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Monday, 30 August 1999
Page: 7939


Senator MURRAY (4:17 PM) —Having written a fairly lengthy set of supplementary remarks, I have only a few comments to make in respect of the Joint Select Committee on the Retailing Sector's inquiry and the report that has been tabled today. I, too, would like to begin by thanking the committee secretariat. I also thank the Hon. Bruce Baird, the Chair; the Hon. Harry Jenkins, the Deputy Chair; and members and senators for their work on the committee. The good temper of the committee was a credit to its members and to the Chair. The program of public hearings was exceptionally well organised. The secretariat produced a very well written draft report and its assistance in the negotiating process to produce the final report was sincerely appreciated by all those who participated; thanks therefore particularly to Andrea and Ross, and to my adviser, Lee Jones.

A hard core of senators and members attended nearly all the hearings and the difference in perception and understanding that resulted from such exposure was notable. A couple of `seagulls' who came in now and again did not have quite the same depth of assessment that they otherwise might have got if they had had exposure to the entire program. Nevertheless, having said that, the debates that the committee had to resolve the final report were conducted in a very thorough and helpful manner.

The committee unanimously made a number of recommendations that I believe will, if implemented, have a substantial, positive impact for both consumers and independent retailers. Indeed, they may well have a substantial, positive impact on the behaviour of the majors, whose market practices may improve from some of the insights that they gained through the committee process. The committee's recommendation that retail grocery store acquisitions be notified to, and approved by, the Australian Competition and Consumer Commission will allow the ACCC to assess the competitive impact of the proposed acquisitions on both the wider Australian market and at the local level before an acquisition can proceed.

The key thing, in talking to this report, is for us all to remind ourselves that it is the government of the day which will be responsible for accepting these recommendations and for reacting to them speedily. In that regard, I think Senator the Hon. Ron Boswell and the Hon. Bruce Baird need to play a particular role in gingering up the government to react sooner rather than later. Plainly, we do not want to spend a year or more waiting for the government to consider these matters at length.

I would hope that the acquisitions power that is proposed to be given to the ACCC would prevent the type of situation that was identified in country Australia—for instance, in Cooma, where a particular supermarket chain bought out its only competitor. That chain now has a monopoly in that town. Not surprisingly, the committee received evidence that prices have risen significantly in that town in the absence of that competitor. While we might think that is all very wrong, we must always expect organisations and people to be true to themselves. If they have the opportunity to make as much money as possible, they will do so. The purpose of competition practice is in fact to restrain at the earliest opportunity the natural instinct of organisations and people to profit as well as they can.

While indicating my support for the recommendations of the committee I also wish to indicate where I think the committee could have gone further. I have laid out six further recommendations. I note that Senator the Hon. Ron Boswell has laid out a further one, which I might say on the record that I agree with. But I think the six that I have laid out give the committee recommendations real bite. I would hope that the government would pay attention to them in its process of paying attention to the committee's unanimous recommendations. In my view, the Trade Practices Act must be amended to give the ACCC the power to order divestiture in regional markets which are overconcentrated. Furthermore, the ACCC should be empowered to order divestiture where an ownership situation exists which has the effect of substantially inhibiting competition. I see this power as being complementary to the ACCC's existing power to prevent acquisitions which have the likely effect of substantially lessening competition. The divestiture issue is often discussed in a somewhat emotive manner, but we should recognise that it is already a core practice in worldwide competition regulation and is indeed a power which is within certain parts of our own Trade Practices Act.

The committee received substantial evidence in relation to predatory pricing. Witnesses consistently complained of the difficulty in proving predatory pricing, particularly against one organisation. The Chairman of the ACCC, Professor Fels, agreed that there is a problem at present with the plaintiff being required to prove that the purpose of the retailer's actions is to damage its competitor. He suggested that there is a case for reversing the onus of proof. In my view, the relevant section, section 46, should be amended so that, in cases brought by the ACCC, once it has been established that a business with a substantial degree of market power has used that power, the onus of proof shifts to that business to prove that it did not use that power for a prohibited purpose. The committee very nearly got to that recommendation themselves but felt that they would hold off for three years.

I must say that in the end, although I let it go because I did not have the numbers, I do think that decision was a mistake, because I have to ask members of the committee: what do they expect to occur during the next three years to either confirm or deny the need for strengthening section 46, given the nature of the evidence we have already received, or that will alter the evidence the committee already have? What will happen in three years time is that there will be fewer independents and more people hurt. There is nothing to suggest that the predatory pricing practices will change, that the number of claims of predatory pricing will decrease, or that it will somehow become easier to prosecute a claim. Of course, I should qualify that by saying that there is plenty to suggest that the number of claims might decrease because the number of independents will decrease over the next three years. I draw senators' attention to my supplementary report for a full explanation of my concerns and additional recommendations.

I wish to leave aside the substantive issues raised by the committee—because they have been well addressed by other speakers to the report—but I would like to conclude by raising an issue of concern as to the conduct of one or more members of this committee. It is clear that the contents of parts of the draft and final reports were either provided or recounted in detail to the media in advance of the tabling of the report. Anyone who read today's newspapers would know that to be true. It was always my understanding that it is incumbent upon members of parliamentary committees not to speak to the media ever about the private deliberations of committee and not to speak to the media on the possible recommendations of the committee until the committee's report is tabled as a public document in either house of parliament. That protocol has clearly not been followed by one or more members of this committee. I hope that is not a practice which will become the norm, because it would see an end to the ability of members and senators to confidentially negotiate the contents and recommendations of reports—whether majority or not. I must say that in the past I have found the Senate's own committees to be much more diligent about this than mixed House of Representatives and Senate committees. I believe that this committee's inquiry has indeed been a very useful exercise, and I sincerely hope that it results in the government making some real changes, at the earliest date, to the regulation of the retailing sector.