Wesfarmers chief ‘disappointed’ by effects test introduction

The chief of Wesfarmers believes the effects test, introduced by the Government yesterday, is bad policy and has vowed that it will not affect the retail giant’s pricing policy.

As the SMH reports, Prime Minister Malcolm Turnbull said yesterday that the test is designed to stop big businesses from behaving in a way that has "the purpose, effect or likely effect of substantially reducing competition".

However, Wesfarmers chief executive Richard Goyder said that it will not affect the price cutting behaviour of its brands such as Coles, Bunnings and Kmart.

Calling his reaction to the news "disappointment, to a degree disillusionment, he  said, "We will continue to do what we have always done, which is compete aggressively and provide consumers with great outcomes and if that for some reason gets us in hot water then we will deal with that down the track."

And he even suggested that possible legal action would not change this position.

"We'd be doing the wrong thing by our shareholders to say we'd stop investing and stop reducing our prices and if we end up in court we'll deal with it then,” he said.

Elsewhere the new policy was welcomed.

As the ABC reports, Former Australian Competition and Consumer Commission (ACCC) chairman Allan Fels said it will help small businesses compete.

"Small businesses are often stopped from competing by big business just taking actions to crush them and often those small businesses are responsible for innovation and for new ways of doing things,” Fels said.

"Most of the innovation comes from small business, but it is cut down by big business when they discount prices in an often predatory manner, blocking small players from getting into markets by things like exclusivity arrangements.

"This is of huge long-term importance, but tomorrow morning you won't wake up and find you're paying less for goods.

"But in 50 years people will look back and say that's had a big effect over time on preserving competitive small businesses."

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