Australia’s consumer watchdog would have the power to ask the courts to split up supermarket giants and crack down on duopolies, if parliament votes in favour of a new Bill.
The Greens on Wednesday will introduce divestiture legislation in the Senate, that would allow the Australian Consumer and Competition Commission to break up powerful corporations.
If passed, the likes of Coles and Woolworths could be forced to divest assets that are “misusing their market power to inflate prices, exploit their supply chains, or keep out competition”.
It would mean the ACCC could apply to the courts for a divestiture order that could either force the sale of a suite of specific stores held by Coles or Woolworths, which would then have to be sold to a competitor or an international operator wanting to enter Australia; or increase competition within their supply chain.
Economists say the mere existence of the powers would serve as a deterrent against bad behaviour, and would protect consumers.
Greens’ economic justice spokesman Nick McKim said Australians were sick of being ripped off by Coles and Woolworths, that he said had “had it their way for too long”.
“We need to stop supermarket corporations ruthlessly using their market power to gouge prices while raking in billions of dollars in profits,” Senator McKim said.
“Giving our courts and competition regulators the power to smash the supermarket duopoly will help rein them in.
“This isn’t a controversial or radical proposition. The UK has this power, and the US has been using it for well over a century.
“The market domination of Coles and Woolworths gives them power to crush farmers, squeeze out competition, and shaft their customers.”
The implications of the Bill – if it were to pass – go beyond just the supermarket giants, and could change the way banks, telcos and energy companies operate.
Referring to the success of similar laws in the United States, former ACCC chair Allan Fels said divestiture powers had “always” been missing from Australia’s competition law.
“It’s been missing not for reasons of economic logic – the economic logic is extremely strong,” professor Fels said.
“It’s been missing because there hasn’t been a political willpower of governance to do it, in the face of big business opposition.”
He said the time was right “now” to change the rules.
“There’s been a step up in the degree of concentration in the Australian economy … Concentration is increasing and the amount of competition is declining,” he said.
The Greens will seek support from all sides of politics, and could have an ally in the Nationals, who have previously backed in calls for divestiture powers to act as a “big stick” against the supermarket giants.
Although the Prime Minister earlier this year said he supported granting the ACCC tougher powers to tackle supermarket prices, he has rejected the idea of forcibly breaking up the two major chains because Australia is “not a Soviet country”.
Jeremy Griffith from the National Farmers Federation’s Horticultural Council said it was “common sense” to at least have the power to break up duopolies on the table, saying the laws would serve as a “ very powerful deterrent to poor behaviour”.
Mr Griffith said all sides of politics should at least agree that duopolies are bad for the economy.
“I think the Australian public would be surprised that the government doesn’t have the power already in place,” he said.
“It doesn’t matter where you sit on the political spectrum … duopolies are not in the economy’s interest, and they’re not in the public’s interest.”
Assistant Competition Minister Andrew Leigh did not respond to direct questions about divestiture power, pointing instead to the government’s work on improving supermarkets’ pricing practices elsewhere.
“The government has charged former competition minister Craig Emerson with reviewing the Food and Grocery Code of Conduct, we’ve tasked the ACCC with a review of the supermarkets, and we are funding CHOICE to do quarterly price monitoring, ensuring that consumers know where the best deal is available,” Dr Leigh said.
“Since coming to office, the government has increased the penalties for anticompetitive conduct, banned unfair contract terms, and set up a Competition Task Force in Treasury which is actively considering issues such as reviewing Australia’s merger laws.”