SMALL business groups are claiming a small victory following a Trade Practices Act review recommendation that will allow small businesses to band together to negotiate collectively with big businesses.
Under current rules small businesses risk million dollar fines if they try collective action.
The Federal Government has given its support to the recommendation, which was one of 43 from the review chaired by Sir Daryl Dawson.
Small business groups have been calling for greater protection from big businesses that they claim unfairly use their market power.
Despite this win the review has been widely branded as overly conservative, something most business groups expected.
Those with a more cynical bent have questioned why the Government chose to release the report on the same day that the HIH Royal Commission findings were handed down.
Other key recommendations from the report included a time limit of six months for the consideration of non-merger applications for authorisation by the Australian Competition and Consumer Commission, the introduction of criminal sanctions for serious cartel behaviour, and changes to the merger authorisation process.
Federal Treasurer Peter Costello said the combined effect of the introduction of a notification pro-
cess for collective bargaining by small business and amending the authorisation process would be to improve the accessibility and effectiveness of the act for small business.
Motor Trade Association of WA executive director Peter Fitzpatrick said unions had for years the right to collectively bargain with employers, allowing large businesses to flex their muscles because of their substantial market power.
‘In the past this has meant that small businesses, or small to medium-sized enterprises, are fully exposed to the full brunt of union power and invariably they have little or no influence over the prices set for them by large corporations,” he said.
“In short, many motor industry SMEs are cornered in a way that makes it very difficult for them to negotiate a reasonable return for the many hours of effort they put into running their businesses.”
However, there are those within the small business community who believe the right to collectively bargain will count for little.
Key among the concerns is how such a collective bargaining system would work and who would be responsible for coordinating it.
WA Retailers Association CEO Martin Dempsey said getting small businesses to band together was difficult. He was also one of the many to brand the Dawson review overly conservative.
“Small business needs help,” Mr Dempsey said.
Small Business and Enterprise Association executive director Philip Achurch said he was unsure whether the collective bargaining arrangement would make much difference.
“The overall review hasn’t produced anything for small business,” he said.
“There is no increase protection for small business on unconscionable conduct. It’s almost irrelevant.
“The review doesn’t address the problem of unequal market power. That should be the focus.”
In 1997 the ACCC was given funding and a direction to go after large businesses that used unconscionable conduct in their dealings with small businesses.
However, to date its success rate in bringing big business to book has been abymissal.
The first test case the ACCC ran has finally come to an end with the High Court last month dismissing the ACCC’s appeal against a decision made by the Full Bench of the Federal Court.
That case, ACCC v Berbatis Holdings, was an appeal against a finding of the full bench of the Federal Court that related to an action the commission started against the landlords of the Farrington Fayre shopping centre.
In the time it has taken for that case to play out, at least one of the original small business owners involved in the case has died.
Freehills Intellectual Property partner Richard Price said the Trade Practices Act did little to protect small businesses affected by big businesses unfairly using their market power.
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