Friday, January 28, 2011
Posted by D. Daniel Sokol
ABSTRACT: In an election year with inflation starting to creep up and beyond the Reserve Bank of Australia’s target zone, it is not surprising that the focus of the major parties turned to prices. In particular, petrol prices were of significant consumer concern, having risen by some 15 cents per liter over the January – June 2007 period from an already historical high. In June, the Australian Competition and Consumer Commission (‘ACCC’) raised concerns that local prices had remained high despite a significant fall in international prices. Shortly after this, the Federal Opposition announced that if elected, it would ‘appoint a national Petrol Commissioner with the sole responsibility to formally monitor and investigate price gouging and collusion’. The ACCC then recommended to the Treasurer that a general inquiry into petrol prices be conducted by the ACCC, and this was agreed to by the Treasurer the following day. The inquiry was to be completed by the end of October, before the election date later in November, but was subsequently given an extension of time. Also in July, the Opposition Leader made what was billed as a major statement on the cost of living in Australia. He promised, if in government, to strengthen the powers of the ACCC to monitor supermarket prices and to direct the ACCC to hold a National Grocery Pricing Inquiry. The ACCC would also be directed to publish a periodic survey of grocery prices at supermarkets for a typical shopping basket to be published on a dedicated website. The petrol and groceries inquiries subsequently undertaken by the ACCC were both substantial exercises requiring extensive involvement by the Chairman and a number of the Commissioners. They were the first significant prices surveillance inquiry references given by the Federal Government to the ACCC since its establishment through the merger of the Trade Practices Commission and the Prices Surveillance Authority. The provisions of the old Prices Surveillance Act 1983 (Cth) were generally incorporated into Part VIIA of the Trade Practices Act 1974 (Cth) in 2004. This paper summarises the key aspects of these two inquiries and comments on the policy recommendations made by them. Whilst generally supporting the views the ACCC has put, there are some areas where we have a different emphasis. Some further general observations on the use of the prices surveillance powers conclude the paper.