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Recommendations
Recommendation 1
The Committee recommends that the Trade Practices Act
1974 be amended to give the Australian Competition and Consumer Commission
the power to undertake representative actions and to seek damages on behalf of
third parties under Part IV of the Act.
The Committee believes that, due to this measure, the
Australian Competition and Consumer Commission may be burdened by an increased
caseload. The Committee therefore recommends that the Government give
consideration to providing extra funding for this purpose to the Australian
Competition and Consumer Commission in future Budget Appropriations.
Recommendation 2
The Committee is of the view that the Australian
Competition and Consumer Commission should consider heavily concentrated
regional markets, such as that which exists in South East Queensland, when
assessing acquisitions or mergers under the provisions of section 50 of the Trade
Practices Act 1974.
The Committee therefore recommends that section 50(6) of
the Trade Practices Act 1974 be amended to provide for the definition of
‘market’ to include a ‘regional market’. Thus, subsection 6 should provide
that:
50(6) In this section:
‘market’ means a substantial
market for goods or services in Australia, in a State or a Territory, or in a
region of Australia.
Recommendation 3
The Committee recommends the establishment of an
independent Retail Industry Ombudsman through which small business can bring
complaints or queries relating to the retailing sector for speedy resolution.
The Committee believes that the Retail Industry Ombudsman should consider,
among other things, the application of the Retail Industry Code of Conduct
(Recommendation 5) in his or her deliberations.
Where complaints received by the Retail Industry Ombudsman
raise issues that fall within the jurisdiction of another established body,
such as the Australian Competition and Consumer Commission, those complaints
should be referred to such bodies for further investigation.
The Committee recommends that the Retail Industry
Ombudsman be appointed and funded by the Government.
The Committee recommends that the Retail Industry
Ombudsman be required to produce a bi-annual report to the Parliament in order
to increase transparency in the retailing industry.
Recommendation 4
The Committee recommends that mandatory notification of
retail grocery store acquisitions by publicly listed corporations be prescribed
within the mandatory Code of Conduct (Recommendation 5), and approved by the
Australian Competition and Consumer Commission, with a requirement that the
Australian Competition and Consumer Commission consult with local authorities
and other relevant parties in order to make an informed assessment of the
likely impact on local businesses of such acquisitions. The Committee
recommends that the Australian Competition and Consumer Commission also be
required to assess and approve new store development applications on a similar
basis, and to provide a detailed response to these notifications within 30
days.
The Committee appreciates that the drafting of a
mandatory Code of Conduct may take some time to complete. The Committee
therefore recommends that, as an interim measure, the Minister make a direction
that mandatory notification be required to take effect immediately.
Recommendation 5
The Committee recommends the drafting of a Retail
Industry Code of Conduct by the Australian Competition and Consumer Commission
in consultation with retail industry groups and other relevant parties for the
purpose of regulating the conduct associated with vertical relationships
throughout the supply chain.
The Committee recommends that the Code of Conduct be a
mandatory code, and should contain a precise form of dispute resolution, with
the process of resolution clearly spelled out.
The Committee recommends that the Code of Conduct be
drafted to include specific provisions that address:
(a) The general principle of ‘like terms for like customers’ – where the
Australian Competition and Consumer Commission may seek information from
corporations, on a confidential basis, revealing key terms and conditions of
contracts of supply.
(b) Transparency in ‘vulnerable’ supply markets – where growers have to deal
with a range of market characteristics, including perishability, market
volatility and a high degree of risk exposure.
(c) Product labelling and packaging requirements – with a view to
implementing a more equitable system than that which currently exists.
(d) Contractual uncertainty – in particular, the passing of ownership of
produce and the circumstances under which produce can be returned.
(e) Truth in branding – so that businesses, which are subsidiaries of, or
are substantially owned by, a listed public company or major retailer, note
that association on shop front signage, in advertising, on stationery, and so
on.
The Committee recommends that disputes falling under the
Code of Conduct should not be limited to resolution by the Retail Industry
Ombudsman. For example, disputes raising issues relevant to National
Competition Policy or the Trade Practices Act 1974 would be more
appropriately dealt with by the Australian Competition and Consumer Commission.
Recommendation 6
The Committee considers that the $1 million transactional
limitation of section 51AC of the Trade Practices Act 1974 hinders
access by some small businesses to the unconscionable conduct provisions of the
Act. The Committee therefore recommends that this limit be increased to $3
million.
Recommendation 7
The Committee is concerned that Recommendation 2.1 of the Reid
Report, which deals with the Uniform Retail Tenancy Code, has not
been implemented. In particular, the Committee is concerned that, in major
shopping centres, there is a lack of transparency with regard to the cost of
floor space rent. That is, the seller (landlord) has knowledge – the buyer
(prospective tenants) has none. Prospective tenants are therefore prevented
from making informed decisions in assessing the ‘market rent’ as it applies to
particular areas of retail space.
The Committee therefore recommends that the Government re-visit
this recommendation, with a view to implementing a Uniform Retail Tenancy Code
through the operations of the Council of Australian Governments.
Recommendation 8
The Committee recommends that major supermarket chains
take note of widespread community and pharmaceutical industry concerns that the
nature of the role played by pharmacists is unique, as it relates to matters of
public health. The Committee is therefore of the view that expansion by the
major chains into the dispensing of pharmaceutical products should be
discouraged.
Recommendation 9
The Committee believes that there may be anti-competitive
impacts where retailers and wholesalers are operated by the same, or related,
entity. For example, where a major retailer enters the independent wholesaling
sector, intimate commercial details could be gained from that wholesaler’s
dealings with its independent retail customers. The Committee therefore
recommends that future acquisitions of wholesalers by retailers, and vice
versa, be subject to mandatory notification and approval by the ACCC in order
to assess the likely competitive impacts of such acquisitions.
Recommendation 10
The Committee recommends that the Parliament reconstitute
the Committee three years from the date of tabling this Report in order to
review the progress of the recommendations, in particular the operation of the
Code of Conduct, and to determine whether further legislative changes are
required. Such changes may include:
(a) An amendment to section 46 of the Trade Practices
Act 1974 to provide that:
Once it has been established
that a corporation with a substantial degree of market power has used that
market power, the onus of proof shifts to that corporation to prove it did not
use that power for a prohibited purpose (as prescribed).
(b) An amendment to section 80 of the Trade Practices
Act 1974 to include divestiture of assets as an additional remedy for
contravention of Part IV, IVA, IVB or V.
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