Jacob Greber, 28 March 2016

Australian Competition and Consumer Commission chairman Rod Sims has taken Coles managing director John Durkan to task over his criticism of the government’s tough misuse of market power laws.

Mr Sims said Mr Durkan’s assertions last week that the laws might hurt his ability to set standard prices across Coles stores regardless of whether they were in remote or city locations were “extraordinarily strange” and “extremely disappointing stuff”. He also said the Coles chief was undermining sensible debate.

“Big business often talks about, on important public policy issues, having a mature, well-informed debate,” Mr Sims said. “And I think that would be good if we could have that in relation to Section 46, rather than misstatements, exaggerations and frankly just untruths, to be honest.”

He said there were plenty of good examples to justify changes to Section 46 of the Competition and Consumer Act, which are aimed at introducing an effects test and strengthening provisions against companies that block competitors from their markets.

He said he was left “lost for words” about warnings by Mr Durkan at a forum last week that the changes might result in Coles avoiding making long-term contracts, such as the one it signed with a tomato-growing business in South Australia using solar power and sea water.

Mr Durkan questioned what might happen if the project put a smaller tomato business out of action, and cautioned that the pending effects test would create uncertainty for future business decisions.

“Would we make that same decision to invest behind a 10-year contract with these guys with an effects test? We’d go and get a whole lot of advice from lawyers and we’d think twice about whether we should invest,” he said.


Mr Sims said he had no idea where Coles was getting its legal advice from, and said Section 46 would have nothing to do with the example raised by Mr Durkan.

“Section 46 is about unilateral behaviour – behaviour by one company on its own [to exclude a rival]. It’s an extraordinarily strange example,” Mr Sims told the ABC’s The Business program late last week.

“They’re getting very strange legal advice,” he said.

“Obviously the law is meant to stop very large companies excluding their competitors, and at the moment that law doesn’t work. My only assumption is that they would rather the law stay as it is – unworkable.”

Mr Sims suggested that Mr Durkan, an executive from Britain, should understand the need for a Section 46 test, given such laws already exist successfully in Britain.

“If we want to have proper debates about public policy issues in Australia, we’ve really got to raise the level of the debate,” he said. “This is extremely disappointing stuff.”

In an interview with The Australian Financial Review on Monday, Mr Sims said supermarkets were “not top of our list” of companies or sectors likely to fall foul of the new laws.

“I think of new technology in the banking sector as more top of mind than supermarkets,” he said.

Extracted in full from the Australian Financial Review.