Competition tsar Rod Sims has launched a spirited defence of key recommendations in the Harper Review in the face of mounting opposition from big business, including the nation’s leading supermarket chains, which have denounced the review’s proposals as damaging to competition and ultimately consumers.

Mr Sims, chairman of the Australian Competition & Consumer Commission, also took a veiled swipe at the big end of town for “contributing to a poorly informed debate’’ that had oversimplified proposed changes to section 46 of the Competition and Consumer Act that dealt with the misuse of market power.

Mr Sims, who, apart from the small business community and farmer groups, is one of the sole key allies of the Harper Review’s push to alter section 46, also called out supermarket giants Woolworths and Coles for dominating the arguments around the contentious issue that had fed into to a “confused’’ and “poorly informed debate’’ around proposed changes to the competitive landscape.

Mr Sims will tell the Committee for Economic Development of Australia in Brisbane today that while any change was up to parliament, he felt the ACCC had to act to ensure a proper debate.

“I appreciate that no business wants to face additional competition, and this equally applies to those with substantial market power. Such firms, however, are using arguments against the section 46 changes that are contributing to a poorly informed debate,’’ Mr Sims said.

“Let us hope the level of debate improves before it affects the quality of the debate on all of the other Harper recommendations.’’

The Harper Review proposed section 46 be altered to include an “effects test’’. The test would mean it would no longer be necessary to prove a business with large market power acted with the “purpose” of substantially lessening competition — only that it ­engaged in behaviour “likely to have the effect” of substantially lessening competition.

Mr Sims said the current law was flawed and the real focus or discussion should be on the two key problems with section 46, namely that a company must “take advantage’’ of its substantial market power and the purpose of the conduct must be to harm an individual competitor and not the competitive process.

“Those are the two issues we should be debating, not whether or not you have an ‘effects test’ because that implies that you are just inserting an effects test into the current law when in fact the biggest issue is the words “take advantage’’.

Anyway, Mr Sims argued the words “effects test” was already in place in sections 45 and 47 and business had not argued against its inclusion there.

Although he said the supermarkets had dominated the debate around section 46, he said the Harper Review was not aimed at the sector. “This whole change has got nothing to do with supermarkets, it applies to everybody,” he said.

“There is no suggestion from the ACCC at all that we need to change section 46 to deal with supermarket issues.”

Woolworths and Coles would not comment yesterday on Mr Sims’s statements.

The Australian National Retailers Association, which represents big retailers including Woolworths and Coles, said the Harper Review panel and the ACCC had not laid out the case that section 46 was grossly failing the competitive process.

“After 11 reviews that rejected variations of the introduction of an effects test and no clear evidence of a problem, but acknowledgment in the report of subsequent uncertain business environment, it is unclear why the government would consider creating uncertainty for business,” ANRA chief executive Anna McPhee said.

Extracted in full from The Australian.

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