The government has scrapped plans to introduce criminal sanctions including jail sentences for business people caught operating cartels.
The provision for criminal sanctions was contained in the Commerce (Cartels and Other Matters) Amendment Bill.
Cartels are where businesses boost profits by collaborating with rivals to keep prices high.
Announcing the back track yesterday, Commerce Minister Paul Goldsmith said the government had to consider the significant risk that cartel criminalisation would have a chilling effect on pro-competitive behaviour between companies.
"If you move to a new regime where [there is] also the potential for going to jail with a criminal regime, then if the consequence is that directors become ultra cautious in their decision making, then that has a cost for the economy because overall there's potentially less innovation, less risk taking," Mr Goldsmith told Morning Report.
Mr Goldsmith said the government had listened to feedback from the community, including law firms and directors.
The minister said cartel behaviour, which is an anti-competitive arrangement by competitors, would continue to be subject to civil sanctions, and these are strengthened in the Bill.
Civil sanctions could be in the tens of millions of dollars for corporations, or up to $500,000 for individuals, depending on the offence.