Effects test: Milk fight looms as Labor says shoppers are the losers

Jared Owens
MARCH 17, 2016
THE AUSTRALIAN
Major supermarkets have been accused of aggressively discounting the price of milk to lure shoppers away from smaller businesses.
Labor is laying the groundwork for an election contest over grocery prices, with opposition MPs seizing on Barnaby Joyce’s complaint that consumers should pay more for milk.
Malcolm Turnbull yesterday triggered a rift with the nation’s peak business group by announcing the introduction of an “effects test” to competition law, allowing small operators to sue larger companies for behaviour that diminishes competition, even if their conduct was not intended to have that effect.
Mr Joyce — who famously predicted a roast lamb would cost $100 under an emissions trading scheme — yesterday accused the major supermarkets of aggressively discounting the price of milk to lure shoppers away from smaller businesses.
“I obviously believe that the proper price of milk is above a dollar. They say they are not selling it below cost. What I say is that in many instances, it’s a loss-leader that is bringing people into the shop and they pick up the money in buying other products,” the Deputy Prime Minister said.
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“The way we had to deal with that in the Department of Agriculture is by starting to open markets into China and we sell that same litre of milk to China for up to $11.”
Labor today predicted the Liberals’ “capitulation” to the Nationals would create “a legal risk every time somebody lowers prices for consumers”.
“When you’ve got an effects test so that doesn’t matter whether people were in fact engaging in anti-competitive conduct, there didn’t have to be any intention other than the intention might simply be reducing prices for consumers,” opposition finance spokesman Tony Burke told Sky News.
“What example did he give of what’s a more proper price? He refers to milk being exported to China at $11 a litre.
“The people that lose out of this are the people that are going shopping.”
Small Business Minister Kelly O’Dwyer dismissed the debate over the price of milk.
“We’ve already heard from (the supermarkets’) very words themselves that they have uttered that they are going to continue to have very strong and competitive products in their supermarkets and good luck to them,” she told ABC radio.