Australian Competition and Consumer Commission chairman Rod Sims has provided a regulator’s perspective on the debate surrounding the market share held by the two major supermarket chains.

Mr Sims was speaking at the Australian Food and Grocery Council’s industry forum in Canberra today.

“The ACCC is completely clear that its role is only to protect the competitive process, and that is how we see the current debate,” Mr Sims said.

“It’s simply incorrect to label all those who question aspects of the degree of market power of the major supermarket chains as people wanting to protect inefficient businesses.”

“Second, we see the supermarket issues capable of being dealt with under the Competition and Consumer Act, and we do not see use of the Act as excessive regulation.”

“Indeed, effective implementation of the Act is vital for the success of our market economy. It provides clear and wide boundaries within which we can all benefit from the power of the profit motive,” Mr Sims said.

“It is incorrect to argue that a market economy needs no regulation. It requires a modest amount of appropriate regulation to be effective, and this is what the Act provides."

In outlining supermarket issues which fit under the Act, Mr Sims provided an update and perspectives on supplier issues, the proposed code of conduct, shopper dockets, credence claims, mergers and safety issues.

He also explained ACCC’s enforcement role and how it must always act on the basis of facts and evidence in taking court action.

“Our enforcement role, therefore, is not to be a decision-maker. This is for the courts which are, of course, the ultimate umpire, as they should be.”

“Take our shopper docket investigation as an example where the ACCC’s role as an enforcement agency has been sometimes misunderstood. The ACCC has no power to ban shopper dockets, nor do we want the power to ban promotions.”

“As an enforcement body, the ACCC can investigate market activity and, where appropriate, take court action seeking injunctions to stop conduct and seek penalties in appropriate cases.”

Mr Sims also welcomed the ‘root and branch’ review of Australia’s competition laws as an important opportunity to ensure the laws are appropriate, and serve to enhance the welfare of Australians.

Commission backs supermarket code of conduct

Mr Sims said many other advanced countries, including the UK, Japan, Korea and Italy, already had laws addressing unfair conduct between large retailers in their dealings with suppliers.

The ACCC was already on the record as saying that, on balance, it saw merit in the introduction of a legally-enforceable supermarket and grocery industry code of conduct in Australia, with clear and real obligations to allow the ACCC and industry to know when traders had crossed the line.

“Such a code could, for example, enable more effective enforcement of contracts, encourage supplier investment, see a more appropriate sharing of risk and allow more effective dispute resolution,” Mr Sims told the AFGC industry forum.

“Of course, any code will impose some transaction and compliance costs, and cannot address all the issues that arise from market power.”

While the code might be seen as increased regulation in Australia, it might help address the broader issues resulting from market structure and market power which have arisen through ACCC’s supermarkets investigations.