‘Effects test’ another tool to balance market power

Mar 28, 2016

The announcement in March 2016 of an ‘effects test’ will strengthen competition across the grocery supply chain. ADF has advocated strongly for the change since 2011, which will be included in section 46 of the Competition and Consumer Act 2010.

The provision will be a further tool to help the Australian Competition and Consumer Commission (ACCC) address the current unequal distribution of market power and encourage transparency to the benefit of producers, consumers and retailers.

ADF President, Simone Jolliffe said she looked forward to working with the government to ensure that the legislation prevents firms with significant market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition.

“The effects test is another tool to help provide integrity and transparency regarding the impact of retailer actions on suppliers,” Mrs Jolliffe said.

“In conjunction with the government’s introduction of the Food and Grocery Code, which included a large number of ADF’s recommendations, this is a constructive step toward fostering a more competitive business environment.”

“Further, the appointment of Mick Keogh OAM as the ACCC’s first Agricultural Commissioner and an Agricultural Engagement and Enforcement Unit, highlights that the government is committed to strengthening competition across the supply chain.”

Mrs Jolliffe said the reforms will support consumers’ interests as well as dairy farmers.

“Moving toward a more objective measure to assess the impact of anti-competitive behaviour will build a more open and transparent marketplace.”

ADF is hopeful that this will assist in preventing damaging practices, including predatory pricing in future.

ADF thanked the Prime Minister, Deputy Prime Minister, the Treasurer, the Minister for Small Business and the National Party for their strong support and action on this important reform.


 

Effects test remains priority

Feb 24, 2016

Competition law has been the focus of a Government overhaul over the past fiver years, with the intention of preventing situations such as the $1 per litre milk campaign – a damaging state of affairs for dairy farmers which highlighted the significant imbalance of market power between retailers and suppliers in the grocery supply chain.

In its discussion paper on the Options to Strengthen the Misuse of Market Power Law, Australian Dairy Farmers (ADF) once again emphasised the need for an ‘effects test’ to be inserted into Australia’s Competition Law.

Without an effects test the current tactics and actions of the major retailers will continue to result in substantial lessening of competition in the market place. This means a significant impact on the viability of proprietary branded dairy products, less product variety on supermarket shelves, less choice and in the long term, higher prices for consumers.

The Australian Competition and Consumer Commission (ACCC) must be given the ability to examine the effect of such strategies, with particular emphasis on the impact on competition (including small businesses like corner stores and regional supply chains), consumer choice, farmer viability and future prices.

Of the six options proposed to amend the current misuse of market power provisions, ADF believes the most practical option proposes that the existing provision be amended by removing the words ‘take advantage’. The law would be amended with the wording, ‘purpose, effect or likely effect of substantially lessening competition’ test.

However, ADF does not agree with the inclusion of the ‘purpose’ element due to the practical difficulties of proving purpose. Inclusion of the purpose element and defence as outlined in the Harper Review recommendation 30 may make the effects test unworkable in reality.

An effects test is in line with competition policy around the world – almost all western nations, except for Australia and New Zealand have an effects test.

There is strong support for the proposed changes to the effects test, from competition experts, including the Harper Review Panel, the ACCC, former Chairmen of the ACCC, Rod Sims as well as small businesses, suppliers and farmers across Australia.

ADF will continue to advocate for stronger misuse of market power laws to foster a more competitive business environment. To view ADF’s submission to the discussion paper, click here.


 

 

January 2016 President's Message

Jan 25, 2016

Welcome to the New Year. I hope you have all had the chance for a short break at least, and are ready to work together to tackle the challenges and opportunities that 2016 brings.

In recent years, Australian Dairy Farmers (ADF) has strengthened dairy’s ties with Canberra to raise the profile of the issues that matter most to our farmers. ADF has maintained our reputation of acting apolitically, being accessible to all politicians, and being willing to listen.

This year we will continue to build this profile, while simultaneously building on our capacity to deliver value to members.

So far in 2016, key members of the ADF team have visited members in central New South Wales. In February our CEO will visit Western Australia – to talk and listen about priorities for the year ahead. These are the first of many 2016 interstate meetings to follow.

I encourage you to take the opportunity and introduce yourself to our team. The passion and commitment that the ADF staff has to help achieve a stronger future for our industry is evident, and we are all prepared to listen to your thoughts, ideas and constructive feedback.

The beginning of the year has been challenging for farmers. Extreme weather conditions brought drought or very dry conditions in Tasmania, West Victoria, South Australia as well as savage bushfires in Western Australia. ADF is seeking to assist its state members with recovery efforts. I commend the efforts of WA Farmers, Western Dairy and Dairy Australia, in providing practical support and counsel to the affected farmers in WA.

Events like these are a timely reminder that so many aspects of our business are affected by elements beyond our control. ADF is committed to ensure that farmers have the information and resources they need to take control of what they can. Dairy Australia also has a great resource of tools and information to assist in preparation and recovery.

In February, ADF will host an environmental scanning and industry planning workshop with key stakeholders such as our state members and Dairy Australia. These sessions will aid in setting our advocacy priorities for 2016, to establish a sound policy platform which ensures we can capitalise upon growth opportunities delivered by 2015’s advocacy.

I look forward to getting out and about in order to meet with as many members and non-members as possible over the course of 2016 to ensure ADF can continue to deliver value for the industry.

Simone Jolliffe

ADF President

Competition policy at a cross roads

Jan 25, 2016

January 26, 2016 marks five years since Coles’ supermarket dropped the price of its home brand milk to $1 per litre, igniting a price war with Woolworths that reduced the value of milk to an unsustainable level.

Australian Dairy Farmers (ADF) has continued calls for the Federal Cabinet to adopt stronger misuse of market power laws to foster a more competitive business environment.

ADF President, Simone Jolliffe said there have been important breakthroughs for competition policy since 2011.

“The introduction of the Food and Grocery Code, which included a large number of ADF’s recommendations, was a constructive first step toward fostering a more competitive business environment.

Further to this the Australian Government’s support for key recommendations from the Harper Review of Competition Policy is extremely positive,” Mrs Jolliffe said.

“ADF also welcomed the announcement in the Agricultural Competitiveness White Paper of $11.4 million over four years to boost the ACCC’s engagement with the agriculture sector including a new Agricultural Engagement Unit.”

However, Mrs Jolliffe said the industry would continue to advocate for improved transparency regarding the impact of retailer actions on suppliers. ADF also continues to advocate for the regulating bodies to have the power to prevent predatory pricing in future. 

“ADF also strongly supports the Harper Review’s recommendations for any updated competition and consumer law to include an effects test,” Mrs Jolliffe said.

“Addressing the misuse of market power is crucial in determining the Australian dairy industry’s future profitability and sustainability.”

Mrs Jolliffe encouraged consumers seeking to show their support for farmers to “buy branded”.

“The more branded milk we buy the more money stays in our dairy value chain. By keeping these dollars in the value chain dairy has the capacity to reinvest in industry research and innovation – which helps to strengthen our farmers, improving their efficiency and prospects of long term sustainability.

Buying branded means investing in choice for consumers on our supermarket shelves and in the future of our dairy farmers. This Australia Day – show your support by buying branded.

 

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