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Move to give courts power to break-up companies



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For more information contact Nick Xenophon on 0411 626 677

26/1/2013

ON THE SECOND ANNIVERSARY OF THE MILK PRICE WAR, WITH DAIRY FARMERS AT BREAKING POINT:

MOVE TO GIVE COURTS POWER TO BREAK-UP COMPANIES

Independent Senator for South Australia, Nick Xenophon, will introduce divestiture laws to allow the ACCC to apply to the courts to break up companies engaged in anti-competitive conduct, including abuse of market power.

The move comes on the second anniversary of the milk price war, which saw both Coles and later Woolworths slash the price of their 1L private label milk to $1.

Senator Xenophon said that despite an extensive Senate inquiry into the issue - which reported in November 2011 - already close to 10 per cent of Queensland dairy farmers have walked off the farm.

“For the past four months some farmers have been receiving 27c/litre and many need a minimum of 40c/litre all year round to make a living,” Nick said.

“If we do not act now, we will see more farmers walk off their farms and fresh milk will become a niche luxury item, with long-life milk the norm. In France, only five per cent of milk is fresh.”

Senator Xenophon said divestiture powers - which already exist in the United States and the United Kingdom - effectively deal with market power by giving the courts the power to ‘break up’ companies if market power is abused.

"There isn't another country if the world that would allow just two companies to control close to 80 per cent of the grocery market, and large chunks of the liquor and fuel sectors too,” Nick said.

“The short-term gain of the milk price war for consumers will ultimately lead to long-term pain all round. We will have fewer dairy farmers, less competition and less choice, and with it a spike in prices,” Nick said.

Senator Xenophon also took a swipe at the Coles ‘Down Down’ campaign, which uses the iconic Status Quo song ‘Down Down’.

“Unfortunately, more and more dairy farmers are finding they can relate to the lyrics of the song: I have found out you see / I know what you're doing / What you’re doing to me.”