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Economics Legislation Committee
17/10/2012
Estimates
TREASURY PORTFOLIO
Australian Competition and Consumer Commission

Australian Competition and Consumer Commission

CHAIR: I welcome officers from the Australian Competition and Consumer Commission. Welcome, Mr Sims. Do you have an opening statement?

Mr Sims : No, we have a lot on and we are keen to leave as much time as possible for your questions.

CHAIR: In that case, we will start with Senator Colbeck.

Senator COLBECK: Have you had cause to look at anything around bonded stores on ports and the charges and the processes that they conduct? They are a captive market, pardon the pun, but they also have a close association with the government because of quarantine issues. I have had a number of concerns about charge-out rates with some of the practices. Have you had a look at those? I have had probably four or five inquiries and I know some other colleagues have as well.

Mr Sims : We have a lot going on, but I am not aware of anything under that heading.

Mr Cassidy : No, nothing.

Senator COLBECK: Not wanting to add to your burden too greatly, but it is something that has crossed my radar on a number of occasions.

Mr Sims : If the complaints come in, we will certainly look at them.

Senator COLBECK: You do not necessarily regard this as a complaint or an issue, so I am putting it on your radar.

Mr Sims : Okay. If you have any extra material that can help us, that would be good.

Senator COLBECK: All right, and I will talk to colleagues about that. How are you getting on with our friends in the supermarkets? Where are you at with that inquiry process?

Mr Sims : The good news is we had a lot of people eventually come forward with a lot of issues. We have requested information from the major supermarkets. We have quite a lot of information from them which we are sifting through. It is fair to say, having looked at the information so far, that our interest in the issue is certainly not decreasing. We think we are finding things that are of interest but there is a lot of information to go through—some of that information has come in as recently as this week. I think we are making good progress but there is a lot of information to go through.

Senator COLBECK: When we talked to you at the food processing inquiry about the time frame you might have around this process and you said hopefully later in the year, that might not necessarily be the case now—is that right?

Mr Sims : Yes. I said we would like to give some indication of what we found before the end of the year. I am not sure we can make that, but it will not be long after. The good news is that, although we have a lot of material to sift through, what we are finding is of interest to us.

Senator RYAN: I will continue with that line, Mr Sims. You say the volume of information can change the time lines. If we had a discussion at estimates in February next year, would you be very close to the end of your inquiries at that point?

Mr Sims : At the last estimates hearing I think I said we would be letting people know publicly what we had found, whether we thought there was problematic behaviour, and I would hope that by that next time we would come up with that. I was not suggesting we would necessarily be ready by the end of the year to take any proceedings; I was more saying we would be willing to indicate to people just what we thought of the behaviour we were seeing. I hope by then we will be able to do that.

Senator RYAN: The time when you feel you will be able to make public comment about your inquiries is not necessarily going to be the time when you will be able to determine any action you might wish to take?

Mr Sims : I was indicating they may be two separate times.

Senator RYAN: That is understandable. When you get a degree of confidence about being able to make some public statements, how much longer do you think it will take for you to get to the second point, if there was a second point? The reason I ask this is that the inquiries being undertaken also have a cost burden on the people being inquired upon, whether they be small or large, or suppliers or large supermarket chains. Obviously, we do not want to get to a point where the burden of regulatory activity starts to be a drag. When you reach a level of confidence to make a public statement, do you have any idea how long after that you might be able to make decisions about future activity or otherwise?

Mr Sims : It would be some months. We do not want this to run on for any longer than necessary either. Our inquiries do always take a long time and that is frustrating as much to us as to people observing these things. I understand it is a burden, particularly with the major supermarket chains. We hit them with a number of investigations that did occur—things like shopper dockets and a range of other things occurred at the same time. The point is that these are matters of major interest and the allegations made were serious and they were many. There were issues in relation to potential unconscionable conduct and in relation to private-label products, and the two blend at times, so there were a lot of things to get to the bottom of. Getting to the bottom of them properly, I think, can really help put boundaries around what behaviour is appropriate. It takes time but the end result will be worth it.

Senator RYAN: I am not trying to dismiss the seriousness of the investigation or of the allegations. That is for you to determine and potentially for others. I assume you are hoping to reach some degree of not permanent finality but finality potentially about past behaviour. Is that what you are hoping to achieve towards the end of your inquiries? There may of course be future allegations or future evidence, but it seems that you are trying to deal with a backlog of accusations or allegations over a long period of time. Is that what you are trying to achieve?

Mr Sims : In relation to the treatment of suppliers, I think that is a fair summary. As you correctly say, other issues do emerge. We had one complaint, for example, raised by Jeff Kennett in relation to the par-baked bread, which we are also looking at. So other things do come up. But in relation to the fundamental allegation of unconscionable conduct in relation to suppliers, private label and misuse of market power, yes, we are hoping to reach somewhere with some degree of finality.

Senator RYAN: There was a piece in today's Financial Review about the Hawker IGA. I do not want to go to the specific issue there, but it raised a number of other issues. I will ask one more question about the previous issue. I forgot to ask when I was listening to your answer. Are you happy with the degree of cooperation that you are receiving from all the participants in your supermarket inquiries, particularly with respect to suppliers? I know you have a few others going—you mentioned shopper dockets and private labels. You mentioned that you are happy with the information that has come forward to assist your inquiry. Are you are happy with the cooperation you are getting when you seek information?

Mr Sims : In general terms, yes. Sometimes it takes a little longer; sometimes you have to clarify things. The broad answer to your question is yes.

Senator RYAN: I turn to the article in today's Financial Review. It says: 'Mr Sims expressed frustration that neither Woolworths nor Coles has agreed to a new regime at expediting the approval process for creeping up acquisitions.' There is a quote attributed to you: 'We're going to have to get this sorted out in the next month or so, otherwise it's not worth further time.' What specifically do you want sorted out in the next month or so? I am taking this as a broader comment rather than with respect to the Hawker IGA.

Mr Sims : That is right. In June this year, I proposed to the major supermarkets—the ACCC proposed—that we would offer an expedited approval process for single-site acquisitions, quite small acquisitions, in return for notification of all the relevant acquisitions and immediate up-front information. We realise we have no legal right to acquire this. This is a voluntary arrangement, but we put that offer on the table. We are having discussions with the supermarkets. I was simply saying, having started this process in June, that you have to put a time on it at some stage.

Senator RYAN: Sure. Is it fair to say that you are frustrated that they are not playing ball or you cannot reach agreement with them on such a process at the moment?

Mr Sims : It has taken longer than I would have liked. There may well be legitimate reasons from their side. They have no legal obligation to do this. It is totally up to them. I do not want to have the thing drag on. If they decide that they do not want to do it, that is absolutely fine. It is completely their right to do that and then we will revert to the normal process. The other thing I said in the paper is that we will still do our best to assess these local acquisitions, but it just may take longer. That is just the way it is going to be.

Senator RYAN: Sure. So pending your assessment, what happens to this particular attempted store sale?

Mr Sims : The Hawker one?

Senator RYAN: Yes, the Hawker one.

Mr Sims : That will be done under normal processes. Through the process we have been engaging in over the last few months, I think both the major supermarket chains know what information we need, so I would hope we would get that upfront and I hope we could deal with it expeditiously. I should say generally they are giving us the information we need in relation to specific transactions, so there has been some benefit come out of the proposal.

Senator RYAN: Without in any way commenting on the specific inquiry, because I appreciate you may not wish to at the moment, do you take into account generally if there has been an attempt to sell an independent site to another independent operator and a price has not been agreed upon?

Mr Sims : In broad terms yes because we have to establish what is going to happen. We are faced with the transaction. We have to establish a number of things. One of them is if this transaction does not happen what else will happen, so the behaviour you are talking about is something we would look at.

Senator RYAN: I am particularly concerned generally about who bears the cost of our particular public policies. If, for example, a lower sale price was forced onto an owner trying to sell a store then effectively they are bearing the cost for a community policy for a general community benefit that you may determine. Is that something you take into account, who bears the cost?

Mr Sims : In large part no. If I can make a general comment, you will largely get a much higher price for selling your business, be it to a major supermarket chain or anybody, if you sell to your closest competitor. We are not in the business, nor should we be in the business, of helping people maximise sales proceeds.

Senator RYAN: That is not always the case and it is not a hard and fast rule. The owner of a McDonald's cannot sell the Red Rooster they own next door necessarily to another McDonald's.

Mr Sims : I totally agree with you that it is not a hard and fast rule. I am simply saying that on average you would think that you will get a higher price from selling to your closest competitor. So if somebody comes in to us and says, 'I want to sell my business to this very close competitor, and by the way that is going to give me a higher price,' we are interested in the competition aspect.

Senator RYAN: That comes down to whether someone can be extracting some sort of market power rent from a situation, which would assume a very tightly defined market that is not very porous presumably. If there are only two supplies of electricity in a given area and one wants to sell to the other, I can see your point. But where you have a porous market where there is mobility, that is a very low bar where you have that, surely.

Mr Sims : We have to then define the market, we have to define how many other competitors are there. If there is not a substantial lessening of competition, there is no problem and they can proceed. Substantial lessening of competition is quite a high hurdle.

Senator RYAN: I appreciate that. I just wanted to clarify that. I have one more issue on this. You have mentioned in that Financial Review piece that there was a degree of frustration on your part that you had not been able to reach agreement to come up with a new mechanism—

Mr Sims : I think the frustration point was made by the journalist rather than myself.

Senator RYAN: That is quite right. That was not your quote. You must have sounded frustrated on the phone.

Mr Sims : I possibly did. I may have had a hard day.

Senator RYAN: Preparation for estimates, maybe.

Mr Sims : Exactly.

Senator Wong: That is one construction, Senator. There are a number of others.

Senator RYAN: So you were seeking a new mechanism there. You made a few comments in a piece reported on AAP on 12 September generally in response to the release of the report by the Master Grocers Association. You made a couple of comments and I will read them out to remind you of them. They were seeking more action from you and more legislative tools to be given to you to address what they accuse the two big chains of market dominance. You said, 'By way of background, in order to meet the tests of conduct being against the law and anti-competitive, it has to be behaviour which is deliberately meant to damage competition.' You made a couple of comments there about whether stores lose money or not, all entirely reasonable comments, but it strikes me that there is a little bit of frustration, to use the journalist's word here, that there are a few mechanisms you think could add to your arsenal in order to address some of the issues being brought to you. Do you have a view on new mechanisms?

Senator Wong: Do you have a view on your arsenal, I think is the question. It is a very warlike comment in the context, but that is okay.

Senator RYAN: You could do with new mechanisms.

Mr Sims : Thank you very much for the question. There were a couple of bits of reporting of that which I thought were not what I was trying to convey in that particular case. What I was saying, in relation to the master grocers' report, was that they were saying that sometimes a new store will come in, stores lose money, stores provide overcapacity, and they were alleging that that was something we should act on. The point I was trying to make—and for that particular article I did so badly, because it was misinterpreted—was that there is nothing wrong with a new store opening up. It may build for some years hence, may lose a bit of money upfront. They will, of course, generally overbuild because the market was presumably well catered for in the first place. I was more saying that I did not think, by and large, that what the master grocers were suggesting was actually a problem, as distinct from 'we needed more powers'.

Senator RYAN: Would the ACCC and your work benefit in the creeping acquisition space from not needing to seek agreement for some creeping acquisition tools, but to be legislatively granted some tweaking around the edges that might more easily either get agreement from the major chains or compel agreement from them?

Mr Sims : Where we stand at the moment, I think we are comfortable with the powers we have got. We are going to look at these local acquisitions, there is a lot going on—and by the way, we have opposed quite a number recently. We will see whether we need more powers. Right at the moment, we are comfortable with what we have got under this particular heading.

Senator RYAN: In September you also made a speech at the John Curtin Institute of Public Policy in Western Australia—

Mr Sims : I must speak less, Senator.

Senator RYAN: I imagine your job involves quite a lot of speeches, Mr Sims. You made a speech at the John Curtin Institute of Public Policy in Western Australia?

Mr Sims : Yes.

Senator RYAN: In that speech, you proposed congestion charges. Is that a fair characterisation of what you proposed?

Mr Sims : I was talking about infrastructure issues generally and I was making the point that if we are going to deal with some of the issues with urban transport, just dealing with the supply side is probably not going to be enough. We need also to look at the demand side.

Senator RYAN: The quote I have got here is:

Some combination of appropriate congestion charging on roads, careful use of the revenue raised, and increased efficiency is needed to address Australia’s growing urban transport problems.

You are in favour of congestion charges in this sense, with those conditions.

Mr Sims : It depends on which cities. The answer is yes, but you have got to address both the demand side and the supply side.

Senator RYAN: The reason I ask this is that I am not sure, Mr Sims—and I am happy to be told otherwise—given how busy you are, whether proposing new taxes is within the ambit of the chairman of the ACCC.

Senator CAMERON: Shock, horror!

Senator RYAN: I am with you, Doug.

Mr Sims : I think that is a fair comment, Senator. I do wrestle sometimes with what is precisely in our brief and what is a little bit broader. I certainly do not want to ever roam too far from what our mandate is, so I do try to stay away from a whole lot of policy issues that I think are fairly none of our business. This one, because it is infrastructure, I felt was appropriate. I suppose, to be honest, it is something I have said before coming to the ACCC.

Senator RYAN: There is a really big difference between the pricing of new infrastructure and the pricing of existing infrastructure; One you usually have to find a mechanism to pay for, one we have substantially already paid for and we have got to pay maintenance costs.

Mr Sims : Yes.

Senator Wong: Senator, if you do not believe he should have made the comment, why are you engaging him on it?

Senator RYAN: I am actually going to challenge some of the assumptions that Mr Sims made.

CHAIR: No, you are not, Senator Ryan, your time is up.

Senator RYAN: Do I get to finish the question?

CHAIR: No, your time is up. Your colleagues want to have a go. Senator Siewert, you have five minutes.

Senator SIEWERT: I want to ask about wheat export access. Could you tell us if you have had any complaints under your responsibilities around port facilities or around access?

Mr Sims : I will see if others also want to add to this but, generally, our central role is to accept undertakings from companies that own monopoly of port facilities so that they make them available not only to themselves but also to their competitors who are doing the upstream marketing of wheat. We have a good to-and-fro with the people providing the undertakings and we consult the companies who are the beneficiaries of the undertakings. I would have said that, generally, that process works pretty well. The undertakings have facilitated quite a lot of new players coming into the market, so we have quite a competitive upstream wheat acquisition market, and the system is working pretty well. I am not sure whether that answers your question.

Senator SIEWERT: It does, partly. I understood that you are also responsible for monitoring compliance with the access requirements.

Mr Sims : We find that works pretty well. We had one issue in Western Australia where the auction regime—and auction regimes are pretty complicated—led to very high prices, withdrawal of capacity and then more capacity ending up with the monopoly owner. We looked into that to see whether that was a breach of the undertaking or, in any other sense, a misuse of market power, and we concluded that it did not. We had a very close look at it and we have asked them to have a look at how they do their auction arrangements. My understanding is that they have changed how they do it.

Senator SIEWERT: My understanding is that it has been responded to. Besides that, have you had any other complaints while you have had this responsibility?

Mr Sims : Not that I am particularly aware of.

Mr Pearson : We have had some concerns with Viterra's auction processes in South Australia. We have done a lot of work with Viterra and they have proposed and are putting in place a new auction system. There have been some minor complaints which have generally been worked out commercially through the parties. Nothing major has come to us, even though we have a dispute resolution role across all four undertakings.

Mr Sims : But, generally, it is working pretty well.

Senator SIEWERT: So there has been no formal investigation, is that right?

Mr Sims : The only one I am aware of is the Western Australian formal investigation.

Senator SIEWERT: So the others have been dealt with through negotiation dispute resolution process, is that what I am to take away?

Mr Pearson : There has been nothing formal. There has been some contact with my staff and with some of the parties, but no formal investigation has been undertaken apart from the two-auction system.

Senator SIEWERT: You seem to be suggesting that there have been some more informal approaches. Is that correct?

Mr Sims : Nothing out of the ordinary in an access system, where you have the to-and-fro of getting the arrangements right and then people working within them. I am happy to get specific, but largely the system works pretty well. Apart from the Western Australian example, which has now been dealt with, it works pretty well.

Senator SIEWERT: Out of that process, even under the Western Australian example, there were no fines or any formal approaches taken?

Mr Sims : No. There were no penalties or sanctions. We investigated, they made changes and we have all moved on.

Senator SIEWERT: Has the Viterra situation been resolved or is it ongoing?

Mr Sims : They are still trying to put their auction process into being, so that is really about how they bring in an auction process that people are happy with, and we are now on a path for that new auction process.

Mr Pearson : We continue to monitor it. We have a monitoring role continuing, so we continue to monitor those processes and those systems.

Senator SIEWERT: Just so I am clear, a complaint was not raised about Viterra's process; they have sought your help in establishing the auctioning process. Is that a correct interpretation?

Mr Sims : We had an issue with Viterra in one of the earlier allocations where we felt they were perhaps allocating too much capacity to themselves. We intervened and they readily amended that process and allocated more capacity to others. We have had issues, but they have been dealt with fairly expeditiously.

Senator SIEWERT: Was that process because someone complained or because you were monitoring the implementation?

Mr Sims : A bit of both.

Mr Pearson : Yes. We were monitoring continually and we understood from our monitoring what the issues were, and we talked to the parties involved and went from there.

Senator SIEWERT: This may be an opinion I am asking. Under the new process, do you think the new process without your involvement—the new proposed process—will continue to operate without the necessity for a more formal oversight?

Mr Sims : What we have said publicly—and what I have said publicly a number of times, I think including in some speeches that the senator has read as well because I said it in WA—is that what is crucial is that those who are getting access to the wheat ports are happy with the voluntary arrangements. That is, they have to be things that they feel are workable. That, as far as we are concerned, is a work in progress, to see whether they can come up with a voluntary undertaking that suits the people who want access to the ports.

CHAIR: Thank you. Senator Whish-Wilson.

Senator WHISH-WILSON: Thank you. If I could just swing back to supermarkets, I was not here for the May budget estimates but I was wondering if you could elaborate on the problematic behaviour you referred to there?

Mr Sims : Two comments to make. I will make a negative comment and then a positive comment, if I could do it in that way. The formal negative comment is that we do not normally talk about where we are up to with investigations midway through. The positive comment, and the way I have answered that question before, is that there was a list of complaints that I think originally Senator Carr came up with in his work with the Food and Grocery Council. That list of issues was the types of issues that we were looking at, things like arbitrary adjustments to payments, putting the risk on the supplier for a risk that really should belong with the supermarket. It was those sorts of things that started this whole process off. Those were on the original lists that we got late in 2011. Those have been the basis for the inquiry.

Senator WHISH-WILSON: Was there any difficulty with getting information from suppliers, given fears of losing contracts with the large supermarkets?

Mr Sims : Yes. As I have said before, we could get the list from the Food and Grocery Council, but that was a list of one-liners and we could not get anybody to come forward to give us any evidence, to allow proper investigation. What we did was go out and assure people of confidentiality. We also talked to the peak bodies like the Australian Food and Grocery Council and urged them to get their members to chat to us. I think a range of other people, including some politicians, urged people to come forward, with saying they could come forward not only on a confidential basis, but sometimes they could even come forward without even telling us who the company was. That then led to about 50 people coming forward over some months, because it did take some months, and that gave us the information we are now working on.

Senator WHISH-WILSON: Also in relation to budget estimates questions on notice, you said that you were actively considering competition concerns about shopper documents, offers of discounts on petrol. Can you give us an update on that, or if there has been any progress on that?

Mr Sims : The investigation continues. The supplier one is complex enough because there are many dimensions to it. That is a particularly complex one because what we are looking at there is discounts that prima facie people think benefit consumers, and we are trying to access what the long-term effect of that is going to be on the structure of the industry. It is a complex negotiation. It is proceeding satisfactorily, but it is hard to say more at this stage, I am afraid. It is something we are still actively working on and making good progress on.

Senator WHISH-WILSON: Fantastic. Three more quick questions.

CHAIR: We have got until 10:20.

Senator WHISH-WILSON: So we have got one minute. All right. How have you been dealing with firms putting up prices and making spurious claims on carbon tax?

Mr Sims : With who putting up prices?

Senator Wong: Firms.

Senator WHISH-WILSON: Making spurious claims on carbon tax. Have there been any recent investigations?

Mr Sims : We are doing investigations all the time. First of all, the number of complaints has gone down dramatically. The number of investigations has gone down but we are still actually actively investigating. Most of the ones we are finding now are largely inadvertent—or they are good explanations—and so we have been dealing with them via warning letters. It is still happening but it is lower level these days.

Senator WHISH-WILSON: I probably will not have time to finish my questions.

CHAIR: Put them on notice, Senator.

Senator XENOPHON: Mr Sims, can you give us an update in relation to the ACCC's inquiry into price sharing between petrol retailers and real-time information in the petrol market?

Mr Sims : Again, that is something we are working on. We are working with all the players in the market to get information—the wide-ranging petrol companies—and we are assessing that data. Again, it is a complex one. I really hate to keep saying these things take time—

Senator XENOPHON: Can you now see any value in petrol retailers giving motorists online access in real time to all petrol prices at the retailers' outlets?

Mr Sims : Yes, that conversation we had last time—sorry, I was a bit slow. What we are investigating is the potential for coordinated behaviour through real-time exchange of information between petrol companies. The point I was rather badly trying to make last time was the fact that that information might also be made available to customers would not necessarily remove our concern about the information sharing amongst the producers.

Senator XENOPHON: It would mitigate them though, wouldn't it?

Mr Sims : In some circumstances, it may but what we are concerned about is their ability to do things with prices—obviously, in this case put them up—and be able to see what their competitors are doing quickly. One of the major complaints I get when I do radio interviews and other things on this is: someone says, 'I was driving along and the price was $1.38. An hour later I notice at every service station around it was $1.52.' That is a whole lot of prices going up at once. That is something we are looking at. Whether those signals would get diluted by sharing that information with customers, Senator Xenophon, I am not so sure.

Senator XENOPHON: Just finally: given that the petrol price cycle now seems to be closer to fortnightly rather than weekly, are motorists now in the dark about which is the cheapest day in the cycle?

Mr Sims : They are less certain. It is less predictable.

Senator XENOPHON: That is a concern for-

Mr Sims : Anything that potentially damages consumers is a concern for us.

Senator XENOPHON: I understand the ACCC is currently investigating an application from the Australian Egg Corporation to register the term 'Egg Standards Australia' as a trademark. Can the ACCC provide some information on the progress of this investigation? Also, what would the ACCC's proposition be on the impact this will have on consumer understanding, particularly in relation to terms such as free range et cetera?

Mr Sims : I am going to pass that to Rose Webb.

Ms Webb : We are in the process of reviewing the rules of that certification trademark. We hope to shortly publish an interim decision in relation to whether those rules comply with the requirements, and the process will go on from there, allowing for public comment.

Senator XENOPHON: I will wait for that. I will move on in my remaining one minute and 50 seconds to one of my pet topics: the Birdsville amendment—are there any investigations into the Birdsville amendment and is it any closer to going to court? Are we any closer to the ACCC publishing a guide on the Birdsville amendment in the same way the ACCC publishes merger guidelines despite a lack of many court cases on section 50?

Mr Sims : We have about four investigations underway on the Birdsville agreement. Believe me, we would love to run a case, if only so we have something sensible to say at these meetings. We have to assess them against all the criteria. Whether anyone of them is close to getting anywhere—

Senator Wong: It is not the only reason actually.

Mr Sims : I might pass to Mr Gregson.

Senator XENOPHON: Perhaps on the guidelines issue whether there—

Mr Sims : We do not feel we have got enough experience to be able to do that yet but, Marcus, do you want to add to that?

Mr Bezzi : I think Mr Cassidy has actually addressed this question on a number of occasions when Senator Joyce has asked the question.

Senator XENOPHON: I am channelling him at the moment.

Senator Wong: Please don't!

Mr Cassidy : We do not actually have guidelines with section 46—

Senator Wong: Senator Bishop's life would be much easier if you didn't!

Mr Cassidy : of which the Birdsville amendment is party simply because, again, we are lacking sufficient judicial guidance. I do not think we will have guidelines on Birdsville until we actually get some judicial guidance on it.

Senator XENOPHON: Finally, and perhaps on notice, how many mergers has the ACCC knocked back since the last Senate estimates? I am happy for you to take that on notice.

Mr Sims : There have been a few.

Senator Wong: We will take that on notice.

Senator BUSHBY: Thank you to the ACCC for assisting us tonight. I have a couple of questions in relation to the Australian Government Competitive Neutrality Complaints Office, which is within the Productivity Commission. The two most recent investigations that it conducted related to PETNET Australia, which is a wholly owned subsidiary of ANSTO, or the Australian Nuclear Science and Technology Organisation, and the NBN Co. Both of those reports found that the government owned enterprises were in ex ante breach of competitive neutrality. As I understand it, that means that, if their market behaviour were allowed to continue, under current projections they would be in breach of the competitive neutrality requirements. Is there any coordination between your department and the AGCNCO when competitive issues are identified in one of their reports?

Mr Sims : I do not think there is much coordination. Michael, would you like to add anything?

Mr Cosgrave : In relation to the second of those matters that you mentioned I can confirm that we were not approached by the office.

Senator BUSHBY: So there is no formal relationship? If they find competitive issues as part of their investigations, there is no automatic—

Mr Sims : They certainly did not approach us, and our role does not require us to approach them.

Senator BUSHBY: Does the ACCC require a complaint in order to commence an investigation?

Mr Sims : No, we do not require a complaint.

Senator BUSHBY: In the case of these two recent investigations, if the ACCC were to conduct—I am not saying that you should—an investigation into those matters, would there be a mechanism for the AGCNCO and the ACCC to share information or would you have to start from scratch?

Mr Sims : I guess the prime point I would make before passing to others to add to it is that the sorts of things that the office of competitive neutrality looks at I would not have thought would generally amount to anything that we could investigate under our act. As I understand it, it went to issues to do with rates of return and things like that. Our interest in those is completely different—in some ways perhaps the opposite. Certainly I do not think that it amounts to anything that would come under our act.

Senator BUSHBY: I understand that there may well be challenges in you actually undertaking such an investigation. But if you were involved in an investigation on that issue—

Senator Wong: That is a hypothetical.

Senator BUSHBY: What I am really interested in is the processes that exist between you and that organisation. Would there be scope to share information or would you have to start again?

Mr Bezzi : Senator, almost by definition, we would not be involved. As I understand the function of that office, they look at a situation where there is some regulatory arrangement that might be anticompetitive. Once there is a regulatory arrangement in place that is taken out from our act. So in a sense it is one or the other.

Senator BUSHBY: So you are saying that you are completely mutually exclusive?

Mr Bezzi : Generally.

Senator BUSHBY: There could not be an investigation that they are conducting which would lead to issues which could be conducted by you?

Mr Bezzi : I would be reluctant to say that in 100 per cent of cases that was correct, but I would expect that in most cases that would be correct.

Senator BUSHBY: I am happy with that.

CHAIR: Thank you, Mr Sims, and officers for being here this evening to assist us.