The effect of the competition provisions of the Trade Practices Act on small business will be part of a major review of the administration of the legislation.
Federal Treasurer Peter Costello yesterday announced the review, which headed by former High Court judge Sir Daryl Dawson and assisted by securities expert Jillian Segal and small business specialist Curt Rendall.
Competition regulator the Australian Competition and Consumer Commission (ACCC) is calling for jail terms for offenders, saying financial penalties are not enough of a deterrent.
"The Act's limitations particularly impact on consumers, including small business," ACCC chairman Professor Allan Fels says.
"The ACCC will be looking to the review for the changes that will assist this important area of the economy.
"The mis-use of market power against smaller rivals is another area the ACCC believes should be the focus of the review, with a view to strengthening the law to better protect competition."
Costello says the review will look "whether the Act provides sufficient recognition for globalisation factors and the ability of Australian companies to compete globally".
"At the same time, the review will consider whether the Act is sufficiently flexible to respond to the transitional needs of certain industries, and specifically those in rural and regional Australia," he says.
Business groups want the review to focus on the actions of the ACCC, with Business Council of Australia president (BCA) Dr John Schubert calling for the watchdog to have as regulator.
"Like the Australian Taxation Office, the ACCC is an extremely powerful regulator, but the ACCC has very few checks and balances," Schubert says.
"The BCA shares concerns expressed by others that it is unfair to ask the regulator to be investigator, prosecutor, judge and jury.
"We are not advocating radical change. Rather, we are seeking to ensure the Act and its administration are transparent, provide confidence and certainty to consumers and businesses of all sizes and deal with the dramatic changes wrought by globalisation."
The ACCC is advocating the introduction of an 'effect' test to determine if particular cases have harmed competition.