The newly appointed chairman of the Australian Competition Consumer Commission has fired an early shot across the bows of the two major supermarkets, warning the he will be watching their use of market power closely.

ACCC chair Rod Sims told the Melbourne Press Club yesterday that he was putting a number of sectors on notice, including the major supermarket chains.

“The two major supermarkets have significant market power, with many smaller suppliers feeling they lack a real ability to negotiate supply arrangements. The ACCC can and will watch closely to ensure any such dealings do not involve unconscionable conduct by the supermarkets,” Mr Sims said.

“To give another example, supermarkets sell both branded and their own private label products. This vertical integration in the supply chain needs close scrutiny to ensure the supermarkets do not misuse their market power under Sector 46.”
Mr Sims pointed to a number of other areas where bargaining power was an issue, and outlined a range of methods to deal with imbalance.

“Telecommunications, particularly the National Broadband Network, and the operation of our major airports are sectors where ACCC oversight will be vigilant in the interests of both consumers and access seekers,” Mr Sims said.
On telecommunications, Mr Sims expressed particular concern about the rollout phase of the NBN where service providers will continue to be reliant on Telstra’s copper network.

“During the transition it is crucial that there is equivalence of outcomes, that there is a level playing field so that the competitive landscape is not distorted as the NBN is rolled out.”

The ACCC has raised concerns about the monopolistic practices of Australia’s major airports for some time. Mr Sims outlined an approach to encourage true commercial negotiations between airports and their users, free of the use of market power. 

“When airport users are negotiating with the airports, they can have access to an outcome arbitrated by the ACCC if required. This is part of our most recent submission to the Productivity Commission on the subject,” Mr Sims said.

Mr Sims also said the ACCC would embrace the challenge to “keep the competition torch burning to see competition introduced into new areas.”

“Sound competition policy – when it is carefully thought out – provides benefits for consumers and for society overall.

“Under my chairmanship I intend that the ACCC will be a sometimes noisy proponent of this view. We are the major Federal Government agency with the word ‘Competition’ in our title. So I believe it is part of our job.”