Addressing an Australian Food and Grocery Council forum in Canberra, ACCC Chairman Rod Sims said a code of conduct that provides clear rights and legally enforceable norms of conduct would be of considerable assistance to food and grocery industry participants.
“However, many of the protections of the proposed code are qualified and retailers and suppliers are able to agree to ‘contract out’ of code provisions,” Sims said.
“This raises an issue of whether the code will address the problems which industry has identified if norms of conduct in the code are able to be traded away, rather than always enforceable.”
A smart approach
Sims also backed recent comments made by the chairman of the Productivity Commission that Australia should stick with its successful strategy of favouring the many over the few by focusing on removing barriers to competition generally, rather than pursuing policies that favour particular sectors.
“I agree with him completely. So, it seems, does the Harper Panel review [of competition policy].
“We strongly agree with the review panel that there is a need to reinvigorate Australia’s competition policy, and ensure that it evolves.”
Sims welcomed the Harper Competition Review draft report and discussed proposed areas of microeconomic reform where the food and grocery sector stands to benefit.
“On road infrastructure provision and pricing, we support the panel’s recommendation on introducing cost-reflective road pricing linked to road construction, maintenance and safety,” Sims said.
“Importantly, more effective road user charges can be offset by lower fuel taxes which currently account for one quarter of fuel prices.
“The ACCC also welcomes the draft recommendations to deepen competition in liner and coastal shipping services. This will also reduce your production costs.”
Low hanging fruit
In discussing proposed microeconomic reform, Sims rejected the notion all the low hanging fruit has been picked, and that all the really important reforms have been made.
“The reforms to shipping are low hanging fruit, and can be implemented quickly. And the road reforms are fundamental to our economy.”
Sims also welcomed the review panel’s consideration of Australia’s competition laws.
“In doing so, they have clearly had regard to established international approaches to setting the appropriate boundaries of such laws. Australia’s competition laws are behind international best practice in important respects.”
Sims broadly welcomed the panel’s recommendation on “concerted practices”, the misuse of market power, and in relation to merger assessment.
In reporting on the ACCC’s recent compliance and enforcement activities, Sims listed outcomes in area of credence claims including beer, pork, honey and free-range eggs.
“When making promotional claims about food or grocery products, the ‘who’, ‘what’, ‘where’ and ‘how’ must be accurate,” he said.