Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The concept of a 25 per cent market measure has quite a good pedigree. The Fair Trading Act 1973 in the United Kingdom was altered to ensure that there was a warning mechanism measure inserted in regulatory practice whereby companies or organisations which reached a 25 per cent market share were put on notice that they were subject to competition law or a competition regulator watch and had enhanced reporting requirements put against them. Of course, 25 per cent is an arbitrary figure, but it was a recognition that 25 per cent delivers very substantial market power.

One of the great criticisms I have had of this government in the 10 years I have been pursuing these matters in depth is that they have failed in trade practices matters to take note of advanced, flexible and workable mechanisms which operate in similar overseas jurisdictions, which are effective in assisting the restraint of any abuse of market power and in ensuring that corporate operators in the market, particularly in intensely concentrated or oligopolised markets, are appropriately restrained and regulated. There is a lack of similar mechanisms here. I continually describe our Trade Practices Act as weak. It is intentionally weak, because the government will not take action in these matters. The Labor Party, to their credit, have recognised the way in which competition law needs to move and consistently over the last few years have joined the Democrats and others in the Senate chamber arguing for a strengthened Trade Practices Act.

I note in debate that the coalition often get annoyed with being told that they are overly subservient to big business views in the matter of trade practices law, but I am afraid that is the distinct impression that legislators, policymakers, small business observers and many media and expert observers have. One of these days, hopefully, the coalition will act to correct that perception. So once again—because I have done it over many years—I draw the attention of the government to the United Kingdom processes and procedures established under the Fair Trading Act, particularly what is appropriately regarded as a warning mechanism for a trigger percentage which alerts one to market concentration.

Having said that, of course, I can see that the danger of the design of Senator Fielding’s amendment was picked up by Senator Joyce in debate. It could, in practice—as opposed to the intent of the designer because the intent is a good one—lead to oligopolisation: namely, the creation of a number of major players, each approximating 25 per cent. It is certainly not the intent of Senator Fielding to end up with four companies running the entire petroleum market, each with a 25 per cent market share of retailing. I have not got the impression that is his intent, but it is why Senator Fielding has reacted well to Senator Joyce’s flip side, which is to reserve a portion of the market for non-major players. He commented on that in his earlier remarks. But I see a fatal flaw at the heart of this: the way in which the amendment is designed could lead to more concentration rather than less—an unintended consequence, I think.

There is a difficulty with industry specific regulation. I am not entirely averse to industry specific regulation—in other debates on other bills at other times I have supported it—but I am of a view that we should move more and more towards general law provisions rather than specific industry provisions. I have noted that the Commonwealth have followed that practice—with respect, for instance, to the criminal code, extracting elements and clauses out of individual pieces of legislation and putting them in the general legislation which covers criminal law to do with issues of fraud or where there is a penalty or other issues. I think we would need far less industry specific regulation in areas like Telstra, the media—or, as we dealing with here, petrol—if our general law were strengthened.

That is one of the reasons I have persistently, consistently and in detail, argued in this place for the assumption of divestiture laws being the flip side of merger and acquisition laws. They work exceptionally well in the most dynamic capital market in the world, which is the United States. The fact that the coalition government, and the coalition at large, will not accept the value of anti-trust or divestiture laws overall, is to their discredit because it is part of the law in the dynamic USA capital market. And once you introduce the flip side to merger and acquisition—which is the ability of the regulator to insist on divestiture in the appropriate circumstances—you can afford to back off from industry specific law because the regulator has a mechanism available.

It is no good saying to me that section 81 covers divestiture, because it only covers divestiture in very limited circumstances. I note, again to the credit of the chair of the committee, and to the credit of the Labor Party, that support for divestiture laws was included in the majority views spelt out in the Senate Economic References Committee, in its report The effectiveness of the Trade Practices Act 1974 in protecting small business.

Let me tell you, if there is one constituency that does not want effective divestiture laws it is big business. As I said, it is to the discredit of the coalition government, which has been quite brave and gutsy in other areas of corporate law reform, that it will not take on this major policy issue. If divestiture did exist, you would be able to parallel with it the UK early warning system of, when you reach a sizeable market share, being put on watch. Then senators would not need to take the initiative—as Senator Fielding has—to try to introduce a minimum mechanism in a particular industry to serve a particular need at a particular time, because the general law would be sufficient.

That is not Senator Fielding’s fault; it is the fault of a failure of broad political principle and policy by the coalition. If the government loses government next time, or the time after, I look forward, shadow minister, to the Labor Party taking up these issues and bringing forward the sound recommendations that are supported in the Senate Economics References Committee report.

The shadow minister raised the issue of review, which is covered in these amendments. I agree with the shadow minister and Senator Fielding that the Oilcode needs to be reviewed, and probably on a regular basis. It is a moving market and it is an extremely dynamic market. It is a complex and very sensitive market from the perception of consumers and businesses, and if the Oilcode is to be the principal and mandatory regulatory mechanism to keep the oil industry honest—I will not use the pejorative word—then the Oilcode needs to be kept constantly under review, and independently so.

The shadow minister made the remark that the role of monitoring and reviewing the oil code is currently contained in section 3 of the draft Oilcode, and that the review and monitoring role will be shared by the ACCC and the Department of Industry, Tourism and Resources. I consider the ACCC, in law, to be an independent statutory authority. I do not accept the minister’s version of it being part of the executive, although I accept that it is part of the broad government area of responsibility.

I tend to see the executive as the coalition government cabinet or, if Labor are in, the Labor cabinet. They are the executive to me. The bureaucracy and agencies are separate. And, of course, independent statutory authorities are, and should be, at arm’s length. Anyway, those two bodies—the ACCC and the Department of Industry, Tourism and Resources—should be sufficient under the Oilcode, as I understand it, to achieve the appropriate review of the way in which the code may work. Therefore Senator Fielding’s amendments could cross with that.

I am concerned that a non-expert body may be given the role of reviewing regulatory competition matters and I am of the view that these matters need to be given to the ACCC as the experienced and concurrent reviewer and regulator. So overall I am concerned that Senator Fielding’s amendments—once again, with the right intent, and reflecting a genuine concern that he has and that is present in the community—will deliver an effect or an outcome which is contrary to his intention. So I must join with my shadow minister colleague from the Labor Party in informing the Senate that the Democrats will not support these amendments.