Is Competition policy decided by a few mega businesses and their union?


By Peter Strong . On 19-Feb-2016


The development of better competition policy in Australia is vital to our future.  It is vital for the consumer to have diversity in the retail sector and even more vital for rewarding innovation and improving our productivity. Without an increase in productivity our standard of living will fall and continue to fall.

This is an election bellwether for the Turnbull government. If it bows to the wishes of some big bullying businesses then the small business community will know it is not a government for small business. That will have ramifications.

For too long our competition policy has been decided by laissez faire economists and the boards of Wesfarmers, ailment ailment Woolworths and Telstra.

This was made worse with a laissez faire competition regulator (prior to Rod Sims becoming Chairman of the ACCC) allowing the biggest businesses to bully, cheap coerce and destroy many other businesses in our retail supply chain.

Laissez-faire attitudes and policies have created an environment that is all laissez with not much being fair.

The great majority of people associated with competition policy know it must change. The independent report on competition laws headed by Professor Ian Harper (known as The Harper Report) recommended changes to Section 46 of the relevant Act. The majority who agree for change includes: more than 96% of businesses and business associations; the Chairman of the ACCC and the six ACCC commissioners; Professor Alan Fels (a past ACCC Chairman) and many academics. The associations that support the changes include the Council of Small Business, hospital the Australian Chamber of Commerce and Industry, the Master Grocers’ Association, the Australian Motor Industry, the Australian booksellers Association, The Australian Hotels Association and many more.

Politically the great majority of back benchers in the Liberal party support the change, many in the ALP also support the change.  The Nationals Party also support the change and indeed forced the Turnbull government to revisit the issue after Abbott stopped supporting the changes.

Most business people believe that the Harper recommendations do not go far enough.

It is just a handful of big businesses believe there is no need for any change. The only industry group that is against change is the Business Council of Australia, but not all their members support the decision and most do not see the issue as important. The companies that are against the change are: Wesfarmers who own Coles and Bunnings; Woolworths; and Telstra. These are the biggest and most dominant businesses Australia has seen and they are panicking. Why? The fact that the biggest businesses don’t want change should be enough evidence to support change.

We went along with the proposed changes even though they did not go far enough, in the end we decided to accept the independent reviews findings and move on.

The biggest businesses named above refused to accept any change and threatened the Abbot Government with dire consequences if the changes went through. They sent secret letters, had covert meetings and made threatening phone calls to Abbott and his closest advisers.  Abbott caved in and declined to change section 46.

That is a warning signal to Australian industry. Will Australia’s business and economic policies be decided by third world practices?  Where big businesses and the wealthiest and most powerful threaten a government and the poor third world government has no choice but to do as they are told. The behaviour of Shell oil in Nigeria in the 1990s where the government used armed forces to protect Shell from being made to pay fair taxes is very similar to the behaviour of Wesfarmers in Australia in 2015.

This is not a big business versus small business war.  This is a few of the biggest businesses Australia has ever seen versus the rest of the business community.

A decision must be made by the Treasurer on Section 46. This cannot wait until after the election.

Those big businesses argue that changes, known as an effects test, will hamper innovation and create a lawyers picnic with litigation and confusion impeding good business.

The fact is the use of similar regulations in the Australian Telecoms Act has not created a lawyers picnic and indeed these powers have only been used 5 times since they were introduced in 1997, to the betterment of competition in that sector.

Most countries have an effects test of some sort in place. For example the countries that have signed up to the Trans Pacific Partnership have an effects test, except for New Zealand. The most innovative countries have an effects test in place.  There is a strong argument that the use of the effects test in the 1980s in the USA to break up the monopoly that Microsoft had become helped create the environment for the development of the iPhone among other innovations.

Our fear is that in appearing to be conciliatory and willing to consider all options we just surrender to the current situation.  That has dangers for the future of choice for consumers and the future of productivity.

What happens if a few companies get their way? What about the future?

If any new oligopoly is created by market forces and consumer demands then fine.  If it is created by regulation that fetters the regulator than that is not fine.  We could end up with one or two corporations owning and controlling aged care, road transport and many other sectors.

This is also about productivity. As seen frequently in the media the suppliers to the big retailers are under constant attack, they struggle to grow and the forcing of generic labelling of their products inhibits any chance to grow, provides no reward for innovation. The biggest companies can act like bullies due to their size, they have become this big due to a lack of an effects test.

Let’s agree on the current proposals from Harper and then agree to meet and consider what else can be done, but importantly let’s be honest and transparent.

About the author

Peter Strong

  • COSBOA October Newsletter

    01-Nov Our October Newsletter is out! Check it out
  • Removing choice in superannuation funds only favours the fund

    24-Oct There is one good example of why we need independent directors on superannuation fund boards.  That
  • Small Business Should Receive 10% Commission on Superannuation Collected for Funds

    03-Oct COSBOA today called on the government to build on agreements between large retailers and the retail
  • COSBOA AGM, Council Meeting & Business Leaders Dinner – 25 October 2017

    19-Sep COSBOA COUNCIL MEETING & BUSINESS LEADERS DINNER 25 October 2017 Hotel
  • Historical MOU with Business Council of Australia

    29-Aug Last week we had a very successful Vodafone National Small
  • ALPs Access to Justice – it’s time to be nice

    14-Aug COSBOA today acknowledged the importance of the ALP’s legislation on ‘Access to Justice’ when
  • COSBOA Submission: Inquiry into Sunday Penalty Rates

    03-Aug COSBOA's submission to the Inquiry into Sunday Penalty Rates is below: Thank you for the opportun
  • COSBOA’s Cash Economy Submission

    02-Aug COSBOA provided a submission to the Standing Committee on Tax and Revenue who are conducting an inqu
  • COSBOA Communique – Business Continuity & CyberSecurity

    28-May Cyber Security, telecommunications failures, power blackouts, website failures, disaster
  • The Cyber Security Issue – COSBOA Council Meeting: 24 May 2017, Hotel Kurrajong, Canberra

    15-May   Cyber Security hit the headlines over the wee
  • Fairness in Competition Gets Ever So Close

    24-Mar COSBOA today congratulated the government on the approach to changes to Section 46 of the Competitio
  • SmartCompany: Let’s focus on the issues that unfairly affect women who run their own small businesses

    08-Mar Peter Strong's article for International Women's Day in SmartCompany: As a bloke I can only c
  • Save the Date: VODAFONE NATIONAL SMALL BUSINESS SUMMIT 2017: 23-25 August 2017

    02-Dec 
  • National Contract Fairness Day! It’s arrived

    10-Nov Let’s celebrate the coming of fairness – the start of better innovation,
  • Who pays for double dipping in paid parental leave?

    24-Oct There are several ways of working out who pays for the double dipping in paid parental leave (PPL).
  • Payment of invoices – Australia comes last

    18-Aug Australia has easily found itself in last place when it comes to paying invoices on time.  We come
  • Competition in the Boardroom – a play in one act

    11-Aug At COSBOA we receive all sorts and we were lucky enough to be sent a small business play that reall
  • Census 2016 – Embracing Change

    10-Aug The events last night with the Census should not be used to attack and criticise or indeed to make u
  • Communicate, Engage, Involve, Communicate – that’s what a successful pack of dogs will do.

    16-Jul The Greyhounds decision is a great example of decision making gone wrong.  Perhaps the decision was
  • Contribute to the Campaign

    10-Jun After the article in The Australian 
  • COSBOA Vodafone National Small Business Summit Registrations Open!

    27-May It’s exciting when the months of planning start to come to fruition and the registrations for the
  • Pay taxes, stop dodging, stop playing games

    11-Apr The CosBullet – Tax collection needs fixing Below is an edited excer
  • 29,000 people support the government’s decision on the effects test – let’s get back to business

    30-Mar Petition to be presented to Kelly O’Dwyer at 2.30pm in the Minister’s office in Canberra
  • The Thinkers Hub – A Small Business Poem

    01-Mar It was somewhere up the country in a town built from rock and scrub That they formed a little busine
  • Is Competition policy decided by a few mega businesses and their union?

    19-Feb The development of better competition policy in Australia is vital to our future.  It is vital for
  • Penalty Rates: Sunday, fairness & jobs

    27-Dec There is a lot of carry-on around penalty rates.  The ideologues of the left want this to be a wedg
  • Security remains an issue – alert not alarmed, vigilant not a vigilante

    14-Nov Small Business people and the nation’s security National Security Hot
  • Tax reform can be managed – see Howard

    12-Nov Tax reform can be managed as long as we are all part of the reform process. Tax re
  • How many duopolies does it take to change a light globe in an aged care home?

    17-Oct In all the debate about the changes to Section 46 of the competition legislation (and the weird over
  • Latest argument for NOT having an Effects Test is just as silly as all the others.

    23-Sep  Trigger warning – Some jargon,
  • The dominant few big businesses are yesterday’s economy

    15-Sep Congratulations to Malcolm Turnbull and commiserations to Tony Abbott. With the change of Prime M
  • Our Champions are under threat from greedy, vested, rich corporate and union muscle

    11-Sep In the world of politics and influence there are some basic facts,
  • Misleading headlines don’t help the cause

    10-Sep Recently I was interviewed by The Guardian about the Effects Test and I made the normal comments and
  • When it’s your money – the game changes

    05-Aug The recent focus on politician's allowances and expenditure reminded me of a story I heard some year
  • Shopping Centres still playing with the facts

    26-Jul Shopping Centre Council misses the mark – as always Recently the Shopping Centre
  • Peter Strong’s National Press Club Address – 1 July 2015

    01-Jul COSBOA's CEO, Peter Strong delivered an address at the National Press Club on Wednesday, 1 July 2015
  • Peter Strong to Address National Press Club

    23-Jun Our CEO Peter Strong will address the National Press Club on Wednesday 1 July 2015.  Australia curr
  • COSBOA Chair addresses Maltese Chamber of Commerce

    17-May COSBOA Chairman and CEO of the Real Estate Institute of Australia (REIA) Amanda Lynch was in Malta r
  • Can we regulate the regulators?

    17-Apr Now is the opportunity to get information to the Productivity Commission, and through them the gover
  • 2.5 million people deserve better

    21-Mar COSBOA is extremely disappointed that we will once again have a new small business minister. The sm
  • Submission to the Senate Inquiry into the new Anti-Discrimination Acts

    05-Jan COSBOA Submission to the Senate Inquiry into the Exposure Draft of Human Rights and Anti-Discriminat
  • The Year that was -2012 – and the Year that will be – 2013 an election year

    19-Dec Please see our review of 2012 and needs for 2013
  • NAB and COSBOA announce new secondment to enable greater collaboration

    14-Dec COSBOA is pleased to announce the secondment of Janett Egber from National Australia Bank (NAB) who
  • Simplicity in Legislation Creates Productivity

    20-Nov This is an article written by John Strong,
  • New Taxation Commissioner – what does it mean for the self employed?

    14-Nov The government has announced the replacement for Michale D'Ascenzo (a great small business supporter
  • Small Business Champion for 2012 – Ondina Gregoric

    04-Nov It is with great pleasure that the Council of Small Business of Australia announces Ondina Gregoric
  • Coles and Woolies – still bullies

    03-Nov Great
  • Small Business in Asia – an example

    28-Oct Examples of some businesses established by Jaquillard Minns in Philippines during the last 5 year
  • Asian Century? Small business people are there already.

     COSBOA welcomes the release of The Asian Century White Paper today by the Prime Minister J
  • Is there a sea change in the way small business is viewed and treated?

    14-Oct Is something happening in Canberra around small business?  There have been some significant changes
  • Join the COSBOA board and other members at the October dinner with guest speaker Minister for Small Business, The Hon. Brendan O’Connor and Steve Lewis from the Canberra Press gallery

    11-Oct Book the 30th of October for a dinner at the National Press Club where our guest speakers will be Br
  • Australian Livestock and Rural Transporters Association

    05-Oct The ALRTA are members of COSBOA and they,
  • No job is better than $15 or $24 an hour? How?

    03-Oct COSBOA has provided a submission to the Senate inquiry into the Fair Work Act and penalty rates.  C
  • Submission to the Senate Inquiry into Penalty Rates

     Submission to the Fair Work Amendment (Small Business – Penalty Rates Exemption) Bill 2012
  • Join the COSBOA board and other members at the October dinner with guest speaker Minister for Small Business, The Hon. Brendan O’Connor.

    18-Sep Book the 30th of October for a dinner with Brendan O'Connor and other members and guests of COSBOA -
  • A Carbon Tax Calculator in the language of small business people – cash flow!

    23-Aug Why do we need a
  • Peter Strong’s Address to the National Press Club on 8 August 2012

    22-Aug Thank you ladies and gentlemen and special thanks and acknowledgement to the Deputy Chair of COSBOA,
  • How to define a small business? (well firstly we are all people)

    16-Aug Just what is a small business?  We currently have a range of definitions by a range of government a
  • The 2012 Economic Forum, the Asian Century and Innovation

    15-Aug COSBOA has two representatives at the Prime Minister’s Economic forum to be held in Brisbane this
  • Big win for owners of small trucking businesses – about time too

    19-Jul Congratulations to the Australian Livestock and Rural Transporters Association