ACCC favours power to break up monopolies

Australia’s competition regulator told a Senate estimates hearing that breaking up monopolies would be a worthwhile power for courts.

Australia’s competition regulator told a Senate estimates hearing that breaking up monopolies would be a worthwhile power for courts to have, and that it was investigating food pricing complaints by customers of Coles and Woolworths.

Probed by Greens Senator Nick McKim about whether the regulator should have the power to break up monopolies, Australian Competition and Consumer Commission chair Gina Cass-Gottlieb said it would be worthwhile for courts to have the power to break up monopolies.

“In a situation where Australia faces a number of quite significantly concentrated markets, it would be a worthwhile power for a court to consider in matters where the contravention had been proved, and the ACCC was able to prove to the court’s satisfaction that it was a warranted remedy,” she said.

“Would there be stronger competition? Yes,” she said, adding that with the current supply- side shocks it was less certain that such a move would achieve a large decrease in food prices.

Ms Cass-Gottlieb said the regulator had not investigated whether market concentration in the supermarket sector was contributing to food prices rising faster than the consumer price index.

“We have not done that analysis,” she said. “We do not have a price setting role there.

“If we were to be given by the Treasurer a market study to investigate what is occurring in the sector, we would – as it is happening in the retail bank deposit study for instance, and childcare – look at costs, prices and profits.”

The regulator this month opposed Woolworths’ proposed acquisition of the SUPA IGA in Karabar, NSW, and its co-located Liquor Boss store, after concluding the transaction would be likely to substantially lessen competition in the supply of groceries in the local area.

While Coles and Woolworths dominated the supermarket sector, Ms Cass-Gottlieb highlighted Aldi’s growth and the contribution of Metcash independent supermarkets in certain areas is adding to competition.

“We do absolutely share concerns and it is part of what informs us in looking at the sectors that we’re monitoring and also is part of consideration that of course we have to test in each matter and look at the evidence in each matter,” Ms Cass-Gottlieb said. “We are conscious of the level of concentration in the supermarket sector.”

She said the regulator was investigating customer complaints about food prices at Coles, Woolworths, Aldi and independent supermarkets, mainly related to misleading and deceptive advertising about discount claims.

Ms Cass-Gottlieb offered a qualified agreement with the proposition put to her by Senator McKim that Woolworths and Coles had the power to increase food prices above what’s necessary. She said that there were other factors resulting in higher prices including supply chain shocks stemming from geopolitical tensions and climate change-induced weather.

“However, in a more competitive market you may (see) those elements competed away,” she said. “There is less constraint on them in a price competition than we would want to see.”