Ian Harper reform on competition in cold storage

The deadline for the government’s promised draft release on competiton law reforms has come and gone.

Nicholson’s week. Illustration: Peter Nicholson

The federal government has put competition law reform on the backburner by apparently abandoning plans to release an exposure draft of Harper review-related changes before the election.

The government had promised the draft before the budget but that deadline has clearly gone and there is little chance it will release the exposure draft during the election campaign.

This automatically delays any decisions for at least two months until the election is over.

Opposition spokesman Andrew Leigh will ram home the point when he delivers the Freebairn Lecture on Public Policy at Melbourne University on Thursday. Leigh will attack the “wasteland” that competition policy has been under the present government. He said yesterday: “The last three years have been wasted by the government, which has done nothing but have a review into competition policy”.

Arguably, the mere existence of a quality review by Harper is a step in the right direction for which the government should get credit. But Leigh has a point. Since responding in textbook fashion to the Harper review in November last year, there has been little in the way of policy change. The delay in progressing legislative amendments is just one issue.

The key policy changes flowing from Harper, such as opening government policy in areas like health and transport to competition, are subject to state approval.

Scott Morrison made a textbook-perfect response to Harper, backing its key changes last ­November, and also satisfied Nationals concerns by promising to tighten the abuse of market power provisions in Section 46. But so far these remain just words and action is yet to be seen.

The bulk of the Harper review has received bipartisan support with the exception of Section 46, the removal of restrictions around domestic shipping and competition rules in health policy.

Labor has made clear its stance on the changes, including opposition to proposed changes on Section 46, which outlaws abuse of monopoly power. Opposition treasury spokesman Chris Bowen has, however, backed several key changes to the law including wider rules on price signalling and resale price maintenance.

The government has backed key Harper recommendations, but has done little to put the changes into action. The exposure draft was a sign the government was ready to enact the changes but, sadly, that opportunity has now passed.

The opposition has also backed small business by opening the way for the Federal Court to issue a “no adverse cost” order after hearing initial evidence in a case. This would minimise the chance a big company might play legal games to keep a case running, which would tend to dissuade a small business from taking action against a larger company.

The concept makes sense.

The opposition’s concerns about the section 46 changes make no sense.

Other legal changes included simplifying the cartel laws, changing the primary boycott rules in Section 4(D) to include them in the cartel rules and clarifying the joint venture defence.

Hunt for new ASX chief

It’s getting up to the three-month mark set by ASX chair Rick Holliday-Smith as the minimum time it would take to find a replacement for CEO Elmer Funke Kupper. The ASX has appointed Korn Ferry to conduct the search, with Graeme Bricknell and Alex Goodfellow the leads on the case. The firm presumably has a shortlist ready by now.

Funke Kupper quit in March against a background of bribery claims against Tabcorp when he was CEO. He was under no obligation to step down from the ASX but did so in the interests of justice being seen to be done and ensuring the integrity of the exchange was maintained. He had led the ASX with distinction for some five years. While some have speculated Funke Kupper may return to the post, in reality he was starting to think about his post-ASX life when he stepped down.

Holliday Smith said he would take his time in seeking a replacement — from three to nine months. Settling the matter sooner rather than later would be helpful for the market. ASX deputy Peter Hiom and general counsel Amanda Harkness are filling the vacuum right now and would be among the internal candidates.

Why they hate polls

This week’s strong Westpac consumer confidence index figures, the best since January 2014, show consumers are not quite as affected by the election as business might have you believe.

Myer boss Richard Umbers cautioned the next two months might slow spending, as if the average punter would delay buying a new dress until she knew who would win the election.

Historically, consumer spending figures show no correlation between the election cycle and consumer spending. But business doesn’t like elections because the wheels of government are on hold, and while politicians are in the midst of high politics, the risks for business increase dramatically.

Banks and supermarkets have the most to fear, but others are also worried they might become an issue and be splashed across the news pages during an election. That is why business blames consumers for sitting on their hands when it’s really corporate Australia which is sitting on its hands for fear of causing offence.

Hardware deal

It’s early days yet for the ACCC which is not due to opine on the Metcash Home Timber & and Hardware deal until June 30.

But for Rod Sims and his team it is a case of deja vu because the deal virtually mirrors the decision when Metcash took over Franklins in 2011 and the Full Federal Court decided the deal would strengthen competition by making Metcash stronger against Coles and Woolworths and so let the deal through.

The ACCC had argued that deal should be blocked because it removed competition in the wholesale grocery market, just as some say it should block the Home Timber deal because it would cut the number of wholesalers from two to one.

The deal should be allowed to go ahead because it will make Metcash’s Mitre 10 a better competitor to Bunnings, which is how the Full Federal Court ruled five years ago. Bunnings argues it has only a 19 per cent stake in the hardware market and points to the likes of Reece in plumbing and myriad BBQ vendors as competition, when we know it is the elephant in the hardware room.

The question will come down to market definitions and it will be difficult for the ACCC to argue against the Full Federal Court.