Competition reforms introduced to improve the bargaining power of small business


Competition reforms tabled in Federal Parliament this week backs small businesses to grow, innovate and create more jobs, according to Small Business Minister Michael McCormack.

He said the Competition and Consumer Amendment (Competition Policy Review) Bill 2017 implements a number of recommendations from a landmark review of Australian competition policy to help small businesses to compete on their own merits. Undertaken by Professor Ian Harper, the review of competition policy was the first wide-scale review in 20 years.

“These reforms level the playing field for small business and will ensure our competition policy is modern and gives Australia’s 2.1 million small businesses the flexibility they need,” McCormack said.

“This Bill will build on our reform of section 46 of the Act which is currently before Parliament. The ‘effects test’ will allow small business to compete on their merits against businesses with substantial market power.

“Thanks to our changes, small business will be able to deal with conduct of most concern – anti‑competitive contracts, arrangements or understandings, cartels, collective bargaining and boycotts and resale price maintenance.”

McCormack said the changes will also improve small business’ bargaining position with large suppliers.

“We know that with collective bargaining, small businesses typically have less bargaining power than a large supplier, putting them at a disadvantage in individual negotiations. Through these provisions, the Government has improved the bargaining position of small business,” he said.

“Simplifying the process and introducing greater flexibility in the collective bargaining framework will enable small business to get on with doing what they do best and provide them with the ability to negotiate with bargaining power equal to a larger firm, achieving a more efficient and pro‑competitive outcome.

In related news, a survey of more than 500 small business owners, undertaken by cloud accounting provider Xero, showed 84% want to see the government encourage a fairer system for small businesses to compete with big businesses for contracts.

“Many of the tender processes governments currently use are often weighted to be more beneficial for larger businesses thanks to complex procurement structures — just a quarter of government contracts were awarded to small and medium businesses last year,” Xero Australia MD Trent Innes told Dynamic Business.

“We’re already seeing the federal government take some steps to fix this and we’re encouraged there are plans to make it a fairer marketplace for all involved.”