Assistant Treasurer and Minister for Competition Policy and Consumer Affairs
3 December 2007 - 8 June 2009
Interview with Steve Chase
Monday, 1 September 2008
SUBJECTS: Trade Practices Act, Creeping Acquisitions
The Rudd Government will today move to tighten the rules to prevent so-called ‘creeping acquisitions'. ‘What's that', you say? Well they're the gradual takeovers giant retailers like Coles and Woolworths make against smaller rivals, particularly in country towns. The Government will today outline two reform options in a discussion paper. The action comes as the ABC's Four Corners program tonight broadcasts a story about the growing power of the major retailers.
Well the Assistant Treasurer is Chris Bowen and he's been telling Steve Chase there's been a problem with takeover laws for some time.
The ACCC has the power to regulate large acquisitions, but where a firm buys a number of smaller stores, for example, the grocery market is one area that's commonly used in an example where Woolworths or Coles buy stores in a country town or a locality. The ACCC's powers are a lot less and a lot more vague, so we want to clarify that and confirm and enhance the ACCC's powers. The discussion paper I've issued today relates to two options to deal with that. I want to get feedback from consumer groups in the retail sector about which option works best. This is an election commitment and was confirmed as a necessary reform in the ACCC's recent grocery inquiry.
Now the Retailers Association Chief Executive Margy Osmond is saying today there are already sufficient powers with the ACCC to prevent acquisitions if they believe that competition will suffer.
That's not our view and it's not the ACCC's view. This has been a problem identified by the ACCC for a long time. The previous Government declined to act on it and we believe that the ACCC's powers should be certainly clarified and enhanced.
Why are you acting now? It would appear that the timing seems to be a little bit suspicious. We've got a big Four Corners program coming up tonight on this very subject. They're talking about farmers saying that the big retailers that they supply goods with are virtually bleeding them dry.
When I released the ACCC Grocery Report I announced then that I'd be releasing a discussion paper on creeping acquisitions by the end of August. Today being the first of September, I've been doing my best to meet that commitment. So it's purely a matter of getting it out as quickly as we could after the Grocery Inquiry.
Well when do you see it possible that you will be able to make this law and what effect do you think it will have on the ground?
We'll get it in as quickly as we can, but we need to get it right. The discussion paper's out for comment for some weeks and then I'll need to weigh all that up to take it through the process of the Cabinet et cetera, so I hope to get the law passed in the next period, in the next few months. But it will take some time.
What it will mean is that where there's concerns that larger companies again, using groceries as an example - it doesn't just apply to groceries, it applies across the economy, but using groceries as clear example - where you have large companies buying in to particular locations, or buying a series of stores over time. The ACCC will be able to take account of that and to be able to act accordingly. At the moment they are on quite shaky legal ground when they try to do so. We want to make sure that they're on very firm legal ground.
And what about small businesses, particularly in rural areas? Are you saying that they will not now go to the wall as a result of what you're doing?
Well this is one of a range of reforms. This is about when a smaller store comes up for sale or when a larger company tries to get into a market. We also have our Trade Practices reforms, the biggest reforms of the Trade Practices Act in 25 years and we're criminalising cartel conduct and introducing a jail term for cartel conduct.
This is just one of a range of policy reforms in the competition and trade practices area that the Government's made a priority and it shouldn't be seen as more or less than part of a policy response to these competition issues.
Mr Bowen thanks very much for your time this morning.
My pleasure Steve.