Steve Fielding (Victoria, Family First Party) Share this | Hansard source

Family First are convinced that the Trade Practices Actneeds to be strengthened to restore fair trading and competition to Australian markets. We are passionate about this issue because fair competition delivers the lowest possible prices to families, which are struggling to make ends meet. Sadly, the government’s bill, the Trade Practices Legislation Amendment Bill (No. 1) 2007, only does part of the job.

Family First introduced its Trade Practices Amendment (Predatory Pricing) Bill 2007 because anticompetitive conduct like predatory pricing can drive small businesses out of the market. Small businesses are particularly vulnerable because of their limited resources. Predatory pricing is where powerful businesses use their substantial market or financial power to drop their prices in one area to drive out competitors. Not only are small businesses affected, with some forced to shut up shop because they can no longer compete, but also Australian families suffer from higher prices in the long term.

Small business has been waiting for the government’s trade practices legislation amendment bill for more than three years, since the Senate Economics References Committee recommended action. The Trade Practices Act states:

The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.

The ‘welfare of Australians’ is central, but to achieve that we need a system to protect consumer welfare, and that system is fair trading and competition. There is a danger that, without appropriate regulation, unfair trading and distorted competition can lead to higher prices and less choice for consumers. There is a great social and economic loss to local communities when small businesses are forced to close.

Family First shares the Business Council of Australia’s concern that ‘heavy-handed responses risk stifling competition’ but believes we need to strike the right balance. A lack of effective regulation to stop anticompetitive behaviour can also stifle competition. The government’s bill has support from most, but not all, small businesses. There is also concern, and reluctant support, from many groups representing big businesses and those involved in trade practices law. The Fair Trading Coalition, which represents 30 small business member groups, states that, while some of its members want section 46 strengthened further, it supports the bill, but it also supports Family First’s moves to address predatory pricing.

The Fair Trading Coalition also wants the government to stop ‘creeping acquisitions’, where markets become highly concentrated not by one-off large purchases but by small purchases, shop by shop, that do not attract the attention of government regulators. The Council of Small Businesses of Australia and the National Association of Retail Grocers of Australia have also indicated they want the government to go further with reforms.

It is worth pointing out that not all groups or individuals representing small businesses support the government’s bill, although the government’s eleventh-hour amendment does have their support. The Southern Sydney Retailers Association declared the amendments ‘meaningless’—that is, the bill itself—while University of New South Wales Associate Professor Frank Zumbo stated that he did not see any merit in the legislation—that is, the existing bill, not the eleventh-hour amendment.

Family First acknowledges that there are significant issues yet to be addressed by the government to ensure fair competition, including creeping acquisitions, defining substantial market power, defining ‘take advantage’, unilateral variation of contracts and ‘take it or leave it’ contracts. The supermarket industry is frequently mentioned as an area of concern. A PricewaterhouseCoopers report commissioned by the National Association of Retail Grocers of Australia, NARGA, found that the two major grocery retailers, Coles and Woolworths, increased their market share from around 35 per cent in the early 1990s to around 80 per cent today. Australia has one of the world’s most concentrated grocery markets.

Family First shares NARGA’s concerns that this enormous market concentration means less choice for families, less competition and higher food prices. It also means small primary producers have less bargaining power with the supermarket giants. The NARGA report found that food prices have consistently grown at a faster rate than inflation for more than 20 years. Last year food inflation in Australia was almost 10 per cent. Continuing rising food prices prove that competition is not working well in the supermarket industry. Families and small businesses are the victims of market power being wielded by some of Australia’s retail giants who dominate key sectors. Family First is certainly not against discount pricing, but, when you undercut for extended periods of time with the purpose or effect of squeezing out a competitor, that is not on. Family First rejects the argument that it wants to protect small business by a method other than by ensuring fair competition.

The government’s bill does not explicitly ban predatory pricing. In fact, it does not even mention predatory pricing. That is why Family First will move an amendment to outlaw predatory pricing. Family First’s amendment applies to all markets and addresses the concerns of small businesses who asked for their industries to be included in Family First’s earlier predatory pricing bill. The amendment adds an effects test, which means those corporations that do have financial or market power need to be careful in how they use that power so they do not substantially lessen competition in a market.

Some big businesses have claimed our action will reduce competition and restrict discounting. But the same criticism could be made of the current section 46 of the Trade Practices Act 1974 or of the eleventh-hour amendment from the government. Family First’s amendment also makes it clear that it is not necessary to prove actual or potential recoupment in order to prove predatory pricing. The government’s amendment still does not make it clear with regard to recoupment, though it is claimed within their explanatory memorandum that it does. Family First, therefore, will still move its amendments.