Consumers Will Lose from Trade Practices Changes

Consumers will be the main losers from any changes to the Trade Practices Act (TPA) that led to restrictions on price competition, the Business Council of Australia said today.

BCA President, Mr Hugh Morgan, said the council was concerned that despite expert and independent advice to the contrary, a Senate Committee was likely to push for major changes to section 46 of the TPA.

Mr Morgan said the changes would constrain legitimate business competition and flew in the face of recent independent rulings that no changes to the Act were needed.

“The changes being proposed strike at the very heart of competition – two large companies engaged in a price war, for example, will risk breaching an expanded section 46 if a smaller competitor finds it cannot compete with lower prices,” he said.

“It’s regrettable that some sectors of small business have been seeking to change the intent and purpose of the TPA to protect some small businesses from competition.

“The essential nature of the Trade Practices legislation is to ensure competition in the market place not the protection of competitors.

“The end result of these changes would effectively see Australian consumers subsidising less competitive small businesses.”

Mr Morgan said despite the fact there was no justification for the arguments that section 46 needed to be strengthened, key members of the Senate Economics Committee had publicly committed to seeking changes to the section before they had even begun their inquiry.

“The High Court has recently applied section 46 as was intended by Parliament. The BCA’s view has also been supported by expert groups like the Law Council,” he said.

”The arguments for expanding the scope of section 46 were examined in great detail, and rejected, by the recent independent Dawson Review.

“It’s unfortunate some small business lobbies have refused to accept the umpire’s decision and have persisted in their campaign to broaden the reach of section 46.”

Mr Morgan said changes to section 46 would jeopardise the balance between promoting legitimate competition and preventing anti-competitive conduct, achieved by the Dawson Review into the TPA last year.

He said the BCA called on the government to ignore the Committee’s recommendations and stand by its commitment to implement the package of Dawson Review reforms as soon as possible.