Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Ross Greenwood.
Business Now, Sky News
Subject: Supermarket inquiry, Federal Circuit Court Small Business and Codes List
Ross Greenwood
Do supermarkets use their size to disproportionately apply pressure on smaller suppliers. And if so, what can be done about it? Well, one organisation that will hear these claims is the small and family business Ombudsman, who also put in a submission to this Senate inquiry. The Ombudsman is Bruce Billson, who joins me now from Canberra. Bruce, always good to chat to you about this. The whole aspect of this really goes to the balance of power. Who has the power in these supply agreements?
Bruce Billson
The big issue is how do you manage that. If you and I were running a small supply business and we wanted any kind of scale, we’d almost have to look at a supermarket chain relationship and that puts us in a precarious situation Ross.
If we invest considerably to meet that scale, then we don’t want that sunk investment just sitting around at risk of being played a little bit by the supermarkets if they want to exercise that power. And that’s where the Food and Grocery Code comes in and tries to make sure those relationships are respectful, commercially reasonable, and that there are some bumper rails to guide that conduct where there is that risk that the dominant party might use its muscle in commercial negotiations.
Ross Greenwood
Okay, so there’s a few ways in which you’ve recommended that this balance of power be adjusted, some of which have been actually looked at in the Emerson review of the Code of Conduct. One, a mandatory code; two, more powers for the ACCC; but one that you’ve come up with which hasn’t really been talked about is this recommendation to introduce a Small Business and Codes List in the Federal Circuit Court and Family Court of Australia. What exactly does that do and why would that change the balance of power?
Bruce Billson
Put simply, Ross, it’s almost like a small claims tribunal in the federal jurisdiction. These federal laws that govern competition and fair conduct and the oversight of industry codes like the one we’re talking about, if a dispute arises and a party wants to exercise its legal right to defend its interests, it’s off to the Federal Court of Australia. Now that’s $250,000 likely in cost. You might have to wait two years before you get your time to argue your case. And then there is that risk that if you lose, you get to pay the costs of the other side. Now, that is an extraordinarily terrifying pathway to go. So, what small businesses tend to rely upon is hoping and a praying that the ACCC will pick up the matter on their behalf.
What we’re urging is a change to the justice system. With the Federal Circuit Court Small Business and Codes List, a simple idea empowers small business economic interest holders to actually advance and protect those themselves through appropriate mechanisms in terms of cost, timely response, and, frankly, a chance to restore whatever harm’s being caused back to a place where the business can get to business.
We think that is a fundamental game changer and too often people talk about aspects of our competition and fair conduct laws and don’t realise they look great, but they are hunting dogs that won’t leave the porch unless the commission picks up a case and runs it on behalf of an aggrieved business.
Ross Greenwood
But the reality of this is also that if you suddenly do not supply a supermarket, or if you suddenly find that you don’t get the shelf space that you need, you’re out of business before you even get to the next six-monthly hearing inside a court. That is a fundamental issue. So, in this particular case, because of the precarious nature of many small businesses, they need to get swift justice. That’s the important aspect of this.
Bruce Billson
Absolutely, and the model we’re proposing would see that accessible within a handful of months, not a number of years. It’s also about recognising that the ACCC, using taxpayer’s money Ross, has to choose which cases to pursue. So, they tend to go for the ones that have a material impact on the economy, a systemic failure or considerable public interest. If you and I, as individual suppliers are being treated in a shabby way and contrary to what the Code or some of the protections in the competition law would expect, we’re not going to get through those gates. So, there’s the promise of legal protection and those bumper rails around fair commercial conduct, but not the follow through to make sure there’s actually consequences for those that step out of what’s reasonable in terms of a market economy.
Ross Greenwood
I’ll tell you what, it’s great to have your insight on the program, Bruce. I know you’ve been working with small business for such a long time and many thanks for your time today.
Bruce Billson
Good to be with you and your viewers Ross.
