New bill aims to curb power of Coles and Woolworths

by admin on June 12, 2013

A new bill will be brought before federal parliament next week which is designed to curb the market power of supermarket giants Coles and Woolworths.

Independent MP Rob Oakeshott, will be introducing a private members bill which aims to strengthen the current rules surrounding abuse of market power especially within the context of $1 milk.

Oakeshott believes that provisions under the current Competition and Consumer Act do not sufficiently protect the supply chain or the consumer in the long term.

The Weekly Times Now reports that the new legislation would ensure that a broader view would be taken by the ACCC when making decisions, rather than limiting judgements to the direct consumer affected, or the direct supplier affected.

Oakeshott says that the 2011, $1 per litre milk campaign by both supermarkets is a prime example.

The commission found that the supermarkets were bargaining with large milk suppliers for $1 per litre milk without abusing power, resulting in a win for consumers. However Oakeshott says those truly affected by the price, the dairy farmers in the supply chain, were not adequately protected.

The new bill will force companies to assess the impacts on the supply chain and provide protection for those affected. It will also allow the ACCC to obtain documents and other information which may impact on the supply chain.

“Their concern is that, in the long term, the processors would look to dairy farmers to deliver the fresh product at lower prices,” Mr Oakeshott said.

“Anecdotally, the prices expected at the farm gate to allow the consumer to purchase milk for $1-per-litre may not cover the basic on farm costs of production for all but the largest dairies.

“Taking a long-term view, a reasonable perception would be the win for consumers now may result in higher prices as more and more dairy farmers leave the industry.

“If dairy farmers do leave the market it could result in less competition in a small pool of dairy producers, or the fresh milk needing to be sourced from international markets.”

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