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Monday, 1 September 2014
Page: 9274


Mr CRAIG KELLY (Hughes) (11:42): I would like to commend the member for Lindsay for putting this motion together. Firstly, I am a great believer in free markets. I believe that the free market is the greatest force that we have ever had in human history to create opportunity for the working class, to create a middle class, to uplift the poor, to create prosperity and to grow wealth. I am someone who, probably more than anyone in this parliament, believes that too many times government regulation gets in the way of that free market and actually has adverse effects. But there is one exception: what we here in Australia call competition law or what they call antitrust law in the USA. Unless we get competition law and antitrust law right, all the workings of the free markets, all the benefits that we have from the free market—we simply miss out on. So, perhaps paradoxically, I believe that we need strong competition law, we need stronger antitrust law—as they call it in the USA—to make sure those regulations are effective, to make sure that we get the benefits from the free market.

I believe that, for the last several decades, we in this country—on both sides of the House—have got competition law wrong. We have had too many people long on theory but short on practice deciding what is best for Australian competition law. We have seen an ideology that sometimes big is better, that there are these endless economies of scale. But of course, as history tells us, that is the same mistake Stalin made.

Perhaps nowhere did we get this more incorrect than in the Dawson inquiry. The Dawson inquiry got many things wrong. Firstly, they got wrong the basic concepts of predatory pricing, price discrimination and geographic price discrimination. They simply did not understand those concepts and they simply failed to understand the history of those provisions—how they came about, the reasons why they were there.

Most of all what they got wrong was, firstly, they said that consumers are benefiting from competition. At that time, if anybody had looked at the grocery industry—which was one of the most discussed during that time—and had taken the opportunity or the time to look at the inflation figures from the OECD, they would have discovered that the rate of food inflation in Australian supermarkets was higher than in just about any other developed country in the world. Prices were accelerating at Australian supermarket checkouts faster than anywhere else in the world, and yet the previous review said there were no problems.

What the Dawson inquiry also got wrong was that they said that section 46 of the old Trades Practices Act, the misuse of market power provision, was 'the appropriate means to tackle anti-competitive price discrimination'. Several cases after that showed that conclusion was completely wrong. I would like to quote the comments of Justice Kirby dissenting in a decision:

With respect, the result of the analysis in the joint reasons in this Court does not protect or promote competition or the competitive process. It stifles it.

…   …   …

This is the third recent decision of this Court (Melway and Boral Besser Masonry … being the other two) in which a majority has adopted an unduly narrow view of s 46 of the Act …

In my view, the approach taken by the majority is insufficiently attentive to the object of the Act to protect and uphold market competition. It is unduly protective of the depredations of the corporations concerned. It is unrealistic, bordering on ethereal, when the corporate conduct is viewed in its commercial and practical setting. The outcome cripples the effectiveness of s 46 of the Act … The victims are Australian consumers and the competitors who seek to engage in competitive conduct in a naive faith in the protection of the Act.

Justice Kirby was exactly right, because the current act does not protect consumers. We have the highest rates of food inflation and, by any logical international comparison of our basic food prices—whether it be a bottle of Coca-Cola, a jar of Vegemite or a tub of margarine—Australian consumers are paying much, much higher prices.

The simple reason is that we allow price discrimination in this country. We have no effective provision against price discrimination. So what happens in this country, which would be unlawful in many other jurisdictions in the world, is that large companies are able to go to the suppliers and demand rebates. The rebates only go to the two largest suppliers in the market. The rebates simply become a cost of doing business which then gets added onto the wholesale price, which is the reason why we have the highest prices. Just look at a bottle of Coca-Cola. It is $4 in Australia; it is half the price almost everywhere else in the world. That is because of the rebates and anti-competitive price discrimination. (Time expired)