Seeking a fine balance

THE Australian Competition and Consumer Commission has come under sustained attack in recent months as the big guns take aim at what they see as bureaucracy gone mad.

Among the gripes emanating from big business is that the ACCC is too powerful, uses the media too much and is standing in the way of so-called national champions.

While there is no doubt that every powerful organisation in the country needs to be watched carefully, a certain equilibrium appears to have been reached when a regulator scares big business into vocal defence.

So is the ACCC too powerful? I can’t see that it is.

Though I am prepared to be convinced the other way, the only ones clambering for change appear to be leading players in industries where a handful of players dominate the market.

It is understandable that, when a company reaches 40-50 per cent of its market, finding growth is tough.

That doesn’t mean it should be allowed to grow in an unfettered way.

Reaching that sort of scale in significant sectors suddenly opens new doors to the businesses involved.

They can lobby politicians to have laws altered to their liking, they can tie down smaller competitors with legal action, and can use industry associations to change their industries in ways that hurt smaller players.

That is not a level playing field. Ultimately, not many of these advantages help the big player involved improve its customer service.

As for playing the media, ACCC chief Alan Fels could certainly not be called shy.

Professor Fels loves the limelight, but that is a legitimate use of media. The big players also use it well, often with huge PR departments that either inundate or starve the press of information, depending on the issue at hand.

And what about national champions?

It is hard to see how any company that ends up in comfortable domination of its market in Australia will have the hard edge needed to succeed offshore, unless of course it intends for its customers to finance that expansion through near monopoly pricing.

One area of concern to me is retailing.

We have watched as two players have taken control of supermarkets (with some resistance from WA’s Foodland) and then pushed into liquor.

We have watched the shelves as they become dominated by the few brands that can afford to buy space on them.

For example, in the liquor industry there is a real danger that the falling number of independent retailers will reduce competition for product, leaving many wine producers without a market and, inevitably, consumers without as much choice.

Ultimately, new competitors do rise to take on the dominators, but there needs to be someone with a thick hide there to make sure the market stays just a little bit fair.

Crushed by the deals of industry

WHILE the Mickelbergs have dominated the general news headlines this week, an equally fascinating story seems to be unfolding in the business press.

It concerns Andrew Forrest and a $3.5 million donation to a charity he was closely associated with, which ended up being used to buy his shares from him.

Without going into the rather intricate facts of the matter, why do people do these things?

No matter how legitimate the process might have been, such a transaction will always look odd and lead to awkward questions which are difficult to explain.

Mr Forrest has spent many years pushing for his dream to become reality.

Most would agree he achieved a lot, but the results have been far from earth shattering at this stage and he was eventually pushed out of the project by the very people to whom he sold his vision.

To end his time with Anaconda in this way, with an seemingly unnecessary pass-the-parcel charity transaction, is likely to further disappoint many who were once believers – even if an adequate explanation is found.

For those involved in the charity trustee, its another lesson about how tough it is becoming to be a director of anything these days.

In the end we can’t question the motivation of everyone’s every move but, increasingly, directors will demand better explanations for complicated and unusual transactions.

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