The head of the Australian consumer watchdog defended the organisation yesterday, following complaints it isn’t doing enough to prevent price competition between supermarkets from negatively impacting the industry.
In a speech to the National Press Club, Australian Competition and Consumer Commission chairman Rod Sims canvassed the achievements of the ACCC in the past year and pledged to take action on complaints against Coles and Woolworths.
He also commented he is “uncomfortable” with the amount of power the duopoly wields.
In terms of direct action, ACCC chairman Rod Sims says the watchdog could “entertain you, or not, with a massive list of what we have achieved,” but he says more is achieved indirectly.
“Because companies know we will enforce the law, the vast majority will not contemplate cartel or other anti-competitive activity. They have active compliance programs to ensure they do not mislead consumers, and a range of, no doubt, commercially attractive mergers are not taken forward,” Sims says.
But Sims acknowledged the most common complaint the ACCC receives regards a lack of action, with people saying the watchdog is “not doing enough on some fronts”.
“Some think we are too intrusive, many think we should be doing more,” he says.
As well as addressing claims of inaction, Sims says he is “uncomfortable” with Coles and Woolworths having a duopoly over the grocery market.
In 2012, IBISWorld reported Coles and Woolworths control approximately 70% of the market.
Sims says the ACCC aims to protect competition and won’t necessarily defend smaller retailers because they feel threatened.
“The supposed harm is the potential damage to many local shops. I explain that this is competition working. Our role is to protect competition, not individual competitors. Competition is not always pretty, but it is clearly in our national interest.
“We believe strongly in the benefits of competition, and as a regulator we see its inadequacies and see regulation as a last resort,” he says.
The ACCC began an investigation into allegations of “unconscionable conduct and misuse of market power” by Coles and Woolworths over a year ago. In September last year, the major supermarkets began drafting a code of conduct.
Earlier this month, the supermarkets released the Food and Grocery Code which includes 10 key principles such as bargaining in good faith, being fair and showing respect for commercial relationships.
The week before the code was publicised, Sims said at a Senate Estimates Committee the code would be legally enforceable.
Sims says for a code to be effective, it “must be workable and be able to address the behaviours of concern”, thereby dismissing any provisions in regards to the shelf placing of private labels, as called for by many farmers.
When action isn’t taken by the ACCC, Sims says this is caused by one of three reasons: the complained about behaviour is not against the law; there are insufficient resources to pursue the matter; or there is an error in the ACCC’s view of the law or assessment of priorities, which Sims says rarely happens.
Sims also addressed the ACCC’s recent loss in the High Court against Google and Trading Post, where it alleged the search giant had “engaged in misleading and deceptive conduct in relation to the publication of certain advertisements appearing on Google’s search result pages in Australia”. The case succeeded in the Federal Court, but was lost in the High Court.
Sims said the case demonstrated the ACCC does not take a “conservative approach”.
“Even when taking a case, or if we lose a case, often messages are sent and behaviour can change,” he says.
Earlier this week the ACCC had a win in the Federal Court of Sydney when Adepto Publications was fined a total of $750,000 for making false and misleading representations in regards to its advertising services.
