Keogh: ‘effects test’ won’t stop an “absolute thrashing”

But head of the Australian Competition and Consumer Commission’s Agricultural Enforcement and Engagement Unit Mick Keogh is one such individual who possesses that unique capacity.

At a recent event held by Agribusiness Australia in Canberra, Mr Keogh used a football analogy to explain the complicated ‘effects test’ that’s been introduced by the Coalition government to address anti-competitive commercial behaviour in the retail supply chain, by dominant players, like Coles and Woolworths, impacting farmers and others.

“As we keep explaining to people - and I use a football analogy - it (‘effects test’) basically says the dominant player isn’t allowed to prevent you getting your team onto the ground,” he said.

“But it is not going to prevent your team from getting an absolute thrashing once you are onto the ground.

“It is more about making sure barriers are not put in place, to allow competition to occur.

“It’s not about the competition itself.

“It’s really about making sure that everyone has an equal opportunity to compete.

“I think it will be interesting to see how that plays out.”

Mr Keogh said introduction of the ‘effects test’ had meant altering Section 46 of the Competition and Consumer Act but for all of its “associated controversy” the changes had passed into law recently, “almost without a whimper”.

“I think there have been some misconceptions on a number of sides about the utility of that particular clause and what it will mean,” he said.

“Basically the previous test for misuse of market power involved three legs.

“You had to be a company that had substantial market power and there was a test associated with that.

“You had to take effect of that market power, which meant you had to do something that a smaller participator in the market could not do, and then you had to have the purpose of reducing competition in the market place.

“Those three legs of that test were quite a challenge to prosecute.

“In fact the middle one was the most difficult one to prosecute because the issue of ‘taking effect of market power’ meant doing something that a smaller player couldn’t do and typically the argument put up was that a small player could do that, if they wanted to.

“That tended to mean that prosecution was quite difficult to achieve, under that arrangement.

“The new test is slightly different in that it looks at actions that have a significant lessening of competition.

“It again requires a company with substantial market power to be the instigator of those actions.

“It is quite likely to make prosecution of those cases a bit easier.”

Mr Keogh said when a new law was implemented, the ACCC took notice of it for a while and then typically a case would emerge for the courts to interpret “and you find out what the law really means”.

“But certainly where there are firms in the agriculture sector that are trying to compete with larger companies and make claims about the anti-competitive behaviour in those companies, it will have some relevance to them,” he said.

Mr Keogh said the ACCC’s Agricultural Unit was also playing an “enforcing” role in oversight of new legislation on Country of Origin Labelling rules - but the changes have not been without “teething problems”.

“The best example I can give you is that most cheese which is manufactured in Australia, is done so with the aid of rennet that’s imported,” he said.

“The rennet might make up .001% of the finished product, but under the definition adopted in the legislation that means it can’t make a claim to be a 100 per cent Australian made product.

“So as is always the case with new laws, there will be teething problems all the way through.

“I think that the dairy sector is now understanding of that and they can still make a claim that it is a 99pc product of Australia, etc etc but that will be an interesting issue to watch.

“I think it will get around that problem of the claim of ‘product of Australia’ or ‘made in Australia’, where an imported product was essentially just brought in here and either cut up and packaged or just packaged and then was able to make the claim under the previous regime that it was ‘Australian’ made because the notion or value added in Australia was significant enough to be called ‘product of Australia’.

“The change is that the products now have to state what their product origin is as well as where they were packaged and produced and only products made in Australia can carry the green kangaroo logo etc.

“I think it will be quite an important change and it will provide better information to consumers about the nature of the products that they are consuming.

“It still raises the issue of how much extra money consumers are prepared to pay for an Australian product.

“But at least they can be clear what that product is in front of them.

“I think that’s going to be quite a useful change that is occurring at the moment.”