Coalition dips into Greens’ populist junk policy bag

In this season of persistent high inflation and living-cost squeezes, big retailers, especially Coles and Woolworths, are on the nose, and have been accused of price gouging. Picture: Getty Images

Peter Dutton and David Littleproud have flicked the switch to the kind of junk policy you’ll usually only find in the Greens’ box of free-market atrocities.

Divestiture – allowing the courts to forcibly break up large corporations or forcing them to sell parts of their business – is really a last-resort option for the worst offences under competition law. Sure, it may grab the headlines and scream “we feel your pain” at the checkout, but it is regulatory overkill and weird for the alleged friends of business.

Last term the Coalition flirted with the populist “big stick” to bring energy companies to heel. The nation needs effective competition policy, not look-at-me populism and big swinging sticks that should be beneath parties that want to form government.

Even those supposedly crazy interventionists in Labor, wanting to pick industry winners and increase the size of Canberra’s footprint in the economy, have been wise to steer clear of such heavy-handed measures.

In this season of persistent high inflation and living-cost squeezes, big retailers, especially Coles and Woolworths, are on the nose, and have been accused of price gouging. Their chief executives have been dragged before show-trial parliamentary inquiries that have been little more than grandstanding opportunities for antagonists such as Greens senator Nick McKim. He has pushed hard for divestiture powers and has even garnered expert opinion and trade unionists to support his case. At the Greens-instigated inquiry into supermarkets in April, former prices and competition tsar Allan Fels backed the introduction of divestiture laws as “sensible” to stop powerful companies misusing market power.

“Felsie”, who still loves a camera as much as he adores a stoush with Big Anything, had conducted an inquiry for the ACTU on price gouging and unfair pricing practices. In his report, the former Australian Competition & Consumer Commission chief recommended a power to force divestiture to address market power issues. And it’s true our supermarket sector, with Aldi and Metcash making up the big four, is not as competitive as in larger US and British markets.

But the ACCC is conducting a far-reaching inquiry into the sector and it would have been prudent for the Coalition to wait to see what current trading tsarina Gina Cass-Gottlieb’s troops had recommended.

Labor’s hand-picked expert to review the grocery code of conduct Craig Emerson argued that forced divestiture in the supermarket sector would bring a range of other problems, including even greater market concentration and store closures. The former Labor minister said forced closures could see workers having to find new jobs and lead to inconvenience for shoppers.

For forced divestiture to work as an effective deterrent to anti-competitive behaviour by supermarket chains, the threat would need to be credible.

The pitfalls, as outlined by Emerson, mean divestiture would lack credibility.

Which is the danger Dutton and Littleproud, too, now face with this policy overreach.