ACCC watches use of market power

Rod Sims, new Chairman of the Australian Competition and Consumer Commission, made his first address to the Melbourne Press Club, putting a number of sectors on notice, including the major supermarket chains.

“The two major supermarkets have significant market power, with many smaller suppliers feeling they lack a real ability to negotiate supply arrangements. The ACCC can and will watch closely to ensure any such dealings do not involve unconscionable conduct by the supermarkets,” said Sims.

“To give another example, supermarkets sell both branded and their own private label products. This vertical integration in the supply chain needs close scrutiny to ensure the supermarkets do not misuse their market power under Sector 46.”

Sims pointed to a number of other areas where bargaining power was an issue, and outlined a range of methods to deal with imbalance.

“Telecommunications, particularly the National Broadband Network (NBN), and the operation of our major airports are sectors where ACCC oversight will be vigilant in the interests of both consumers and access seekers,” said Sims.

On telecommunications, Sims expressed particular concern about the rollout phase of the NBN, where service providers will continue to be reliant on Telstra’s copper network.

“During the transition, it is crucial that there is equivalence of outcomes, that there is a level playing field so that the competitive landscape is not distorted as the NBN is rolled out,” he said.

The ACCC has raised concerns about the monopolistic practices of Australia’s major airports for some time. Sims outlined an approach to encourage true commercial negotiations between airports and their users, free of the use of market power.

“When airport users are negotiating with the airports, they can have access to an outcome arbitrated by the ACCC if required. This is part of our most recent submission to the Productivity Commission on the subject,” said Sims.

Sims also said the ACCC would embrace the challenge to “keep the competition torch burning to see competition introduced into new areas”.