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- Start of Business
- MINISTERIAL STATEMENTS
- STATEMENTS ON INDULGENCE
- Fairer Private Health Insurance Incentives Bill 2011
- Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011
- Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011
- PRIVATE MEMBERS' BUSINESS
- REGISTER OF MEMBERS' INTERESTS
- DELEGATION REPORTS
- Competition and Consumer Amendment Bill (No. 1) 2011
- National Health Reform Amendment (National Health Performance Authority) Bill 2011
STATEMENTS BY MEMBERS
- Morrison, Abbey Rose
- Carbon Pricing
- Small Business
- Carbon Pricing
- Carbon Pricing
- Bennelong Electorate: Ryde Lantern Club
- Donovan, Ms Ricki Lee
- Wright Electorate
- Bass Electorate: WIN Television
QUESTIONS WITHOUT NOTICE
(Abbott, Tony, MP, Gillard, Julia, MP)
Live Animal Exports
(Mitchell, Rob, MP, Gillard, Julia, MP)
(Hunt, Greg, MP, Gillard, Julia, MP)
(Rishworth, Amanda, MP, Gillard, Julia, MP)
(Ciobo, Steven, MP, Gillard, Julia, MP)
Live Animal Exports
(Bandt, Adam, MP, Gillard, Julia, MP)
(Brodtmann, Gai, MP, Swan, Wayne, MP)
(Hockey, Joe, MP, Swan, Wayne, MP)
- Carbon Pricing
- STATEMENTS ON INDULGENCE
- MATTERS OF PUBLIC IMPORTANCE
- Albanese, Anthony, MP
- Disability Services
- Cowper Electorate: Blind Courage Team, Cowper Electorate: World Rally Championship
- Deakin Electorate: Nunawading Christian College
- Hibberd, Ms Carly
- Rotary International
- Riverina Electorate: Reserve Forces Day
- Start of Business
- Casey Electorate: Apple Imports
- Fraser Electorate: Eastern University Games 2011
- Trio Capital
- Fountain Gate Secondary School: Lone Pine
- Foreign Investment in Agriculture
- Adelaide Electorate: Vipac Engineers and Scientists
- Parkes Electorate: Gulgong Hospital
- Canberra Electorate: Health
- Riverina Electorate: Primary Centre for Science Education
- Shortland Electorate: Building the Education Revolution Program
- Forrest, John, MP
- Rotary International
- Longman Electorate: Murri Teilah Medical
- Bass Electorate: Regional and Local Community Infrastructure Program
- Chisholm Electorate: Australian Envelopes, Petition: Easter Sunday
- QUESTIONS IN WRITING
Thursday, 7 July 2011
Mr BILLSON (Dunkley) (11:54): I rise today to speak on the Competition and Consumer Legislation Amendment Bill 2011 and do so having risen, I think, in this very room in the same place, to discuss this legislation before parliament was prorogued for the last election. The bill is very much exactly as it was the last time we discussed it in this chamber. There are some additional technical amendments to the Australian consumer law that are attached to this legislation.
It is important to open the batting by saying that we do not oppose this legislative change. In fact we made it clear that we find this bill quite unobjectionable in that what it seeks to achieve is extraordinarily modest, and it manages to achieve such modesty. There is no harm from this legislation, but it would be false and quite wrong—to use the consumer law language, false representations would be made—if the government were to claim that some enormous shift will be achieved by this legislation. It will not. And that is one of the reasons the opposition has no objection to this legislation. However, we will be highlighting how it fails to achieve a number of the things that the government has described as being the ambition of the legislation.
Essentially, the bill has two main aims. One is to clarify the operation of existing provisions, not new provisions, relating to mergers and acquisitions by attacking a potential uncertainty or a potential ambiguity that may arise—it has not yet—in defining what a market is for the purposes of section 50 of the Competition and Consumer Act. Its second aim is to insert interpretive principles. These are not new provisions. They are not new measures that will give greater protection to small business in relation to unconscionable conduct by big business. It does nothing of that sort. It simply seeks to insert interpretive principles into a unified unconscionable conduct provision for consumer- and business-related provisions to assist the courts in applying the law and to assist stakeholder understanding.
Stakeholder understanding is an important concept here in that the government in the second reading speech talked about these measures offering new protections for small business. That is completely false. It does nothing of the sort. The claim in the second reading speech that it will somehow protect small businesses is not right. There is no change. The legislation is purely about clarifying existing provisions and then inserting these interpretive principles so that people's expectations are managed. The government is trying to make it sound as if there is a new tool in the tool kit to tackle big business unconscionably pushing around small business, but there is no new tool. You can imagine the man cave—the shed—with the tools on the wall. Sometimes they are outlined so you know where to put back certain tools. Well, that is all this does. It outlines what these unconscionable conduct provisions might mean so that people's expectations are not too great.
It achieves those extraordinarily modest objectives. The objectives as stated in the more sober and objective provisions of the second reading speech—as modest as they are—are actually met. Some of the rounding-out comments in the second reading speech are not met. They try to create the impression that there is some miraculous change and some enormous renovation to the competition and consumer laws in Australia. That is not correct.
Over the past decade or so there have been concerns raised within the community about market concentration in a number of key sectors—we have seen it in banking, retail fuel, groceries and some other areas—and the ability of section 50 of the competition and consumer law to deal effectively with creeping acquisitions. These creeping acquisitions are acquisitions which may, of themselves, not be terribly significant. They may, of themselves, not represent a substantial or wholesale change in market conditions, but when accumulated over time they bring about quite a different complexion in the conditions in the market place.
To some extent you can look at the supermarket area to see this. When Professor Hilmer was doing his landmark work looking at our competition and consumer framework, and recommending reforms that earned a wide degree of support, I think the two major supermarket chains had less than half of the total grocery market. Changes were foreshadowed that would supposedly nurture competition and consumer interests. We now know those two major chains have nearly three-quarters of the market. Nothing enormous or transformational may have happened overnight, but a system and a series of acquisitions, new presence and purchasing of other properties has seen the majors in the supermarket area really enhance their positions. That is called creeping acquisition.
The Baird committee considered creeping acquisitions in 1999 in its report, Fair market or market failure?
The committee recommended a code of conduct be established requiring the mandatory notification of supermarket acquisitions by publicly listed companies. The Baird committee also considered whether subsection 50(6) should be amended to specifically allow consideration of a regional market in order to address creeping acquisition concerns at a regional, rural or more localised level. The interpretation of that subsection by the ACCC has not been tested by the courts. In response to the Baird review and in commentary that followed, the ACCC felt that specifically allowing for consideration of a regional or more localised market was not needed—because the law already provided that utility by the description of the commission being able to consider the impacts on the market. In Justice French's decision in 2003 in the Federal Court of AGL v the ACC, while not offering a concluded view on it, he left open the possibility that a market needed to be considered substantial and may be determined with reference to Australia as a whole. That opinion has not been tested and there is no jurisprudence to validate that view, but it was a risk and a potential avenue of action for those concerned with merger and acquisitions proposals and perhaps aggrieved by the ACCC's conclusion.
It was conveyed to the ACCC that one major supermarket chain may possibly press that interpretation to resist any objection to acquisitions in geographically confined markets from being considered under section 50. Prior to the last parliament and in this parliament, given the threat of a legal challenge being mounted on that basis, the government thought that the law should be clarified. Given that lack of jurisprudence, the bill seeks to redefine 'market' as 'any market' and to remove the term 'substantial' to define the market to be any market in Australia—which might otherwise prevent the application of section 50.
A related area which arises when talking about distinctions in the supermarket sector is that one of the major supermarket chains has routinely informed the ACCC about vacant site acquisitions plans. Another has not been so enthusiastic about that in communicating intentions in regard to greenfield sites, to be purchased or leased, claiming that such an acquisition is undertaken in 'the ordinary course of business' and therefore would be exempt from the creeping acquisitions provisions. While the bill contains no express provisions to deal with this issue, in bringing this bill forward the government has made it clear that, if the government believes the ACCC's interpretation is valid but this proves not to be the case, and if the ACCC's powers do not extend to considering the acquisition of greenfield sites, the government will act to clarify the law.
So we have clarification about a possible risk through a potential ambiguity on the basis of a threat about how someone might attack a legal argument—that is the justification for one of the provisions. There is an announcement that the government is telling supermarket chains or any others that, if it thinks acquisition of greenfield sites is not an acquisition for the purposes of section 50, it will argue that that is wrong but, if challenged on that, it will change the law.
I hope you can see from that description that there is really no great joy. There is no sense that the toolkit available to nurture durable consumer benefits and a competitive market place will be enhanced by these changes because effectively they do not change much. They are just window dressing and aimed at dealing with a potential risk. On the basis that it is risk management, the coalition supports the bill. So, on the basis of the argument that it is risk management, the coalition support the bill, but we do not support it on the basis of the government's argument that this is somehow strengthening the competition and consumer protection framework—on that, we beg to differ. That is nonsense and hyperbole, and the government should desist from over-egging the pudding in that regard.
The other part relates to the unconscionable conduct provisions. Again, let me make it clear: there are no changes to those provisions, none whatsoever. What the bill seeks to do is implement some recommendations from 2009, from an expert panel of eminent competition and consumer lawyers established to consider the recommendations of the Senate Standing Committee on Economics inquiry into the statutory definition of 'unconscionable conduct'. The coalition were very much the pioneers in introducing the concept of unconscionable conduct into our competition laws. While we appreciate that those who feel a bit hard done by sometimes conclude that the conduct directed towards them was unconscionable, that conclusion is often not really well informed by an understanding of the law. The law makes it quite clear what unconscionable conduct is, but it is not something that is well understood generally out in the business community, particularly amongst the small businesses that I am very honoured to represent, and that is why the Senate Economics Committee said a statutory definition should be provided.
The committee recommended that the government set up an inquiry process to determine whether examples would be helpful and whether a statement of principles would enhance the unconscionable conduct provisions. The expert panel found that the unconscionable conduct provisions had been regularly enforced since their inception and that the case law was still developing. I am mindful of the fact that, when these provisions were first introduced, the Howard government provided resources to the ACCC to build up the case law—to pursue instances where it was believed unconscionable conduct had been inflicted on a smaller business, to establish the legal facts and precedents and then, through that, inform the broader marketplace of what unconscionable conduct is really about. The government accepted the panel's statement that unconscionable conduct provisions are not easily understood and that they could and should be made clearer for businesses, consumers, enforcement agencies and the courts. The panel also found that a list of examples might give rise to misguided expectations and stated that the inclusionof some interpretative principles in the TPA would assist.
Essentially, the conclusion the government accepted was that, if you put case studies into the law, people will read their own circumstances into those case studies, which might create the expectation that the law is able to act in relation to what is often their commercial disadvantage at the hands of a larger competitor, but that might not be well founded in the law itself. So the government have moved away from providing case studies and examples, for fear that they might increase people's expectations about the remedy and relief that is available to them through the unconscionable conduct provisions. Instead, these interpretive principles are being introduced.
Let me again emphasise that this is not a change to the material content of the law. There are no new tools being brought to the unconscionable conduct tool kit. What there is is the introduction of some principles to give people better insight into how the existing provisions actually operate and to manage expectations about the relief and remedy that may be available through unconscionable conduct provisions. So, again, it is quite misleading of the government to conclude in the second reading speech and in other commentary on this bill that there is somehow improved protection of small businesses under these provisions. There is not. The substantive elements of the law, and the machinery and the efficacy of the law, are unchanged; it is just an improved explanation so that stakeholders, including agencies and courts, have a clear sense of the principles that underpin it.
The interpretive principles aim to ensure that the courts do not too narrowly interpret the bill or apply a common-law concept of unconscionable conduct to business and consumer relationships; that unconscionable conduct provisions are not solely limited to the way a contract is formed but also apply to the terms of the contract and the manner in which the contract is carried out; that the prohibition on unconscionable conduct applies to systemic conduct or patterns of behaviour; and that there is no need to identify a person at a disadvantage in order to attract the prohibition. That last point is very relevant as it relates to the common law concept of unconscionable conduct, where there is a need to identify the victim of that unconscionable conduct as having some kind of disadvantage, impairment or inability to fully engage and appreciate the kinds of transactions they have entered into. Clearly, people with no such disadvantage, impairment or diminishment of faculties can still be the subject of unconscionable conduct. Therefore, this is aiming to ensure that the courts do not resort to that narrow common law concept but actually look at the statue law as it has been written. These interpretive principles should give clarity to the court on what was intended.
There is some other stuff in there which seeks to harmonise the ASIC related provisions with the Australian consumer law, so that there is a single set of specific factors which the court may consider, rather than a risk of separate provisions being interpreted differently. That is designed to eliminate any potential for confusion. Again, there is no evidence of confusion but this is designed as a risk management measure to eliminate the potential for confusion where unconscionable conduct provisions are applied to both businesses and consumers.
There is not a lot new in this; in fact, there is very little new in this because the parliament has considered it before and it has passed the House of Representatives with the support of the Senate Economics Legislation Committee. It headed its way off to the other place but, in between, parliament was prorogued and we had an election.
For the government to claim that this is some major change is completely false. There is nothing in this bill which could substantiate such a claim. This is clarification and interpretation, avoiding any risk of confusion. It is nothing new, no new tool kit in the competition and consumer protection framework, nothing like the kind of enhanced protection for small business some would suggest. This is not even in keeping with the expectation the government itself has created about the creeping acquisitions issue in the public's mind, as in the election campaign in 2007.
The government has attracted some criticism that this bill amounts to nothing more than window-dressing. I think that is fair and well-justified criticism. It also does not do much to deal with what inspired Senator Xenophon with his Richmond amendment, which was designed to improve what he considered were unresponsive and ineffective provisions dealing with creeping acquisitions. Interestingly, neither the government nor the opposition supported Senator Xenophon's legislative proposal. It was very well intended, I am sure, and I certainly understand the motive behind addressing the unresponsiveness and ineffectiveness of the current provisions, but the particular provisions in the Richmond amendment did not achieve that. So it was understandable why neither the government nor the opposition backed it.
What is also undeniable in my view is that there is a need to have a very close examination of creeping acquisitions and some of those legal concepts that shape the regulatory process for considering merger and acquisitions proposals. What would be wrong would be for people to point to Senator Xenophon's amendment, the Richmond amendment, and say that, just because it was poor and did not achieve what it set out to achieve, there is somehow no problem. I think that is a mistake. There is so much debate about market concentration, about creeping acquisitions and their impact not only on consumers but also on those participating in the supply chain.
The ACCC is in a position to consider whatever it feels it needs to consider when assessing merger and acquisition proposals and in the way creeping acquisition provisions apply. I think the ACCC should be obliged to consider implications for the supply chain, those selling into businesses that are acquiring or already have an extraordinarily substantial market share. I think that would be a more worthwhile discussion to have. It would reflect the kind of sentiment that inspired Senator Xenophon, but it would also recognise that just because Senator Xenophon's response was not all that it could have been that does not mean that somehow the problem is not there. I think there is a good case to have a look at the impact on the supply chain.
There are a range of areas the coalition has identified and put to the Australian parliament that would improve and enhance our competition and consumer framework. Prior to the last election the then government minister who had responsibility for this area, Craig Emerson, was quick and quite shrill in announcing to the Australian public and the business community that there was nothing more that needed to be done to the competition and consumer protection framework in Australia. It was a bizarre statement that he made when he was attacking the coalition's election commitment to have a root and branch review of that framework, the toolkit that is available and the way in which it is implemented.
I would characterise that as Hilmer 2.0. Hilmer did that work and made sure that the competition and consumer affairs concepts, frameworks and regulatory arrangements were relevant at the time that review was conducted. Much has happened since. Many of the assertions, conclusions or, dare I say, misguided assumptions that influenced the conclusions of Hilmer's work have proven not to be true. They have not been borne out by the facts, and the market today looks very different than it did in that time.
We on this side of the chamber think that the work is far from done and we completely reject the government's assertion that it has done all it can to the competition and consumer law framework in Australia. It was a ridiculous statement that the minister made then, which was inspired by political opportunism and to have a go at the opposition. You do not have to take my word for it. We are here today talking about amending the bill. Those very laws were claimed to be so perfect that they would not benefit from refreshing, renovating or rethinking, so precise were they in the eyes of the Labor government, but we are here talking about changes, albeit changes that are immaterial and window dressing.
Later today in the chamber we will also be talking about a bill relating to price signalling. Again, that is another area where the coalition has led the debate on the need to improve the competition and consumer protection framework. Belatedly, the government has now come to that task. The government's own actions clearly prove that the claim by Dr Emerson, the then minister at the time, that everything was sweet and hunky-dory was just not right.
This extends into other areas, such as the assumptions about the reach of section 46, how the provision dealing with the abuse of market power operates and how in the eyes of many, including some of the regulators, there is a whole lot of effort required to demonstrate the abuse of market power. These are very difficult provisions. If the case is proven only a fine is applied. Where so much weight is being put on one provision of the law that has proven itself to be extraordinarily difficult to implement and where someone who has been found to have offended that law faces relatively modest consequences, it undermines the utility of that very provision.
I think that section 46 needs to be revisited. So much weight has been placed on that provision in order to achieve all sorts of things, including the claim by the Hilmer review and embraced by the Hawke-Keating government that it would deal with price discrimination better than the old section 49 because it was a more comprehensive approach to anticompetitive market behaviour. If that is the ambition behind that provision it has not lived up to it and it needs to be examined. If it was said to have been able to cover all sorts of circumstances and it has been proven to be deficient in that task then it needs to be revisited. That is just one area.
There are also issues around the way in which the effects test applies. For the life of me, I cannot understand why our competition laws are not more interested in effect and purpose. So much of our law relates to the motive of particular participants. Where a purpose to lessen competition at varying degrees is proven then an offence has been committed and an option for some remedies is to be implemented. But most countries base their abusive market power test on an effects test because people are interested in the consequences, the outcomes, the actual diminishment of consumer interest and detrimental impacts on competition. They are interested in the effects.
I would think there is a very strong argument for adding purpose and effect. I think there is a very strong argument in competition law and in an economic policy sense to make sure that we capture those outcomes that are detrimental to consumers and are anti-competitive, regardless of the motive, so that we can attack the harm not just go to people's motives as we make those assessments. There are even opportunities to strengthen areas of the retail code from the models that you see overseas on aspects of unacceptable behaviour. There is a very strong argument to revisit that case.
We have touched on mergers and acquisitions. I pointed out that I think there are some opportunities to look at impacts on the supply chain. Some of the tests for market power are so incredibly complex to prove, yet in other jurisdictions the way in which market power, and therefore the abuse of it, is substantiated introduces a range of concepts ours do not really focus on. Market power in our context looks at the impact of the almost impunity with which a business can raise prices with no detriment to their market position. That is a consumer focus. What if the market power is so profound that the suppliers to that company or business with a strong market position can virtually name their price and the suppliers are left saying they are price takers? Surely where there is an abundance of evidence that suppliers into particularly dominant companies in certain markets are price takers there is some unhealthy imbalance in market power.
I think these concepts should be teased out. They should be teased out because the ambitions that were set through the reforms that emanated out of the Hilmer review and are captured in the current law in many cases have not been met. Therefore that would be a worthwhile exercise. That would be the clear justification for the coalition's policy position that we need a root-and-branch review of our competition law, the framework within which it operates, the tools available to the regulator and the way in which they are implemented. It is the implementation of appropriate tools that we should be looking at not an ongoing defence of the law as it currently stands.
For those operating in a highly competitive marketplace it comes as little comfort when they know what is being done to them is hardly in the spirit of competitive markets and durable consumer interest when the answer they get is, 'Ah yes, but that conduct has not offended the law.' In our country it does not come down to an argument about whether the conduct is pro-competitive or even neutral, whether a consumer benefits or not, it comes down to an argument over whether black-letter law has been offended. If the law has not been offended, it is assumed to be okay. The market has changed since Hilmer. The pressure on those in the supply chain is getting greater and greater.
The weight of market concentration is playing out in so many different areas of our economy and that is why we need to make sure that our competition framework, the tools within it and the way in which it is implemented are fit for purpose. That is not what this bill does. This bill is window-dressing. It is ornamental at best. It achieves no new outcomes for small business. It is a false and misleading for the government to claim so. There is a job that needs to be done. The coalition has said we are prepared to do that work. It is work that needs the government's resources. It also needs a clear mind about what a competitive marketplace and durable consumer benefits mean in Australia for the long run. That is the work that needs to be done because the law is far from perfect, as the government would try and tell people. Its own evidence is on bills being discussed in the House. I hope we get to have that more substantive discussion about what really is needed for the framework of competition and consumer protection in Australia because there is much work to be done here. (Time expired)