Supermarket Spins the Politics?

By Brian Tessmann, QDO President

The current supermarket spin that the proposed ‘Effects Test’ would stifle competition, would put any spin bowler to shame. This ridiculous line was put forward on the ABC’s 7.30 Report last week by Richard Goyder, the head of Wesfarmers, owners of Coles supermarkets is the very same company that is most often accused of manipulating farmers and small business domestic competition.

Mr Goyder claimed the ’Effects Test’ would lead to less competition and less innovation. This is as ludicrous and deliberately misleading. This isn’t the first time they have used this line with leaked confidential submissions to Cabinet from last year claiming that everything from the loss of milk exports to China and even improved iPhones would be restricted if an ’Effects Test’ were introduced. Seeing as Australia is one of only two developed countries not to have an ’Effects Test’ or equivalent, it is surprising that it has ever been a hindrance to the iPhone or innovation in those countries.

The real threat to Chinese exports is the current low national milk production caused at least in part by the poor returns from the supermarket dominated domestic market. We need to look at what an ’Effects Test’ is as compared to what is currently available. The current law can only find an action of anti-competitive behaviour if there is proven intent or ‘purpose’ of reducing competition. To which a defence is completed by simply stating, ‘oh we didn’t mean to do it”.

The ’Effects Test’ looks at what the ‘effect’ of the action is on competition to determine if it reduced competition. Blind Freddy can see from this that an ’Effects Test’ would be a positive for competition and deliver better market function. In an Australia without an ’Effects Test’ large powerful companies can unfairly damage suppliers and small competitors and our ACCC cannot prove anti-competitive intent or ‘purpose’ even though the ‘effect’ is clear.

Like some Star Wars movie, the big power in this ’Effects Test’ battle is often unseen. My concern is what ‘force’ has made the Labor party, who claim to be the party of the battler, so against these reforms and by doing so sell out its small business supporters. It seems like another big union, big business deal, with no concern for member’s interests. The question is whether the Nationals and maybe the Independents and Greens are able drag some of the Liberal and Labor members away from the dark side.      

After all, the objective of the Competition and Consumer Act is the promotion of competition, fair trading and consumer protection. It would be nice for it to do what it was intended to do.