Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Hansard source

I rise to speak on the Competition and Consumer Legislation Amendment Bill 2010and, for those who are listening, this is a different one from the one we have just been discussing. There has been quite a lot of traffic through Dr Emerson’s portfolio around these issues. This bill has two particular aims. The first is to clarify the operation of provisions relating to mergers and acquisitions by removing potential ambiguity in the definition of the market that is applied by current law. The second is to insert interpretive principles into unified unconscionable conduct provisions for consumers and business related provisions to assist the courts in applying the law and to assist stakeholder understanding of the law.

In the past 10 years concerns have been raised within the community about market concentration in key sectors, including retail, fuel, groceries and banking, and the ability of section 50 of the Trade Practices Act 1974 to deal effectively with what is known as creeping acquisitions. The Baird committee considered creeping acquisitions in its 1999 Fair market or market failure? report. The committee recommended a code of conduct be established requiring the mandatory notification of supermarket acquisitions by publicly listed corporations. The Baird committee also recommended that section 50(6) be amended to specifically allow consideration of regional markets in order to address creeping acquisition concerns at a regional and rural level.

The interpretation by the ACCC of section 50(6) has not been tested by the courts. However, it was considered by Justice French in his 2003 decision in the Federal Court case of AGL v ACCC. Justice French left open the possibility that whether a market is considered substantial under section 50(6) may be determined by reference to Australia as a whole. It has been conveyed to the ACCC that a major supermarket chain may press this interpretation to resist any objection to acquisitions in geographically confined markets from being considered under section 50.

Given the lack of jurisprudence, the bill seeks to remove the term ‘substantial’ in defining the market to be considered that might otherwise prevent the application of section 50 to a local or any other relevant market. Put in simple terms, the concern, and the argument advanced by an experienced and highly regarded trade practices lawyer to the ACCC, was that if there was a challenge about whether a market could be defined as a regional, outer metropolitan or contained area and there was a suggestion that that would prohibit the acquisition of a greenfields site or of a site generally or of a property then they would run the argument that it needs to be considered against the market of Australia as a whole.

You and I, Madam Deputy Speaker, would probably realise that if we are looking for choice and variation in our supermarket shopping we do not tend to commute right across the continent of Australia to determine what supplier we might choose. So that common sense practical application of the law was being challenged by a threat, not in a malicious sense but challenged by an argument the prospect of which may have been put in challenging some determinations by the ACCC where a supermarket chain was unhappy with their conclusion. As a result, the bill contains no new provisions to deal with creeping acquisitions but simply removes the prospect of this broader definition of the market under the banner of ‘substantial’ from being a constraint in the application of the law.

So, essentially, that first provision is seeking to change the law so that the law is implemented in a way the law was intended to be implemented. It is a bit of a stretch. The minister has left, but I was going to point out to him that his second reading speech is a Herculean projection of what he hopes this bill is about—that is, the claim that it fulfils a government election commitment to enact new laws to deal with creeping acquisitions. This is not really a new law. In fairness, he did not use the word ‘law’. I will quote:

The bill will implement the government’s election commitment to enact laws to deal with creeping acquisitions by amending section 50 …

That bit ‘by amending section 50’ is an addition to what the election commitment was. This is a modest measure at best. It is a very modest measure. It is really an action taken in anticipation of the prospect that a lawyer might run an argument that was mooted in a discussion in a court many years ago to challenge the application of the law as it was intended.

This is what has caused some disquiet in the community, where there is legitimate concern about creeping acquisitions and at times a seeming inability or unwillingness to address market concentration issues achieved by creeping acquisitions. Sadly, this amendment adds no new tool to the toolkit—nothing. For people claiming it is some miraculous beefing-up of the toolkit available to the ACCC in relation to creeping acquisitions to create dominant market positions, they will be very disappointed. There are no new tools in this. On the suggestion that the election commitment would introduce a law, technically a bill is a law. I am sure people who read that election commitment from Labor prior to the last election probably expected a little bit more than a line being put through the word ‘substantial’. In fact, I am certain that was their expectation.

So to some extent the small business community in particular have been wooed by the prospect of some more meaningful change in this area and have been, frankly, underwhelmed by the nature of the change that has been proposed, the change that, as I have said, will not change in any way the intended operation of the law or the toolkit. It is designed to cut off at the pass the prospect of a legal argument, not put at this stage anywhere, not advanced, but a prospect of it. This is cutting off that possibility. I can just sense how, having been seduced by the prospect of genuine strengthening of the tools, many in the small business community will feel somewhat betrayed by what has been produced.

Having said all that, we are not opposing that change. We do not think it will achieve much, but it causes no harm. But it is important to note it is still an issue. The step-by-step acquisition of properties and sites to accumulate a dominant market position is still an issue. This is why the opposition have signalled our intention to review these provisions—not to pronounce some prescription now. That is a very difficult proposition for an opposition to do. We do not have the enormous resources of government and access to football teams of trade practices lawyers and the like. We are not so blessed. What we do, though, is confront the reality of the issue and the need to properly diagnose that issue so that any response is properly calibrated, objectively tested and implemented to achieve what it intends.

I say that because in more recent times there has been quite a discussion around this subject and in relation to Senator Xenophon’s Richmond amendment that was being canvassed in the Senate. Considerable attention was given to that. It was called the Richmond amendment because it related to a petrol station in the Adelaide suburb of Richmond where it was believed that some of the actions of a major petrol retailer were going to greatly compromise and in fact blow out of the water an independent petrol retailer. There are not many independent retailers, they are an endangered species, and Senator Xenophon brought forward some ideas about how that might be responded to. Both major parties concluded that the remedy being advocated by the Richmond amendment was not going to achieve the outcome people were looking for, so both Labor and the coalition agreed that the Richmond amendment was not in a form that could be supported.

Where the major parties diverge, though, is that the coalition recognises that there is still an issue there. The Rudd Labor government seems to think there is not. In fact, upon the announcement of our intentions in relation to an examination of competition law the minister was quite vitriolic in his response, suggesting it had all been done and that there was no real challenge or issue that needed to be addressed. I suspect he has very few people who agree with him there. As I move around Australia and talk with business organisations and individual enterprises, small and large, and I talk with academic experts of considerable stature and insight such as Professor Zumbo, and as I talk to trade practices lawyers in major firms and smaller firms with a whole range of clients, I can only think of one occasion where it has been asserted that there is no need to examine these issues. That was from the minister. That was a crushing blow to all those in the business community that see conduct that is unbecoming in the marketplace, that feel that either the toolkit available to the ACCC is not adequate or perhaps its application is inconsistent and needs further consideration. To all those people the words of the minister in being very hostile to the opposition’s approach came as a great disappointment. This is perhaps an example why.

Some organisations have welcomed these changes because they change nothing. If all you value in public policy is certainty, the best thing you can do is change nothing; you are certain to get certainty. Change nothing and you will get certainty because nothing has altered. But that is a very narrow and self-serving view of public policy by those advocating the no-change case when there are legitimate concerns that need to be addressed. If those legitimate concerns and some suboptimal outcomes in terms of the national interest and sound public policy objectives remain, arguing a do-nothing strategy is abandonment of the responsibility and duty of all of us in this place.

So on this creeping acquisitions issue and the Richmond amendment, which was Senator Xenophon’s private member’s bill, as I mentioned, the two major sides of politics did not support that, feeling it was not fit for the purpose it was intended for. But let me be clear, and I concur with the coalition senators’ remarks in the report, that that does not mean that the issue is not legitimate and that certainly does not mean that we should stop the constant pursuit of examining what is required to deal with it. So that is the issue around creeping acquisitions. There is a question mark about ‘substantial’. Okay, we are putting a line through that so that there is not an argument that can be mounted that ‘substantial’ needs to be judged against the continent as a whole.

The second area relates to its application to greenfield sites. There are no specific provisions in the bill to deal with that. The operative segment of this debate that deals with that are the words delivered by the minister in his second reading speech. He is asserting the intention of the law to extend to greenfield sites, and that is appropriate, that is an interpretation that I agree with and I think most people would, and that is certainly the intention of the parliament.

And whether the acquisition of greenfield sites can be argued to be part of the normal course of business and not subject to the oversight and intervention of the ACCC may also be challenged. This is designed to say to someone who might consider running that argument that that is not the intention of the parliament. The minister has made it clear that, if the court subsequently interprets a matter in that way, it will be revisited by the parliament. You are looking for some substantive change, but that is jawboning the judiciary to make it clear what the parliament is on about. There is no change to the tool kit that is available to deal with creeping acquisitions, and I would say that the bill falls a considerable way short of the expectation that was created in the small business community. In that respect, it is situation normal. Labor went out prior to the election with all these enormous expectations and seduced people into thinking everything was going to be new, shiny and different. They got elected and have done what can only be described as a stealth-like set of reforms that are so minimal they will make not a jot of difference whatsoever—and they now claim that that fulfils an election promise! I understand the deep cynicism in the small business community because of that behaviour—but I will not call it unconscionable conduct, because I am about to get onto those provisions.

The other area of the bill relates to the unconscionable conduct provisions and essentially does two things: it seeks to bring together and harmonise the unconscionable conduct provisions as they might affect consumers and business—therefore removing any potentially confusing distinctions that may exist between those two audiences—and it sets out a range of principles. This is another area where Labor in government and in opposition created considerable expectations that it would address the concerns within the small business community—in my view, legitimate concerns—about the accessibility of unconscionable conduct relief. The expectation was that there would be some meaningful action. Quite a lot of work was done to deal with the legitimate concerns about the fairness of conduct towards business and consumers. That issue has been dealt with and provisions have been in place since 1986 and 1988.

The provisions in this bill, though, seek to implement the recommendations of an expert panel that was set up to consider the recommendations of a Senate economics committee inquiry into whether there was a case for a statutory definition of unconscionable conduct. The motive behind that was to try to create a greater sense of certainty and dependability in the relief and protections of unconscionable conduct. There was a sense that they were complex concepts that were not well understood in the marketplace. Many in small business felt that the relief was not there when they felt that the conduct that they had been subjected to by, in many cases, larger businesses was indeed unconscionable.

The Senate committee recommended that the government set up this inquiry process to determine what examples could be incorporated to provide greater clarity. In the end the committee that examined the Senate committee’s report came back to the government and said that the proposition was so difficult that they could read into example A, with certain characteristics and certain factors taken into account, a judgment of unconscionable conduct. Someone who is aggrieved might see that case study and project their circumstances into that set of facts and feel quite convinced that an act or behaviour that would fall within the definition of unconscionable conduct had been inflicted upon them. That has its dangers. An individual can look at cases that have the outcome they desire and then conclude that a similar set of circumstances and the law and the precedent apply to them. That is hazardous. It does not rule out the need, though, for greater clarity and greater certainty. It certainly does not do that. But going about it by, let us say, modelling cases to project them into other circumstances does have its hazards.

The expert panel found that these provisions have been regularly enforced since their inception and that the case law is still developing. For many in the small business community that would probably come as a surprise, but I do understand, from briefings from the ACCC, that an amount of enforcement activity has been undertaken and that the case law is still developing. Many would like to see that case law accelerated and the ACCC more prepared to take on cases that may be challenging and hotly contested but may well add to people’s understanding of the case law and the way in which these provisions apply.

The other thing that needs to be talked about is this. So much of the decision about whether to pursue an unconscionable conduct case happens through internal processes within the ACCC. It is quite fair enough for them to work through their own processes and arrive at their own judgments about which cases to pursue and which not to pursue. I guess what I would like to see, though, is the broader Australian public and enterprises understanding why those decisions are being made and what the decision support framework looks like. Is it that the case is poor? Is there some aspect of the case that might undermine a successful litigation? Is there a conflicting or problematic precedent that might fly in the face of what might seem on the surface to be a very clear case of unconscionable conduct?

I guess the point I am making is that there is so much mystery surrounding unconscionable conduct that it is hard for me and many others to see that the way in which the law is being applied is actually promoting conscionable conduct. That is, are we getting the message out that certain cases and enforcement activity proves that this kind of behaviour is wrong and that therefore the market should not go there or should take these factors into account? I just do not think that that educative process is working terribly well at the moment.

I am hoping that these principles will add something. They seek to tease out the kind of conduct that can fall within the reach of the unconscionable conduct provisions. They seek to provide some clarity to the business community, consumers, enforcement agencies and the courts. They seek not to give rise to confusion and misguided expectations as to case law. They do not say: ‘Here is a case study; do you fit into one of these?’—a kind of cookie-cutter approach. They do not do that. But the interpretive principles do seek to tease out some of these legal concepts. They seek to make sure that the courts do not apply too narrow a definition; the common law concept of one of the parties being disadvantaged in some way and the other taking advantage of that disadvantage—that is quite a narrow interpretation. But the law seeks to say, ‘No, it goes beyond that’—that it can include the nature of the relationships between the parties; go to questions about the way in which contracts are formed, and the terms and the manner in which contracts are carried out; and go to questions of systematic conduct and patterns of behaviour. And there is no requirement to identify a person at a disadvantage to pursue and enforce those provisions. So that is all reasonably good stuff but, again, it does not change the tool-kit. Hopefully it will inform people more, in a legal sense, about what is going on.

I have sought and I hope to get more advice about how the ACCC will carry out its role in the context of these principles. At the end of the day, the way they are applied and utilised is as important as the black letter law, and that is often where there seems to be some confusion and inconsistency in the marketplace.

So the opposition is happy to support this bill because, frankly, its provisions are unobjectionable. They do not achieve much. In fact, to use the medical analogy, these are placebo provisions. They do not do a whole lot of anything. They do not harm anybody. They do not present any new tools for the tool-kit. They resolve a problem that may possibly arise if someone takes a particular argument to the courts—we have cut that off at the pass. Had someone wanted to run the line that greenfield sites were not included, Dr Emerson has given the parliamentary jawboning exercise here to the courts to make it clear that that was the intention. And we have got these principles, which tease out the law as it currently stands but which do not, of themselves, alter the law. So that is where we are today.

I have touched on why I think there is a need to revisit the tool kit. I have provided some examples about where I think suboptimal outcomes are occurring. I am not so reckless and lacking in care as to stand before you and prescribe what the remedy is. I am saying, though, that an objective evidence base examination of whether the tool kit is fit for purpose and relevant for the current state of commerce and future trends in competition is the way to go. Having established that quite clearly, then we can be careful and thoughtful in the remedies we seek to bring to the parliament. That is our approach.

Just in closing, I would like to place on record the opposition’s condolences to the family of John Martin, who has passed away. John is a former commissioner of the Australian Competition and Consumer Commission. He held that role for a decade. He passed away quite suddenly over the weekend. He served the nation in a very distinguished way. I think his family can be very proud of John and his contribution, not only on the ACCC but also in other areas. He was chairman of the International Air Services Commission, he held an executive director role at the Australian Chamber of Commerce and Industry and he made a very important contribution on the board of Standards Australia and also in international work representing Australia on a business and industry advisory committee to the ACCC. He served the nation through those roles and also as a policy adviser and program manager in Treasury and the department of industry and as a regional consultant for the UN in Bangkok. He was a distinguished Australian. He will be missed. By those in the small business community he was admired for his supermarket inquiry in the Australian Capital Territory and for trying to make a positive contribution around issues of dominant presence in that sector. His family and those near and dear to him, particularly his children, must be having a terrible time now. I would like to put on the record the coalition’s condolences and hope that in this difficult time the family can comfort each other and take great comfort from his contribution to Australia, to the Commonwealth government and also here in Canberra.

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