No Need for Economic Cultural Cringe on Competition Law

Claims by Richard Goyder AO, Managing Director of Wesfarmers, that proposed changes to the Competition and Consumer Act would be inconsistent with the goals of the G20 are an economic version of cultural cringe, Queensland Senator Matthew Canavan said today.

“Competition laws in the United States provide for companies to be split, a penalty that has been imposed a number of times, most recently for AT&T under that well-renowned anti-free market government known as the Reagan administration.”

“Why would we be embarrassed if we chose to insert an ‘effects test’, which is a much more moderate position than divestiture laws?”

Mr Goyder was responding to proposals to change section 46 of the Competition and Consumer Act. That section currently requires a complainant to prove that the “purpose” of an act was to “substantially lessen competition” to sue for anti-competitive conduct. That threshold has proven hard to meet and consequently some have proposed to change the test to only requiring that the “effect” of an action is to “substantially lessen competition”.

“Some of Mr Goyder's claims are inaccurate and incomplete. Mr Goyder fails to point out that an ‘effects test’ would only apply to companies that have a ‘dominant’ position in a market, and only if their action ‘substantially lessens competition’, not ‘likely damaging a competitor’ as described in his remarks.”

“Mr Goyder is right to say that competition law should be about consumers, but it also should be about getting the right incentives for investment too.”

“Large retailers with substantial buying power make it difficult for both small and big food suppliers to be confident that they can achieve a return on their investments. Recently the chief financial officer and executive vice-president of Heinz, Arthur Winkleblack, called Australia the most ‘inhospitable’ retail environment in the world.”

“When even one of the world’s largest businesses can be bullied by our retail giants, perhaps it’s time we recognise that we have a problem.”

6 August 2014

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