And now to consumers

My friend Frank Zumbo has had a crack today about the Federal Government's inaction for consumers in 2009.

In particular he is referring to grocery and petrol prices. I only have three short comments;

1. Frank is right that the generic only store ALDI exerts some strong price competition, but wrong to welcome the consequence of home brand products in the big two. Their home brands further entrench their market power and merely reflect further vertical integration. For all their other foibles brands do carry important consumer information in relation to quality and reliability. I want to choose my supermarket AND have a choice of brands.

2. The fact that Coles and Woolies drop prices geographically in response to competition is unfortunately seen by regulators as a good thing - i.e. competition working. The Birdsville amendment that is no more was one way to address this. The other would be to restore the original s49 of the TPA. This was a prohibition on price discrimination other than on the basis of cost. The arguments for its deletion were based on the claim that where the discrimination is injurious to competition it would fall foul of s46. This has proven not to be the case for two reasons, the first is that s46 doesn't work anyway, the second is that the staff of the regulator interpret the repeal of the old s49 as stating that price discrimination is not anti-competitive.

3. The fact (as I've written about before)that both the petrol and retail markets have been thoroughly screwed by the ACCC's continuing sanctioning of "shopper dockets" despite the fact that they are both anti-competitive (s46 breach) and misleading (s52).

On a completely different tangent I was thinking further about the "consumer and citizen" section at the ACMA. One of the troubling issues in telco is the divided responsibility between the ACCC and the ACMA for aspects of "consumer protection". For example a code on prices terms and conditions is enforceable by the ACMA though the conduct if illegal anyway is the responsibility of the ACCC.

The Government might claim their action has been to introduce the Australian Consumer Law - but even that did not get concluded before parliament rose.

It does not have to be this way. ASIC has responsibility for promoting confident and informed participation by investors and consumers in the financial system. The Bill referred to above maintains this responsibility and makes the same amendments to the ASIC Act as are made to the TPA. The industry body Communications Alliance in its submission on the Bill suggested that the telecommunications industry should get the benefits of the reform (i.e. less duplication) by the removal of the consumer protection powers of the ACMA.

There is an alternative and probably far better outcome which would be the exercise by the ACMA of the full ACCC (or new Consumer Law) powers (i.e. the TPA Part 5 powers). The ASIC powers provide the precedent and indeed the logic, that these are complex technical products for which consumer protection and technical regulation should go together.

Another interesting feature of the ASIC regime is their FIDO website. This puts the consumer interest pages somewhere other than the corporate pages. There was a brief flurry in 2006 where the Communications Law Centre with funding from the ACCC launched FairTel which was to be a consumer education campaign. At about the same time the ACA used FairTel as the name for a hypothetical telco on a model consumer contract. Unfortunately the idea of using "FairTel" as the brand for a telco version of FIDO couldn't happen now as a service provider is using the name.