MARKET power and understanding its consequences are crucial as Australia seeks to recover from the economic impact of COVID-19, ACCC chair Rod Sims says.
The competition czar used a speech to the National Press Club in Canberra to pose the question as to whether the market economy was too much favouring producers at the expense of consumers.
“On joining the ACCC nine years ago, after nearly 20 years in the private sector, mostly advising top 50 companies on corporate strategy, I was surprised to be constantly hearing that ‘companies succeed by focusing only on the needs of their customers’,” Mr Sims said.
“This is a naïve and inadequate understanding of business strategy and incentives,” he said.
“Do not get me wrong. I am a complete believer in a market economy, and the benefits of the profit motive. It brings efficiency and innovation we would otherwise not have, and it provides us with competent business leaders.
“It is the belief that businesses will only and always act in the interests of their customers that I object to, because it is simply not correct.”
Mr Sims said Australian cartel laws, “whilst clunky and technical and challenging to enforce”, were nonetheless effective.
“So much so that people of the same trade these days seldom meet with each other without their competition lawyers present,” he said.
Mr Sims said an important focus of competition law involved the new section 46 test of behaviour which had the purpose or effect of substantially lessening competition.
“Big business fiercely opposed a workable section 46 against the interests of largely voiceless consumers. It required effective lobbying by small businesses to get the changes through,” he said.
“We brought our first case under this new law late last year against Tasmanian Ports Corporation, and we have some fascinating investigations underway.”