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Transcript of interview with Brooke Corte: Sky News Business: 18 November 2013: Supermarket Industry Code of Conduct



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Small Business Minister Bruce Billson

18 November 2013

Interview with Brooke Corte, Sky News Business SUBJECTS: Supermarket Industry Code of Conduct

BROOKE CORTE:

We are now joined by the Small Business Minister Bruce Billson who has been putting a hard word on the retailers. Thank you so much for joining us Minister, appreciate your time there from Canberra. Um just broadly explain to us how this code of conduct does advance the interests of small business.

BRUCE BILLSON:

Well it's a very positive and constructive step that has been taken in a collaborative way by Coles, by Woolworths and the Food and Grocery Council to recognising that in our economy the supermarkets are behemoth businesses. They are very large suppliers, are very dependent on those businesses and that creates an imbalance in market power, an imbalance that we need to be alert to and put in place a framework where the conduct between those parties with very different market power can interact effectively, can see both businesses thrive and prosper and deliver benefits to consumers. That's what the code is about.

CORTE:

Their market power has been recognized for some time in that we have grocery inquiries going back many many years. There has been quite a few of them I think, I was just looking back there was one back in 2008, there has been one more recently. This agreement has taken 14 months to come up with. Um why at this point after recognising there's been a problem for so long, why at this point just a voluntary code of conduct? Why something not more enforceable?

BILLSON:

Well it's not the only thing going on in this space Brooke. As you'd know, the ACCC's investigating more egregious concerns, allegations about unconscionable conduct. Those mechanisms are still in place and those investigations are ongoing. So that's dealing with the current law.

The Government has announced a root and branch review of the competition laws themnselves to make sure the toolkit which hasn't been thoroughly examined for over 20 years is made to be fit for purpose for the current and emerging economy.

And then the third piece of the picture is this code which deals with the conduct, the day to day relationships, the way in which the supermarkets and their suppliers interact and putting in place some safeguards to make sure that that very strong market power the supermarkets have is used fairly in their dealings with smaller suppliers.

CORTE:

If this code of conduct fails to meet expectations the Government will, you know, potentially think about stepping in at that point and take your own action. How long do you give it though and particularly with an issue where we have seen suppliers so reluctant to come forward and speak because of the power that these guys have. How do you even monitor whether this is going to be working?

BILLSON:

Well, we'll know shortly because this code when it's presented to me formally today will be made available more broadly and a regulatory impact statement process will be activated. That will give stakeholders, not only those directly involved in this negotiation Brooke, but those more generally more broadly involved a chance to say does this work? Is it responding to the legitimate concerns that have been raised? Does it need to be strengthened? That process will inform my decision about whether to prescribe this code or whether further action steps are required.

CORTE:

So how long do you give it?

BILLSON:

Oh look I suspect that will be a couple of months before everyone's had that opportunity for a say and the ACCC has had a chance to review the code to see whether it responds to the areas of concern and sets an effective framework for the dealings between the big supermarkets and their suppliers. And also whether other supermarkets will sign up to the code as well, because that's an opportunity that will be available for the smaller supermarkets.

CORTE:

And so what role does the ACCC play in seeing whether this is all effective?

BILLSON:

Yeah what will happen is once we have gone through the regulatory impact statement to make sure that this is effective, its responsive its fit for purpose in relation to ensuring fair and mutually respectful dealings between suppliers and supermarkets. It then is presented to me for approval as a prescribed code. There are mechanisms within it that deal with dispute resolution, that deal with certain matters relating to the supermarkets conduct, the way in which they can be resolved and then the ACCC can oversee that to see whether the code is working or whether it needs to be strengthened or further changes are required in the law itself.

CORTE:

I suppose some people just on the face of it will be saying still you know you've got two companies that have 80 per cent of the market. The ACCC have supposedly been overseeing this sector for some time and yet we are at this point. Has the ACCC basically got enough, has it got the tools, has it got enough power? Obviously the toothless tiger phrase is one that's brought up often in relation to the ACCC. Can they have a stronger role in all of this so people can actually feel like they are doing something about it?

BILLSON:

Yes they can and they are taking a stronger position. The Abbot Government has made it clear to the ACCC that they need to be decisive and firm in exercising the powers that are available to them. But we have also recognised that in some areas those powers may well be deficient. We know section 46 that broad and general misuse of market power provision that was thought to be omnipotent, able to deal with any kind of commercial mischief that a big player might flick to a smaller player. Well we've seen through court decisions that power does not operate the way in which it was anticipate. I've at times characterised it as a hunting dog that won't leave the porch. You know it looks good, it sounds like it could be effective but it's proved not to have the utility that was anticipated. That's why the root and branch review of the competition laws that we've committed to is an important additional step to make sure the ACCC has the toolkit it needs to do its job.

CORTE:

Thank you very much Minister.