Joe Kelly, 15 March 2016

The Business Council of Australia has endorsed a Labor policy to improve the access of small business to the court system so they can more easily combat anti-competitive conduct by larger ­rivals.

Labor yesterday unveiled its plan to ease the costs of private litigation for small business owners under the Competition and Consumer Act and provide better resourcing for the Small Business Ombudsman.

Opposition treasury spokesman Chris Bowen said the plan was a more effective solution than the introduction of an “effects test” at section 46 of the act, which is fiercely opposed by Labor on grounds it would lead to a “lawyers’ picnic”.

While recommended by the Harper Review of competition policy and heavily supported by small business, the “effects test” has divided government and alarmed big business groups.

Treasurer Scott Morrison is to make a submission to cabinet this month on section 46 after deferring a decision late last year.

Opposition small business spokeswoman Michelle Rowland yesterday said the real reason smaller operators did not bother taking action against their larger competitors was because they were often “David and Goliath battles”, and “Goliath has very deep pockets”.

Under Labor’s plan, a Federal Court judge could waive the liability incurred by small businesses if they were to lose a case against a much larger rival by issuing a “no adverse costs order”.

“The ability to have no adverse costs orders will mean that small business seeking to bring actions will not be put off immediately by the prospect of having to not only pay their own costs, but those of their opponents,” Ms Rowland said.

Business Council of Australia chief executive Jennifer Westacott welcomed the “ALP’s recognition that changing section 46 could damage the economy” and that “non-legislative measures for addressing concerns about misuse of market power are preferred”. “The ALP policy announced today goes to the heart of the issue, which is access to justice,” she said.

The Labor plan will also provide better financing to the Small Business Ombudsman. A total of $1 million would be spent over two years to ensure it can provide an initial assessment on whether the legal case to be considered can qualify for a no adverse cost order.

Extracted in full from The Australian.