The competition effects test

BRUCE BILLSON'S PROPOSED "EFFECTS TEST"

LEVELLING THE PLAYING FIELD: Small Business Minister Bruce Billson wants a so-called "effects test" that would curb the domination of big business and effectively lower the threshold for proof in anti-competition cases.

COMPETITION: Under current laws big companies are banned from using their market power to eliminate or damage a competitor, or prevent a new entrant into a market. The competition watchdog has to satisfy the courts that a business "took advantage" of its power.

EXISTING PROVISION: Mr Billson believes the law favours businesses that can afford the legal costs to navigate competition rules and enter into anti-competitive conduct without breaking the law.

EFFECTS TEST: The proposed change would get rid of the "take advantage" element from the law and instead introduce a test of whether a business is substantially lessening competition. This would allow the courts to assess whether the conduct is harmful to competition.

IMPACT: Mr Billson says the change would make sure businesses with substantial market power don't damage the economy or consumers, while bringing the law in line with international standards.

WHERE IT STANDS: Cabinet is currently considering the recommendation but hasn't shown much enthusiasm for change but there's support for the change among the rank and file of the coalition. Labor says an effects test will strangle enterprise and have every company board looking over its shoulder wondering if the business will end up in court.