Your Business

High Court Wallops Small Business

Allowing companies to spend freely on political campaigns favors big firms over small ones.

Small business took a big hit from the Supreme Court’s recent decision on campaign cash. When the justices ruled -- in Citizens United v. Federal Election Commission -- that companies and unions can spend as much as they want, they gave big business, with its far richer coffers, a huge advantage over small firms with no money to spare.

The court’s ruling will further undermine fair market competition between large corporations and independent business owners, says Jeff Milchen, founder of the American Independent Business Alliance, a national nonprofit organization created to support independents.

More big-company pressure is almost a given. While no one expects firms to start spending all their profits backing political candidates, they don’t need to. Imagine the effect if they got together and defeated a critical committee chairman or swing vote. Or imagine a big-box store pressuring zoning officials to back a move that would overwhelm nearby smalls.

One probable result: Continued lax enforcement of federal contracting rules. Small business advocates have long railed at the Small Business Administration for failing to meet federal procurement goals, which mandate that 23% of the total value of federal prime contracts go to small business. There’s a bill in the hopper on Capitol Hill that would give this mandate more teeth through tougher rules and more transparency, but the court decision may boost opposition.

Also possible: Repeal of a key law -- the Robinson-Patman Act -- that helps keep large firms from using their buying power to negotiate lower prices. Moreover, the ruling could bolster opponents of legislation intended to strengthen the Sherman Antitrust Act.

Federal research money is at stake. There’s already a move afoot in Congress to loosen eligibility rules in the federal Small Business Innovation Research program. Doing so would hurt independent little firms because they’re sure to find themselves losing out to small rivals backed by big venture capitalists. The court ruling enhances the climate for looser rules.

Another potential battleground: Stricter food labeling laws favored by some small organic food products makers but opposed by megacorporations, says Milchen.

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