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Thursday, 6 March 2014
Page: 1016


Senator XENOPHON (South Australia) (12:42): I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

Senator XENOPHON: I table an explanatory memorandum and I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

COMPETITION AND CONSUMER AMENDMENT (MISUSE OF MARKET POWER) BILL 2014

[Mr President]

The need for the measures in this Bill is painfully obvious. The amount of power that Woolworth and Coles have over our food industry is genuinely frightening, with the two chains holding around 80% of the dry grocery market. They are the ones who decide whether to stock local or overseas products for a massive part of the market.

They also have influence over the country of origin labelling laws, and despite massive community support for change, we are yet to see any positive and real advances on this front. A Roy Morgan survey of Australian consumers released in August last year found that more than half of all respondents—55%—said that buying Australian-made had become more important to them in the last 12 months. Of those surveyed, a staggering 78% were happy to pay a little extra to buy local.

With control of four-fifths of the market in some categories, Coles and Woolworths are in an extraordinarily powerful position to be part of the solution, or a key cause of the problem. To put this duopoly into perspective, in the UK four separate chains—not two—hold a similar percentage of the market, and in the US the largest chain can only hold around 20 per cent, with the top four only holding 35 per cent. This is thanks to laws that limit the amount of market share a corporate entity can hold.

The United States divestiture laws focus on monopolies and monopolistic behaviour, and so tend to prevent the kinds of issues this Bill addresses before a corporation has enough market share to be able to abuse its power.

We need similar safeguards here in Australia, and that is what this Bill aims to establish.

In case you need any evidence that some suppliers feel bullied and afraid of these two very powerful players, you only need to look to the actions of the ACCC.

In early 2013, ACCC Chairman Rod Sims encouraged suppliers for Coles and Woolworths to bring forward evidence of unconscionable conduct. However, it wasn't until the ACCC guaranteed a confidential process that suppliers felt safe to provide information.

Mr Sims has also identified the main focus of the ACCC's attention as being shopper docket schemes. In the last week, the consumer watchdog has launched court action against the two supermarket chains over the fuel shopper docket schemes, following the failure of Coles and Woolworths to abide by the limits set by the ACCC.

These most recent developments are further evidence of their striving for market power in Australia and, as Mr Sims says: "if these shopper dockets continue at these levels, it's going to be very hard for other players to compete and we may end up with just two companies in the country selling petrol".

The purpose of this Bill is to give the ACCC and the Courts another option when it comes to tackling misuse of market power. The provisions in this Bill will allow the ACCC, or any other person, to make an application to the Court for a divestiture order. The Court can choose to apply this order when a corporation has breached Section 46 of the Competition and Consumer Act.

The Court also has the option of agreeing to a consent order with a corporation, whether or not a breach of the Act has occurred. A corporation can also offer to enter into an undertaking with the Court, rather than waiting for the Court to issue an order.

Requests for orders can be made within three years of the offence occurring. The Court can order a corporation to reduce its market share or market power within two years.

The provisions in this Bill provide both punitive measures and act as a deterrent. I acknowledge that there are still many concerns about how breaches of section 46 can be proven, and I agree that section of the Act needs to be reviewed. However, it is time that more effective measures were put in place to sanction companies abusing their market power.

The mere existence of such provisions will, I believe, in itself act to change the culture and behaviour of large corporations for the better.

Senator XENOPHON: I seek leave to continue my remarks later.

Leave granted; debate adjourned.