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Wednesday, 22 June 1994
Page: 1876

Senator BOSWELL —My question is addressed to the Minister representing the Treasurer. I refer to the current WA Foodland takeover bid which would see Coles Myer controlling 78 per cent of the Western Australian grocery market following on its 69 per cent of the South Australian market, 42 per cent of the Victorian market, 25 per cent of the market in New South Wales and 42 per cent in Queensland, as well as a national grocery market share of 42 per cent. If the bid is allowed to go through, Coles will have a controlling interest in four out of five major food wholesalers in every mainland state of Australia, allowing it to influence the price of its independent competitors. As this would put a threat over every independent grocery retailer, create unfair bargaining power over suppliers and be against consumer interests, what action is the government prepared to take to prevent this disastrous situation occurring?

Senator COOK —I appreciate Senator Boswell's question. The government is monitoring the situation closely. The Trade Practices Commission has announced that it is closely examining the takeover offer for Foodland by the New Zealand company Rank Commercial Ltd. Before Rank Commercial can proceed with such a takeover, it needs to get FIRB approval to bring in an investment for the purposes of the takeover. To the best of my knowledge it has not made an approach to the FIRB at this stage. That is not to say it will not, but, in terms of government machinery, that would be the first hurdle. As I understand it, at this point no approach has been received.

  The Trade Practices Commission has also said that it will look at the role of Coles Myer in this takeover bid. Professor Alan Fels, the Chairman of the Trade Practices Commission, has met with Mr Peter Bartels, the Chief Executive Officer of Coles Myer, and Mr Graeme Hart, the CEO of Rank Commercial. The investigation is continuing; it has not concluded. The government takes the view that it is proper that the investigation go on and that it be conducted by the proper authority, the Trade Practices Commission, to establish the facts and the options. Judgments as to the proper use of trade practices power or government authority should be made after that process.

  There are perhaps two other things I can say in answer to this question. This government has held aloft the banner for competition policy in this country. We have been the ones who have sparked the report on competition policy and had those discussions with the states. So our position on competition is well known.

  I am also advised—perhaps I can add this as a footnote—that the Assistant Treasurer, Mr George Gear, the person responsible in this area, has referred the issue of this takeover to Treasury for it to be studied from a Treasury perspective for any policy implications involved. I understand that he is awaiting a reply from Treasury.

  In conclusion, I can say that the proper authorities have the matter properly in hand but have not yet concluded their analysis. The government is properly dealing with this by seeking the right advice and, when it obtains that, in view of all the facts, it will make a decision.

Senator BOSWELL —Mr Deputy President, I ask a supplementary question. I thank the minister for his comprehensive answer, but I am concerned that there is a court finding that there is a division in the wholesale and retail markets. Coles has made the statement that it will succeed in getting Foodland assets and become an independent wholesaler and does not need the approval of the TPC to do it—a pretty bold statement. Considering that Wal-Mart, the world's largest retailer, has only 2.4 per cent of the US market and Coles will now have 42 per cent of the Australian grocery market, will the government as a matter of urgency investigate the possibility that Coles will circumvent the Trade Practices Act as a result of the QIW decision? Will the government give a clear signal that it will not approve this takeover?

Senator COOK —Senator Boswell has raised the question of a court ruling and of reported statements by Coles Myer. The government is aware of those reported statements. If there were an artificial construct being implemented here for the purposes of getting around the authority of the Trade Practices Commission, obviously the government would be concerned about that. I can only repeat what I have said: this matter is before the proper authorities and is being dealt with in the proper way. What Senator Boswell has referred to is known to the government and the proper authorities, and we would be concerned if the authority of the Trade Practices Act were in some way being evaded.

  At this point no judgments can be made about those things, although they are before us. When we have completed our investigations and made those judgments, obviously the government will express itself or, if it is appropriate, the Trade Practices Commission will express itself.