ACCC targets supermarkets and petrol industries

Richard Gluyas
The Australian
February 21, 2012

SUPERMARKETS and the petrol industry are in the cross-hairs of new competition watchdog chairman Rod Sims, who also flagged a criminal cartel case to “get the message across” to unschooled businessmen that cartel activity is illegal.

Outlining his enforcement priorities, Mr Sims foreshadowed a renewed emphasis on consumers, making use of the “profound” changes in the Australian Consumer Law relating to unfair contract terms and powers to investigate misleading representations.

There would be a much closer working relationship with the states in this area, he said.

But in signalling the Australian Competition & Consumer Commission would act on concerns about co-ordinated petrol price movements, as well as the way supermarkets dealt with suppliers and expanded shelf space for home brands, Mr Sims is treading a well-worth path.

For example, the government-initiated 2008 inquiry into the supermarket industry found there was no misuse of market power.
Mr Sims said that inquiry was “in the past”, and it was important to get evidence of any competition law breaches. “A lot of companies allege things but don’t give us the evidence,” he said.

“We are urging them to come and talk to us, even confidentially, if they feel there have been breaches of the (Competition and Consumer) Act.”

The ACCC chief, in a speech to the Australia Israel Chamber of Commerce in Melbourne, outlined five main priorities. They included making full use of the recent changes in the Australian Consumer Law, focusing on the most vulnerable consumers, maintaining or enhancing competition in concentrated markets, leading a sharper debate on the regulation of monopolies, and increasing the level of the ACCC’s engagement overseas.

Mr Sims said that, overall, the commission should not be too conservative, and would sometimes take on cases where the outcome was uncertain.

On future consumer enforcement, he flagged a close examination of the telecommunications and energy sectors.

With energy, he said, rapidly rising prices were creating new activities that could mislead the customer, such as advice on the best prices from businesses that earned commissions from “a limited number of companies”.

Telcos, meanwhile, were offering more complex products that could mislead consumers about what they were purchasing.

Mr Sims said he would “not hesitate” to take action against unconscionable conduct, despite the high legal hurdle.

In the online retailing world, he said he would watch “very, very closely” for cases where large incumbent companies were being challenged after barriers to entry were falling away.

The ACCC chairman also foreshadowed a criminal cartel case, because the evidence still suggested that price fixing, market sharing and bid rigging were not seen as cartel activity.

On the regulation of monopolies, Mr Sims said 2012 would be a busy year, with establishment of the regulatory regime for the future operation of NBN.

The Productivity Commission would also consider the need for regulation of the nation’s main capital city airports.

Mr Sims indicated he was not a strong advocate of the price-signalling laws created for the banking industry. While there was uncertainty surrounding the law of what level of commitment constituted an “understanding” between market participants, the law only applied to one sector.

“If they are going to have competition laws, they should apply equally to all sectors,” he said