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Select Committee on Australia's Food Processing Sector
Australia's food processing sector
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Select Committee on Australia's Food Processing Sector
Xenophon, Sen Nick
Edwards, Sen Sean
Madigan, Sen John
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Select Committee on Australia's Food Processing Sector
(Senate-Tuesday, 15 May 2012)
CHAIR (Senator Colbeck)
- Mr Durkan
Content WindowSelect Committee on Australia's Food Processing Sector - 15/05/2012 - Australia's food processing sector
de GRUCHY, Ms Rayne, Deputy Chief Executive Officer, Australian Competition and Consumer Commission
GREGSON, Mr Scott, Group General Manager, Enforcement Operations Group, Australian Competition and Consumer Commission
JONES, Mr David, Director, Adjudication, Australian Competition and Consumer Commission
RIDGWAY, Mr Nigel, Group General Manager, Compliance Operations Group, Australian Competition and Consumer Commission
CHAIR: Welcome. Thank you for talking to us today. Do you wish to make an opening statement before we start?
Mr Gregson : I am happy to give you a short update from our last appearance, if that helps you.
CHAIR: Thank you.
Mr Gregson : We last appeared before the committee, I think, in August of last year. At that time we provided an overview of the interaction the ACCC has with the food-processing sector, some of the legislative framework that brings us into contact with industry participants and issues that arise. We took a number of questions and hopefully provided some useful information. We also left the committee with a summary of the types of matters we deal with under the legislation, and hopefully that assisted.
Since our last appearance our chairman, Rod Sims, has publicly commented on our interest in matters concerning supermarkets in particular, and that is reflected in the new compliance and enforcement policy that was published earlier this year where we set out a number of priorities for the ACCC over the next period. They included considering competition and consumer issues in highly concentrated sectors. We particularly named supermarkets as being an area of interest. In various public references the chairman has also made particular statements about our interest in concerns over the dealings between the major supermarkets and suppliers.
We have sought in various forums people to come forward, particularly suppliers, even on a confidential or anonymous basis, to assist us to get a better feel for the issues out there. I am happy to note that we have had a number of approaches in light of those calls. That is greatly assisting the ACCC to get on top of the issues that we have seen in the marketplace and that we have commented on publicly. We are turning our minds to those issues to see, first of all, whether they can be considered under the provisions of the Competition and Consumer Act. Even more generally, we are just forming a view in relation to the provisions. The chairman has been very public in saying that, even where they may not raise concerns under the Competition and Consumer Act, we may otherwise form a view about the behaviour and comment on it. We also continue to have exposure across a number of issues in this sector. We would be happy to elaborate on those or take your questions.
CHAIR: Firstly, I appreciate the fact that you confirmed that you have had some approaches. It has almost been implied that concerns that we have been raising, or that have been raised with us, might even be mythical. So it is nice to have some credible reinforcement of the fact that there are some concerns about that are being dealt with and taken seriously. Can you give us a sense of the scale, the quantum?
Mr Gregson : The quantum of people approaching us?
CHAIR: Yes. I understand the sensitivities.
Mr Gregson : Yes. We have had well over 10, less than 100.
CHAIR: That is a decent range.
Mr Gregson : I should say that it changes almost on a weekly basis. We have a very senior team out there who are talking to industry parties and it almost changes daily. We are getting contacted by people providing very short, sharp anecdotal experiences and others providing more lengthy experiences.
CHAIR: Do you have enough information yet to provide some sense of the adequacy of provisions? Obviously that is one of the things that we are looking at and one of the things that we would like to be able to report on. Are there things that are not captured by the current scope, the tool kit that we have at the moment, but that could potentially see some coverage? A code of conduct has been suggested. Do you see things like that as being adequate mechanisms to deal with these issues, or are we looking at something more comprehensive?
Mr Gregson : Senator, I hope I do not appear evasive in answering this. I think our chairman has taken the correct position to note that the first task is to see whether the provisions will apply, whether they will address the issues. There will come a point in time, hopefully not too far down the track, where we form an assessment about the types of things that we can tackle and the types of things we cannot but where we still think there might be a harm that needs addressing. When we get to that point in time, our chair has indicated that we will not be keeping that secret or behind closed doors. We will make some comments about the types of things that we see as being problematic that may not be dealt with under the Competition and Consumer Act. But it is perhaps a bit premature to do so at this stage as we gather bits of information.
CHAIR: So you would not have formed a view yet as to whether there are or are not things that need to be looked at. You are still looking at what you have got.
Mr Gregson : That is very much right. Until we get a little bit more information through the process of assessing that against the various provisions, we really are reluctant to make too many comments there. That said, I think it is clearly the case that, whenever we look at any industry or sector, there are a range of matters, some of which may be less problematic and probably will not fall within the provisions of the act whatsoever. We may form the view down the track that they are not the ones that we would say anything about in terms of raising concern. But there will be others that are closer to the line that we may actually say that there are some issues here but the current provisions may or may not deal with them. We will be quite transparent about that.
CHAIR: You do not have a sense of what sort of time frame might revolve around that process?
Mr Gregson : We have been looking at these things, and earlier this year Rod Sims indicated that we were starting to turn our minds to them. We are hoping to be in a position later this year to make some comments about where we are up to and those types of assessments about the types of things that we might be able to consider and the types of things we may not. Again, that perhaps sounds a little vague and evasive. This process is not quite as simple as setting down a timetable. We are getting more information and approaches. Of course, any assessment requires talking to all the parties, including the supermarket operators.
CHAIR: I understand that. In the context of the pressure that works up and down the supply chain, we have had exchanges on a number of different issues. We can go back to the milk issue that occurred in Tasmania in 2009, with National Foods and the dairy farmers there. There was a lot of discussion around the process for collective bargaining or the capacity to collective bargain. And there was perhaps even a lack of understanding by the participants in that process, particularly at the lower end of the system and the tool kit that they had and how it might apply in assisting to even up the balance of power. Obviously, it varies at different levels, say, between supermarket and processor. Again, that can vary depending on a number of factors—including brand strength, scale of the businesses, the penetration of the market and, of course, consumer demand for a product and its availability within that process—as we found during that inquiry. Do you think that sometimes the pressure within the supply chain is perhaps more perceived than it is real in some of these equations? Is that something that might be coming through some of your processes? It may be that there are some issues that need to be dealt with in the longer term, but sometimes you feel as though you are on the downstream end of things? Farmers would say to us on any day of the week that they are the ultimate price taker, for example. But there would be particular circumstances where they might be able to dictate a price, depending on their circumstance.
Mr Gregson : I think the appropriate response from the ACCC to that is not so much whether there are different perceptions but how we might approach things from different perspectives. The ACCC does come at issues from a competition and also a legislative framework. I think we have been quite careful and proper in acknowledging that the position of individuals, the farmers, in the milk case and also in the case of suppliers of dry goods is that they are in a very difficult situation. So an impact on them, while it may not have a broader impact on competition, is real. We try to be sympathetic to that while still focusing on the long-term interests of consumers, hopefully through the fostering of competition. I think I had dealings with you at the time in 2009-10 through the course of the milk inquiry and the matters arising in Tasmania with National Foods. It was certainly the case there that some of the issues we looked at were not necessarily ones that we were able to deal with under the Competition and Consumer Act. There was available the collective bargaining, but we know that is not going to be a silver bullet to the plight of many farmers in that case.
CHAIR: There are other elements that apply. Collective bargaining was something that proved to be a strength for them at the end of the day because, largely, they effectively applied it.
Mr Gregson : That is right.
CHAIR: But in other circumstances, in the same industry, players have not understood what they have had and have effectively been chipped off, which has allowed the strength of the collective bargaining process to be diminished. Therefore, the result has been very different. Just understanding the tool kit is part of the process as far as getting an outcome and knowing what the rules are and how they operate.
Mr Gregson : I think that is right. I am straying into the areas that Mr Jones works in in talking about collective bargaining. I have had some exposure as well, and in the last two years we have certainly have seen us ramping up our interest in telling industry about the benefits of collective bargaining, the framework we can provide through the authorisation or notification process and indeed some of the positive examples. Dairy has provided that, although I would not say across the board. You might recall there is an umbrella arrangement for dairy farmers, and we have certainly seen pockets of bargaining groups that have worked quite well. It may not ultimately result in price gains for those farmers all the time, but in other terms and conditions we have seen really good and innovative steps that hopefully benefit both sides of the equation.
CHAIR: In some of these discussions that are coming up, are we seeing not issues of competition but issues of trade? Coles's submission made the point that up and down the supply chain it is not a matter of competition, unless of course you are a player in that particular part of the supply chain. For example, where they own wineries and abattoirs, they would be both participants in the supply chain and competitors in the supply chain, which raises different issues. But we are talking about issues of trade up the supply chain, so effectively it is not necessarily about competition; it is about the rules of trade.
Mr Gregson : There are probably two things I would comment on there. When we look at competition we often phrase it as looking at the horizontal issues, which are dealings between competitors and the lessening of competition at that horizontal level. We also look at competition on a vertical level. It is possible, for example, for the behaviour of someone upstream to impact competition downstream by engaging in conduct that knocks someone out of the market, which will have negative impacts on competition at that lower level. In that respect, they are both competition issues. But we also look at the fair trading aspects. My colleague Mr Ridgway deals a lot with businesses, particularly small businesses, in terms of the unconscionable conduct provisions and the other provisions within the horticulture code or the franchising code that deal with those issues—I say reluctantly of fairness, but really of the rules about how you must trade with each other.
CHAIR: One of the things that a number of processors have discussed with us during the inquiry is the issue of certifications schemes that operate within the supply chain, particularly around food safety. In the seafood sector there are at least a couple of hundred certification schemes. The supermarkets have separate certification schemes. They effectively become tools of differentiation because the principles for a certification scheme, particularly around food safety, are fundamental. But you will have some other particular add-ons to say: I go to this level; I go to this level. We spoke to a seafood processor in Western Australia, and they had something like eight people down from AQIS. They had a third-party audit every second month, basically. They were buried in auditors. They were quite grumpy when the local council—which had a low-level requirement, when they were certified to a high AQIS standard—came in on Easter Thursday and said, 'By the way, we're here for a compulsory check of your systems.' Do you look at the claims that are made by some of those different certification schemes, as part of what you do? It extends much more broadly, I think, than just to the food sector, because, where you find certification schemes, there will be claims made about the efficacy or otherwise of those certification schemes. Is that something that you would do in respect of a market based claim of advantage, as far as the purchase of a product goes?
Mr Gregson : Let me have a first stab at that, and then we will see if Mr Ridgway or Mr Jones, who also have exposure to this, wish to add anything. Broadly speaking, I am familiar with three certification systems. One is linked to legislation or regulation, so the local council is one example. They are very much matters for the administration of those agencies. The second are the certified trademark arrangements, which first get lodged with IP Australia. They then come to the ACCC to determine if there are any competition or consumer protection issues, and we have an opportunity to approve or not approve those, based on the rules and our assessment. They pick up issues such as the heart tick, which you would be familiar with; that is a certified trademark that only people who meet certain rules can use. So we have that exposure too. You then have the voluntary or industry imposed certification processes—for example, a particular retailer might say, 'We expect you to get to a certain standard'—and, by and large, that is a matter for those businesses.
To address the crux of your question, though: if businesses are using that as leverage or as a marketing advantage when they may not actually meet those standards, yes, the ACCC can take them on. We have a bit of a history of taking on what we call credence claims—claims that might be difficult for a consumer to determine by looking at a product but that might be misleading, whether it be in relation to free-range eggs or the type of paper used in a product. If businesses are making claims about the level of quality or certification, yes, we can take that on, and we do, from a misleading and deceptive conduct point of view.
Mr Ridgway : The only observation I would make is that it is not uncommon for some suppliers to look for ways to raise the premium for their products by reference to a claim, whether it is trademark certification or meeting an Australian or international standard. It is a way of differentiating their product from their competitors' products. As Scott indicated, we have a history of testing such claims from time to time, when we have a sense that maybe they are not meeting those claims. I might go further and say that, on occasion, you will find more than one scheme in a particular space—whether it is to do with environmental integrity or some other form of credence claim—and it is not uncommon, when you have different, competing schemes in one space, for the proponents of one to be critical of the other. So, from time to time, we do consider some of those concerns as well.
CHAIR: Okay. That was one in particular that I was looking at. I was looking at the marine sector and I actually had the opportunity to read a critique of about eight or nine different marine certification schemes, which was a very detailed document. It went through the pros and cons of each certification scheme. Then, when I got to the fine print at the end of the last page, I found that the certification scheme which came out best of the eight or nine in that assessment was created by the person who wrote the critique. Surprise, surprise! It is not uncommon to see that in the market. So I am interested in whether you do actually look at the claims that different schemes might make about their efficacy. How would you deal, though, in circumstances where, say, an external party to that scheme that might be in some way associated makes a claim on behalf of that against another scheme? Is that something that you would look at as well?
Mr Ridgway : If I am getting the question right, this is a question of how we look at a claim by a party that is not actually the party generating the scheme but one that claims to meet a scheme standard—is that right?
Mr Ridgway : From time to time there will be complainants that come to us, saying that they think one of their competitors is claiming to meet a particular standard when they have reason to believe that they do not think they do, and on those occasions we look at what the standard is claiming, what the standard requires, and then we are able to test. It varies of course, depending on whether a particular standard or framework is aspirational or whether it has some more concrete requirements. It does vary from scheme to scheme.
Senator XENOPHON: Can I just go to issues in relation to the abuse of market power in terms of predatory pricing. There was a genuinely interesting interchange with the chairman of the ACCC on 6 October last year during the dairying inquiry, about the hurdles that you need to clear for a section 46 case in terms of abuse of market power. Can I just ask: how many cases have been brought to court under the Birdsville amendment? I do not think there have been any to date, though, have there?
Mr Gregson : There have not.
Senator XENOPHON: How effectively do you think section 46 is operating, including the Birdsville amendment that Senator Joyce moved several years ago?
Mr Gregson : I think I recall the exchange you are referring to. We have had a number of questions at various Senate estimates appearances about it.
Senator XENOPHON: Including on the issue of intent—of how you show intent to harm someone if it is part of Coles trying to reposition itself vis-a-vis Woolworths, for instance, but there is collateral damage in terms of, say, the dairy industry and suppliers. To what extent is that a fetter on taking action?
Mr Gregson : Cut me off if you think I am going into too much detail in answering your question but, as you are familiar with, we can look at predatory pricing under either the Birdsville amendment or, indeed, the general provisions of section 46. Common to both of those are a few elements: either a substantial degree of market power or a substantial market share, in the case of Birdsville, and that is something we can turn our minds to relatively easily. Working out that they have actually engaged in conduct using that market power in the context of 46 or, in the context of both provisions, for that purpose, one of those proscribed purposes of either damaging, eliminating or deterring competitive conduct—that sometimes is a barrier or a burden that means that when we look at a matter we do not think there is an issue there under section 46 or, indeed, Birdsville.
Senator XENOPHON: It can be a very high barrier, can't it?
Mr Gregson : Absolutely. But I think we have commented on a number of occasions that that hurdle is one that might knock out a number of matters that might otherwise raise concerns under a misuse of market power allegation. That is not to say that we think that is the wrong hurdle or—
Senator XENOPHON: I understand. But, Mr Gregson, can I put this to you: you could have a situation where one party says: 'We've slashed the price of a particular commodity. It is in order to reposition ourselves in the marketplace, to change our image in the marketplace, to get customers going through the door,' and that is their primary purpose. But if the incidental or collateral effect of that is to push suppliers out of business or push dairy farmers out of business or to squeeze their margins to the extent that they are unviable, does that mean that, if it is collateral damage, you would be precluded under the current test from taking action because they could genuinely say, 'We do this because we want to reposition ourselves in the marketplace'?
Mr Gregson : On the face of it, that is right. We are always very keen to be not absolute about these things because what might look like, on its face, not an anti-competitive issue, when you delve or investigate could be. So we always test those arguments about what the purpose is, but if the genuine purpose is not one of those proscribed purposes—that is right: section 46 or 46(1AA).
Senator XENOPHON: And there is an element of subjectivity in what is a genuine purpose, because genuineness is in the eye of the beholder, isn't it?
Mr Gregson : It is. But there is a fair degree of case law that talks about the subjective and objective aspects of a purpose.
Senator XENOPHON: Sure. But there is a degree of subjectivity in it, isn't there?
Mr Gregson : There is.
Senator XENOPHON: So in order to nail someone under the Birdsville amendment you would be pushing it if they say, hand on heart, 'This is what our purpose is and if the collateral damage happens to be growers or suppliers, people down the chain, it's too bad.'
Mr Gregson : That may well be the case in terms of the way those provisions work, although coming back to your first question about effectiveness, the ACCC has taken and continues to take actions under section 46. I grant you they are not one every week but we have recently concluded a fairly major—
Senator XENOPHON: You would need a much bigger budget if they were one a week, I reckon.
Mr Gregson : Seeing the bills that come across my desk, Senator, you would certainly be right. That said, there are some matters which have come through in the last couple of years which have gone to court making allegations of section 46. Some of those are still before the courts waiting judgment but we have certainly put forward what we think is a case which says there is purpose there. Just a few years ago we got that result in relation to Cabcharge, which also included a predatory pricing aspect. The matter was resolved by consent but it is not an insurmountable burden or hurdle for us to get across. You may be surprised about the information that sometimes is there on purpose. Our investigators are well-trained to go out and find those smoking guns that might refer to purpose or alternatively build a case based on an inferred purpose, which the act allows us to do.
Senator XENOPHON: But it is problematic. Despite the intent of the Birdsville amendment, it has not proved that easy to—it has not been tested, has it?
Mr Gregson : No, although I think the evidence we provided to various Senate estimates committees is that we do look at complaints. We escalate those for investigation and a number of them have been investigated, but no, we have not proceeded to court on any of those matters. That is not necessarily to say that we think those matters were problematic. They just fell down because of that missing element. Many of those matters we would look at and say that they would not have been anti-competitive anyway. Price discounting in itself is not anti-competitive, so we really do look for those elements.
Senator XENOPHON: I think the argument of Associate Professor Zumbo, who was author of the Birdsville amendment and is now Deputy Small Business Commissioner in South Australia—the criticism has been that the ACCC has never put it to the test. You are saying that is not a fair criticism?
Mr Gregson : We are quite happy; in fact, we enjoy the accountability that is brought through by public debate and criticism of what we do. Certainly as the person responsible for the investigations across the country I am comfortable that we look at them, we give them all the investigative attention they deserve and, if we believe there is a case—the competitive harm, meeting each of those elements—yes, we take it on.
Senator XENOPHON: Perhaps you can take this notice or refer us to where the committee can get an answer to this question. To what extent do other jurisdictions have a slightly different test, so that purpose is not the primary criterion, that the effect of a particular pricing practice includes the long-term impact it could have on an industry? I think Coles' very comprehensive submission to this inquiry is quite interesting. On page 35 it talks about why exclusion, predation of foreclosure could be anti-competitive and interestingly they say that sometimes you can have a short run price decrease but that could end up leading to long run price increases, which interestingly was one of the arguments put by Dairy Farmers in terms of the price wars. Could you take that on notice? Is there some tweaking of legislation or is there a different approach in other jurisdictions, in Europe for instance and in other common law countries, where the test is applied differently?
Finally, I want to go to the issue of trading terms. This committee has heard—most of us have heard privately—complaints about unilateral trading terms. You may be aware that when ABC's Lateline did a story on trading terms and the behaviour of Coles and Woolworth they made over 100 calls to people to come forward. They managed to get one person and the chair will remind me who that was.
CHAIR: I think I know who that was but they ended up not giving evidence anyway because they withdrew before the show went to air.
Senator XENOPHON: Okay. I think they were close. But not quite. Sorry, I thought they actually did. That was quite extraordinary and I think that Lateline made a comment that it was extraordinary to go to 100 contacts and no one is willing to come forward. I speak to people on a fairly regular basis who do not want to be identified under any circumstances because of fear of retribution. One of the common complaints is trading terms. Things can unilaterally change. They get a call from one of the 'big two' saying, 'By the way I have to do a special this week and we need you to supply it to us.' It does not matter if it is going to cost them dough. Alternatively, it could be a small outlet, whether it is a supermarket or a bottle-o that is providing something on special, and then in the liquor industry they need to provide things on special as well. Unilaterally they have to cop it. John Durkan, from Coles, hand on heart gave very strident evidence that they do not do that sort of thing. He said, 'It is not our policy, it was not systemic, it just does not happen.' To what extent is that unconscionable? To what extent can you provide protection to someone that comes forward if they are subject to retribution and how do you prove retribution? If things are going along swimmingly and then suddenly, six months later, they say, 'We don't want your product anymore?'
Mr Gregson : Forgive me, Senator; I did not see at what stage you were in the room. I mentioned in our opening that we publicly commented on the concerns that we might have about anecdotal information that we are receiving about—
Senator XENOPHON: —Between 10 and 100? Is that right?
Mr Gregson : Yes that is right. We have had parties come to us in large part prompted by our calls for people to come forward. We have indicated to them the manner in which we will treat the information they give us and indeed, dealing with issues of confidentiality, and even to the extent of saying that even anonymous information helps us. If we want to put a case, at the end of the day we might need more from other parties. But the first thing the ACCC is very keen to do is get its head around what is happening out there in the marketplace and form a view about whether there are problems. Then we have got a number of other investigation tools that we could employ to get that information. The concerns that you referred to are the type of things that are coming to us. They are the type of things we are looking at. There are a number of genres of matters that people are raising and, I should say, these are anecdotal and not matters we have put in evidence or before a court. But they are helpful for us to get an idea at least to get an idea of what suppliers are experiencing.
Senator XENOPHON: They are not anecdotal insofar as I have seen some of the invoices where they say, 'This is what they have done to us,' but they are not willing to make a complaint for fear of retribution.
Mr Gregson : Sure, and that is a real concern and issue. We have put a lot of effort in to try and deal with that anxiety that suppliers have, and you can understand where it comes from.
Senator XENOPHON: Finally, perhaps you could take this on notice. If I could refer you to the submission made by the Winemakers' Federation of Australia. On page 7 they make reference to the Competition and Consumer Act and what is going on in France, Germany and in the European Union generally, where they have laws in terms of transparency in trading terms, and the like. Could you, on notice, take a question on to what extent the ACCC has looked at the approach they have had in Europe which seems to give, on the face of it, a bit more transparency in trading terms and a bit more equity for people down the supply chain?
Mr Gregson : The short answer is that we are looking at a number of jurisdictions but we can give you more information on that.
Senator XENOPHON: Thank you. Thank you very much, Chair,
CHAIR: Can I just ask a question on the back of that, and that is the difference between a contract that might apply in this process and a supply agreement. There seems to be a bit of difference around how those two might operate. My perception would be that the supply agreement provides the supermarket with a bit more opportunity for variation and particularly even to set supply at zero in a particular circumstance. It is probably not something you can comment on specifically now, I understand that, but I just put that in front of you as part of some of the things that we may have picked up as part of this process.
Mr Gregson : There might be some terminology issues there that I will be careful not to cut across. To a large extent, they may also be not the focus of what we look at in the sense that we might be looking at if there is unfair treatment, harsh or oppressive treatment, and whether it is in a contract context or in a supply agreement context, that may not terribly matter.
CHAIR: That was the point I was going to ask about. Would you differentiate between a contract and a supply agreement in the terms of the act that you are applying to them? Without my going through the act and getting that determination, is there a difference?
Mr Gregson : Not necessarily for the types of provisions that we would look at. There might be some difference on the margins about enforceability and, therefore, what a party might be entitled to do before they start behaving unconscionably. But I would not say that that will be a major issue for us.
Senator EDWARDS: On the same theme, Senator Xenophon is probably too shy to refer to evidence that he took from Dick Smith in his questioning last Friday. In his questioning Senator Xenophon generally talked about Dick Smith's reluctance to come to you to talk about his issues. Senator Xenophon said:
One of the complaints I get from food processors is that they are terrified of making a complaint in case the big two find out about it. They are worried about retaliation. I get the feeling that you do not have the same sense of fear as others. Do you think it would be useful for others to put it to the test in terms of the beetroot prices?
As it was in this case. Devastatingly, Mr Smith said:
Maybe you are right. First of all, the retaliation is absolutely right. If I ran a family company I would not be here.
There you have somebody who runs a processing business who is sending the message that there is a retaliation. I respect Mr Durkan's attendance here this morning and his representations were quite genuine. Anecdotally you are now hearing that there are trading terms issues, but he suggested to this hearing this morning that there are not, that they are culturally not in any kind of mindset that any of these things happen. You have anecdotal evidence of between 10 and 100 at this stage. Does it concern you that there is a system failure for processors and suppliers who are obviously being marginalised and that this system is failing to get to you somehow? All the evidence from people who have really nothing to gain suggests that. The big two have helplines, complaints lines—one is called Speak Up, and I have forgotten the other one—but nobody rings them for fear of retaliation, as everyone has put it and as Mr Smith has put in evidence. 'Retaliation' means delisting.
We took confidential evidence in Australia that that actually happened. The product was delisted six weeks later, mysteriously because it was not selling through after it had been given a price rise. We are sitting here trying to solve the problems and you people are charged with trying to sort the problems out if you know about them. Where do we go from here? How do we build the bridge?
Mr Gregson : We are not really in a position to comment on whether there is or is not retaliation but what we certainly can comment on is that those persons we are talking about, whether they be large or small suppliers, do have an anxiety. That is understandable in the sense that a big part of how they get their products to market is through a smaller number of retailers, so you can understand the origins of concern. To answer your question, yes it is quite worrying to the ACCC. We thrive on information coming to us, whether it be in the context of this industry and these types of matters or in relation to cartel conduct or exclusive dealing. In relation to consumer protection issues, wherever they are, we rely very much on information coming to our attention.
Yes it is a concern and we have sought to overcome that by taking a fairly unprecedented endeavour to get people to come forward, and that is proving successful. Sure, we would like more and we would always like to get a broader range of issues before us, but we are quite pleased with the type of information that is coming to us to help us look into those matters. Yes we are concerned about the anxiety that suppliers have. Do we feel we have made inroads? Yes, we do.
Senator EDWARDS: In my home state of South Australia, Food SA is quite public. It is an industry body that represents the people, who can remain anonymous; although, if you were a retailer buying from members of Food SA you could actually go and boycott the whole lot of them. That body is very easy to go and talk to and would give you information as long as your arm. Are you proactive in this or are you reactive?
Mr Gregson : Both. We have been proactive in the persons we have sought out and, without naming names, in the associations and organisations. Yes, we do go to those who represent others and have found that to be a very useful mechanism. A number of those associations and organisations have volunteered to be a conduit for the provision of information, and that maybe another mechanism to avoid the sensitivity and anxiety of individual suppliers. That might have some limitations from an evidentiary point of view many miles down the track but, in our current exercise of wanting to get as much information that we can that has proved very useful.
Senator EDWARDS: Here is something that may worry you; it certainly worries me. There is a group of people in Australia right now who are trying to pull together a $25 million fund to, effectively, go out and run a campaign against major retailers to try to resolve the inequities they believe are there and which are largely being talked about in the anecdotal evidence you have collected. This is the first time I have spoken about this but I have been waiting for you to come before the committee. They do not feel that the provisions of section 46(1AA) protect them. They need an the organisation in which they can cloak themselves to use the muscle of a publicity campaign, rather than use your organisation, to try to redress what they believe is the imbalance when it comes to the trading terms and the timing issues that are used. Some of these trading terms extend to payment terms and things like that. The people involved in it are not lightweights at all, I can assure you, and they are looking to go underground with a campaign to address this issue.
Mr Gregson : I am not familiar with those issues but I would make a couple of comments. The first is the paramount that the ACCC places on this, and being responsible for our enforcement actions I also feel responsible for being as effective as we can in dealing with the competition or consumer protection issues that come to our attention. As I mentioned to Senator Xenophon, we appreciate and hopefully rise to any criticisms about areas in which we could do better, and we constantly listen on that front. On the concept of whether it bothers us that parties like—
Senator EDWARDS: It is not a criticism of you. It is the legislation under which you are working, so let me make that clear.
Mr Gregson : Thank you. I understand that. On the issue of parties looking at other mechanisms to deal with concerns, whether they be competition and consumer protection or outside that area, one of the benefits of our legislation is that it does provide proprietor rights of action. That is not to dismiss our responsibilities. It also does provide other mechanisms such as collective bargaining for parties to take some matters into their own hands in terms of collective attempts to raise their bargaining power within the framework we have endorsed. Indeed, public commentary might be another mechanism available to industry. The fact that parties look at other options does not bother me per se. If it were a reflection of us not being as effective as we could be, or indeed the legislation as far as policymaking goes, that is an issue we would always have some concern about.
Senator EDWARDS: I have questions to put on notice which relate to getting around in your area, Mr Jones. They are about the rights of farmers to collectively boycott, so will I will put all those on notice for you.
Senator MADIGAN: For primary producers, manufacturers, suppliers and independent competitors who may allege unconscionable conduct or predatory pricing or whatever it might be, is there a document the ACCC has that they can access so that they can self-assess, so that they can say, 'These are the things that the ACCC looks at,' and can have some confidence that they have some case?
Mr Gregson : Senator, I might let Mr Ridgway answer this.
Mr Ridgway : The short answer is, yes, the ACCC does have some guidance on what it considers, for example, unconscionable conduct to actually be. It indicates some examples of matters where the courts have found certain conduct to be unconscionable. Often the guidance we have, because we are responsible for market-wide application of the law, is sort of necessarily a bit high level. Then we have our information centre where we are able to take calls, respond and expand if this or that group, individual, producer or supplier has a query. We are happy to try and give a more specific application. We do not give legal advice, of course, but we do have some officers within the ACCC whose role it is to provide a bit more industry guidance where that is being sought.
Senator MADIGAN: Is there something that people can download from your site? People ask me whether there is something they can access readily and easily as a bit of a guidance before they ring you?
Mr Gregson : There are probably two or three key publications, and I am happy to provide a link to either the committee or to yourself, Senator, that would cover most of the issues that get raised.
Senator MADIGAN: In the event that a group of primary producers' right to collectively bargain was being challenged or eroded, does the ACCC support farmers' right to collectively bargain?
Mr Jones : In relation to collective bargaining the ACCC's role is to assess the application for authorisation.
Senator MADIGAN: Let's assume they have it, and then it is being undermined by a segment.
Mr Jones : Under authorisation they have protection from action under the Consumer and Competition Act. What is not conferred though is a right to force the other side to collectively bargain. The authorised arrangement in most cases is voluntary to enter into that collective bargaining.
Senator MADIGAN: Thank you.
Mr Gregson : There have been some concerns raised about that type of collective bargaining, but the larger player to whom the collective bargaining is happening with may not be or is not participating to the extent that the other parties want. That is a concern that is often raised, as Mr Jones has mentioned. It is not something that the authorisation process can mandate. We might be able to look at it if there is ancillary unconscionable conduct issues. We would be happy to talk to parties who are in that situation.
Senator MADIGAN: Where farming groups have been given the right to collectively bargain and the other side is refusing to deal with them and says, 'We do not accept your collective bargaining,' is the ACCC, which has granted them the right to collectively bargain, able to say to them that they have to sit down with the farmers and collectively bargain or not?
Mr Gregson : Not per se, Senator. To reiterate Mr Jones comments, the authorisation process is saying that for something that would otherwise be illegal, we give them an exception, that is, collective bargaining. It is not a mechanism to force parties to sit at a table and bargain; it is to provide the opportunity for that to happen. As I commented, there might be some circumstances where refusal to negotiate or discuss could raise some concerns under the unconscionable conduct provisions and they are matters that we could look at, but they would be at the extreme end of behaviour as opposed to not participating in the collective bargain to the extent the other party would like.
CHAIR: Thank you very much everybody. I would appreciate your evidence today. We shall move onto the next witnesses. We do have a couple of questions to put on notice, so we would appreciate your assistance with them. Thank you very much.