“Minister Emerson’s stance on the Birdsville Amendment will take small business and consumers backwards in their fight against predatory pricing. Under Minister Emerson’s proposals small businesses will have the aspiration to, but little hope of, pursuing a predatory pricing case and this will further centralise the most centralised grocery market in the OECD. When the small business is gone, the market players that are left will extract a premium from the working family's pay-packet. This will mean even higher prices for groceries and petrol.
“When the prospect of going into business is made virtually impossible because a major player will, with the endorsement of Minister Emerson and Labor, conduct a program of below cost selling to take you out at the start, then the freedoms and liberties of the Australian citizen to go into business and be master of their own ship are curtailed.
“Predatory pricing is selling below cost, not to be competitive but to remove competition. When an organisation can centralise its power in the market place it can push around its suppliers because they have little or no choice. More importantly, it can exploit its customers because they have little or no choice. When there are only a couple of players it is very easy for big businesses to understand the game of exploitation without having to explain the rules to each other.
“Minister Emerson said that the Birdsville Amendment, which was created to outlaw predatory pricing, was written in the Birdsville Pub. Let us take that as an indicator of his grasp of the subject matter. The final draft was, for the record, faxed from the Birdsville Hotel after many years of small business lobbying, predominantly in Canberra. However, I’d have to admit, the Canberra Amendment does not have the same ring to it. This amendment was to overcome the High Court’s questionable findings in the Boral case.
Minister Emerson also said that the Birdsville Amendment would remove discounting from the market place. However, there have been 47 approaches to the ACCC under the Birdsville Amendment ‘market share’ provision since September and none of them have been upheld as legitimate. So, the reality is the Birdsville Amendment is quite able to distinguish between discounting and predatory pricing. There is not one example that Minister Emerson can provide of where the Birdsville Amendment has unnecessarily impinged on discounting. The reality is the Minister is inconsistent and factually incorrect.
“The purpose of the Birdsville Amendment is to outlaw the destruction of competition by campaigns of predatory pricing which, in the past, required the corner store or shopping mall butcher to try and jump through hoops to mount a case against the large retailer determined to destroy the competition. The first hoop was outrageous. Your local independent fuel retailer, for instance, had to prove that the large oil multinational across the street could raise prices without losing customers before they could take the case any further. There is only one market structure that can raise prices without losing customers and that is a monopoly, which means the small business is dead.
“It was not surprising that no case has ever been successful since 2003 and this is where Minister Emerson and Labor are taking us back to. All the Birdsville Amendment did was say you only had to prove a business had a substantial market share before you could go the next step. Then, naturally enough, as the next step, you have to prove the big business engaged in a sustained campaign of selling below cost to remove competition. The court, as with all legislation, has the job of interpretation and Minister Emerson saying it will take 10 years was yet another example of over dramatisation standing in proxy for facts.
"What is interesting is this latest position by Labor appears to have unified one comment across a wide political spectrum of informed sources and that is, it's bad legislation.
"It has become apparent the former Chairman of the ACCC, Allan Fels, also has serious concerns about the repeal of the Birdsville Amendment, stating constant changes to Section 46 of the Trade Practices Act are making it difficult for even the TPA "cognoscenti" to keep up. He has suggested the "latest Bowen package will bring sighs of relief to many big companies with large market shares and discount pricing, like Woolworths" (SMH, 3rd May 2008).
“I do not always agree with the Institute of Public Affairs, but Minister Emerson’s spray at their Director, Alan Moran, did mean that I had a reason to contact them. Both of us agree that this position of Labor's is neither Arthur nor Martha, but a hybrid confusion. Labor is doing a lot of this lately: half repealing IR laws, 2020 New Ideas Summit for old hoary chestnuts, not dealing decisively against the Telstra monolith, the Education Revolution announced with all the fanfare of world champion wrestling and approximately the same credibility and, the latest 'ball-tearer', the FuelWatch Scheme, a peculiar, inspired form of 'hydro-carboniferous' voyeurism at the petroleum pole dancing nightclub where the Government watches fuel prices go up with strict instructions not to touch.
"It’s starting to look a lot like the ongoing adventures of Captain Confusion and the repeal/amendment/whatever of the Birdsville Amendment is another attempt at finding a comfortable position on the barb wire fence."
Ends