Competition Policy Review: retailer groups question ‘effects’ test

The Federal Government’s Competition Policy Review Panel has made recommendations such as removing regulations governing retail trading hours and parallel imports, and that an ‘effects test’ in Section 46 of the competition law, “should direct the court to weigh the pro-competitive and anti-competitive impact of the conduct.”

However, Coles and Woolworths lined up against a tougher substantial lessening of competition ‘effects test’, while the Australian Retailers Association (ARA) and COSBOA have little confidence that changes to competition policy such through the ‘effects test’ will work or are tough enough.

The Panel said that Section 46, dealing with the misuse of market power, does not usefully distinguish pro-competitive from anti-competitive conduct, while its sole focus on ‘purpose’ is misdirected as a matter of policy and out of step with international approaches.

“Section 46 should instead prohibit conduct by firms with substantial market power that has the purpose, effect or likely effect of substantially lessening competition, consistent with other prohibitions in the competition law,” the Panel said.

Another recommendation is that small business needs greater assurance that competition complaints can be dealt with.

“In general, consumers and small businesses operating in the retail sector can benefit from introducing more competition through eliminating barriers to entry. This can include lifting restrictions on trading hours and on the types of goods that can be sold in supermarkets and service stations,” the Panel said.

On supermarket concentration, it said that the important issue for competition is not whether the market is concentrated but whether some businesses engage in anti-competitive conduct. Other important factors include barriers to entry and the ability to switch to other suppliers, products or customers.

Looking at fuel retailing, the Panel said it is not persuaded that consumers are made worse off by the availability of fuel discounts at their current levels.

“However, shopper dockets can constitute a form of third-line forcing and loss-leader pricing, which has the potential to damage competition if sustained at high levels,” the Panel said.


Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top