I rise today to speak in favour of the Competition and Consumer Legislation Amendment Bill 2011. In doing so, I wish to speak primarily about the issue of creeping acquisitions. The free market system in which Australia operates may not be perfect, but it has proven over the course of history to be the best method of ensuring that consumers get the services and products they need to live their lives at a price and quality that represents good value.
At the heart of this system lies competition— competition based on the ability of people to freely trade with each other; competition to ensure that larger actors in the market do not seek to unduly use their influence to shut out better deals and competitors; and competition to ensure the right of the consumer to freely choose the products and services that suit their needs and ensure a system that is fundamentally based on a fair go, where the crucial freedom is that the community has the opportunity to engage in the marketplace. This is a fundamentally Australian value and it is a core value of the Labor Party and this government. Competition ensures that Australians are given meaningful and fulfilling jobs. It keeps the cost of living down by keeping the economy efficient and it improves the standard of living by driving innovation and change.
To ensure that fair competition happens, government must from time to time act to ensure that the regulatory framework is such that it drives adequate competition in any marketplace in Australia. Governments have an obligation to monitor and constantly improve competition policy, for one of the characteristics of a free market economy is dynamism and change. When problems are identified, governments must act. This imperative is simply a specific case of the need to always stay on the reforming path.
We have seen through the global financial crisis what can happen when governments fail to implement appropriate regulatory processes and consumer protections. In fact, Australia was spared from the full effect of the global financial crisis entirely because of its robust regulatory frameworks and swift, decisive and effective government action. However, because of the very nature of the dynamic market, the need for reform never truly ends. Labor governments of the past knew it; this government knows it and is committed to it. Reforms can be large and small but must always be measured and appropriate and aimed at improving the fundamentals of the Australian economy. These reforms are not designed to fix problems associated with the political whims of the day. In fact, to act in such a manner would be counterproductive in the long term. The reforms of Labor governments are designed to fix problems over the long term to ensure that every Australian benefits from the nation's wealth. This has been our history and it remains core to this government's values.
So we arrive at the legislation before us today. It is apparent that there is uncertainty or lack of clarity around the powers of a competition policy body—in Australia's case, the Australian Competition and Consumer Commission—so it is necessary to take careful steps to remedy the problem while avoiding the creation of new problems through unintended consequences. The issue of mergers and acquisitions illustrates the fact that, in a market economy characterised by competition, some firms will falter and others prosper, there will be changes in ownership and some firms will become larger. Of itself, this is nothing but a consequence of competition. However, mergers and acquisitions can create the risk that competition will be lessened.
It is therefore the responsibility of government to ensure that the ACCC is in the best position possible to assess and deal with this possibility. In particular, this bill seeks to provide greater clarification as to what the definition of a market is. The legislation as it currently stands prohibits mergers or acquisitions that would, or would be likely to, substantially lessen competition in 'a market'. While the ACCC has always held the interpretation that this includes the lessening of competition in any market, this cannot be guaranteed.
Further, there is also a concern around the issue of the interpretation of 'substantially'. Again, while it has generally been interpreted that this includes Australia as a whole or a state or territory, or indeed a region, statements by Justice French have highlighted a concern. In particular, Justice French noted:
It does not seem likely that the relativity implied by the term ‘substantial’ in s 50(6) relates to the size of other markets in whichever of the geographical areas mentioned in the definition the market is to be found. For there is no lower bound on the size of ‘a region of Australia’. It may be that having regard to s 4E the substantiality of the market in question, even if it be geographically limited to a State or a Territory or a region, is to be judged by reference to Australia as a whole. I express no concluded view on that difficult constructional issue … (Debate Interrupted)