(Transcript from SBS World News Radio)
Proposed new consumer laws could stop big companies like Coles and Woolworths from action that could put smaller competitors out of business.
Cheaper food and longer shopping hours could be available if the federal government accepts the findings of a new report.
Thea Cowie reports.
(Click on the audio tab above to hear the full report)
Professor Ian Harper is undertaking the nation's biggest review of competition policy in two decades.
His draft report calls for law and regulation changes, to make them more relevant in today's highly globalised and digitised economy.
The most radical recommendation is for consumer laws to be amended to stop big companies abusing their market power and forcing smaller companies out of business.
The Australian National Retailers Association represents Coles and Woolworths.
Its acting CEO Rob Hadler says there's never been more competition in the Australian retail sector.
"Prices, particularly on food, have never been lower. So there is no evidence that competition is waning and there is no evidence to suggest that smaller competitors are suffering from that competition. What's effecting them is the rising cost of doing business, largely driven by government."
Under current laws, in order to prove a company is abusing its market power, the Australian Competition and Consumer Commission has to prove the company intends to lower competition.
But under proposed changes the watchdog would only have to prove a company's actions have the effect of lessening competition.
Mr Hadler says, if implemented, the test would stop retailers making business decisions for fear of legal action.
"Major companies - whether they're retailers or banks, or mining companies for that matter - will be significantly be hamstrung in their decision making. This is in effect a protectionist policy that will mean no growth for big companies. That's a great result for those competitors that don't want to face up to competition. But the losers of that will be Australian families for who want lower prices or jobs for their kids."
Report author Ian Harper has told the ABC there would be an automatic defence in some circumstances.
"And the defence is, if that substantial lessening of market power, nevertheless is a rational action - result of rational action that a firm that didn't have market power would have done, and is in the long-term interest of consumers - pass. The point is we don't, the panel does not regard negative impacts on competitors, individual competitors losing out because of the actions of other competitors. That is not ipso facto bad for the competition process, particularly obviously if it's in the interests of consumers in the long-term and it represents actions that would have occurred without market power."
Another of the report's controversial recommendations is to scrap restrictions on pharmacies.
Currently the community pharmacy agreement places restrictions on where pharmacies can operate, and ensures they must all be run by qualified pharmacists.
But the Harper report says the regulations should be dropped because they limit consumer choice and the ability of suppliers to meet consumer demand.
The Pharmacy Guild of Australia's Greg Turnbull says Mr Turnbull says current location rules would lead to clustering, with pharmacies no longer within walking distance in most communities.
And he says customers would suffer if the supermarket chains take over pharmacy business.
"Their biggest sellers are cigarettes and alcohol so any suggestion that they've got the health of their customers high in their mind is flawed. The second thing is that when pharmacists own a pharmacy you know that the ethical and professional and clinical requirements will be applied to that business. Where shareholders and large corporate, in some cases global, multinational companies own pharmacies the first thing that is going to be the priority will be shareholder profit.".
Another of the report's draft recommendations is that trading hour restrictions should be abolished because they are anti-competitive.
But it says exceptions should still apply to Christmas Day, Good Friday and Anzac Day mornings.
The Australian Chamber of Commerce and Industry's Kate Carnell says if shopping hours are deregulated, the labour market must also be deregulated.
"If we're going to allow, and we should allow, small businesses to open when their customers want them to be opened it's also important that those small to medium businesses can afford to employ during those times which might be Sundays at night, public holidays."
Alan Kirkland from the consumer group, Choice, says Australians could see the cost of digital goods and services drop most dramatically, if the recommendations are implemented.
"Commonly TV shows, films, software - where Australians pay significantly more than overseas. The critical thing is that the Australian industry is largely protected by our intellectual property laws which allow Australia to operate like a protected economy shielded from the prices paid in the rest of the world. And this review seems to be saying we need to look more closely at that."
Consumers could also see cab fares drop, with Professor Harper calling for taxi industry regulation to be overhauled.
He says states and territories should allow other services to compete with taxis, and axe regulations that restrict the number of taxi licences.
Professor Harper's final report will go to the federal government in March 2015.
Share
