The Harper report accepted that its recommended amendment ran the risk of "inadvertently capturing pro-competitive conduct" by including in its drafting a set of mandatory factors to which the courts must have regard. These are the extent to which the company's conduct actually increases competition, by enhancing efficiency, innovation, product quality or price competitiveness.

In announcing its response to the Harper review early last year, the government accepted the Harper amendment in full, including the mandatory factors to safeguard competition. Now the government, at the last minute, is removing those safeguards from the bill that will go before the Senate.

Not surprisingly, the Greens and the Xenophons support the government's amendment, siding with it in a Senate inquiry. Labor, which describes itself as the party of competition, has long opposed an effects test and dissented from the Senate majority report.

Removing the pro-competitive safeguards

Purportedly the removal of the mandatory factors is to avoid a "lawyers' picnic" when allegations of misuse of market power are taken to court. Yet the ACCC's draft guidelines issued last September set out the same mandatory factors. These ACCC guidelines, too, were a Harper recommendation.

In light of the government's removal of the mandatory factors from its bill, the ACCC has only two choices: remove them from its final guidelines or retain them. If the ACCC removes them the courts will be given no guidance in interpreting the new law. If it retains them the final guidelines will be inconsistent with the law and, to use the government's own argument, will create a "lawyers' picnic".

If the Treasurer's amended bill sails through the Senate, large businesses will be confronted with a decade or more of unguided test cases as the courts try to interpret what was in the minds of the legislators. The onus will be on them to prove they are not breaking the law.

Prime Minister Turnbull has signalled his intention to continue pursuing a company tax cut for large corporations when the Senate inevitably rejects the bill later this week for all companies with an annual turnover in excess of $10 million. The Prime Minister's stated reason is that he wants large businesses to invest. Yet his Treasurer's removal of the pro-competition safeguards from the government's competition bill sends exactly the opposite signal.


Selling out consumers

The BCA's reaction to the removal of the mandatory factors has been thermo-nuclear, its president Grant King describing it as "an astonishing amendment from a supposed free-market government".

The Treasurer should recant on his sop to protectionist lobby groups and National Party agitators and abandon the removal of the mandatory safeguards. At a minimum, he should subject his last-minute amendment to proper scrutiny by a Senate committee. On this he could be totally confident of Labor support.

If, however, the Treasurer presses ahead, the only reasonable conclusion to be drawn is that the government has done a deal with the minor parties to protect small businesses at the expense of consumers.

Craig Emerson is adjunct professor at Victoria University's College of Business. He is a former Minister for Competition Policy and Consumer Affairs.