Labor the last holdout against ACCC divestiture power
Unlike its foreign equivalents, the ACCC lacks the power to break up big corporates. The Labor government has doubled down on its opposition, despite growing support.
In a doorstop interview on Monday, Treasurer Jim Chalmers said the government’s opposition to ACCC divestiture powers was “clear.”
“That’s not something that we have been exploring because we have found better, more effective ways to deal with some of the issues in our competition policy landscape,” he said.
“It’s very clear to us that there are much higher priorities when it comes to competition policy.”
Unlike its UK and US equivalents, the ACCC lacks strong divestiture powers, meaning it cannot ask the courts to force the break-up of big corporates.
Assistant Treasurer Andrew Leigh seconded Chalmers’ position, explaining major competition reviews of recent decades have all stopped short of recommending the power.
Last month, the Greens introduced a bill to parliament that would give the watchdog just that power.
In his second reading speech, Greens Senator Nick McKim claimed the idea was not as radical as many considered it to be.
“When the Prime Minister was asked a few weeks ago about divestiture powers, he dismissed the idea as Soviet Union-style policy,” he said.
“Well, that well-known command and control economy, the United States of America, has had divestiture powers since the 1890s.”
“The competition agencies of Ireland, Italy, and the Netherlands have all recently used divestiture powers to require the divestment of supermarket assets in their countries,” McKim added.
Nationals leader David Littleproud embraced the Greens bill, calling it an “important reform” to protect against price gouging and to break up monopolies.
On Monday, opposition leader Peter Dutton cleared up the Liberal Party’s position, explaining their support would turn on the details of the proposal but that it “should be looked at.”
“If you’ve got concentration of market power, if you’ve got a situation where consumers are being ripped off, if you’ve got a situation where suppliers are being crunched, then we need to have a look at the appropriateness of the settings,” he explained.
Former ACCC chair Allan Fels has been a strong supporter of divestiture, claiming it would be a needed “huge stick” against anticompetitive behaviour, adding it would have a “big effect on business behaviour generally.”
In its submission to the Economics Committee’s competition review, the ACCC submitted that monopolies should be avoided upstream, making no mention of divestiture.
“At different steps of privatisation decisions being made, there must be consideration in advance of a structure that doesn’t create a monopoly at the beginning,” it said.
Economist and former Labor minister, Craig Emerson, published an interim report of his review of the Food and Grocery Code which recommended fines of up to 10 per cent of annual revenue for the mistreatment of supermarket suppliers.
Emerson took the opportunity to step outside the scope of the review to express his disapproval of the proposed divestiture power.
Forced divestiture, he said, could bring about “greater market concentration” if, for instance, a supermarket was forced to sell its stores to “another large incumbent.”
If large competitors were banned from buying the divested stores, foreign supermarkets or smaller buyers would be left to snap them up or else they would be forced to close.
Often, this will not be a viable option for smaller operators, he said.
Greater competition, said Emerson, can be brought about by “an effective, mandatory Food and Grocery Code of Conduct, robust enforcement of Australia’s enforcement laws by the ACCC, and wide competition policy reforms relating to planning and zoning laws.”
When asked about this position, Dutton claimed Emerson and Chalmers were “at odds” with the chair of the ACCC.
“That’s the reality. The ACCC has pointed out that the divestiture power would be a handy tool in the toolbox,” he said.
“I don’t think anybody would be surprised about the fact that Mr Emerson’s views line up with the instructions he was given by Mr Chalmers.”
