Kay Hull (Riverina, National Party) Share this | Hansard source

I rise today to oppose the changes that the Labor government has proposed in the Trade Practices Legislation Amendment Bill 2008 in relation to the Birdsville amendment in section 46 of the Trade Practices Act 1999. The Birdsville amendment was introduced by the coalition government less than a year ago—after a long period of lobbying by a number of us on Capital Hill, in both this place and the other. It was introduced to ensure that small businesses had a fair go when major supermarkets and the like set up shop and made it very difficult for these small businesses to be as productive. Since the introduction of the Birdsville amendment, it has been no secret that it needs time to work and needs to be tested in the judicial system. We have to make sure that small businesses are not pushed out of the market by unfair, anticompetitive practices by much larger companies.

I refer to a particular incident that took place in my electorate not so long ago. It has been the subject of some discussion by the ACCC and also NARGA, which is the body representing this particular small business. The situation, which was brought to the attention of the ACCC Chairman, two inquiry commissioners and a number of senior staff of the ACCC, was an example of what was believed to be an act of predatory pricing by Woolworths against a Supa IGA supermarket in Cootamundra, in my electorate, in the Riverina. There was a list of products that Woolworths Cootamundra was selling each week at prices considerably below Woolworths’ published statewide specials for those weeks—that is, Woolworths in Cootamundra were undercutting their own specials, which applied across their network in all other Woolworths stores in New South Wales.

The reaction from the ACCC at the time was to reject the suggestion of predatory pricing, abuse of market power or whatever you would like to call it. The chairman suggested that it might have been in the interests of Metcash Ltd to give the independent some price support through this cycle, thereby subsidising the independent. And there were comments made that the chairman was cynical about suggestions the ACCC should act to stop such behaviour by Woolworths taking place. Some of the comments were that, if taken by the ACCC, this action would surely be to the advantage of the IGA independent.

NARGA, in defence of their chain and the IGA in Cootamundra, pointed out that it could not be certain that Woolworths was selling below cost but they did know that Woolworths was selling below their own statewide specials and at an extremely low cost, and they indicated that the ACCC rightly had the necessary powers to investigate whether it was in fact below-cost pricing and therefore potentially predatory. Contact was made with the Cootamundra Supa IGA by the ACCC, but the ACCC basically said it would be really difficult to prove predatory pricing. There was no conversation in detail in relation to the allegation or the concerns that were being expressed by not only the owner of the Supa IGA but other people as well, and there was no great attempt to collect any information on the products or the period of time involved in this low pricing. I repeat: the pricing was below what was advertised right across New South Wales in every other Woolworths store. It did rate a mention, though, on page 538 of the grocery inquiry report. The ACCC said in relation to the Cootamundra allegation:

The ACCC sought information from Woolworths about the pricing policies of its Cootamundra store and the costs of supplying the discounted products over the period of the promotion. Although the information provided suggests—

everything always ‘suggests’ to the ACCC!—

that Woolworths sold some of the relevant goods at below its cost of supply, the ACCC notes that this only occurred for a limited period, the purpose of which was to vigorously compete with a refurbished store reopening. The information did not suggest that the conduct was directed at or could have resulted in eliminating, or substantially damaging, the newly refurbished competitor.

When the parliament passed the Birdsville amendment on predatory pricing, it was welcomed by many people—by me, Senator Ron Boswell, Senator Barnaby Joyce and those of us who had been trying to have this looked at and seen to since the integrity of the process had been undermined by the Boral case. It was a very important statement of principle. The parliament had really stated that the type of conduct that I have just referred to by Woolworths in Cootamundra was simply not acceptable. But it was also recognised that the courts would need to define some of the elements, including ‘substantial share of a market’ and ‘sustained period of time’; that a complainant would still require the ACCC to establish where there had been below-cost selling, because a complainant would have no access to the internal company information of an alleged predator; and, finally, that the courts would need to decide on ‘purpose’ in relation to injury or elimination of a competitor.

The ACCC Chairman himself said in a news release on 12 October 2007:

Inevitably, we will prosecute appropriate cases to test some of these questions before the court. However, it should be remembered that businesses which have suffered as the result of anti-competitive conduct of larger rivals can bring their own legal actions under the Act.

It should not necessarily be assumed that the ACCC will be the first to bring forward such a case. It is equally conceivable that a private party could be the first mover in this area. In fact, historically, the majority of actions under section 46 have been taken by private litigants.

Regardless, clarification from the courts on these issues will be welcome when it arrives.

The news release went on to say:

Mr Samuel said that the full implications of the changes would not be known until they had been properly tested by the courts …

But now Mr Samuel is acting as the court.

Is this a vote of no confidence from the member for Riverina in Mr Samuel? Sadly, sorrily, so it is. I for one have always stood up for the integrity of the Chairman of the ACCC, but I am sad to say that I can no longer stand up for that integrity. I have come up with every conceivable reason why the ACCC can do nothing about anything anymore. Here we have now—rather than an increase of rigour over those businesses to ensure their behaviour is not predatory and an abuse—a watering down of this section, and it is a crime to say the least.

COSBOA is the Council of Small Business of Australia and represents those small businesses. I did note that someone from the government side of the House last week—I cannot recall who—indicated that COSBOA actually supports the removal of this principle. It does not. It clearly says in its press release of 27 August 2008:

COSBOA believes that it should be the birth right of every Australian to have the opportunity to start their own business, and to succeed or fail on merit, without fear of being crushed by predatory tactics used by large corporations taking advantage of their greater market share or greater financial resources.

Effective laws to prohibit Predatory Pricing are essential in fostering an entrepreneurial culture, which is vital to the future economic prosperity of the nation.

It is a fact that those small businesses that make up rural and regional Australia in particular are always at the mercy of many issues and it is very difficult for them to represent their own needs. It is through COSBOA and many others that they can have some sense of justice. Basically, COSBOA is saying that the government’s proposed changes to the Trade Practices Act reinstate both the market power test and the take advantage test. In the past, these tests operated as an escape clause, not as a clause to sort out predatory pricing but as an escape clause for large corporations to hide behind to destroy competition with predatory pricing practices.

Big business wants these terms reinstated into the Birdsville amendment because they know that their predatory pricing will not be captured under these tests as the High Court has very narrowly interpreted such concepts. This is the reason for the insertion of the Birdsville amendment to section 4: to give small businesses the opportunity to be able to function. COSBOA also supported the changes made by the former government to introduce a new test of market share for predatory prices cases to overcome the High Court’s narrow interpretation of the concepts of ‘market power’ and ‘take advantage’. COSBOA says that small business prefers the market share test as the market power test and take advantage test are just too difficult, and the federal government is not making these tests any simpler.

COSBOA is not convinced that government’s proposed changes to reinstate these tests will strengthen the act in any way and is concerned that these changes would in fact weaken the act. So it is an absolute issue for that organisation that represents small businesses. We continue to go along in significant terms about the issues that are currently being faced and are related in many instances. There is no doubt that more competition brings down the prices for the consumer, whereas market centralisation allows the dominant players to exploit the consumer, the grower and the farmer. Less competition means higher fuel and grocery prices for consumers, and this all adds to inflation. Less competition means that farmers get less and less for their meat and their products, which would have dire consequences for the livelihoods of many.

Our small businesses are an integral part of any economy, especially in rural and regional areas. In Australia in 2006, small businesses accounted for 58 per cent of the private sector jobs growth and generated an estimated 30 per cent of the nation’s economic production. In Australia small businesses employ around four million people, which represents over 45 per cent of the workforce, much of this workforce in rural and regional Australia. Our small businesses are the backbone of our local communities. They are always the first port of call to support our charities, especially when they are having fund-raising ventures and the like, and small businesses are always there to support other local clubs with sponsorship and donations. The small businesses in our rural communities are already doing it tough because they have often been set up solely as a support for those rural communities and they have come to depend on these consumers to purchase their products. It is a very courageous effort to set up a business. You often risk your family, your home and your possessions in order to provide your service and goods to the community and also to provide employment opportunities.

What we have seen and what I have demonstrated here today is the fact that Mr Samuel has publicly said on many occasions that the ACCC’s role is to protect competition, not competitors. But I say to you, Mr Speaker, there is one issue here that cannot be denied: the ACCC’s protection of competition has been a resounding failure, more so in the last nine to 10 months than it ever has been before. It has been a resounding failure and an entirely new strategy is required. As I said, the ACCC report into our GroceryWatch was an absolute indictment on the fair go for the Australian person, on the fair go for the Australian business. I stand here in this House today to say I have no confidence in the ACCC; I have no confidence in the ACCC chairman; and I suspect that future businesses in Australia will be severely impacted upon as a result of what takes place in this House over the next few weeks in respect of this piece of legislation.

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