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Business news, business advice and information for Australian SMEs | SmartCompany

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    Four years after Reebok began claiming that wearing their EasyTone shoes would make buttocks 28% more toned and strong than wearing other walking shoes, Australia’s consumer watchdog has begun action in the Federal Court against the brand’s claims.

    The fitness brand was fined $25 million by the US Federal Trade Commission in September 2011 for making the claims, but continued to make the same claims in Australia.

    The FTC was careful to add that its complaint was not a finding or ruling that the fitness brand had broken the law.

    Reebok claims walking in EasyTone shoes strengthens and tones buttock muscles by 28% more than other walking shoes, thighs by 11% and calves by 11%.

    The ACCC alleged that “from September 2011 Reebok Australia made false, misleading or deceptive representations about EasyTone shoes”.

    The Australian Competition and Consumer Commission alleged that using the shoes “would not result in these increases in strength and toning, and that Reebok Australia did not have reasonable grounds for making these representations.” The claims break the Australian Consumer Law, the ACCC alleged.

    The ACCC also alleges that Reebok was “was aware” the claims were subject to a settlement following enforcement action from the time of the 2011 FTC complaint.

    Reebok made no comment in response to the ACCC’s claims.

    The shoes are still available for sale on online sellers serving Australia, the US and the UK for between about $50 and $100 a pair.

    The first hearing is set for mid-February next year. The ACCC is seeking injunctions, corrective actions and pecuniary penalties.

    Hall and Wilcox partner Sally Scott told SmartCompany in March that some “puffery” is allowed when promoting a product, but the risks of ACCC action is always there when a company steps over the line.

    "Businesses making credence claims should consider the following questions: firstly, what is the overall impression and secondly, whether that overall impression is likely to be misleading to consumers," she said.

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    Tech giant Apple has been forced into an embarrassing backdown over its refunds policy, which is subject to a punishing court-enforceable undertaking.

    Apple will have to contact customers who were denied refunds, returns or replacements of Apple products bought in the last two years in contravention of Australian Consumer Law, and reassess or resolve their complaints.

    Apple must also make changes to comply with the ACL and display online the difference between Apple’s warranty and consumer laws.

    The Australian Competition and Consumer Commission was concerned about “false or misleading representations” to consumers on their guarantee rights including that under some circumstances customers wouldn’t get a refund, repair or replacement from Apple when those rights are enshrined in the ACL.

    The court-enforceable undertaking states the ACCC was concerned that customers were told Apple is not obliged to give refunds in circumstances where there is a major failure of purchased goods, or a refund, repair or replacement when minor failures appeared in goods from Apple or one of their third-party suppliers. The concerns applied to Apple products and goods resold in Apple stores and online on the app store and iTunes.

    Apple agreed to increase education on consumer rights for online, phone and in-store customers for the next two years. It also made assurances that it would offer ACL equivalent rights to consumers in its own two-year warranties, while acknowledging that consumers’ rights may extend further than two years.

    It will also train relevant staff annually in consumer rights including in any updates to the ACL over at least 24 months and report back to the ACCC on its training results.

    The tech company will also contact customers who have been denied a remedy.

    The ACCC has raised various concerns with Apple since January 1, 2011, when the ACL was introduced. The undertaking applies to claims made since that date.

    ACCC chairman Rod Sims said consumers had rights under the ACL that over-rule any limitations to those rights in product warranties.

    “The ACL consumer guarantees have no set expiry date. The guarantees apply for the amount of time that it is reasonable to expect given the cost and quality of the item or any representations made about the item,” Sims said.

    Additional to the court-enforceable undertaking, Apple must not make claims that are out of line with the ACCC’s concerns with their compliance with the ACL.

    An Apple spokesman said, “In Australia, we have been working closely with the ACCC to make sure our customers understand their local consumer rights and receive the industry leading customer service they expect.”

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    A name dispute has emerged between two Australian radio networks, as Kiss FM prepares to take legal action against Australian Radio Network.

    On January 20, 2014, ARN is scheduled to rebrand its Mix radio station in Sydney to KIIS, to be headlined by the Kyle and Jackie O Show.

    This name change has spurred the ire of Victorian community radio station Kiss FM, which has been operating under the name since 2005.

    In what the network has labelled a “David and Goliath” type battle, Kiss FM is appealing for funds to help it launch legal action against ARN.

    In a statement on the Kiss FM’s Facebook page, the radio station said if ARN successfully launch the KIIS brand, it will damage the “goodwill and reputation” of Kiss FM.

    “Unperturbed by the fact Kiss FM Dance Music Australia has carved out a national and international reputation as Australia’s premier dance music radio station, ARN has chosen to ignore Kiss FM’s common law rights and pending trade mark application (which we have clearly notified them of) forcing us to engage in a legal fight to protect our brand,” it says.

    “In a David and Goliath battle or scenario akin to ‘the vibe’ in the iconic Australian film The Castle, Kiss FM Dance Music Australia is being forced to defend its rights to exclusively use on an unrestricted basis its Kiss FM name in Australia.”

    ARN, under a subsidiary, has also currently filed seven trademark applications for KIIS FM.

    Hall and Wilcox partner Ben Hamilton told SmartCompany this is a lesson to business owners to obtain a trademark as soon as your business launches.

    “Where there is often a dispute, it arises when there is a party which launched first but hasn’t taken out trademark protection,” he says.

    “It’s a pretty fundamental issue. If you launch a brand, taking out trademark protection as soon as possible can help… otherwise when a competitor pops up you have to rely on common law rights.”

    Hamilton says it’s often an issue for start-ups, as filing for a trademark can fall by the wayside.

    “There are so many competing priorities when setting up a business and protecting trademarks is just one of many issues faced by a start-up when starting a business,” he says.

    “Court cases are costly and ultimately a business needs to consider whether or not the cost is worth it.”

    As neither company currently has an approved trademark, should Kiss FM want to challenge ARN, it will have to do so under a common law defence.

    “Without a registered trademark you rely on common law rights. What this means is you’re relying on establishing that the other party is engaging in misleading and deceptive conduct or passing off,” Hamilton says.

    “Misleading conduct has stolen the spotlight recently… and as the name suggests you have to establish that consumers are being misled. Whereas with a trademark infringement you look at what you have and whether or not the competition is using a similar trademark.”

    Hamilton says under consumer law, Kiss FM would need to show that radio listeners were confused or thought the two stations were associated.

    “You need a reputation first and foremost. Consumers need to be aware that you’re around. They’d look at the extent of a business’s reputation – if it’s national, in a niche, or just cities, it’s a very factually based claim,” he says.

    “Having established reputation, you then need to establish if a reasonable consumer would be confused. You look at where the competing market is being accessed or seen by consumers and the court would make an assessment as to whether or not a consumer would be confused into thinking the companies were the same or associated.”

    ARN spokesperson Bec Brown told SmartCompany KIIS 1065 is being built specifically for Sydney.

    “As a Sydney brand, with a completely different music format and audience to Kiss FM’s Melbourne dance station, ARN are clearly not looking to compete with this community station,” she says.

    “We’ve been in discussions with Kiss FM on all of this and those discussions are continuing.”

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    Iconic discount retailer Dimmeys has been placed in administration, following a $3 million penalty for breaching product safety laws late last year.

    Yesterday, administrators Richard Cauchi, Peter Gountzos and Michael Carrafa were appointed from SV Partners.

    In December 2013, Dimmeys copped the multi-million dollar penalty after an investigation by Consumer Affairs Victoria uncovered 14,000 unsafe items being sold by the retailer.

    Distribution company Starite Distributors was also fined $600,000 and the director of both companies, Douglas Zappelli, was given a $120,000 penalty and banned from managing corporations for six years.

    Administrator Richard Cauchi told SmartCompany the likely cause of Dimmeys voluntary administration was the high penalty.

    “It’s safe to say it’s probably as a consequence of the fine… All the stores will continue to trade as normal and we intend to keep them under control for the time being,” he says.

    “In essence, neither the stores nor the business had a large debt. The principal debt is really to the related parties for stock supplies. There are very few external creditors.”

    Cauchi says he will look to sell the business.

    “I will continue to trade the business with a view to assess its operations and then look to advertise for the sale of the business,” he says.

    “I always hope to find a buyer, it’s always something we’d like to see come out in the wash, but we can’t control the advertising process and I can’t pre-empt whether or not we’ll find an interested party.”

    For now, Dimmeys 500 employees are safe. However, as the business is assessed there may be redundancies.

    “Until we assess the operations of the company as a whole, nothing will change,” Cauchi says.

    Since Zappelli took over the running of Dimmeys in 1996, the business has been involved in four cases of selling hazardous products, or incorrectly labelled items.

    Prior to the penalties being handed down by the Federal Court, Dimmeys was ordered in June 2013 to publically recall the unsafe items which included girls’ padded swimwear, baby bath toys, cosmetic sets and basketball rings.

    The products had been sold between January 2011 and March 2012. Some toys were deemed to be choking hazards, while the girls’ swimwear did not have appropriate safety tags.

    Dimmeys was also ordered to pay for the destruction of the unsafe goods.

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    The Australian Securities and Investments Commission has revealed its chairman, Greg Medcraft, spent $246,409.99 on international travel in 2013 and has an equally busy travel schedule planned for this year.

    ASIC released documents yesterday which revealed Medcraft’s taxpayer funded travel expenses, including travelling by business class for trips as head of the International Organization of Securities Commissions.

    The total cost for Medcraft’s business-class flights, rail passes and transfers came to $98,465.19, hotel stays came to $19,101.16 and other travel costs equalled $10,474.39. 

    Staff travelling with him, also in business class, made up the remainder of the amount. 

    Last year, Medcraft spent at least 74 days travelling overseas for conferences and meetings, with the majority of the places visited in his capacity as chairman of the IOSCO.

    He has no plans to ease up on travel, with trips booked in the next few months for Hong Kong, Kuala Lumpur and Madrid.

    The corporate regulator says it released Medcraft’s travel expenses in a bid to improve transparency.

    The pre-emptive release of the expenditure by ASIC follows increased scrutiny of Medcraft’s travel expenses after a freedom of information request by Fairfax last year revealed the extent of the travel undertaken by Medcraft.

    "Being chairman of IOSCO does mean that I have to travel from time to time, however, there are important benefits for Australian investors and businesses,” Medcraft said in a statement provided to SmartCompany this morning.  

    “Many of the issues facing Australia are global issues and need a global approach and my work in this role means we have an Australian helping shape the international financial agenda. That is, we have an Australian looking out for Australia."

    In a video posted on YouTube a month ago, the ASIC chairman acknowledged there had been criticism of ASIC and his role as the chair of IOSCO.

    In the video, Medcraft defends his role leading IOSCO and says, “We want to make the global initiatives work for Australia, rather than against us.”

    Medcraft came under the spotlight after a trip to St Petersburg in June last year coincided with ASIC's scheduled appearance before a Senate Estimates hearing, so ASIC's deputy chairman Peter Kell appeared instead.

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    The Australian Competition and Consumer Commission (ACCC) recently released guidance on managing online reviews.

    Businesses face the risk of prosecution by the ACCC if they cause or permit false or misleading online reviews to be published. Adopting social media policies along with competition compliance programs will help avert the risk of a business being prosecuted.

    Back in the good old days, trolls used to hide under bridges and attack goats. Now, they hide behind pseudonyms and ambush unsuspecting consumers who are casually wandering the internet.

    There are increasing reports that trolls are now being paid to post reviews that suit the ends of their master. This practice – called “astroturfing” – is clearly misleading and substantially detracts from the usefulness of online reviews.

    According to the ACCC, up to one in five reviews might not be a true representation of the consumer’s views.

    If you remember the story of the three billy goats, it isn’t until the third billy goat crosses the bridge that the troll learns its lesson. It would seem that the ACCC has stepped up to play the role of that third goat, the big bad buck, who throws the troll back into the stream beneath the bridge.

    By releasing its first guidance note for online reviews, the ACCC has fired a warning shot to businesses, review platforms and trolls. The rules for business haven’t changed − the rules are just being applied to the ever-evolving online environment.

    The message for business, including employees, is that there is a need to be transparent and accountable in online dealings. Businesses must not (and must not encourage others to) engage in online conduct that is misleading or deceptive.

    Some simple rules to follow are:

    1. Do not post fake reviews.

    2. Do not encourage others to post fake or inflated reviews.

    3. If you, your colleagues, associates, friends or family post reviews of your business or your competitor’s business, the post should disclose the connection with your business.

    4. Do not delete or modify unfavourable reviews. This is especially important where there is a star rating system in use.

    Recently, an employee of a substantial organisation wrote glowing reviews of his employer whilst being derisive of its competitors. The employer was apparently unaware of the situation. When the ruse was uncovered, the press had a field day. Unsurprisingly, the employee was terminated. Other businesses have paid substantial fines to the ACCC when they have used fake testimonials on their company website.

    All businesses should ensure that their employees are educated about their responsibilities as the agents and representatives of their employer. The collateral damage of being exposed as a troll will almost certainly outweigh any potential goodwill that is generated. Businesses should seek to adopt a policy about use of online technologies by their employees.

    Even more disconcerting are the reports of companies paying for people to advocate the employer’s interests online while deliberately concealing their identity. This is clearly misleading and would expose the company to significant penalties from the ACCC.

    If you think that your business is the subject of adverse troll activity then there are steps that you can take.

    In certain circumstances the review platform may be required to take action. Some platforms may take action where their terms of use have been violated and businesses should make complaints in accordance with the procedures for the platform.

    Otherwise, the digital fingerprint of a careless troll can sometimes be traced back to the cave where it came from. The location of the computer and the troll responsible for the offending post can be determined with expert legal and technical assistance, and a little bit of luck.

    As the ACCC has noted, it can be difficult to find trolls. However, it can be done. The ramifications for the offending troll will be worse than being dunked in a chilly mountain stream.

    Trent Taylor is a special counsel at law firm Holding Redlich and Ben Patrick is a senior associate at Holding Redlich.

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    Solar businesses P&N Pty Ltd and P&N NSW Pty Ltd (trading as Euro Solar) and Worldwide Energy and Manufacturing Pty Ltd (WEMA, formerly trading as Australian Solar Panel) have been ordered by the Federal Court to pay combined penalties of $125,000.

    Euro Solar’s sole director, Nikunjkumar Patel, was ordered to pay $20,000 personally for his involvement in the conduct. 

    The penalties follow an investigation by the Australian Competition and Consumer Commission which found the solar businesses faked testimonials and made false or misleading representations about the country of origin of the solar panels they supply.

    The Court found video testimonials published on YouTube by Euro Solar and written testimonials published by WEMA on its website were not made by genuine customers of the companies.

    In his judgment, Justice Besanko found the companies and Patel engaged in careless and reckless conduct and knew the representations made were both false and misleading.

    The judge also found it was “suggested in some of the advertisements that not only were the solar panels made in Australia but that customers or potential customers ought to be supporting them because of that fact” and that these representations “were a central part of the respondents’ business and marketing strategy”.

    “Consumers should be able to trust that testimonials give honest feedback about a consumer’s experiences with a service or product. If they are not genuine, consumers may be enticed into making a purchase that they would not have otherwise made,” Justice Besanko found. 

    The court also found that Euro Solar and WEMA made false or misleading representations to consumers that they manufactured or supplied solar panels that were made in Australia – when they were in fact made in China.

    The misleading representations were made online, in newspapers and on television between November 2012 and September 2013 and were brought to the ACCC’s attention by competing businesses.

    In addition to penalties, the court also made other orders by consent including declarations, injunctions, corrective advertising and a contribution towards the ACCC’s costs.

    The case is the ACCC’s first litigated outcome in relation to the specific prohibition against fake testimonials under the Australian Consumer Law.

    ACCC chairman Rod Sims said in a statement consumers were often prepared to pay a premium for products made in Australia.

    “Businesses making misleading representations can harm consumers by influencing them to purchase products, sometimes at a premium price, they otherwise wouldn’t choose to,” he said.

    “They can also harm competitors who accurately represent their products by creating an unfair playing field.”

    Jamie Nettleton, partner at Addisons Lawyers, told SmartCompany businesses need to be “very careful” using testimonials.

    “Particularly if those testimonials are not real as it is false and misleading conduct to try to deceive customers when someone has said something and they haven’t,” he says. 

    “There is a related issue of using testimonials from real people where people are not experts or there is some degree of a health characteristic in respect of a product, for example, diet pills.”

    Nettleton says the consumer watchdog is focusing on the use of testimonials and businesses needed to take “extreme care” when using testimonials.

    He warns the use of testimonials on social media are also considered to be part of a businesses’ promotional portfolio.    

    SmartCompany contacted Euro Solar for comment but did not receive a response prior to publication.

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    Discount retail chain Chemist Warehouse has copped a slap on the wrist from the health and medicine products ads regulator for breaching advertising standards, but it seems the retailer isn’t going to roll over without a fight.

    In December 2013 the chain was found by the Complaints Resolution Panel to have misled consumers to believe vitamin products advertised on its website could help treat and prevent breast cancer and strokes.

    Advertisements for these vitamin products appeared adjacent to written copy about breast cancer and strokes.

    “Any reasonable consumer would relate the content of the ‘Breast Cancer’ and ‘Stroke’ pages to the advertisement promoting the supply of vitamins, given the content of the vitamins/herbal/minerals subsection encouraging the use of vitamins, herbal and mineral products to help treat and prevent these diseases,” the Panel determined.

    As a consequence, the Panel ruled Chemist Warehouse should withdraw the advertisement from further publication, publish a retraction and provide evidence of its compliance within 14 days of being notified of the request.

    However, Chemist Warehouse commercial manager Damian Gance told Fairfax the company would not comply with the retraction.

    The Complaints Resolution Panel has no authority to enforce its requests; however, defiance of its orders could result in court action led by the Therapeutic Goods Administration.

    SmartCompany contacted Chemist Warehouse, but no one was available for comment prior to publication.

    In its defence, Chemist Warehouse argued the situation was no different to what occurs in newspapers where ads appear alongside articles.

    “The respondent also argued that the juxtaposition of the ‘health information’ with retail links on each side was analogous with newspapers’ news content with advertisements on the same page and does not make the entire page an advertisement, that content sought by a consumer is plainly displayed in the central window of the page and the non core, advertised content is around the edges of the web page,” the Panel determination says.

    Chemist Warehouse also emphasised the importance of health information and said the information in question had not been on the site for two years and all links and search results had been removed for commercial reasons in 2011.

    TressCox lawyers partner Alistair Little told SmartCompany it’s an unusual case dependent on whether or not the supposed advertisements are relevant to the articles displayed on the page.

    “The only similar case was with Google AdWords. The case went to the high court last year and the Australian Competition and Consumer Commission argued Google had breach consumer laws by misleading people to think the companies featured in the Google ads were linked to the businesses people were searching for,” he says.

    “The court ruled there had been no breach of the law and Google was just putting in front of people what advertisers had provided.”

    But Little says in this case there is an argument the ads and articles were linked.

    “The final outcome will probably be that it ends up in court if Chemist Warehouse ignores the determination of the Panel,” he says.

    “But the Panel are only able to request businesses to comply. It’s a regulator, but not in the usual sense because it can’t enforce the law.”

    Little says businesses need to realise the placing of advertisements on a page is important.

    “You need to think carefully about if the ad, when read in conjunction with the text, makes a representation to consumers that the two are linked,” he says.

    “There is a clear need not just to throw things together on a website without thinking about the way things read in conjunction with one another.”

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    The competition watchdog has launched an inquiry into Australia’s beer industry, focusing on whether or not anti-competitive practices are taking place, as smaller breweries struggle to compete.

    The Australian Competition and Consumer Commission has sent a letter to major beer businesses and craft breweries asking about the practices occurring in the market.

    The letter was obtained by Fairfax and explained the ACCC was interested in “understanding how certain conduct may be affecting competition”.

    Beer companies were asked to identify whether they had “an exclusive distribution arrangement with any customers for the supply of draught beer”, whether the “price paid by venues allow your business to earn a competitive margin” and to identify if an offer to supply beer to a venue had been declined.

    In a statement the competition watchdog told SmartCompany it is making market enquiries to “better understand aspects of the supply conditions within the wholesale beer market(s)”.

    “These enquiries are not being conducted due to the ACCC being notified of a merger in the market(s),” the ACCC says.

    “The ACCC does not have further comment on these enquiries as they are underway.”

    The biggest players in the Australian beer market are Japanese-owned Lion and SABMiller, while Coles and Woolworths control more than 60% of the packaged liquor retailers including Dan Murphys, First Choice and BWS.

    Tasmania craft beer brewery Moo Brew told SmartCompany it received the letter from the ACCC.

    “It’s a really competitive market at the moment due to a number of factors. There is a serious craft beer movement, but there are also lots of bigger breweries with lots of diversification and they have a greater ability to reach all corners of the market,” Moo Brew head brewer David MacGill says.

    “It makes it difficult for smaller brewers in the craft sector to compete on price with the bigger brewers. This is a common theme amongst smaller brewers.”

    MacGill says it can be difficult to determine what constitutes anti-competitive behaviour, but he suspects it’s occurring in the sector.

    “It’s being tested now and I’d say there is a level of anti-competitive practices as far as our market is concerned,” he says.

    Despite this, MacGill says he’s optimistic for the year ahead.

    “We’re in a good period at the moment. Craft beer still only makes up about 2% of the national market, so there’s great growth potential,” he says.

    TressCox lawyers partner Alistair Little told SmartCompany there are six main categories which the ACCC focus on which constitute anti-competitive behaviour: Anti-competitive agreements, misuse of market power, exclusive dealing, cartel conduct, predatory pricing and resale price maintenance.

    “Anti-competitive agreements are those which exclude someone from being able to compete. For example, where two players lock out a third party by entering into restrictive agreements,” he says.

    “Exclusive dealing occurs when there is an arrangement where a supplier says to a retailer they’ll give you the goods so long as it agrees not to buy anyone else’s beer. This lessens competition and is anti-competitive. Alternatively there will be agreements where a supplier will offer to give you three free fridges as long as you just sell its beer.”

    Resale price maintenance occurs when a distributor says not to sell a product under a certain price or it’ll stop supplying the retailer with the product, while cartel conduct happens when major players agree to engage in certain conditions to stop another player competing in the market.

    Little says there have been many cases of the ACCC pursuing anti-competitive behaviour and these investigations have the capacity to result in multi-million dollar penalties.

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    The Sydney Business Chamber has welcomed tough new street violence law which impose mandatory 1.30am lockouts on many CBD venues, saying they’re necessary to safeguard Sydney’s reputation as a safe city.

    But the Australian Hotels Association is highly sceptical of the new laws, believing they punish businesses that rely on the night-time economy despite their having nothing to do with street violence.

    NSW Premier Barry O’Farrell has been under pressure for some weeks to introduce a legislative response to the one-punch death of Sydney teenager Daniel Christie, who died after being punched in the head from behind in Kings Cross at 9.10 pm on New Year’s Eve. It follows a similar incident in 2012 where another 18-year-old, Thomas Kelly was fatally and without provocation punched in the back of the head. 

    Yesterday, O’Farrell announced a suite of sweeping measures aimed at combatting the problem of street violence, which include mandatory eight-year minimum jail sentences for fatal one-punch attacks, significant increases in on-the-spot penalties for disorderly behaviour, and increased police powers to ban ‘troublemakers’.

    The laws also target businesses. Venues in the Sydney’s central business district and Kings Cross will have 1.30am lockouts and be forced to stop selling drinks at 3am, while bottle shops across New South Wales will be forced to shut at 10pm.

    Small bars serving up to 60 people, restaurants, casinos and tourist accommodation facilities will be exempt from the laws.

    Parliament will be recalled next week to pass the new measures.

    Patricia Forsythe, the executive director of the Sydney Business Chamber, says the new laws are needed to maintain Sydney’s reputation as a safe city.

    “We’re a city very much based on the service economy, and as part of that, the visitor economy is one of the critical parts of our economy,” she tells SmartCompany.

    “To be able to attract visitors, and be a city popular with tourists, whether Australian or overseas, we need a reputation as a safe place to visit. We’ve had that reputation. The events of recent times in particular, and the media frenzy around those events, have put that at risk.”

    The state government’s proposed laws strike the appropriate balance between upping the penalties on violent offenders while also limiting the potential for street violence to occur, she added.

    “There’s no single solution. What the government’s tried to do is adopt a multi-faceted approach, which does require changes from business, government, law enforcement and the community in general.”

    Forsythe particularly welcomed small bars and restaurants being excluded from the laws.

    “They’re not the source of the problem. Indeed, they may be part of the solution.”

    However, the Australian Hotels Association has been far less welcoming of the proposed changes.

    In a statement, the body said it welcomes tougher sentencing for “thugs”.

    “However, we remain sceptical about the effectiveness of lockouts across the Sydney CBD area and ‘last drinks’ at 3am – the time of the taxi changeover.

    “We do not believe tens of thousands of people will stay in licensed premises past 3am once alcohol is no longer served but will instead be out on the streets looking for a way home. The government will need to address this new issue.”

    “The lockouts and closures in the Sydney CBD will also have an undeniable impact on the night-time economy penalising businesses that are well run and have had nothing to do with the recent violence.”

    Before the new laws were announced, the NSW AHA’s director of public policing, John Green, said any lockout would see more young people on the streets in the early hours of the morning.

    “Organisations are again using an incident which occurred early in the evening to call for mandatory lock-outs and closures of hotels from 1.30am. Yet no one seems to be able to explain how this would help.

    “[It] flies in the face of common sense. The latest tragic incident happened at 9.10pm allegedly by a man on bail for assault. The death of Thomas Kelly happened just after 10pm at the same location in King’s Cross – how would further restrictions on venues in the early hours of the morning make any difference?

    “Independent Bureau of Statistics figures show that violence in and around licensed premises [is] at the lowest level in 15 years – this is thanks to the co-operation between hoteliers and police… However, we are being told by doctors that the intensity of assaults is increasing.

    “What has changed, and where has the prevalence of the ‘king hit’ culture at all hours come from?

    “There is a far deeper explanation, and simply closing hotels and shutting down the city is not the answer. We need to work with the community on finding solutions.”

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    One of Australia’s best-known dip brands is up for sale seven months after the Family Court ordered it be placed in receivership, the receivers told SmartCompany.

    Black Swan, owned by Melbourne-based business Poseidon Tarama, was put in the hands of Deloitte on June 17, 2013, Deloitte Corporate Finance partner Victoria Brilliant says.

    Brilliant was unable to reveal details of the case, or the reason for the sale, but says it is not related to the company’s finances, confirming it is “very profitable”.

    She says the business has the largest market share for dips and chilled yoghurt dips in Australia. An advertisement for the sale of the business says it creates 20 million tubs of dips for the Australian market each year.

    The sale encompasses a Clayton-based manufacturing plant, full control off the 70-plus product line and distribution agreements with major supermarket chains nationally including Coles, Woolworths, Aldi and IGA.

    Brilliant says the business has around 70 staff and says the plan is that whoever takes on the company will retain staff in a “business as usual” approach.

    The company was founded by Christos Saristavros and was first listed on ASIC in 1980. It has been family-owned ever since. Saristavros was passionate about creating fish-flavoured dip tarama and hummus dips and initially sold them at the South Melbourne markets.

    Saristavros was fatally shot in 2000 when returning from a charity function with his wife. Reports indicate the case is still unsolved, despite the family calling on a police reward of $1 million for information leading to the mystery being solved.

    Deloitte began advertising for the sale of the business yesterday, and Brilliant says there is already “a lot of interest from different businesses”.

    She declined to speculate on the value of the company.

    Brilliant says Deloitte are aiming to conclude the sale by June 30 ahead of the new financial year. It has opened expressions of interest until February 12.

    The Poseidon Tarama head office was contacted for comment, but no reply was received prior to publication.

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    The corporate regulator has banned a credit business manager and a mortgage broker for submitting false documents to secure loans worth $3.45 million. 

    The Australian Securities and Investments Commission announced this morning it has banned Anthony Bergin from engaging in credit activities for three years after an investigation found his company submitted seven home loan applications worth $3.2 million to a lender that contained false or misleading information, including false payslips.

    ASIC's investigation found Bergin’s company, Equity Financial Management, submitted the loan applications between September 2011 and February 2012.

    ASIC also banned Hyuk Hwang, a former Sydney mortgage broker and real estate agent, from engaging in credit activities for three years after an investigation found he was involved in the submission of false documents to secure a loan worth $250,000.

    ASIC’s investigation found Hwang allowed another person access to his online broker system in July 2012 and allowed that person to submit a loan application and documents to Westpac which contained false information.

    Hwang included a letter of employment from another business he owned which falsely represented the borrower was employed by, and received an income from, that business.

    Hwang was aware the application and the letter contained false information at the time they were submitted to Westpac.

    Bergin, Equity Financial Management and Hwang all have a right to a review of ASIC’s bans through the Administrative Appeals Tribunal.

    ASIC deputy chairman Peter Kell said ASIC has taken action against eight credit providers in the last three months, including two convictions, three permanent bannings and three bannings totalling 11 years.

    “This number is unacceptably high. ASIC will not hesitate to take action where we encounter deliberate breaches, serious misconduct or significant risk of consumer detriment,” he said in a statement.

    Phil Naylor, the chief executive of the Mortgage and Finance Association of Australia, told SmartCompany this morning the market has been watching closely to see how hard ASIC is on brokers who break the rules.

    He says it is important to look to whether brokers are members of the MFAA. Hwang was a member until March last year when his membership was cancelled. 

    “We have very robust rules which are even higher than ASIC’s standards,” Naylor says. 

    “It seems in both these cases that obviously information has been supplied and falsified and whether this is with the customers knowledge it is not clear.”   

    Since 2003 the MFAA has expelled or suspended 60 of its members, which Naylor says “is a small number” out of 10,000 members, while ASIC has taken action against another 10 or 11 brokers since it took jurisdiction.

    “It is reflective of the small proportion of people in the industry who do the wrong thing,” Naylor says.

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    The federal government released its watered down version of the draft of the Future of Financial Advice legislation yesterday. 

    Assistant Treasurer Arthur Sinodinos said the government is supportive of the principles of FOFA but the previous government’s reforms were “unwieldy, burdensome and unnecessarily complex”.

    The government announced in December that it would seek to overturn the majority of the former Labor government’s financial advice reforms.

    Research undertaken by Rice Warner Actuaries in 2013 found that the previous government’s FOFA laws would reduce the average cost of financial advice from $2046 before the reforms to $1163 after the reforms by 2026-27 and double the provision of financial advice in Australia.

    But Sinodinos says draft legislation and regulations will still reduce compliance costs and remove red tape on the financial services industry. 

    “The proposed reforms will reduce the burden on industry and pressures on the cost of advice to consumers,” Sinodinos said in a statement.

    The government has now announced many of the changes will be made by regulation not legislation, meaning there will be no scrutiny by a parliamentary committee. 

    “In order to provide certainty for industry and to ensure that the measures have effect as soon as possible, the government will implement time-sensitive measures through regulations to the extent legally possible, with amendments to be subsequently made in the primary legislation,” Sinodinos said.

    The key amendments include removing the opt-in requirement, streamlining the annual fee disclosure requirements, amending the best interests duty to allow for scaled advice, exempting general advice from conflicted remuneration and amending grandfathering to allow for adviser movements.

    The government said the interim regulations will be repealed once the legislative amendments have been passed, while those amendments best addressed via regulations will remain in place.

    A spokesperson for Sinodinos defended the amended FOFA regulations to SmartCompany and said the "catch-all" provisions had been removed from the best interests duty because they created "significant legal uncertainty" on how advisers can actually satisfy the best interests duty.

    "Removing this provision will make the best interests duty more objective and ensure that advisers have access to a true safe harbour," she said.

    "The best interests duty without paragraph g will still provide appropriate levels of protection to consumers as the remaining elements of the duty (i.e. sections a-f) impose an appropriate standard of care."

    But Industry Super Australia is critical of the government’s approach and says a thorough assessment is needed of the impact of proposed changes to laws designed to protect consumers from conflicted financial advice.

    David Whiteley, chief executive of Industry Super Australia, said Australians want impartial financial advice that is in their best interests and not tainted by sales commissions, ongoing advice fees, volume rebates or other types of incentives paid to financial planners by banks and other institutions.

    “Industry Super Australia is concerned that these proposed changes will re-permit the payment of conflicted remuneration and re-open the debate about whether a financial planner is an impartial adviser or a sales rep,” he said in a statement.

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    The Australian Competition and Consumer Commission has announced its chairman, Rod Sims, will take on the top job as chief executive officer starting on Monday, February 3.

    Sims replaces current chief executive Brian Cassidy, who announced last week that he will be retiring on May 23. The ACCC said Cassidy will assist Sims in a transition phase, and will continue to “lend his extensive experience to the ACCC’s submission to the root and branch review”.

    The government’s ‘root and branch’ review is the first comprehensive examination of competition laws in 10 years.

    “As Chairman I look forward to taking an even more active role in the management of the ACCC as we put in place the changes that will help keep the ACCC and the AER as strongly performing agencies into the future,” Sims said in a statement.

    “We thank Brian for his outstanding career of public service. Indeed, the ACCC owes much of its professionalism and success to him.”

    The news comes amid revelations that the competition regulator is set to run out of money in April this year, after several significant budget deficits have left it without the cash to operate past that date.

    It has operated in deficit for several years and lost $25 million on an operating basis last financial year. It asked Treasurer Joe Hockey late last year for an extra $100 million to carry out its duties.

    SmartCompany reported last week that Small Business Minister Bruce Billson is in talks with Sims to come to an arrangement.

    Billson told SmartCompany he expects the remedy to the ACCC’s “dire financial predicament” will involve “some extra funding, but also a close examination of the way the Commission spends its fund and manages to live within its means, as we expect of all Commonwealth agencies”.

    “It’s outrageous and appalling that the former Labor government has left such a crucial agency in such a precarious financial state,” he added. “We’re now working hard and collaboratively with the Commission’s chairman to map out a pathway to restore its financial position and sustainability.”

    “We need to find a solution before the cash runs out,” Billson said.

    Sims was not available for further comment on his plans as chief executive this morning.

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    Have you heard of a business called Publicity Monster?

    The Sydney company is run by Tim Sabre and operates by cold-calling small businesses, pledging to make them appear in Google Places' top seven search results for chosen keywords.

    The small business hands over cash but many are now complaining that Publicity Monster doesn’t deliver the results.

    What’s more, they claim Publicity Monster harasses and threatens businesses which do complain. 

    In NSW, 99 applications have been lodged against Publicity Monster at the NSW Civil and Administrative Tribunal, 20 have been lodged at the Victorian Civil and Administrative Tribunal and another five have been lodged at the Queensland Civil and Administrative Tribunal, according to a report in Fairfax.

    Sabre tells me Publicity Monster hasn't cold called for over 18 months and has "thousands of customers" that it optimises and delivers results to.

    "Yes, we did grow to quickly and that resulted in some issues but we have worked hard for the last 2 years to rectify this," he says.

    Nevertheless, NSW Fair Trading is currently investigating Publicity Monster and other companies which make similar claims, but the watchdog’s powers are limited because the contracts that small businesses had with Publicity Monster were generally "business to business".

    This means they don’t fall within the scope of the Fair Trading Acts or Australian Consumer Law.

    Companies like Publicity Monster can get away with promising the world because unfair contract provisions which apply to contracts between businesses and consumers don’t provide any protection in this sort of situation.

    Small Business Minister Bruce Billson is currently looking into the terms of reference for a review of competition law which will consider expanding unfair contract protections. 

    The problem with such a review is that simply expanding consumer protections to business runs the risk of creating uncertainty in business transactions.

    The other problem is that the whole review is progressing very slowly while so-called search engine optimisation “experts” target small businesses. 

    There’s no easy solution, but what’s clear is that the current laws leave small businesses exposed. 

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    An employee in the United Kingdom has been ordered to hand over the log-in details of four LinkedIn group accounts to her former employer.  

    The employee, Susan Wright, set up the LinkedIn accounts in the course of her employment and also used them for personal reasons.

    But the England and Wales High Court found the accounts were the property of her former employer, Whitmar Publications, in a decision which has implications for Australian businesses.

    The legal stoush began when three long-term employees of Whitmar, including Wright, resigned on the same day, stating that they were going to establish their own competing company.

    Whitmar claimed that in the four months leading up to their resignation the employees tried to solicit some of Whitmar’s clients and employees, used Whitmar’s confidential information to produce media kits and other material, took customer and circulation databases with them and used  LinkedIn groups they had managed on behalf of Whitmar to promote their own business. 

    Whitmar demanded Wright provide it with the user name and password for four LinkedIn groups which she accessed and used on computers owned by Whitmar.

    Wright refused, claiming that her use was personal and unrelated to Whitmar’s business and she continued to use the LinkedIn account and its contacts after her resignation date.

    But the England and Wales High Court granted a permanent injunction to prevent Wright and the other employees from using and disclosing confidential information that was the employer’s property.

    Deputy Judge, Peter Leaver QC, said Whitmar had “a very good chance of succeeding at trial’.

    The court found the LinkedIn groups were a significant source of contacts for Whitmar, and Wright was ordered to provide Whitmar with the log-in details, so that it could access and amend the database.

    Rachel Drew, partner at TressCox Lawyers, told SmartCompany although this was a British case, and decided upon its individual circumstances, the same common law principles apply in an Australian context.

    “The general rule is that where an employee uses the employer's resources to produce something of value, produces that during work hours, or uses it as part of their employment, the employer may claim the intellectual property is theirs,” Drew says.   

    She says employers pay wages not just for the employee’s time, but also for any intellectual property their work produces. 

    “While there is no restriction on an employee taking their skills or experience from one employer to another, an employer can require any intellectual property of value to be handed over on departure,” Drew says.  

    “The employer can also recover any profits made from publishing or promoting materials prepared as part of their employment.”

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    The political lobbying accompanying the government decision to withhold financial support from SPC Ardmona has overshadowed the big structural issues facing Australia’s preserved food industry.

    The two major issues are the shift of market demand towards fresh food and the role of Chinese imports.

    The decline of SPC Ardmona’s cannery business is not an isolated event. Heinz closed its cannery business in Goulburn Valley in 2012, Windsor Farm closed in Cowra, and only a few small players remain, mainly in NSW and WA.

    Imports, mainly from China, have been singled out and demonised as “cheap, dumped and frequently contaminated”. This is a short-sighted perspective.

    China is a big global player in international agribusiness. Chinese importing of fresh food provides opportunities for Australian exporters, but at the same time Chinese exports of canned food compete with Australian products in the local domestic market and in traditional export markets.

    The “cheap, dumped and frequently contaminated” label will not stick for long.

    China is stepping up consumer protection

    While China’s canned food will remain cheap because of economies of scale and because canning technology is not much different in Australia and China, contamination is being addressed more seriously in China with new laws and regulations expected. The flow-on effect will mitigate Chinese consumer dissatisfaction with local food standards, but also improve the quality and safety of Chinese export products.

    In January, China’s Supreme People’s Court announced an 18-clause guideline on how to handle civil disputes regarding food, drugs, cosmetics and dietary supplements.

    The new guideline, together with an updated version of the consumer protection law, will come into effect on March 15, World Consumer Rights Day, and signal a new wave of regulatory action from the government to tackle China’s food safety problems. It gives consumers backing from the courts to sue manufacturers and retailers of unsafe food. Advertisers and publishers can be sued even before any actual harm is inflicted. Celebrities who endorse substandard products can also be sued if consumers feel they have been misled.

    Story continues on page 2. Please click below.

    Since the milk powder scandal of 2008, much as been done to alleviate public anxiety and improve practices in the food industry. The Food Safety Law, replacing the outdated Food Hygiene Act, came into effect in 2009 and includes provisions on risk assessment methods, unification of food safety standards, improving supervision, and imposing tougher penalties on violators.

    In March 2013, China’s State Food and Drug Administration (SFDA) was renamed to China Food and Drug Administration (CFDA) and elevated to a ministerial-level agency directly under the State Council, in an attempt to consolidate power and streamline regulation of food and drug safety.

    The new guidelines change the balance of power between consumers and producers and rely less on local government enforcement. One challenge facing China in food safety regulation is that law enforcement and implementation at the local level do not match the original intent of the law and central policies. With clearer procedures on how to protect their rights, consumers are given more say on food safety. This will increase food producers’ opportunity cost as consumers are now more willing and able to participate in the monitoring process.

    Previously, producers and manufacturers had an incentive to sacrifice quality in order to maximise profits, because the chance of being caught and penalised was low. But consumers and social media now play a much more active role in monitoring food safety and have successfully put pressure on the government to enforce food safety standards

    Australia has a head start

    While enforcement will work for the corporatised food export sector, China’s highly fragmented food industry will continue to face problems because of the scale of monitoring required. Almost 80% of the half a million food companies in China are classified as “cottage industry” with ten or less employees.

    Like in Australia, there are social reasons to keep small producers afloat. Along this complex supply chain there is a need to balance the interests of producers, markets and consumers. China’s first policy document of 2014, the No.1 Central Document, underscored the importance of rural reform and the development of modern agriculture.

    For Australian agribusiness, this entails opportunities and challenges. Chinese producers will for the foreseeable future not be able to satisfy the demand of urban middle class consumers for top quality food. Australia, in competition with New Zealand, has a head start in this market with an enviable and hard to replicate reputation for clean and fresh food.

    On the other hand, Chinese exports will become more competitive in the preserved food market, in particular in such traditional segments as canned food, putting more pressure on Australian producers in those market segments. For SPC Ardmona and its supply chain, the farming communities in the Goulburn Valley, this will require a radical rethink of traditional products and a switch to new product lines.

    Hans Hendrischke is professor of Chinese business and management, University of Sydney Business School and chair of the executive committee of the China Studies Centre at the University of Sydney. Wei Li is a Postdoctoral Fellow, Business School at University of Sydney.

    The ConversationThis article was originally published at The Conversation. Read the original article.

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    Gary Morgan claims Fair Work Building & Construction threatened and intimidated witnesses to secure a judgment against the pollster’s family trust.

    Morgan, chairman of research company Roy Morgan, made the allegations in complaints to the Victoria Police and the Commonwealth Ombudsman.

    The claims of witness intimidation involve a recent Federal Court case which found Morgan’s family trust, Linkhill, underpaid 10 employees who it had maintained were contractors.

    The court ordered Linkhill pay its workers $178,941 in unpaid wages and entitlements.

    But Ryan Lowery, one of the workers named in the case, says he was served with a notice by FWBC (formerly the Australian Building and Construction Commission) on March 31, 2010 requiring him to produce documents. 

    Lowery claims after receiving the notice an FWBC inspector contacted him directly and told him the effect of the notice was that refusal to attend for an interview and to give a statement to FWBC was a serious offence for which he could be imprisoned. 

    However, the notice had no such effect and Lowery was entitled to refuse to assist FWBC with its enquiry.

    “I did not provide the information contained in my statement freely and voluntarily,” Lowery said in a sworn affidavit provided to the Victoria Police and the Commonwealth Ombudsman.

    “I was intimidated and therefore compliant with every request [the inspector] made of me in relation to the contents of my statement.”  

    In his complaint to the Victoria Police, Morgan claims Lowery made a statement to the FWBC “against his will, and under the belief of a possible risk of imprisonment”.

    “It is Linkhill’s view that [the inspector’s] conduct was unlawful, and constituted an attempt to pervert the course of justice, and/or threaten a witness,” the police complaint states.

    Morgan told SmartCompany he intends to appeal the judgment to the Federal Court and potentially the High Court.

    “It was intimidating to the contractors working for us, they were all very frightened once they read that letter,” Morgan says.    

    Both the Victoria Police and the Commonwealth Ombudsman have refused to investigate the allegations as the police claim it is a matter for the Ombudsman and the Ombudsman cannot investigate matters which are being dealt with by a court unless there are special reasons. 

    Sarah Mennie, spokesperson for the FWBC, told SmartCompany FWBC is also unable to comment while the matter is before the court.

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    Small business complaints to the competition and consumer watchdog have jumped 84% in the last half of 2013, as a result of increased education campaigns and court action.

    The Australian Competition and Consumer Commission’s latest half-yearly report into small businesses and franchises revealed general enquiries are also on the up, with more small businesses reaching out for information on their legal responsibilities.

    The ACCC received almost 3600 complaints from small businesses between July 1 and December 31 last year.

    “The growth in complaints received by small businesses and franchisees reflects the need to educate and empower the sector,” ACCC deputy chair Michael Schaper said in a statement.

    “The rise in complaints is likely due to a number of factors such as increased awareness-raising campaigns by the ACCC amongst the small business sector, enhanced data collection of small issues within the Commission’s info-centre, and increasing public debate about small business matters and the Competition and Consumer Act in recent months.”

    Of the 3600 complaints, most were about misleading conduct and false representations.

    The ACCC has been particularly active in pursuing misleading conduct in the past year, with companies such as Luv-a-Duck and iiNet hit with substantial penalties.

    One business felt the consumer watchdog’s wrath for purposefully misleading small businesses by demanding payment for ink cartridges they never purchased.

    The Federal Court found that Artorios Ink engaged in misleading and deceptive conduct when it demanded payment for the unsolicited ink cartridges.

    Schaper told SmartCompany small businesses frequently call the ACCC to report misconduct from other businesses or with queries about their own responsibilities.

    “We ask them to look at both areas to make sure they’re not falling foul of the law, but also to consider what other businesses are doing,” he says.

    “We receive a reasonable mix of both types of calls. People will call up to find out about their responsibilities and things like what acceptable refund policies are, but they also complain about their competition.

    Schaper says not only do businesses dob in other businesses, but there have also been some whistleblowers.

    “It pays to treat your customers well, your competitors and also your staff. If you’re not doing the right thing by your customers, you’ll find your competitors also call up. There are also some whistleblowers from within businesses who call to report something their managers are doing.”

    The most common complaints about small businesses were regarding those operating in the advertising services sector, online and non-store retailers and store-based retailers.

    The ACCC’s report also found small businesses lost more than $719,000 to false billing scams throughout 2013.

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    The Business Council of Australia is calling for the federal government not to introduce any policy or law that restricts competition in its “root and branch review” of competition policy laws.

    BCA chief executive Jennifer Westacott will today give a speech at a Competition Policy Forum in Sydney, where she will say the review should not attack big business, including supermarkets.

    The competition law review was announced as part of the Abbott government’s 2013 federal election policies, amid supermarket wars between Coles and Woolworths where the ethics of petrol vouchers on shopper dockets were debated.

    In her speech Westacott will advocate that competition law should “foster robust competition, not protect individual competitors or sectors”, The Australian Financial Review reports.

    “Governments should generally avoid policy and legislation that restricts competition,” the speech says. “The general competition law should also entrench the primacy of the consumer, including improved choices, better services, and lower prices.”

    In an opinion column published in the AFR written by Westacott and Gilbert + Tobin managing partner Danny Gilbert, the pair said Australia’s high living standard “owes much to the Hilmer reforms which opened our economy up to competition”.

    Conducted by Fred Hilmer in the 1990s, the Hilmer reforms overhauled competition law nationally.

    “For consumers it has meant such things as cheaper milk and eggs, better mobile phone services, the ability to shop after work and on the weekend,” they said.

    “For business it has meant being subject to the constant discipline of competitive markets, trucks travelling interstate more easily, and opportunities for investment in sectors that were once dominated by tightly controlled, unproductive and inefficient government monopolies.”

    The opinion piece said there are three things from the Hilmer approach that could be usefully adopted in the current review.

    In addition to the message that general competition law should foster robust competition, they said regulation should protect the “competitive landscape of today”. This should take into account the increasing competition faced by overseas businesses, they said.

    The third focus should be on “getting the incentives right so as to promote the successful implementation of government reforms”.

    Council of Small Business Association of Australia executive director Peter Strong will be on the panel in Sydney with Westacott today, and he told SmartCompany the broad review into competition law was important.

    “Small business is a major part of the Australian economy and it will form a good part of the review,” he says.

    Late last year Strong said he was concerned the competition review panel could be dominated by big business representatives.

    “I hope we don’t get someone from the big end of town to head it up. You obviously can’t get the local newsagent to head it, although they’d do a better job, but you need someone who will understand the difference between big and small business and aren’t stuck in the policies from the 1990s,” he said at the time.

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