ACCC demands tougher competition laws

Mr Sims faced a critical examination of the ACCC’s investigation of the Barnawartha boycott during a public hearing in Canberra this week of the federal Senate’s inquiry into competition concerns within the red meat processing supply chain.

The ACCC investigated whether the Competition and Consumer Act was breached but in a controversial finding handed down late last year, failed to prove collusion among the meat processors.

Mr Sims said the ACCC’s inquiry identified competition concerns with the case but on the evidence collected, failed to demonstrate the nine processors had reached any specific agreement not to attend the sale.

Victorian Nationals Senator Bridget McKenzie said observers who were not “au fait” with competition laws would think “this looks absolutely like collusion behaviour” and was essentially a boycott by “the big end of town”, against producers in north-east Victoria.

Mr Sims said he understood how the matter looked to the “casual observer” but collusion laws meant the ACCC’s investigation needed to establish whether “some form of meeting of the minds” had occurred.

He said a little-publicised Harper competition review recommendation, in relation to concerted or facilitating practices, highlighted a deficiency in Australian laws.

Mr Sims said other jurisdictions had laws on concerted practices which covered market signals being sent out in various ways that amounted to a substantial lessening of competition.

“I think it would be something sensible to look at,” he said of the Harper recommendation.

“Our laws are quite limited in a number of ways.”

Mr Sims said there was no law dealing with facilitating practices in Australia but there was a variation of it that only applied to banking, “which is frankly, rather silly to have a law that only applies to one sector”.

He said during the Barnawartha boycott investigation, the ACCC knew conversations occurred between the processors and different people held positions on pre-sale weighing.

But he said before the ACCC can take action in a case alleging collusion, external counsel needed to be able to say “we’ve got reasonable grounds” but “we were nowhere near that, so we just could not take action”.

“It really is as straight forward as saying the missing law is on concerted practices,” he said.

“Collusion is really the main thing people are concerned about where sellers in a market - or buyers for that matter in this case - are colluding, and that’s really the cornerstone of trade practices law.

“But overseas they’ve recognised for a long time, that there are circumstances where you can get close to that, where you are giving information, particularly privately but also potentially publicly, where that has the purpose or effect of substantially lessening competition.

Mr Sims said “we would say we’re missing this key element of law which would have dealt with this issue”.

“I can only urge again, that we’re hopeful the parliament will endorse the government’s recommendation to bring that particular law in,” he said.

ACCC Enforcement and Compliance Executive General Manager Marcus Bezzi said if the ordinary person in street understood what the test of collusion was in Australian law they would agree it didn’t occur, in the Barnawartha case.

“It falls short of that,” he said.

“It is much closer to what Mr Sims was describing as a concerted practice.

“A concerted practice is essentially where competitors share confidential information with each other without any expectation that the other party will do anything reciprocal.”

Mr Bezzi explained a legal case in the UK where a banker regularly provided information about future interest rates to a competing banker “without any expectation”.

Queensland LNP Senator Barry O’Sullivan interjected on the statement saying, “I’ll allow you to keep a straight face”.

Mr Bezzi said the other banker didn’t say ‘this is what our rates are and ensure we act consistently with each other’.

But he said under Australian law, if it can be proved the parties came to an understanding “then we can take action against them as collusion”.

If there is no understanding - if there’s only a sharing of highly sensitive, confidential information which then has an impact on competition, then in the UK, Europe and the US competition agencies can take action (but) here we can’t, he said.

Asked by Senator McKenzie if that type of behaviour occurred between processors at Barnawartha, Mr Bezzi said “there was certainly the sharing of information about sensitive matters”.

“What is really clear is that there was no mutuality - there was no expectation generated that there would be – no evidence of that,” he said.

Mr Sims said if concerted practices laws were in place “we would have had a very close look under that heading”.

He said once the ACCC understood the situation, they would have then switched from looking for collusion to looking under the concerted practices heading.

“Now it’s an interesting issue ‘I’m not turning up because of when you weigh the cattle’,” he said.

“Any market where people are just exchanging information about how they’re going to price - they’re not asking you what you’re going to do, but they’re just equally letting each other know how they’re going to price - now most people, going back to the pub test, would say that should be against the law.

“In Australia it’s not; let’s hope in the future it is.

“I hasten to add that facilitating practices is not law yet and once it becomes law it only looks forward, not back.”

WA Labor Senator Joe Bullock said implementing a law on concerted practices was something parliament should be doing, to overcome what many inquiry witnesses had said, ‘everybody knows there’s collusion’ but raising it to a standard of proof, for the ACCC to do something with, was the pitfall.

Senator O’Sullivan said “it would seem to me that our laws in this space are completely and absolutely inadequate”.

Mr Sims also referred to another recent judgment in relation to the Australian Egg Corporation that’s still before the courts, on appeal by the ACCC, where the judge found that there was no collusion.

He said that judgment was made despite meetings being called to discuss the culling of eggs which was clearly the topic of conversation among people.

Mr Sims said the ACCC felt it had much stronger evidence than in the Barnawartha case and took the egg matter to court.

But he said the judge found it wasn’t collusion because, even though the culling of hens was talked about at the meeting, “we had not shown the necessary level of commitment; I’ll do this, if you do that”.

“Now we appealed it because think it’s an interpretation that perhaps is taking what you need to show to get collusion, beyond what we think is appropriate,” he said.