ACCC break-up could leave suppliers vulnerable

01 Apr, 2015 07:10 AM
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There are considerable synergies between competition law enforcement and economic regulation

WHILE hailing the Harper Review as the "most significant review of its kind in over 20 years", the Australian Competition and Consumer Commission (ACCC) has flagged concerns over proposals to break up the organisation.

Competition Policy Review Panel leader Professor Ian Harper presented the final report - which made 56 recommendations - to Small Business Minister Bruce Billson yesterday afternoon.

Amongst other points, the review has recommended tougher measures to deal with conduct that reduces market competition across supply chains.

The independent review was commissioned by the Coalition about 12 months ago with the four-member panel releasing an issues paper last April and draft report in September.

“This is a very important report. It sets out many pro-competitive reforms which, if adopted, could significantly enhance economic productivity over the years ahead,” ACCC chairman Rod Sims said.

“The Panel’s recommendations to expose more sectors of the Australian economy to competition show the considerable scope for reform."

The consumer watchdog has already signalled important questions to be addressed over proposals to break up the ACCC.

“The ACCC considers there are considerable synergies between competition law enforcement and economic regulation, which would be lost,” Mr Sims said.

“Apart from the increased overheads from having to run two organisations rather than one, there would be very real costs for businesses in having to deal with two regulators, who may have conflicting views.

“Breaking up the ACCC would also go against the international trend, which is towards agency consolidation.

“That said, we recognise that these are issues for government to consider.”

The ACCC supports the report’s findings on roads, shipping, intellectual property and parallel imports, as well as proposals to make the misuse of market power provision workable, to introduce a prohibition on concerted practices (to tackle cartel-like conduct that may otherwise be permitted), and to improve merger assessment processes.

Mr Sims said the Panel’s recommendations to simplify the Act and make it easier for businesses to understand their obligations under the Competition and Consumer Act 2010 are commendable, “however, the ACCC is concerned that changes to the law should not weaken Australia’s cartel laws - any amendments should not fundamentally alter the existing scope of the prohibitions”.

“Some of the proposed Part IV changes will require further consideration of the fine detail,” Mr Sims said.

“While the report’s recognition of the need for continuing advocacy in support of competition and the need for a market studies power is pleasing, we need to further consider why we do not follow the approaches being taken to these issues in other countries where they are functions of the competition regulator.”

Mr Billson said an eight to 10 week consultation process was now underway, before government decided which of the report’s recommendations to adopt.

Misuse of market power in the retail supply chain has been a key issue for farmers, with accusations of anti-competitive conduct levelled at Coles and Woolworths.

It was one of the top five issues raised in more than 1000 submissions to the Harper draft report, along with retail trading hours, road transport, planning and zoning and supermarkets.

Coles is facing penalties of $10 million and may have to pay as much as $16m in refunds after admitting it engaged in unconscionable conduct with small grocery suppliers last December.

In an embarrassing mea culpa, Wesfarmers group managing director Richard Goyder and Coles managing director John Durkan apologised unconditionally for the retailer's ­dealings with suppliers after reaching a historic settlement with the ACCC.

In her decision, Justice Michelle Gordon repeatedly described Coles’ conduct as “deliberate, orchestrated and relentless”, and questioned the maximum penalty for unconscionable conduct. At $1.1m per contravention, she observed, this was “arguably inadequate for a corporation the size of Coles”.

Woolworths was also accused of bullying suppliers into paying millions of dollars to fund a discount war just a week later, prompting the competition watchdog to examine whether the supermarket giant is in breach of competition and consumer laws.

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READER COMMENTS

Mad Matt
1/04/2015 7:51:30 AM

The ACCC should also have the legal right to force corporations to be broken up. Coles and Woolies should be forced to sell off parts of its business.
pepper
1/04/2015 8:12:05 AM

For all the noise they would hardly pay their way anyway.... don't just split them up ...shut them down. and replace them with a few 'bill of rights' enforceable by law. Self perpetuating and prolific organisations are generally parasitic on any community. We need a valid and detailed cost/benefit analysis to demonstrate beneficiary status.

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