti-competitively to destroy competitors for the sake of raising prices once the smaller competitors are taken out. Yes, businesses are there to build market share but that’s not a licence to engage in any conduct whatsoever. The United States, the home of free enterprise, has long recognised that there is a line to be drawn between pro-competitive and anti-competitive conduct. That’s why the US has long stood by their anti-trust laws.
Of course, we need to recognise that small businesses are not to be “protected” from competition. Small businesses need to sink or swim on their merits. Anti-trust or competition laws are not about picking winners or losers. Competition laws are there to safeguard competition and prevent recognised forms of anti-competitive conduct. Let’s never forget that anti-competitive conduct disadvantages consumers and for that reason alone such conduct needs to be stamped out as effectively as possible.
So what needs to happen to ensure a vibrant small business sector?
Well, first, we need a full scale review of Australia’s competition laws as proposed by the Shadow Federal Treasurer Joe Hockey last week. Given that it’s nearly 10 years since the last major review of our competition laws it’s clear that a review is now well overdue. With the Federal Government having shown real enthusiasm over the past two years for setting up Inquiries one can only hope that they show enthusiasm for a full scale review of our competition laws.
Competition laws are essential to the proper and efficient functioning of a market economy such as Australia. Competition is a key driver of a prosperous economy and effective competition laws are critical to promoting vigorous competition.
Weak competition laws lead to weak competition in the marketplace and that’s bad news for consumers. It’s no surprise that the United States has long had the world’s best competition laws for the simple reason that the home of free enterprise recognises that strong competition laws promote strong competition.
In contrast, Australia has some of the weakest competition laws in the world and that’s costing consumers dearly. With Australian consumers now regularly being gouged on groceries, petrol and banking services because of the overwhelming dominance of the big players in those markets, it’s obvious that Australia’s competition laws are in urgent need of repair.
Australia’s competition laws need to follow the example set by such countries as the United States and United Kingdom in the following areas:
- We need a divestiture power to enable the courts to break up large and powerful companies that act to the detriment of competition and consumers; and
- We need laws against anti-competitive price discrimination whereby different customers are charged different prices for the same goods or services without justification.
Australia also needs to move against anti-competitive creeping acquisitions where large players buy out smaller competitors in a piecemeal and anti-competitive manner over time.
Access to essential infrastructure also needs to come under the spotlight as large players are very good at locking out smaller competitors.
Gaps in our competition laws following recent court decisions also need to be fixed. These court decisions have, for example, made it harder to prosecute price fixing behaviour and to stop large and powerful companies from abusing their market power.
A review of our competition laws must also extend to reviewing the performance of the ACCC. While the big of town may be comfortable with the ACCC’s performance in recent years, it’s clear that many are not happy at the ACCC’s failure to do all it can to weed out anti-competitive conduct.
Ultimately, the ACCC can certainly do much more to promote vigorously competitive markets. Accordingly, it’s clear that the ACCC’s enforcement of our competition laws needs to be carefully scrutinised on a regular basis. Strong competition laws need to be backed up by a strong and effective regulator.
In addition to having a full scale review of our competition laws, it’s important we acknowledge those MPs who try and take a stand on behalf of small businesses and consumers. There have been some notably performances including Peter Reith’s small business reforms of 1997 and Peter Costello’s enactment of the Birdsville Amendment against anti-competitive predatory pricing.
More recently, we have had some false starts with Chris Bowen’s attempts to prevent big businesses from using unfair contract terms against small businesses being so readily discarded by his Labor Government ministerial colleague, Craig Emerson.
Let’s not forget the recent efforts by Federal Shadow Small Business Minister Bruce Billson to, for example, put the spotlight on the difficulties faced by small businesses when trying to get finance, especially from the 4 major banks. Likewise, Senator Nick Xenophon and South Australian Small Business Minister, Tom Koutsantonis’ strong stance on behalf of a small petrol operator in the Adelaide suburb of West Richmond in the operator’s fight against supermarket giant Woolworths.
Finally, credit needs to be given to Mr Tony Piccolo, a South Australian Labor MP who introduced a Caucus backed Franchising Bill late last year to incorporate a statutory duty of good faith in commercial dealings; to introduce penalties for breaches of the Franchising Code of Conduct, and to promote greater emphasis on alternative dispute resolution.
All in all, it’s essential that small business issues receive the bi-partisan political support that they deserve. Let’s not forget the vital role that small businesses play in the economy and let’s ensure that small businesses are not destroyed by big businesses intent on engaging in anti-competitive conduct to the detriment of consumers.
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