Last week, outgoing Chairman of the ACCC Graeme Samuel took to the stage of the National Press Club in Canberra to discuss his achievements and those of the ACCC under his watch.
The speech was, not unexpectedly, positive about the ACCC and Graeme Samuel’s achievements.
Mr Samuel took the opportunity to talk about what he calls an expectation gap, a gap between what Australians expect and what the ACCC can deliver.
It is in discussing achievements the area of small business where Graeme Samuel talks about the expectation gap in the context of what the organisation can do versus what some say it should do (or have done). he also mentions tough love when discussing small business.
Reading and re-reading the section of the speech which deals with small business I get the impression that Graeme Samuel knows that he has let small business down and needs to explain why this is not his fault. He certainly gets the value of small business to the Australian economy:
The Australian economy depends on the contribution of small business. In recent times the sector has produced about one third of our Gross Domestic Product and employed almost half the workforce.
Mr Samuel then goes on to say that the ultimate obligation of the ACCC is to competition, suggesting this as an excuse to small business people concerned at the lack of action by the ACCC. That is how the speech reads at least.
My view is that Graeme Samuel failed Australians not only in the areas of newsagencies and small business areas but more broadly.
According to a PriceWaterhouseCoopers report in 2008, Coles and Woolworths then controlled up to 80 per cent of Australian grocery trade. This is up from 30 per cent in 1975. Once you add fuel and liquor who have two businesses in unassailable market share positions.
The market share of Coles and Woolworths has increased considerably under Mr Samuel’s watch. Back in 2003, Coles and Woolworths did not dominate, as they do today, fuel and liquor. They were not the kings of convenience that they are today.
While I have no evidence on which to base this, it feels to me as if there is less competition today than eight years ago when Mr Samuel entered office. Fewer butchers, greengrocers, hardware shops and newsagents … small businesses directly affected by the lack of action by the ACCC on these two retail giants getting bigger.
In terms of newsagents and the ACCC, the ACCC has failed to properly assess the impact of the deregulation of newspaper and magazine distribution which it watched over in 1999. No one knows if consumers are better off as a result of deregulation. Newsagents certainly know that the deregulation was only half completed and that the ACCC administered changed resulted in a free kick to Coles, Woolworths and others while lumbering newsagents with anti competitive business practices.
Despite repeated complaints by newsagents, the ACCC has failed to complete a warranted and appropriate study of the terms offered newsagents since deregulation.
The ACCC has also turned a blind eye to the use of the publicly owned Australia Post brand to take business from small business newsagents through 850 or so government owned post offices. Australia Post remains protected despite world’s best practice indicating that it itself should face competition. That it has remained protected while it has so aggressively gone after newsagent business is a blight on competition policy and on Mr Samuel’s ACCC.
Too often in the speech Mr Samuel runs for cover of the Act and politicians for protection. He was hired to make Australia a more competitive economy. By my assessment he has failed. Any such assessment must not only consider economic benefits, as these things usually tend to do. No, it must also measure social benefits. It is in the area of social benefits where newsagents and other small business retail channels serve well. Sure Coles and Woolworths give back but I suspect they do not give back as much as privately owned small businesses.
We give kids employment early in life, support community groups, help with fund raising, work with local sporting groups and schools, offer a more convenient shopping experience, are less likely to engage in manipulative and questionable pricing tactics and provide a personal human service.
The most important and valuable role of small businesses, and small business retailers in particular, is our participation in the community narrative. That is supporting, upholding and sharing the history and stories of the local community in which we serve.
Graeme Samuel has, in my view, failed small business over his eight years of tenure as Chairman of the ACCC. He has been a friend of big business and weak in dealing with politicians. Australians are left with a less competitive environment.
Click here to access a full copy of Graeme Samuel’s speech.
Spot on Mark…and it is not going to improve. We had Swan in the Australian two weeks age (tuesday) saying that he is concerned that small business is doing it tough…yet he stood by while the unions ordered Fair Work to impose a wage rise……I believe the US Gvt only allows a duopoly a 20% market share, and as I remember their Post Offices are only just that.
I wouldn’t compare any US Govt regulations to ours. There usually so many flaws and loopholes that the stats are manipulated.
e.g. in broadband a postcode is considered “served” if a provider has a single customer.
There are similar problems with 20% market share. I’m sure there are pockets where 1 company effectively controls pockets of several states – but on a national level doesn’t have 20% market share. Repeat that over the country and you can have little to no competition nation wide, but have 6 companies controlling the whole market.
From the ACCC web site: “Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws.”
What laws do you suggest Coles and Woolworths have broken and should be chased up on? The ACCC is not there to give small businesses a leg up.
Rob, the market power of Coles and Woolworths feeds and encourages anti competitive behaviour, consumers end up paying more.
Competition policy should not just be about driving consumer price.
Sorry Jason to let the facts get in the way of your nice story…but the reality is this.
Small business and consumer rights do not always go hand in hand. Is the “aggressive competition” (to quote Samuel) by Woolies and Coles of late in respect of bread, milk and beer good for competition…of course it is. It may not be in the interets of Metcash and their multimillion dollar profits but don’t feel too sorry for Aldi and Cosco neither massive German or US company is going broke any time soon as a result of aggressive competiton by these two companies. Aldi actually welcomed the competition which helps consumers. The only winner is guess who the consumer. Maybe if newsagencies allowed 7 eleven or supermarkets to sell and deliver papers instead of having to go through the newsagency that owns the licence then this would also be good for competition….but not necessarily the small business! This is the essential point, whether he headed up the National Competition Council or the ACCC his role was to look after consumers not vested intrests and the reality is, in some circumstances that is what small business is. I think your analysis of Samuel believing he let down small business may be a bit of amateur phychology on your part. Without people like Samuel we representing the consumer, ordinary Australians would simply be fleeced left right and centre.
Jason, ordinary Australians are being fleeced as a result of poor competition management by the ACCC.
Sorry Jason, but I have to object to a couple of points.
You don’t seem to realise that Coles and Woolies aren’t wearing the full cost of their ‘competitive’ pricing on milk, bread and soon to be fruit and vege, its the primary producer who takes the largest hit.
Our other business is in primary production, so we’re in a position to know. When you are dealing in perishable products, there comes a point where you just have to sell it and take what you are offered. Coles and Woolies are fully aware they have us over a barrel. And in the end it will be the consumer who pays, perhaps not in monetary terms, but in terms of quality and food safety when products are sourced from overseas as local producers go to the wall.
And I have to take my hat off to Metcash, as they are the only market we deal with who offer a fair price of our products and actually care about the quality (and will reward the grower for good quality by paying well and being loyal)
In my opinion, the ACCC have rolled over and submitted to big business on far to many occassions. And I don’t see that changing anytime in the near future, regardless who sits in the top position.
Well put Vicki my family are also in primary production Bananas actually! yes they may have been recieving a great price per carton in recent times but this hardley makes up for the 3 yrs of losses prior from the 2 majors offering less than the cost to produce a box. The ACCC is suposed to be about fair trade practices for business so make it equal for all to compete why should we be told by Mr Murdochs cronies that we will be over supplied and there is nothing we can do about it because of who he is and teh hold he has over the balance of power in many countries. His news of the world paper just proves that as a company they are willing to undermine honesty, integrity and equality in return for finacial gain for themselves.