3. Key empirical findings

Empirical findings in relation to the level of competition

3.1The Committee acknowledges the complexity of measuring competition, as each industry is influenced by unique dynamics and operates under distinct conditions. This chapter contains key empirical concepts and data, which are foundational to understanding the rest of the report.

3.2Recognising the diversity in methods used by economists to evaluate the level of competition, the Committee has heard that ‘…it is important to actually look at the existing different metrics in unison’.[1] Some experts advocate for a multifaceted ‘triangulation’ approach, using various metrics to gain a clearer, more reliable, and comprehensive understanding of market competition.

Market concentration

Concentration and market power

3.3The Committee acknowledges that a large market concentration does not always directly imply reduced competitive outcomes. In some ‘winner takes all’ markets, the most productive company naturally dominates. If a firm offers a superior product at a lower price and captures the market, this can be seen as an efficient outcome, particularly if the threat of firm entry places a constraint on firm pricing.[2]

3.4The Productivity Commission (PC) argued that across the economy, and also within some sectors, a rise in market concentration could partially be attributed to efficient, large-scale providers entering regional markets—potentially improving local competition. It told the Committee that:

… larger firms that tend to be strong innovators, …may be more productive than some smaller firms…a policy that promotes more competitors…isn’t necessarily going to drive good competitive outcomes in all cases, and it may not drive innovation and productivity.[3]

…

It's not hard to identify sectors where you can see a headline increase in market concentration, but a kind of eye test suggests there is pretty vigorous competition going on.…There is very high churn and high levels of both entry and exit—that’s partly just the nature of that industry, with lower fixed-cost businesses—and then others where it'll tend to be dominated by incumbents over a longer period of time…It might be that there is plenty of competition and plenty of innovation by incumbents.[4]

3.5In response, the Australian Competition and Consumer Commission (ACCC) considered that market concentration raises concerns when it is associated with anti-competitive actions, such as competitive actions, where market leaders deliberately limit consumer choices, for example, or block suppliers from engaging with other competitors.[5] It told the Committee that:

…while the specific roles that concentration plays in driving market behaviour and performance in a given circumstance is an empirical question…concentration is one of the key features of market structure, and high levels of concentration tend to give rise to market power concerns’.[6]

3.6The Committee also heard evidence from the e61 Institute, that in concentrated industries there is evidence of both higher rates of cost pass-throughs to prices and higher rates of consumer law contraventions (compared to in less concentrated industries).[7]

Variation across industries

3.7The Productivity Commission told the Committee that market concentration varies widely across industries. It said that highly concentrated sectors often involve natural monopolies, such as utilities in telecommunications, energy, water services, and airports. In such circumstances, ‘…the presence of a single dominant business is almost inevitable, making regulation the proxy for competition’ […] ‘…and competition must be achieved through means other than entry’.[8]

3.8In Australia, industries such as airlines, banks, retail, and insurance are also highly concentrated, with the top two to five companies dominating the market, often due to significant entry barriers such as capital requirements and regulatory hurdles.

3.9Additionally, the Productivity Commission has found that the banking, supermarkets, mobile telecommunications, internet service provider, fuel wholesale and retail, and general insurance sectors all have top four firm market shares of 70 per cent or more.[9]

What the data reveals

3.10Data from the e61 Institute has revealed a significant increase in market concentration in Australian industries, as measured by the market share in a sector of the top four firms (the ‘CR4’). Firms’ concentration has nearly doubled, rising from 1.7 per cent in 2010 to almost 3 per cent in 2020.[10] Utilities and the retail sector are the sectors contributing the most to this increase.

3.11The Productivity Commission explained that some measures using HHIs show that overall business concentration in Australia has increased between 2002 and 2016. Australia's average HHI has consistently risen due to significant concentration increases in various industries, including warehousing and storage services, non-depository financing, life insurance, gas supply, water freight transport, and several manufacturing sectors.[11]

Source: e61 Institute, ‘The State of Competition in Australia’, 30 August 2023, p. 5.

Mark-ups

3.12The e61 Institute presented data showing an increase in price-to-cost margins.[12] The Committee also notes data compiled by the Hon Dr Andrew Leigh, Assistant Minister for Employment and for Competition, Charities and Treasury, which shows that firms in the top 10 per cent of markup distribution—holding the most significant market shares—have also been the firms with a larger increase in markup trends.[13] Separately, research by the economist Jonathan Hambur suggests that since the mid-2000s, firms’ mark ups have risen by 5 per cent.[14]

3.13Regarding the existing relationship between mark-ups and market competition, the Committee heard that there are differences between economic sectors and that, in some situations, an intricate part of the mark-up is the necessity for all businesses to cover their fixed costs.

3.14The e61 Institute said that:

…If you're a capital intensive firm or you've got a large investment in intellectual property, that's not going to be in your marginal cost, so you must recover it in other ways…If there is any trend towards high fixed costs, you will see a trend of upward margins as a necessary feature of commercial viability.[15]

3.15The Committee is aware that companies deeply involved in digital activities experienced a notable 12 per cent increase in their mark-ups. Yet, even sectors less dependent on technology observed a growth pattern in markups.[16]

3.16For example, the e61 Institute advised that Australia, in comparison to other economies:

…is unique in that we've seen a much more broad-based rise in mark-ups across the distribution. So it's not just a story of superstar effects not just a story of reallocation of factors to high mark-up firms.[17]

3.17Additionally, the Productivity Commission told the Committee that:

… aggregate markups don't tell you what you might want to know across different sectors…there is a need to dig down below the aggregate level to be able to draw out causal links.[18]

Markups and inflation

3.18The Committee acknowledges arguments proposing that firms with market power may seize the opportunity to introduce additional price hikes, taking advantage of overall inflation to make these increases less conspicuous.

3.19In this vein, the Productivity Commission argued that in a high-inflation environment, price disparities across various sectors are more pronounced, leading to misleading price signals compared to a stable price environment. This could result in varying markups appearing across different sectors.[19] Additionally, in the Commission’s view, markups do not inherently indicate temporal changes or universal industry impacts, unlike inflation, which signifies a sustained average price increase over time. Notably, the Commission observed, aggregate markup increases seem to have commenced before the current inflationary period.[20]

3.20Contrarily, the ACCC stated that:

… it is crucial to analyse the type of inflation we're experiencing, […] …it seems recent inflation has been due to a mix of real and nominal shocks, complicating the assessment of competition or market competitiveness effects. In a purely nominal shock scenario, firms with market power might find it easier to raise prices beyond costs due to the obscurity created by general price increases. However, real shocks, like supply chain disruptions or labour shortages, could lead even competitive firms to increase prices and markups temporarily to manage demand until the shocks are resolved.[21]

Rate of firm entry and exit

3.21The Committee emphasises the importance of considering dynamic factors like firm entry and exit, which allow for a more comprehensive understanding of the market's competitive landscape.

3.22The Committee is aware that a disruptive firm entry, characterised by high innovation, can be a notable source of competitive tension in various sectors, particularly in financial services. Innovations such as ‘buy now, pay later’ services and platforms like Uber exemplify this trend, bringing significant market changes and competitive pressures.

3.23At an aggregate level, the Committee heard from the e61 Institute that the entry rate of firms in Australia ‘…declined from around 15 per cent in the early to mid-2000s to around 12 per cent just before the pandemic, but there has been a slight uptick since then’. Concurrently, the exit rate also decreased. It started at 10 per cent in 2005 and fell to 8 per cent by 2020, leading to an increase in the average age of firms.[22]

3.24Complementing this analysis, the Productivity Commission stated that ‘the entry rate grew modestly between 2013-14 and 2019-20, before experiencing a significant increase during the COVID-19 pandemic’. It also noted that because entries remained above exits, the stock of competing businesses grew overall.[23]

3.25Further, the Productivity Commission explained that ‘competition can be strong even with lower entry and exit rates if there is contestability [where the barriers to entry and exit are relatively low] or a small number of firms are competing vigorously for market share’.[24]

Incumbent entrenchment

3.26The Committee also heard that there is significant data which indicates the same companies remain entrenched as market leaders in Australia, and that this phenomenon has been consistently observed across various sectors of the economy. The e61 Institute told the Committee that:

… not only has the market share of the largest firms increased, but the leadership positions are also consistently held by the same firms.[25]

3.27Further, e61 Institute research reveals that in 2006, a firm in the top four of its market had a 61 per cent chance of retaining its position. By 2018, this likelihood had increased to 66 per cent.[26]

3.28Separately, analysis by the Hon Dr Andrew Leigh, Assistant Minister for Employment and for Competition, Charities and Treasury, has highlighted the relative stagnation of the Australian economy as measured through the low rates of historical change in the make-up of Australia’s largest firms.

In the mid-1980s, the largest US firms were IBM, Mobil, Exxon, Ford and General Motors. Today, they are Apple, Microsoft, Alphabet, Amazon and Tesla. In Australia, there’s been barely any change. In the mid-1980s, the largest Australian firms were Westpac, Commonwealth Bank, NAB, BHP and ANZ. Today they are Westpac, Commonwealth Bank, NAB, BHP and CSL.

It gets worse if we go back to 1917. None of America’s top ten companies then are still in the top ten today. But of Australia’s top ten companies at the end of World War I, five still make the list today. Although some have changed their names, Westpac, ANZ, NAB, BHP and Wesfarmers have enjoyed more than a century at the top of the Australian sharemarket.[27]

3.29In relation to firms’ survival, the Productivity Commission submitted that during periods when exit rates have fallen, both new and established businesses have shown higher survival rates after two and three years. These survival rates could enhance productivity, as firms that endure start to expand and contribute to competitive dynamics, thereby boosting overall productivity.[28]

3.30The Productivity Commission expanded on these caveats:

…measures of market concentration such as the four firm concentration index or the Herfindahl-Hirschman Index should be interpreted with a great deal of care, particularly when measured at an aggregate level.

Indeed, the proposition that market concentration measures by themselves must be negatively associated with productivity growth and economic wellbeing has been debated by economists for at least 50 years. As a matter of economic theory, it is straightforward to derive examples where a higher HHI, which indicates great market concentration, is associated with higher rather than lower economic wellbeing. In practice, as our submission discusses, the link between concentration and wellbeing greatly depends on the economic context. In any case, at the industry level, our analysis of concentration dynamics shows that most Australian industries are not concentrated and very few became concentrated between 2006 and 2021. Moreover, the distribution of concentration measures across industries has been relatively stable over that period, so the claim that the Australian economy as a whole is becoming more concentrated does not seem to hold up. Most industries in Australia are not highly concentrated and this has not changed much.

Related to this…there is some evidence that mark-ups have been increasing in Australia. However, the evidence is plagued by measurement issues, and, from a policy perspective, interpreting aggregate evidence on mark-ups isn't straightforward. For example, you could have a situation where costs and price are falling together, so that consumers are better off, but prices are falling at a slower rate, so that mark-ups rise. In that case, what would be the appropriate policy response?[29]

Committee comment

3.31The Committee recognises that while it is challenging to draw definitive conclusions from any single measure of competition levels, the combined evidence it received suggests a decline or stagnation in competition across all key metrics.

3.32Despite arguments that high market concentration can be a result of efficient, dominant firms leading markets, or that it might not necessarily impede competition and innovation, the data shows a significant rise in market concentration—with the top firms increasing their market share and maintaining their leadership positions over time. Additionally, increases in price mark-ups and changes in the rate of firm entry and exit point towards growing market entrenchment and potentially reduced competitive pressures. This situation could adversely influence the overall market dynamics in Australia, impacting innovation and productivity growth.

Empirical findings in relation to economic dynamism

3.33The Committee acknowledges that the root causes of the productivity slowdown are multifaceted and have been intensified by a waning competitive environment, with a significant decline in economic dynamism being a primary factor.[30]

3.34The Committee is aware that the declining dynamism of the economy manifests in various ways, from inefficient resource allocation and reduced motivation for firms to innovate and invest, to a more gradual adoption of cutting-edge technologies and a decline in the emergence of new market players.[31]

Allocation of factors of production: capital and labour

3.35The Committee is aware that the decline in dynamism in both product and labour markets is interlinked. New firms entering the market naturally offer alternative job options for workers, facilitating job transitions. Data shows that approximately half of the observed decline in job transitions can be attributed to fewer workers moving from established firms to new entrants in the market. The propensity of the average Australian worker to change jobs has been decreasing, dropping from 11.3 per cent in the mid-2000s to a more modest 8.5 per cent in 2022.[32]

3.36This trend is further supported by the fact that the percentage of Australian workers taking on new jobs has decreased by an average of 16 per cent since the early 2000s.[33]

3.37The e61 Institute has also argued that the role of input reallocation in boosting aggregate productivity has been diminishing, suggesting a lessened transfer of resources from less productive to more productive firms. This trend is further highlighted by the shrinking disparity in employment growth between high and low productivity firms, which contracted by over 2 per cent from 2003 to 2016. Since 2012, there has been a marked slowdown in the rate of labour reallocation from low to high productivity firms.[34]

3.38Additionally, the e61 Institute has found from the mid-2000s onward, firms with lower productivity levels have had a higher likelihood of survival, while the movement of labour towards more productive firms has decelerated. Such phenomena explain approximately a quarter of the observed productivity slowdown.[35]

3.39The e61 Institute’s research has also shown that the propensity for high-productivity firms to expand and low-productivity firms to contract has declined over time, and that the extent to which scarce labour is reallocated from less productive to more productive firms has therefore stagnated. Some estimates suggest that such a decline in productivity-enhancing labour reallocation is a key feature of Australia’s productivity slowdown in the past decades.[36]

Specialised factors of production, skilled labour

3.40The Committee is aware that skilled migration can help Australia fill gaps in professional expertise across various fields. The Grattan Institute advised that ‘skilled migrants with work experience abroad are the most likely to diffuse knowledge and international best practice into Australia’.[37]

3.41The e61 Institute has argued in separate research that economic prosperity relies on efficiently utilising and optimally allocating existing workforce talent. Policies should therefore focus on reducing market frictions to enable productive firms to grow, thereby creating quality jobs. While enhancing educational standards and adjusting migration policies are long-term goals, in the Institute’s view immediate gains can be realised by ensuring the right skills match with the right jobs and firms.[38]

3.42The Grattan Institute also told the Committee that diversity in management is crucial, stressing that efforts to promote more women into senior executive positions and encouraging broader female participation in the workforce would undoubtedly enhance workforce participation and productivity.[39]

Young firms and workers

3.43The Committee heard from the e61 Institute that: ‘…young firms disproportionately drive aggregate economic growth, whether it's job creation, productivity or innovation.’ It added that ‘…young firms are more productive, and on average, they create about 13 jobs each per year. That accounts for about 40 per cent of aggregate net job creation in the Australian economy. So any friction we create that affects the ability of young productive firms to upscale can potentially entail large macroeconomic costs.’[40]

3.44The e61 Institute has also argued that the dip in business dynamism has notably impacted the employment prospects of young people, who are typically drawn to newer or emerging firms that resonate with their skills and ambitions. Young workers have used job transitions to locate roles that better match their developing skill sets. However, the Institute has found, with the decline in the number of new firms entering the market, opportunities for such mobility have been diminishing, making it increasingly difficult for young Australians to establish themselves in the professional arena.[41]

3.45Young firms are discussed in more depth in Chapter 4: Economy-wide measures to boost competition and economic dynamism.

Level and translation of innovation

3.46The Productivity Commission highlighted to the Committee the essential role of business investment in Australia's economic growth, emphasising its positive impact on labour productivity, wages, incomes, and innovation. Investment not only boosts the capacity to produce goods and services but also serves as a critical channel for knowledge transfer. The investment to GDP ratio, particularly outside of mining and ownership of dwellings and ownership transfers, has been declining, and has reached its lowest level since 1960. Since the global financial crisis, all business investment as a share of GDP in Australia has declined. Further, the Commission’s findings from its 5-year Productivity Inquiry reveal a concerning slowdown in investment in knowledge-intensive capital, which is crucial to fostering innovation and skill development.[42]

3.47The Productivity Commission submitted that this sluggish investment in ‘capital with brains’ over the past decade is particularly troubling, as it directly affects the economy's ability to innovate and grow. The shift pointed to a broader challenge facing Australia's economic dynamism and future prosperity.[43]

Empirical findings in relation to productivity and economic outcomes

3.48The Productivity Commission highlighted studies conducted by Treasury and the Reserve Bank of Australia (RBA) which have found a relationship between the competitive pressures in the economy and the slowdown in productivity growth.[44]

Global productivity frontier

3.49Moreover, the economic literature suggests Australian firms are lagging behind global industry leaders, and that the rate at which these firms are closing the gap with leading global practices has slowed compared to previous years. It has shown that the pace at which laggard firms approach the global productivity frontier is slower in industries that have either experienced fewer pro-competitive reforms or have seen increasing markups.[45] Also, younger firms tend to align with the global frontier faster than established ones, as they have the advantage of adopting new technologies without prior constraints.

3.50In this light, the e61 Institute told the Committee that:

…there is a divergence in the global productivity slowdown. Market-leading frontier firms in each sector actually experienced rapid productivity growth. That was symptomatic of their better managerial quality and their ability to use digital technologies productively. The issue was that all other firms fell increasingly behind…

…this divergence between Australian firms and the global frontier was more pronounced in services. I think that says something about the importance of competition in this regard’.[46]

3.51Further, the e61 Institute pointed to Treasury research suggesting that the declines in business dynamism and competitive pressures appear to account for half to three-quarters of the slowdown in the rates at which Australian firms reach the global productivity frontier.[47]

Income distribution and wages

3.52The economic literature suggests that a decrease in market competition has led to a growing disconnect between productivity and wages. More market power is associated with greater ‘excess economic’ profits accruing to shareholders, or a higher ‘profit share’. This implies that a lower share of income will be paid to production factors like labour and also points to workers’ bargaining power being reduced.[48][49]

3.53The e61 Institute has pointed to evidence showing a decade of little to no real earnings growth over the past ten years.[50] One of the contributing factors to this stagnation is the reduced movement of labour to high productivity firms. Given that these firms generally provide higher salaries, their diminished presence in the market translates to fewer opportunities for well-paying jobs.

3.54As noted above, there is evidence suggesting the decline in job mobility towards higher-paying roles has led to a reduction in worker bargaining power. Fluid labour markets typically provide workers with alternative options, strengthening their negotiation position with current employers. However, as labour market fluidity diminishes, workers inherently find their bargaining power reduced.

3.55For example, the e61 Institute has posited that in the past 15 years, the estimated pass-through from productivity to wages has dropped by nearly 25 per cent. In the mid-2000s, a 1 per cent surge in turnover per worker correlated with a 0.19 per cent rise in average wages. By 2020, this relationship had diminished, with the same 1 per cent increase in turnover leading to just a 0.14 per cent wage increase.[51] Further, the Institute has found that the industries with the most profound declines in new firm creation, such as real estate and retail, have experienced the lowest pass-though rates.[52]

3.56The e61 Institute stressed to the Committee the disproportionate impact on younger Australians of low wages growth. It added that skills mismatches disproportionately affect young workers, who typically depend on job transitions to find a suitable match. Additionally, younger workers are more likely to work for newer firms, and a decrease in such firms reduces opportunities for them.[53]

3.57There is evidence suggesting that low wages may be linked to the low rates at which workers are changing jobs. The e61 Institute’s research indicates that lower rates of job switching have led to a decrease in average wages.[54]

3.58A decline in job switching also leads to a scarcity of attractive alternative employment opportunities, and means workers face more risks when transitioning between jobs. Treasury research has indicated that for every one per cent drop in the job switching rate, there is an associated decline of approximately half a percentage point in wage growth.[55]

Data collection and analysis

Caveats to the interpretation of the data

3.59Witnesses consistently stressed the need for caution in interpreting the data on competition.

3.60First, strong conclusions should not be drawn on the basis of a single metric. A rise in market concentration, for example, may not indicate less competition per se, if there is also an increase in market churn (where efficient enterprises, with their superior operational strategies, supplant inefficient firms that struggle to maintain their market position), a point made by the e61 Institute.[56]

3.61It is important therefore to stress test any empirical findings, where possible, to see if a trend extends across multiple metrics. In the words of the e61 Institute:

…it's important to actually look at all these different metrics in unison, not just market concentration. It's how it connects to the entrenchment of incumbents and how that's correlated, for instance, with entry rates and so forth and how that's connected to basically job mobility rates.[57]

3.62Second, economy-wide conclusions should not be drawn from limited datasets and without broader context.

3.63Treasury noted that much competition research on Australian conditions had been based on the Australian Bureau of Statistics’ Business Longitudinal Analysis Data Environment (BLADE) mechanism, which analyses firm-level data. However, BLADE lacked price data and even though enhancements to BLADE are being explored, its precision is ‘limited’.[58] Building on this, the Productivity Commission said that price level data generally did not exist at the firm level so the alternative that tends to be used, an ‘average aggregate price level’, was ‘pretty rough and ready’.[59]

3.64In a similar vein, European Central Bank President Christine Lagarde recently observed that ‘we don’t have as much or as good data on profit as we do on wages…if I had the choice, I would improve our data on profits on an aggregate basis as well as on a more granular basis’.[60]

3.65Further, Treasury pointed to the importance of carefully distinguishing between industries when considering the policy significance of firm entry rates. Concentration and the entrenchment of a few large firms in an industry with high fixed costs, such as the resources sector, is considered normal. Indeed, when it comes to innovation, Australia’s top mining firms are at the leading edge of the global frontier.[61] But in retail, for example, where small business would be expected to play a major role, market dominance by a few major players may indicate a problem for competition and dynamism.[62]

3.66Overall, the Productivity Commission cautioned, the concept of dynamism ‘…is hard to measure well…’ and that phenomena such as firm entry and exit, concentration, and price-markups are ‘…proxies for dynamism, which have varying insights into the underlying processes’.[63] It is important, therefore, to ‘…distinguish between dynamism as a process at continuous work in the economy and indicators of it...’ as ‘…movements in the imperfect proxies may reflect factors unrelated to real dynamism in an economy’.[64]

3.67The Productivity Commission also pointed out that economic dynamism depended on many other factors beyond competition—including levels of entrepreneurship, business regulation, labour market mobility and flexibility, the degree of technology diffusion across firms, and levels of investment.[65]

Committee comment

3.68The Committee recognises that a meticulous examination of data related to market competition in Australia is needed to comprehend the decline in national productivity growth. Such a comprehensive analysis will unveil insights into the complexities, challenges, and ramifications associated with the low productivity of recent years.

3.69Despite the data limitations outlined above, the Committee recognises that data collection and analysis has undergone significant transformation in the past decade. Thanks to the availability of more detailed and high-quality data at the firm level, we now possess the ability to discover insights into competition and market dynamics that were once hidden due to the constraints of sector-level or economy-wide data.

3.70Consequently, the Committee emphasises the critical role of data collection, particularly firm-specific data, in shaping effective policies. The rapid evolution in both the availability and quality of data underlines the pressing necessity for policymakers and government agencies to harness this wealth of information to devise more impactful policy. By actively engaging with these data-driven opportunities, the Committee is confident that the Government can foster a marketplace that is both more competitive and dynamic.

3.71The Committee believes that such an approach is especially pertinent given the current gaps in our understanding of productivity trends, competition, and economic vitality. Enhancing the availability of both firm-level and sector-level data becomes imperative, as variations in firm productivity, along with the underlying factors, which may include aspects of competition and economic dynamism, have significant implications for allocative efficiency and overall sector and economy-wide outcomes.

3.72On this point of gaps in our understanding, the Committee has reviewed evidence highlighting the strategic use of microdata in refining competition policy. As stated by the Hon Dr Andrew Leigh, Assistant Minister for Employment and for Competition, Charities and Treasury in his January 2024 speech, ‘Game Changer: Harnessing Microdata for a Fairer Competition Landscape’,

Economic dynamism will always be a difficult concept to neatly bundle up and measure as there are so many variables, but microdata can provide new insights. ... Microdata includes survey data from the Australian Bureau of Statistics as well as de-identified administrative data sourced from government agencies such as the Australian Taxation Office and IP Australia...A few key projects (from the Competition Taskforce's research program) include a newly developed tool that tracks merger activity and an investigation of the impact of competition in the aviation sector in recent decades.[66]

3.73That the Australian Government seek to better understand trends in both labour productivity and multi-factor productivity.

Enhancing the availability of firm-level and sector-level data is vital, especially considering that variations in firm productivity have a significant impact on factor allocation and overall sector-level and economy-wide productivity outcomes.

3.74That key government agencies strengthen their capacity to analyse firm-level data.

Some of this data may already be in the possession of government in collection agencies such as the Australian Taxation Office and the Australian Prudential Regulation Authority. A greater emphasis on using this data to inform policy-making would need to take account of privacy and other considerations.

3.75That an appropriate government agency gather more detailed and higher-quality data related to profits, including Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) rates and Return on Equity (ROE).

3.76That the Australian Bureau of Statistics assemble data on the market shares of the largest firms in key sectors and report this over time.

3.77That the Government’s Business Longitudinal Analysis Data Environment (BLADE) dataset include price levels.

That the Government consider expanding third party access to the BLADE dataset.

3.78That the Australian Competition and Consumer Commission’s capacity to analyse large microdata sets be enhanced.

3.79That the Australian Competition and Consumer Commission be given oversight of market concentration powers.

Footnotes

[1]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 2.

[2]D Autor et al, ‘The fall of the labor share and the rise of superstar firms’, The Quarterly Journal of Economics, 135/2 (2020), pages 645–709.

[3]Mr Michael Brennan, Chair, Productivity Commission, Committee Hansard, 16 March 2023, p. 2.

[4]Mr Michael Brennan, Chair, Productivity Commission, Committee Hansard, 16 March 2023, p. 3.

[5]Australian Competition and Consumer Commission (ACCC), Fines and penalties,www.accc.gov.au/business/compliance-and-enforcement/fines-and-penalties, viewed 16 February 2024.

[6]Mr Rajat Sood, Acting Chief Economist, ACCC, Committee Hansard, 17 March 2023, p. 5

[7]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 28 August 2023, p. 15.

[8]Mr Ralph Lattimore, Chief Economist, Productivity Commission, Committee Hansard, 16 March 2023, p. 2.

[9]Productivity Commission, ‘5-year Productivity Inquiry: A competitive, dynamic and sustainable future’, 17March 2023, p. 3, www.pc.gov.au/inquiries/completed/productivity/report.

[10]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022,e61.in/five-facts-for-the-summit/, p. 11.

[11]Productivity Commission, Submission 1, p. 18.

[12]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 16March 2023, p. 1.

[13]A Leigh, ‘A More Dynamic Economy’, The Australian Economic Review, 55/4 (2022), pages431–440.

[14]J Hambur, ‘Product Market Competition and its Implications for the Australian Economy’, Economic Record, 99/324 (2023), pages 32–57.

[15]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 16March 2023, p. 2.

[16]A Leigh, ‘A More Dynamic Economy’, The Australian Economic Review, 55/4 (2022), pages 431–440.

[17]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 16 March 2023, p. 4.

[18]Mr Alexander Robson, Deputy Chair, Productivity Commission. Committee Hansard, 16 March 2023, p. 6.

[19]Mr Michael Brennan, Chair, Productivity Commission, Committee Hansard, 16 March 2023, p. 9.

[20]Mr Alexander Robson, Deputy Chair, Productivity Commission, Committee Hansard, 16 March 2023, p. 9.

[21]Mr Rajat Sood, Acting Chief Economist, ACCC, Committee Hansard, 17 March 2023, p. 9

[22]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 2.

[23]Productivity Commission, Submission 1, p. 5.

[24]Productivity Commission, Submission 1, p. 6.

[25]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 2.

[26]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022,p. 11.

[27]A Leigh, Fair Game: Lessons from sport for a fairer society and a strong economy, Monash University Publishing, 2022, pages 18-19.

[28]Productivity Commission, Submission 1, p. 8

[29]Mr Alex Robson, Deputy Chair Productivity Commission, Committee Hansard, 15 September 2023, p. 55.

[30]A Leigh, ‘A More Dynamic Economy’,The Australian Economic Review, 55/4 (2022), pages 431–440.

[31]International Monetary Fund, ‘World Economic Outlook, October 2019: Global Manufacturing Downturn, Rising Trade Barriers’, October 2019, pages 55–76, www.imf.org/en/Publications/WEO/Issues/2019/10/01/world-economic-outlook-october-2019, viewed 28 February 2024.

[32]A Leigh, ‘A More Dynamic Economy’, The Australian Economic Review, 55/4 (2022), pages 431–440.

[33]A Leigh, ‘A More Dynamic Economy’, The Australian Economic Review, 55/4 (2022), pages 431–440.

[34]D Andrews and D Hansell, ‘Productivity-Enhancing Labour Reallocation in Australia’, Economic Record, 97 (2021), pages 157–69.

[35]D Andrews and D Hansell, ‘Productivity-Enhancing Labour Reallocation in Australia’,Economic Record, 97 (2021), pages 157–69.

[36]D Andrews and D Hansell, ‘Productivity-Enhancing Labour Reallocation in Australia’, Economic Record, 97 (2021), pages 157–69.

[37]Mr Brendan Coates, Economic Policy Program Director, Grattan Institute, Committee Hansard, 2 May 2023, p. 8.

[38]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022,p. 20.

[39]Mr Brendan Coates, Economic Policy Program Director, Grattan Institute Committee Hansard, 2 May 2023, p. 8.

[40]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 2.

[41]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022,p. 13.

[42]Productivity Commission, Submission 1, p. 24.

[43]Productivity Commission, Submission 1, p. 24

[44]Mr Michael Brennan, Chair, Productivity Commission, Committee Hansard, 16 March 2023, p. 6.

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[46]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, pages 5–6.

[47]D Andrews, J Hambur, D Hansell and A Wheeler, ‘Reaching for the stars: Australian firms and the global productivity frontier’, 7 February 2022, p.1, treasury.gov.au/publication/p2022-243535.

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[50]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022, p. 18.

[51]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022,p. 14.

[52]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022, p. 15.

[53]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 6.

[54]N Adams et al., 'Better harnessing Australia’s talent: five facts for the Summit’, e61 Institute, 28 August 2022, pages 12–13.

[55]M Quinn, ‘Keeping pace with technological change: the role of capabilities and dynamism’, Speech, 20 June 2019, treasury.gov.au/speech/s2019-390085, viewed 28 February 2024.

[56]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 2.

[57]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 2.

[58]Dr Owen Freestone, Assistant Secretary, Competition Review, Treasury, Committee Hansard, 15 September 2023, p. 29.

[59]Dr Stephen King, Commissioner, Productivity Commission, Committee Hansard, 15 September 2023, p. 58.

[60]C Lagarde, ‘Hearing of the Committee on Economic and Monetary Affairs of the European Parliament’, Speech, 5 June 2023, www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230605~0aadd43ce7.en.html.

[61]Mr Dan Andrews, Research Director and Head of Policy Engagement, e61 Institute, Committee Hansard, 2 May 2023, p. 6.

[62]Dr Owen Freestone, Assistant Secretary, Competition Review, Treasury, Committee Hansard, 15 September 2023, p. 23.

[63]Productivity Commission, Submission 1, p. 4.

[64]Productivity Commission, Submission 1, p. 4.

[65]Dr Stephen King, Commissioner, Productivity Commission, Committee Hansard, 15 September 2023, p. 60.

[66]The Hon Dr Andrew Leigh MP, Assistant Minster or Employment and Assistant Minister for Competition, Charities and Treasury, ‘Game changer: harnessing microdata for a fairer competition landscape’, Speech, 30 January 2024, ministers.dewr.gov.au/leigh/game-changer-harnessing-microdata-fairer-competition-landscape, viewed 28 February 2024.