House debates
Monday, 4 November 2024
Bills
Competition and Consumer Amendment (Tougher Penalties for Supermarket and Hardware Businesses) Bill 2024; Second Reading
10:32 am
Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source
I move:
That this bill be now read a second time.
I rise today to introduce this private member's bill, the Competition and Consumer Amendment (Tougher Penalties for Supermarket and Hardware Businesses) Bill 2024.
Under Labor, the price of almost everything has gone up. The Prime Minister promised life would be cheaper under Labor, but that could not be further from the truth. After two years of Labor, inflation is still too high, interest rates have increased 12 times, families' real disposable income has collapsed and we are in a household recession, a per capita recession—and have been, indeed, for six quarters.
Whilst we've seen interest rates going down in the United States, in Canada, in the UK, in New Zealand, in South Korea and, indeed, in Japan, there is no relief in sight here in Australia. At the same time, as mortgage payments have increased, families are paying more on their energy bills and they are paying substantially more at the check-out. For many families, the weekly shop is a huge financial stress.
Every local member will have spoken to constituents who talk about what they see when they go to the check-out and what they get for a bag of groceries compared with what they did just a couple of short years ago. All those years seem like dog years—they seem like they are long, hard years—at the moment, I have to say. At the same time as mortgage payments have increased, we've also seen the price of everything else going up, such as insurance and everything we buy every single day. We are seeing this right across the board. Families are struggling with the cost of essential items, so it's more important than ever that they can have faith that businesses, including supermarkets, do the right thing by their customers.
We've seen in recent weeks concerning findings from the ACCC in regard to supermarkets. Indeed, the ACCC is taking action. The allegations relate to practices around discounting and, if they are true, they are a damning indictment on a sector that families across Australia—and suppliers, farmers and many others as well—rely on every single day for their livelihood. This is not what we have reason to expect. It's not what families expect.
This government has been too slow to act on competition policy not just in our supermarket sector but across the economy. We've seen that with the news bargaining code, consumer data rights and the serious cartel allegations against the CFMEU. The coalition has led the way on this since the start of the term, and this package of bills is the outcome of that work, led by me and the member for Maranoa, who is here today. Our approach is all about getting the balance right—strengthening the food and grocery code and introducing a targeted divestiture penalty to put businesses and the sector on notice. The coalition's approach has been carefully designed with appropriate safeguards. It is subject to a clear public interest test, including the impact on services, jobs and shareholder value in relation to requirements to add benefits from competition. It's limiting its application to specific sectors with established structural competition challenges. It's ensuring latitude to the ACCC and affected parties to reach enforceable undertakings as an alternative. It's providing clear statutory timeframes for courts and regulators to adhere to. It's limiting the standing for a divestiture order to be brought by the regulator in relation to a section 46 abuse-of-market-power action.
Where a court determines there's been a breach of section 46 by a body corporate or group operating in the supermarket or hardware sector, it's open to a party to that action or to the ACCC to apply to the court for a divestiture order. The ACCC or party to that action must seek a divestiture order within 18 months of finding the breach of section 46. A court may order the group to divest its assets or shares where it's satisfied that the divestment will lead to a substantial improvement in competition—a really important safeguard—but also, as I said earlier, is in the public interest with respect to impacts on unemployment, access to goods and services, and shareholder value. A divestiture order must be completed within five years of being issued. The court can accept enforceable undertakings.
Of course, this is a last resort for egregious behaviour. There are many other penalties that can be proposed along the way, but this is an appropriate last resort, we believe, providing a structural solution to a structural problem. The ACCC has been explicit that Australia's supermarket sector is an oligopoly. The Woolworths and Coles market share accounts for just over two-thirds of national supermarket sales. The e61 Institute has found that Australia's supermarkets are highly concentrated in local markets, particularly in regional areas. There are high levels of customer inertia between the brands. Indeed, according to e61, 33 per cent of Woolworths customers' most likely alternative shopping destination is another Woolworths store. So these competition issues are very real.
Other research has shown the impact of new market entrants in the retail sector is positively correlated with innovation, increased customer choice, decreased prices and lower inflation, saving consumers $3,500 a year since 2019, including $678 on groceries. The ACCC, the Productivity Commission and the Harper review have all recognised the practice of creeping acquisition as an anti-competitive practice of the supermarket sector, and they have been doing that since 2008. So there's universal recognition that a merger regime is ineffective right now in preventing the practice of creeping acquisitions and the addition of a divestiture penalty to this sector is warranted by this ongoing structural competition issue. This will be a substantial tool in the ACCC's armoury to address anticompetitive behaviour and ensure consumers, suppliers and small businesses are treated appropriately. Indeed, the ACCC chair has noted, in response to the ACCC's action on misleading pricing against the supermarkets, 'It is essential, when pursuing competition policy enforcement, that penalties need to exceed the cost of doing business in that anticompetitive way.'
There are some who are arguing this is out of line with what we see elsewhere in the world, and nothing could be further from the truth. But I don't expect the Prime Minister and others on the other side of the House to understand any of this. They clearly don't, and we've seen that in the sluggish way they've sought to implement competition policies in this country. The truth of the matter is that regimes along these lines exist in many of our peer countries around the world, including the United States and the UK. I was privileged enough to write my masters thesis on exactly that provision in the UK legislation, which has evolved over time and, indeed, is now reasonably close to what we are proposing here.
Significant divestiture orders were enacted by the Regan administration. Many will remember the 1982 AT&T breakup of their telecommunications companies. And the Thatcher administration in the UK had the Beer Orders of 1989. Both the Clinton and the Bush administrations pursued significant divestiture actions against monopolies, including Microsoft. And divestiture, while rarely invoked, has been found to lead to better competition and consumer outcomes and is inherently compatible with free market economics.
The sort of focus we believe in is where the best regulator of any market is competition, and most importantly the consumers have that competition. If a consumer has competition, they regulate the market and they regulate it via the choices they make every single day. That's far better than any agency sitting here in Canberra, let me tell you. Competition is far better than anything any regulator can do here in this city, because the consumer knows what they want. They know what their family needs. They know what they're prepared to pay, what their household budget is and how they can allocate their scarce resources in the best possible way.
Those opposite would do well to understand that rather than the heavy-handed approaches they take, it would be better if they made way for an approach where we seek more competition and, most importantly, understanding from the corporate sector that if they act in a competitive way and they give customers good choices and they avoid anticompetitive behaviour, then all of us in Australia will be better off.
Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source
Is the motion seconded?
David Littleproud (Maranoa, National Party, Shadow Minister for Agriculture) Share this | Link to this | Hansard source
I second the motion and reserve my right to speak.
Debate adjourned.