Strong competition policy needed for ag

By Derek Schoen - President, NSW Farmers

Our industry is on the verge of a boom and set to be one of the key economic pillars for Australia over the next 50 years.

However our potential will be hindered if Australia’s competition policy does not ensure our farmers receive a market signal to invest in increasing our agricultural production.  The government’s response to the Harper Review which is looking at Australia’s competition laws and policies is fundamental to policy that will enable our farming businesses to realise the prospects offered by the growing demand in overseas markets.

Failure of current competition laws are eroding the limited premiums available to farmers as price takers on the world market.

Reform is therefore essential to ensure we can operate with confidence and certainty. We need better protection from misuse of market power and must have access to effective and accessible regulatory recourse if we are subjected to anti-competitive behaviour.

It’s not surprising some sections of the economy are calling for the status quo in relation to Australia’s current laws on misuse of market power.  International law on abuse of market power recognises that companies with privileged positions in the marketplace fully understand the impact of their actions on the competitive landscape. 

The Australian Competition and Consumer Commission’s poor record when pursuing prosecution under current misuse of market power provisions is not because of a lack of concern in the market place nor because the commission is reluctant to act.  It simply does not have the right tools for the job. 

The government has taken a step in the right direction by giving the ACCC expertise in agricultural markets.

But we also need an appropriate ‘effects test’ that does not stifle competition so the ACCC can police those with significant market power and help bring about competitive tension needed for fair farm gate returns.

Introduction of an ‘effects test’ will enliven competition and ensure that the Act can fulfil the promise it was designed to achieve – preventing those with significant market power from substantially lessening competition in the supply chain.

The implementation of a suitable ‘effects test’ is paramount to building strong competition policy that will promote the prosperity of the farming sector in Australia. It should be seen for what it is - a welcome enhancement to help ensure vibrant competition in the Australian economy.

Published: The Land, 13 August 2015

Contact: John Dunn

Phone: 02 9478 1000

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