Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697636586868.pdf (Australia)
# Misuse of Market Power # I wish to detail a number of examples of abuse of market power that I have witness directly or as told by trustworthy friends and family members.

I hope you can propose controls that correct these abuses of power.

I also request that the ACCC can be resourced into playing a greater role in tackling the regular abuse of power by market dominate players.
Its successes are admirable however for those keeping an eye on the power plays of large businesses in Australian economics realise how much consumers and smaller players are given a more expensive cost compared to what a truly competitive market place would look like.

ACCC needs better resources to continue to correct the balance though enforcing the laws of commerce.

1.
1.

Refusal to supply - trade through known competitors During the course of my partner's sole-trader retail workwear clothing business there was a wholesale supplier with substantial market power who sells a number of well recognised brands in Australia.

This supplier refused on a number of occasions to engage in any form of supply arrangement with my partner's retail workwear business.
They offered that purchases of their product could be acquired though another substantial retail workwear outlet in the same region.

The purchases from a direct competitor where very little value added service could be applies has the following disadvantages: * a competitor directly benefits from your sales; * a competitor will not sell in a manor that provides you with the ability to add any margin; and * a competitor gains insight into the volume and type of sales undertaken by you.
As highlighted by Winston Rodigues in Submission 4 paragraph 5 the behaviours of at least refusal to deal isn't protected by the suggested changes to s.46.

General market theory requires that markets, like the wholesale supplier, should act in their own interests by supplying to all retailers that desire products.

It is only by doing so that the consumer receives the benefit of competition in the retail geographic region.

Instead an effective monopoly was created due to the abuse of market power.

2.
2.

Refusal to supply - case 2 A large wholesaler of pet food entered into an arrangement where a number of products where only sold to a large retail franchise.

A family retail business where not informed of the products despite regular significant purchases from the same wholesale supplier.

The market discrimination was realised when customers switched their supplier to the family business and insisted on a product they where previously purchased.
The friction created by this information asymmetry resulted in a poor customer/retail store interaction during an attempted purchase and a poor wholesaler sales rep/retail owner conversation.

A free market requires information symmetry between multiple retailers and customers for products to be delivered competitive to customers.
Like the previous example a Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 [Provisions]Submission 30 refusal to supply created a market monopoly for a retail chain that isn't solved by the amended s.46.

3.

Enforced purchase of unneeded services to obtain another service As an ADSL customer on a RIM connection the only wholesale supplier available to me is Telstra.

I only require a ADSL service.


Because Telstra do not offer directly or through another provider the ability to acquire an ADSL service without a telephony service I am paying a ~$30 a month "service" fee for a phone service that I don't use.
The monopoly of Telstra has abused its market power to not undertake minimal changes in the accounting infrastructure to ensure that a ADSL service can be provided independently of a telephony service and hence receiving a substantial service fee in addition to the wholesale cost of the ADSL service which also ensures service availability.

This price gouging and double dipping is an abuse of substantial market power that needs to be prohibited in the bill.

4.
4.

ACT fuel prices The ACCC report of the Australian Petroleum Market December Quarter 2015 shows that Canberra prices to be higher.

This can be concluded by Chart 3.6 where it is noticed that Darwin and Hobart also frequently have higher costs compared to the largest 5 cities.

The Chart 4.2 showed that NSW regional cost per litre compared to Sydney where 3.7% higher in September 2015 and 9% higher in December 2015.
Table 1A showed that the Sydney vs Canberra prices for the same two months of a similar comparative pricing.

The effects of market price differences in 4.1 for regional areas cannot be realistically applied to Canberra.

The result of this is a failure of the market to lower prices where aspects of supply costs are similar and a large number of retail outlets with a large dependent consumer base are present.
The ACCC doesn't appear to have the power to determine the cause of the market behaviour and this doesn't appear to be addressed in the bill.

5.

Brisbane Petroleum Prices Section 3.4 of the previously mentioned ACCC report into fuel prices notes the consistently high prices "likely to be at the retail level" indicating but not proving collusion.
Given the price is set by the fuel supplier and owner with the retail outlet having no ownership or control over the price of fuel served by them is another abuse of market that doesn't seem to be address in this bill.

6.
6.

Banks, VISA, Mastercardand ApplePay The difficulty of Apple as payment provider to move into the Australian merchant market, despite a substantial enabled iPhones, shows an abuse of power by the banks to use their dominance over merchant banking to allow another competitor into the payment market Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 [Provisions]Submission 30 where substantial rental and transaction costs are applied to every EFTPOS terminal.
The fees charged by banks to business customers is significantly larger for a similar accounts by individuals for no increase in service.

The control of Visa, Mastercard and EFTPOS to extract a premium off transaction costs for little value add service attests to the abuse of market power in preventing new entrants to the market.

6.
6.

Mortgage Lenders Insurance Self proclaimed experts in the housing sales market, banks, will still charge every loan applicant of the order of $10,000 for mortgage lenders insurance for those without sufficient deposit/securities to cover their risk.

This is despite there only ever being one case of a claim in the ACT ever (as I remember my conveyancing laywer describe).

This excessive charging of consumers despite an inconceivably small risk shows and abuse of market power by lenders.
How is this protected by the existing Act or the Bill under question?

I hope the proposed legislation can protect consumers and emerging and small business from the abuses of market power by enacting defences against the described scenarios.

Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 [Provisions]Submission 30