ACCC Chairman Stresses Importance Of Retail Competition
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has highlighted the importance of retail competition at the AFR Retail Summit in Melbourne today.
Speaking at the summit, Sims covered a number of retail and competition issues, noting the role played by the ACCC in considering a number of recent mergers.
“Last month we said we would not oppose JB Hi-Fi’s acquisition of the Good Guys as we considered, on balance, that the combined company would face strong competition from Harvey Norman and others in that retail arena,” Sims stated.
“To gain merger approval in some complex matters, undertakings may be offered by the merger parties to address our concerns, or the deals themselves may be restructured along the way.
“For example, we said we would not oppose the Metcash acquisition of Home Timber and Hardware subject to certain undertakings and, in the case of Coles acquiring Supabarn in Canberra and NSW, the merger parties decided to restructure the deal so that the final transaction ended up being much less anti-competitive than the original proposal.”
Sims additionally noted “many positive signs for competition in retail”, with competition, in particular, “benefiting from online sales challenging the established bricks-and-mortar stores”.
“Going forward, our main competition role in retail will be to ensure new entrants are not prevented from competing on their merits,” Sims stated. “While this is our key challenge across all sectors, the rise of online retail makes this particularly important in this sector.
“We will, therefore, be alert to the consequences of large firms acquiring promising start-ups, we will closely monitor access to data issues, and we will continue to support the proposed Harper changes to section 46.”
Sims stated that the proposed section 46 changes “have led to a strange debate”, noting that it would be expected that some very large firms would oppose the changes.
“They will more likely be the firms on the receiving end of section 46 action as they seek to protect their strong incumbent positions and exclude competition on its merits,” he observed. “What has been strange, however, are some of the arguments used. We have been told, for example, that opening new stores in new areas will be prevented by the Harper section 46 changes.
“This is, of course, an extremely strange argument. Not only is opening new stores in new areas pro-competitive but, in any rare case that such activity could substantially lessen competition (SLC), we already have the ‘effect of SLC’ test in sections 50 and 45.”
Sims also touched on supply chain issues and consumer guarantees, noting that “misrepresentations about consumer guarantee rights have been a staple of ACCC consumer actions”, with the ACCC having “stepped these up again this year”, also addressing product safety.
“All companies should pay close attention to quality assurance and be proactive in detecting and removing unsafe products from their shelves,” he commented.
“We have revamped the Product Safety Australia website, www.productsafety.gov.au, and no matter where you sit in the supply chain, I encourage you to pay it a visit.”