News

Market power ‘effects test’ a win for farmers and small business

17/03/2016

The Coalition Government will introduce changes to misuse of market power provisions in the Competition and Consumer Act (CCA).

Deputy Prime Minister and Minister for Agriculture, Barnaby Joyce, said the reforms to the CCA announced today by the Prime Minister, Treasurer and Assistant Treasurer were a major element of the Agricultural Competitiveness White Paper and the Harper Competition Policy Review and would be welcomed by thousands of farmers and small and medium enterprises across Australia.

“The Coalition Government has listened to the overwhelming view of agricultural and small business stakeholders and will formally adopt an ‘effects test’ to protect them against misuse of market power and anti-competitive behaviour,” Minister Joyce said.

“These reforms will address a long-standing weakness in the existing competition rules and will ensure that we have a more transparent and competitive marketplace that treats all supply chain participants fairly.

“Importantly, and for the first time in Australia, the Australian Competition and Consumer Commission (ACCC) will have meaningful provisions to protect businesses that have been subject to misuse of market power.

In line with the Harper Review’s recommendations, the substantive changes being proposed to section 46 of the CCA mean that conduct that has the effect of substantially lessening competition will be better regulated.

“I note that the current Chair of the ACCC, Rod Simms, has been calling for these stronger provisions and former Chairman Allan Fels also strongly supports these changes.”

Minister Joyce said the government consulted widely with stakeholders on the design of these reforms and was confident that they would deliver fairness to businesses and a genuinely competitive marketplace for consumers.

Cattle Council reaction

Reforms to protect beef producers against anti-competitive behaviour in the market place have been welcomed by the Cattle Council of Australia.

Chief executive Jed Matz said the reforms were of importance to the beef industry where power was concentrated in the industry’s value chain. The limited scope of the current provisions allowed for conduct having an anti-competitive impact on the market place to go unchecked, he said.

“This failing has eroded beef producers confidence in the competition law framework as a whole,’’ Mr Matz said.

“CCA supports this reform as it strikes a good balance between protecting the competitive process whilst ensuring competitive behaviour and innovation are not stifled.

“The role of competition law framework must be to offer an environment in which competition between businesses can occur to drive efficiency and innovation, for the benefit of consumers.’’

Cattle Council had pushed for the implementation of the effects test through a submission to the Senate Rural Affairs committee inquiry into the red meat processing industry.

The inquiry into producers’ claims around a lack of transparent pricing information and processor consolidation leading to diminished returns, was sparked by a dispute over pre-sale weighing at Victoria’s Barnawartha saleyards in 2015.

Mr Matz said the reform would open opportunities for cattle producers to have anti-competitive conduct investigated.

“This reform will focus on the effect of the activity by the company, and not their intent,’’ he said. “The inadequacies of competition law in protecting cattle producers has been clearly illustrated and this will provide a more even market place.’’

He said the legislative changes came at a time when the ACCC was focused on agriculture. It marked a concerted effort by peak agricultural bodies to achieve a positive outcome.

“This is about rebalancing the power within the agricultural industry, allowing producers to operate on a level playing field in a fair market place.’’

 

Sources: Minister for Agriculture and Water Resources, Cattle Council of Australia

 

 

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

  1. Loretta Carroll, 17/03/2016

    Congratulations to the Coalition Government, Minister Joyce, the Harper Panel and those involved with this process. Terrific to gain positive changes to the Competition and Consumer Act – our farmers have long needed better protection from anti-competitive behaviour and misuse of market power. Thank you!

Get Beef Central's news headlines emailed to you -
FREE!