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Killing competition. Murder or manslaughter?

Thursday, January 28, 2016

There’s an important debate happening at the moment about whether small business people can effectively compete in an allegedly open ‘competitive’ Australian economy.

It’s to do with whether or not the ‘effects’ test is introduced. It’s about how to stop big business abusing dominant market power. Big business strongly opposes the effects test. Small business (including us) strongly supports the change.

The Minister for Small Business and Assistant Treasurer, Kelly O’Dwyer, is in charge of managing the issue and she is organizing roundtable discussions with big and small business representatives—all parties in the discussion together. Here’s the government’s discussion paper.

Yesterday, (27 January) ICA President Norman Lacy attended the first of the roundtable discussions. Here’s our submission. In part, we say:
The need for the effects test can best be understood by comparing it to the legal and moral principles comparing murder with manslaughter.
‘Murder’ requires intent to kill. ‘Manslaughter’ is behaviour that has the ‘effect’ of death. The current competition laws require proof that a big business intended to kill competition by abusing its market power. The effects test is like a manslaughter test, albeit still a very strong test.

In our submission we say:
The effects test is needed to protect competition.
  • Big business will seek monopoly. That is human behaviour.
  • The achievement of monopolies must be thwarted.
The effects test will not:
  • Advantage small businesses. It will protect their capacity to compete.
  • Stop big business operating. It will require them to operate responsibly so as to protect competition.
You can read our full argument here.

 

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