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The Harper Review: How small businesses in Australia will be affected

In its response to the Harper Competition Policy Review, the Turnbull Government recently accepted a majority of recommendations for competition law reform. Find out how this will impact small businesses in Australia.

There’s one thing almost all small business owners can agree on – Australia’s competition laws are complicated. And things can get especially difficult to untangle when it comes to dealings with larger businesses.

Now, many of these policies are set to have a major refresh. In March 2015, Professor Ian Harper and his panel released a wide-ranging review of Australia’s competition laws. This report was the first of its kind in 22 years and included 56 recommendations designed to streamline and modernise laws to boost competition, jobs and economic growth.

The Turnbull Government has now agreed to the vast majority of these recommendations, including simplifying collective bargaining, tidying up the merger process, revising the operation of cartel provisions and removing restrictions on retail trading hours.

But while the Australian Competition & Consumer Commission and the Business Council of Australia have welcomed the reforms, there is debate about how much small businesses are being looked after.

We talked to a few industry experts for some insights into how the Harper Review reforms will impact small business in Australia.

The challenges for small businesses

“Overall there is a sense that small businesses are pretty disappointed,” says Brian Walker, Chief Executive Officer of leading retail consulting firm Retail Doctor Group. “In all reforms there are winners and losers and, largely, the bigger companies seem to be the winners.”

The misuse of market power is one of the major concerns for small businesses. To address this, the Harper Review recommended some controversial changes to Section 46 of the Competition Act, which would help prevent big businesses from exploiting their market power and forcing out smaller companies.

However, this is one of the few recommendations that was not immediately accepted by the government. For now the issue has been put on ice, with a more detailed discussion paper promised in the coming months.

Another challenge for small businesses, Walker says, will come from the removal of restrictions on retail trading hours.

“These reforms have the potential to disadvantage small and medium retailers,” he says.

“The upside for small businesses is that they will have the capacity to trade for longer hours and potentially reduce some of their operating costs. The challenge for them will be to remain competitive against the scale and muscle of the larger retailers, which will be able to trade for longer hours still.”

The benefits for small businesses

But despite these challenges, some of the reforms could lead to small businesses having more agency, power and support when it comes to dealing with larger companies.

“Australia’s competition laws can certainly protect small businesses in their direct dealings with big businesses,” says Trevor Evans, Chief Executive Officer of the National Retail Association.

“For example, many of the biggest cost pressures facing small businesses in recent years have come from large suppliers in industries with limited or regulated competition, such as utilities and government-owned corporations.

“Well-functioning competition in most product markets has kept other cost pressures lower by comparison. So the extension of consumer-type protections to small businesses is an identifiable trend and can do a lot to minimise unfair dealings between businesses in these areas.”

For small to medium businesses, some of the most significant recommendations from the Harper Review revolve around:

Dispute resolution

The review recognised that small businesses need more support in resolving competition complaints and better access to justice. It was recommended that the Australian Competition & Consumer Commission play a more active role in connecting small businesses to alternative dispute resolution resources, as well as offering more clarity and information around their options.

Collective bargaining

Changes to the collective bargaining notification guidelines should empower small businesses with more flexibility and a greater understanding, strengthening their bargaining power when dealing with large businesses.

Simplification of complex policies

Overall, the Harper Review has a focus on reducing the complexity of competition laws. This will be of benefit to all businesses, but especially those that are currently most vulnerable under confusing and unclear policies – that is, small businesses that often lack the resources for expert guidance.

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