The “Effects test” gets cabinet approval - NSW Nationals

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It’s another big win for the little guy. Barnaby and The Nats have fought for it, and now the Federal Cabinet has adopted our recommendations to shield small business against the anti-competitive behaviours of big businesses. Changes to the legislation will provide better protection to small businesses who often face an ongoing power struggle with big businesses and multi-national corporations to provide affordable options to local buyers. So what effect will it have?

Changes to the Competition and Consumer Act - the origin of the 'Effects test' legislation - is not about reducing competition, but rather creating an even playing ground for the market place. Any business that can improve efficiencies and therefore be able to lower prices to gain market share is welcome to do so. But at the moment big businesses or multi-nationals can force smaller suppliers out by lowering prices for their goods over a period of time that is unsustainable for the smaller businesses.

Eventually, the small business will be irreversibly damaged by their lowered income to the point of extinction because they simply don't have the flexibility of shifting capital around like a big business does.

Even though the Competition and Consumer Commission (ACCC) and the Act that governs it provides some protection, Section 46 of the Act hasn’t been substantially updated for over three decades. A 2015 survey found 72 per cent of Australians believed there was not enough competition in the grocery chain and 75 per cent wanted stronger competition laws. 

Changes to Section 46 of the Act will provide the ACCC more grounds to pull large companies into line so that they can no longer wipe out small businesses and monopolise the system. 

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