Australia, insurance, car, home, live, holidays

“However,the existence of the power is likely to have a big effect on business behaviour generally. It’s a huge stick,and a big stick is needed to make some parts of the[Competition and Consumer] act work more effectively.”

Fels pointed to section 46 of the act,which prohibits companies with substantial market power from “taking advantage” of their power by inhibiting rivals. He described this section as “relatively ineffective” with “very minor” penalties or fines,which made it difficult for smaller business to win cases against large companies with significant resources.

“Business tends to not take too much notice of section 46. But if there is a chance of divestiture it would make a huge difference,” he said.

Legislative changes would not grant the ACCC itself power to break up a company:rather,the ACCC would be able to seek orders from the Federal Court,where it has found misuse of market power,to break up the business.

Fels recently spearheaded an inquiry into price gouging,commissioned by the Australian Council of Trade Unions,which found thatAustralians are paying too much for everything from energy and flight tickets to groceries and childcare.

Coles and Woolworths have come under pressure recently amid high inflation,and they are facing multiple inquiries into supermarket prices after accusations of price gouging,including areview of the food and grocery code of conduct led by former Labor minister Dr Craig Emerson,who in January expressed scepticism about divestiture powers.

“What,we say Coles has to close half of its stores and Woolworths[closes] half of its stores,and we wish and hope and pray that someone else will come in and open them? I mean,they’re very populist sorts of ideas. What I am interested in is something that works,” Emerson told10 News First.

Woolworths and the ACCC declined to comment. Coles was contacted for comment.

The government has also ordered the ACCCto investigate supermarkets in a year-long inquiry,which will examine the difference between the prices received by producers at the farm gate and paid by consumers at the checkout.

In submissions to the Senate inquiry into supermarket prices,Coles and Woolworths said the key driver behind higher prices on the shelf was due to adoubling in price increase requests from suppliers and farmers,who are facing a raft of higher business costs across fuel,energy,packaging,freight,shipping,and utilities and more.

The ACCC has been pushing Treasury to reform merger and acquisition laws over concerns that the current regime,which is voluntary and does not force companies to notify the competition watchdog,is ineffective,resulting in lower competition and higher prices for consumers.

Current ACCC chair Gina Cass-Gottlieb indicated to a Senate estimates committee in May last year that she was supportive of divestiture powers for the Federal Court.

“In a situation where Australia faces a number of quite significantly concentrated markets,it would be a worthwhile power for a court to consider in matters where the contravention had been proved and the ACCC was able to prove to the court’s satisfaction that it was a warranted remedy,” Cass-Gottlieb told the Senate committee.

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