Rating the independence of our competition watchdog

The perception of either bias or of participation in politics is very dangerous for any watchdog. Equally dangerous is any perception from consumers that the watchdog just likes to “watch” rather than act.

Being labelled a toothless tiger is often a precursor to a slow and slippery downward slope where the watchdog is increasingly dismissed by both consumers and more dangerously by those who should respect the watchdog.

Once an industry or business “smells” weakness from the watchdog, the watchdog quickly loses respect and is increasingly treated with contempt.

One is reminded of Teddy Roosevelt’s famous saying “speak softly but carry a big stick.”

Of course, that is not to say that the watchdog is a law unto itself. Rather, the watchdog is there to enforce the law without fear or favour and to do so in a manner that effectively deters all forms of anti-competitive conduct as determined by the Parliament of the land.

Where there are gaps in those laws the watchdog has a duty to inform Parliament again without fear or favour. The reporting of such gaps should not be politicised.

All members of Parliament are mindful that gaps in competition and consumer laws are detrimental to consumers and it’s essential that such gaps are closed quickly.

In short, the enactment of effective competition and consumer laws must be supported by a watchdog that acts rather than watches and which remains steadfastly above politics.

So how does our competition and consumer watchdog – the Australian Competition and Consumer Commission - rate?

Well, minds will of course differ and all one can do is set out some examples and make some observations. It will be history that ultimately decides.

Let’s start with the failed Fuelwatch.

In years gone by the ACCC had regularly expressed real doubts about Fuelwatch.

Then a new Federal Labor Government is elected having promised to put maximum downward pressure on petrol prices.

All of a sudden in early 2008 we then have a big push by the then new Labor Government Minister for Competition Policy and Consumer Affairs – Chris Bowen – to implement a national Fuelwatch Scheme.

Interestingly, around the same time the ACCC comes onto the Fuelwatch bandwagon. Gone are the old ACCC reservations about Fuelwatch, and after further “work” and “research” on the proposed Fuelwatch the ACCC underwent a Road to Damascus-like conversion.

Nothing wrong with the watchdog changing its mind if its previous view was incorrect or if new information comes along to reveal a flaw in the previous thinking, but of course such changes in a long held view inevitably call into question the validly or merits of other views that may be held by the watchdog.

What other mistakes or omissions has the ACCC made on other issues? Will other ACCC views change or be found wanting after new information is unearthed following a, later, more comprehensive review?

We expect the ACCC to get it right the first time after careful and comprehensive analysis in the first place, rather than undertaking piecemeal or ad hoc “stabs” at issues.

Sadly, the ACCC did not help matters on their change of view on Fuelwatch for the simple reason that they repeatedly declined to publicly release all the data underlying its new research.

Then came the GroceryChoice website. This time the ACCC was put in charge of the website, but was dangerously exposed to concerns that the information on the website was out of date and meaningless.

Given that GroceryChoice was another one of the previous Minister’s policy decisions, the ACCC’s implementation of a Federal Government policy without any express legislative mandate from Federal Parliament was always going to leave the ACCC vulnerable to criticism if GroceryChoice failed, as it did, to deliver anything meaningful to consumers.

With the new Federal Minister for Competition Policy and Consumer Affairs, Craig Emerson having dumped GroceryChoice before Choice could launch the new revamped website that the major supermarket chains feared so much, the new Minister was left scrambling to a find Plan B to fulfil to Labor’s pre-election commitment to put maximum downward pressure on grocery prices.

With this in mind, Minister Emerson hit the airwaves on the weekend sounding concerned about restrictive covenants in retail leases that help shield Coles and Woolworths from new competitors in shopping centres to the detriment of consumers.

Where was the ACCC on the issue? Well, interestingly, on the weekend we also saw media reports that the ACCC is going to “look more closely” at restrictive covenants

So a year after the ACCC reported that restrictive covenants in leases were the “single most important issue” identified in their Grocery Inquiry, we now are starting to see movement at the station on the issue, or are we?

Without a clear timetable from the ACCC on dealing with the restrictive covenants issue, fears that the ACCC will just do more “watching” on the issue will only grow.

“Watching” while competition continues to fail is a no substitute for action and the sooner the ACCC and Minister Emerson act to stop the games played by the big boys the better off consumers will be.