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Friday, 25 November 2011
Page: 9647


Senator RYAN (Victoria) (11:25): I rise today with some relief to speak upon the Competition and Consumer Legislation Amendment Bill 2011. Let me say upfront that the coalition does not oppose this package of legislative changes. Indeed, it is the role of the law to facilitate domestic market conditions that are good for business and the community, and competition policy plays a critical part in that role.

The amendments in this bill attempt to strengthen the competition policy regime, which in turn should facilitate a more conducive economic and business environment. That said, the coalition believes that this is an extremely modest bill with modest aims. While we see no damage being caused by this bill, we also see no great cause for celebration. The govern­ment's language of accomplishment and achievement does not suit this bill. It is misleading and overstates the impact these changes will make. Yet again we have the Labor Party seeking to create the illusion of reform. Desperate to claim some sort of policy success that assists businesses, and particularly smaller businesses, it makes claims where there are none and overstates the impact of minor changes.

Essentially, this bill has two aims. The first is to clarify the operation of existing provisions—and, I stress, not to create new ones—relating to mergers and acquisitions by addressing a potential uncertainty or ambiguity that may arise in defining what a market is for the purposes of section 50 of the Competition and Consumer Act. It does this by broadening the language of 'market' so that all markets can be included and so that creeping acquisitions can also be scrutinised. This will ensure that a court or the ACCC can examine mergers in a greater number of markets.

The second aim of the bill is to insert interpretive principles into the unconscion­able conduct provisions to assist the courts in applying the law as well as to assist broader community and stakeholder understanding. What the bill does not achieve is that which was described in the government's speeches in the second reading debate, when it claimed great accomplishments for small business and groundbreaking shifts in competition and consumer law in Australia. It does not do anything of that sort. It is what it is, and we support it for the aims I have just outlined. It is a modest gain to clarify contested and often misunderstood aspects of competition law.

I first want to address the bill's provisions in relation to its amendments to the Competition and Consumer Act 2010 with respect to section 50, which is the key provision relating to mergers and acquisitions. It provides the ACCC with the legislative framework to analyse, consider and address potential competition policy concerns posed by mergers and acquisitions in Australia. Most of us agree that mergers and acquisitions are important for the efficient functioning of the Australian economy. They allow firms to achieve efficiency such as economies of scale and the diversification of risk across a range of activities. Absent some genuine and real concern for the greater community, there is no role for the state or the law in restricting these.

However, the current law does contain a weakness, and this bill addresses the issue of 'creeping acquisitions'. Creeping acquisitions are a series of small-scale acquisitions that individually may not substantially lessen competition in a market but collectively have the potential to do so over time. Each of these small acquisitions may not be in breach of section 50, and therefore the series of acquisitions are permissible by law. However, over a long period of time such transactions may have the cumulative effect of substantially lessening competition in a market. There are currently no provisions in the Competition and Consumer Act to prevent or limit creeping acquisitions.

Over the past decade or so there have been concerns raised about market concentration in a number of key sectors. We have seen it recently in banking, groceries, fuel and a few other areas. As a result, issues have arisen as to how section 50 of the Competition and Consumer Act is applied to these markets, particularly those affected by creeping acquisitions. One just has to look at the supermarket sector to see my point. Just over two decades ago, when Professor Hilmer was doing his work looking at our competition and consumer framework and recommending the reforms which earned a wide degree of support and which have been of significant and undoubted benefit to Australia and Australians, the two major supermarket chains had less than half of the total grocery market. Today, those same two chains have more than two-thirds—approaching three-quarters—of the market. Nothing enormous or transformational happened overnight. Indeed that change in market share may partly simply reflect changing consumer preferences. But we also know that, through a series of acquisitions, new presences and purchases of new properties, the supermarket majors have greatly enhanced their positions. It is only fair to concede that the degree of increase in market share of these two major chains has caused a level of concern in some areas of our community—amongst consumers, producers and businesses alike.

To start with, these changes to the act remove the word 'substantial' in relation to the ACCC's analysis of mergers and acquisitions, so now even those mergers not considered substantial can be scrutinised by the ACCC. The hope is that this will remove the risk that a court might adopt the view that an acquisition in a geographically confined market is not substantial and therefore does not fall within the scope of section 50.

The bill also amends section 50 to replace references to 'a market' with references to 'any market'. Together, these changes clarify the ability of the ACCC or a court to consider multiple markets when assessing mergers, including smaller mergers which over time may amount to potentially damag­ing creeping acquisitions. It is important to note, however, that the amendments to section 50 do not oblige the ACCC to examine the competitive impact of an acquisition in a small market. It is simply a clarification that it indeed may do so and that it is a relevant factor where a merger is being considered for other reasons.

So what do we have here? In short and put simply, this is a clarification of the law to reduce an ambiguity that might become a legal basis to challenge the work of the ACCC. On that basis, the coalition supports the bill. But I say again: we do not support the government's claim that this bill is somehow a profound strengthening of the Competition and Consumer Act.

The other aspect of this bill relates to the concept of unconscionable conduct. As with the amendments to section 50, these provisions also reflect work undertaken by the Senate Economics Legislation Committee. The Competition and Consumer Act does not currently include a statutory definition of 'unconscionable conduct'. Let us be very clear: this bill makes no changes to those provisions. Rather, what this bill seeks to do is implement guiding interpretive principles so that there is better understanding of 'unconscionable conduct'. The coalition supports this initiative.

What we really need and what will contribute to the further development of healthy competition policy is a better under­standing of the concept of unconscionable behaviour and what it means for businesses—in particular, small, medium-sized and family businesses. While we understand that many people and many small businesses may at times have a negative experience, particularly when dealing with a larger business, and can come to the conclusion that what they have experienced is unconscionable conduct, this is a complex area of law and we need to assist people to understand this area of law in more detail. This bill does make it a little bit clearer and the way it brings clarity is through establishing these interpretive principles.

It was the recommendation of the Senate Economics Committee that interpretive principles were needed rather than specific examples. This is an important distinction. Examples, it was thought, may create a false sense of expectation. It was also believed that examples may not remain relevant or current as community expectations change—such changes might change the meaning and understanding of 'unconscionable conduct'. Interpretive principles will assist the courts in interpreting the provisions, help stakeholders in understanding them and guide regulators in enforcing them.

But, again, let us be clear about the impact of these interpretive principles. They do not in any way, shape or form offer the agencies new powers in addressing unconscionable conduct. There are no new protections announced for small business and it would be misleading for anyone to imply in the commentary on this bill that these changes represent substantial new protections for small business. These interpretive principles should give clarity to the court about what was intended by parliament, but they should not be oversold.

These amendments insert new guidelines to assist people, to assist businesses, to assist the regulators and to assist the courts. But by no means are these principles any sort of new measure that will give the greater protection that some have called for. Again, the government has attempted to oversell its limited efforts in order to create the illusion of activity and the illusion of substantial policy reform. Sadly, the constant over­selling of its efforts reduces its fatally damaged credibility even further, particularly when dealing with small business.

The government claims that this bill before the Senate today implements a Labor election commitment to introduce a law in relation to creeping acquisitions—they claimed the then regulatory response did not adequately address the problem. They claim great reform. But that is little more than misplaced grandeur. In reality, what we have here is the government applying a dictionary and a thesaurus to the original bill—expanding some definitions and giving us some interpretive guidelines to better understand the sometimes complex language of competition law. That is an important objective. These are all good and necessary changes that the coalition supports. However, they must be understood and explained for what they are—this is a start and a step in the right direction, but many more steps are needed. That is why the coalition has called for a root and branch review of the competition and consumer law. Two decades on, such a review is only appropriate, but for some reason this government seems to think that a few tweaks and a few changes here and there will create the illusion that it is really listening when it is not.