LAURA JAYS:
Woolworths and Coles will be announcing a new code of conduct that is a self-imposed code of conduct and one that will be overseen by the ACCC. Joining me here in the studio this morning is Small Business Minister Bruce Billson. Minister thanks so much for your time, first of all this is self-imposed, they're voluntary restrictions put forward by Coles and Woolworth, isn't this a toothless tiger?
BRUCE BILLSON:
Well we don't know yet, that's part of the steps that will follow once we've received this code. What the Government's made clear to Coles and Woolworths is that they have enormous market power, they are behemoths in the Australian economy and for many suppliers dealing with Coles and Woolworths can be very difficult. And we've all heard stories about suppliers feeling like they've got take it or leave it arrangements, that they're almost serfdom in terms of their dealings with the…
LAURA JAYS:
Well on that, why are these self-imposed restrictions? Why isn't the government intervening?
BRUCE BILLSON:
Well there are a couple of things going on. First of all the ACCC is looking at some of the more of the egregious concerns to see whether those allegations of unconscionable conduct or misuse of market power warrant further investigation and prosecution. So that work's happening now. Second, we know that the relationships that are important to the supply chain need to be guided so that they're fair, they're mutually respectful. That they deal fairly with the smaller business dealing with the big supermarkets. That's what the code's about and also that we have announced our commitment to a root and branch review of competition laws to see whether the ACCC has the toolkit that it needs to deal with changes in the economy, such that we've seen the domination of Coles and Woolworths grow since 20 years ago when the original framework that we operate within today was put in place. So there's a need to update that toolkit as well and that works out…
LAURA JAYS:
So will you be waiting for the root and branch review into the competition laws or is there a benchmark before such time where the Government might intervene or at least review the process?
BRUCE BILLSON:
No, well this will get reviewed before it takes effect, this needs to now to go to a regulatory impact statement and the ACCC and the Government have a responsibility to examine this code to see whether it is likely to be effective, whether it is likely to protect and nurture good and respectful, reasonable commercial relationships.
LAURA JAYS:
But Minister we have known about some of these concerns for quite some time. I mean, suppliers have bought up the issue of Woolworths and Coles being able to demand more money for promotions, things like shelf fees, demanding deeper discounts and also homebrand products. Do these rules, self-imposed rules, affect any of those?
BRUCE BILLSON:
Yes they do. There are provisions in here about an inability to unilaterally vary the terms and arrangements that a small business may have engaged with a supplier, may have engaged with the supermarkets. There is also a protection about homebrand and what's seen as a business's intellectual property, a new product, a new idea being taken by the supermarkets and then handed over to someone else to produce as a homebrand product. Areas around shrinkage. There have been examples here
supermarkets have leaned on suppliers to pay for shoplifting in their own stores. I mean that's ridiculous. The issue around paying for shelf space is not something that's acceptable under the code. There's dispute resolution mechanisms and oversight from the ACCC. The kind of collaborative industry lead effort, where the industry players who know best about what's going on have said yes there are some issues, here's their response to it and now we've got to see whether its effective and go through the regulatory impact statement process.
LAURA JAYS:
What hasn't been addressed and it perhaps might be separate to this, is concerns about the fuel shopper dockets. Nick Xenophon for one is calling for an immediate moratorium on them. Are you willing to go that far?
BRUCE BILLSON:
No we're not, but we do see there are some problems there. Where the discounts available through shopper dockets are a few cents that can be exciting for motorists, people like that. They can do their supermarket shopping and get a modest discount off their fuel. That doesn't squeeze out efficient retailers that aren't offering discounts. Where it becomes a problem is where that discount is so large that even the most efficient competitor in the retail fuel market can't compete, because they are being hit with discounts that are way beyond the profit that's available. What we've said to them is….
LAURA JAYS:
So how will that be addressed? It's not going to be addressed by these self-imposed rules but it will through the competition…
BRUCE BILLSON:
Yes, the current law has some provisions where there's a distortion in the marketplace and the ACCC is investigating that. Secondly, under the current law these kinds of third line forcing or conditional benefits aren't required; they don't need to be proven to be in the consumer's interest if it's between related businesses. Now that's a rather peculiar provision of the current law. That's the sort of provision that will be examined through the root and branch review and the competition law just to see whether that legal framework is appropriate giving the behaviour that we are seeing.
LAURA JAYS:
Bottom line, when is that going to happen?
BRUCE BILLSON:
Bottom line this is being looked at as we speak, in terms of the current law and it's a matter that will be dealt with by the root and branch review of competition law which will be undertaken in the next calendar year.
LAURA JAYS:
Earlier next year?
BRUCE BILLSON:
It will start early in the calendar year. The terms of reference will be known before the end of this year and we will also be announcing the panel about who will be doing this important piece of work to make sure our competition laws are fit for purpose. Not only for today's economy, which is very different from where it was 20 years ago, but for the trends in the economy in the future.
LAURA JAYS:
Bruce Billson thanks so much.