The Regulation of Retailing Lessons for Developing Countries

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(No Transcript)
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The Regulation of Retailing Lessons for
Developing Countries   by Professor Allan Fels,
AO Dean   The Australia and New Zealand School
of Government   Third Asian Competition Law
Conference   Hong Kong Polytechnic
University Hong Kong   10th 11th December 2007
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• Retailing in developed countries
• Retailing in developing Asian countries
• Lessons from experience in developed countries

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AUSTRALIA GROWTH OF CONCENTRATION

• Coles Myer merger in 1980s
• Woolworths/Safeway merger
• Decline of wholesaling
• Withdrawal of Franklins
• Coles, Woolworths control 80 per cent of dry
  grocery market
• Poor management by Coles
• Coles acquisitioned by Wesfarmers. Link with
  Bunnings hardware stores

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AUSTRALIAN CASE LAW

• ACCC successful opposition to Coles Myer proposed
  acquisition of Foodland in Western Australia 1993
• 1990s approval of wholesale mergers to form a
  single dominant wholesaler
• Safeway case 2003-attempted price fixing and
  misuse of market power
• ACCC vs Liquorland and Woolworths 2006

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MERGER LAW

• Change from dominance to substantial lessening of
  competition 1993
• Creeping acquisitions
• Divestiture

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ABUSE OF MARKET POWER (DOMINANCE)

• 1986 extension to cover oligopoly
• Conservative attitude of Courts
• Birdsville amendments prohibit sustained
  pricing below cost by firms with substantial
  market share where it harms competitors (not
  competition)
• New Labor Government to strengthen misuse of
  market power law

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AUSTRALIAN RETAIL INDUSTRY CODE OF CONDUCT

• Has had some effect on small supplier
  relationships with big retailers
• Little effect on bigger suppliers and retailers
• Not transparent
• Could be stronger

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unconscionable conduct LAW

• Common Law
• Insertion of unconscionable conduct into Trade
  Practices Act
• Extension of criteria for small transactions
• Court verdicts are mixed
• Does not affect buyer-seller relationships in
  Australia
• Has some effect on shopping centre tenant
  relationships

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NEW ZEALAND

• Recent New Zealand Commerce Commission rejection
  of proposal by Foodstuffs NZ and Woolworths Ltd
  to acquire third largest retailer the Warehouse
  overturned by Court

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UNITED KINGDOM

• 2000 Inquiry by Competition Commission
• A relatively clean sheet for UK retailers but
  some concerns at lack of competition in many
  local areas. Some concerns at retailer-supplier
  relationships
• Suggested introduction of a Code which proved
  to be weak
• 2007 report
• Concerns at planning laws and land bank
  accumulation
• Some concern at category management
• The milk case
• Suggested need for stronger Code
• Little concern about fate of wholesaling and
  small stores
• Skepticism regarding water bed effect
• Concerns at retrospective rebates and other
  behaviour of retailers to suppliers.

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CHINA

• Pre WTO restrictions on foreign participation
• December 2004 opening up of retail sector to all
• Local government problems e.g. requirements for
  public inquiries
• Many foreign retailers in China
• New Chinese Antimonopoly Law
• Chinese economic nationalism
• Merger provisions
• National champions
• Retailers not dominant
• Probable little action on administrative
  monopoly

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INDIA

• Debate regarding foreign ownership
• Restrictions on foreign supermarkets
• Single retailers allowed, supermarkets not
  allowed
• Some entry by wholesaling
• Rise of Indian supermarkets
• Social opposition

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INDIAN COMPETITION LAW

• 2002 Competition Act
• Constitutional problems
• 2007 Competition Act amendments
• 2008 year of take off?
• Debate on foreign role continues with riots etc.

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THAILAND, INDONESIA

• Some retail restrictions
• Modest enforcement of Competition Law

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CONCLUSIONS

• Concerns at retail concentration in developing
  countries
• How to secure benefits of efficient Western
  retailing in developing countries while avoiding
  undue concentration?
• Side effects on small business?