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Unsolicited (Letters to the editor)

Every Issue

Cite as: (2008) 82(6) LIJ, p. 8

We welcome letters to the editor of no more than 400 words.

Email: letters@liv.asn.au Fax: 9607 9451 Mail: LIJ, Managing Editor Mick Paskos, GPO Box 263C, Melbourne 3001; or DX 350 Melbourne.

We reserve the right to edit letters and to republish them in their original or edited form on the internet or in other media. Letters must include a phone number and address for authentication.

TPA Amendment Still a Bargain For Consumers

Dugald McWilliams suggests that amendments to s46 of the Trade Practices Act (TPA) intending to attack predatory pricing by large corporations may in fact be of detriment to consumers, by discouraging big business from discounting or pursuing stocktake and seasonal sales (“Not such a great bargain”, LIJ, April 2008, page 40).

This view appears to be scare tactics and there is little evidence that consumers have not enjoyed the benefits of discounting and sales since the enactment of the so-called Birdsville amendments in September last year.

The purpose of the amendments is to encourage healthy competition and thereby protect the interest of consumers.

This was something that s46 of the TPA has failed to achieve in the past.

The narrow interpretation given to “market power” by the High Court in ACCC v Boral effectively hamstrung the regulator from pursuing anti-competitive predatory pricing practices by large businesses.

Indeed, the High Court’s interpretation meant that absolute freedom from competitive constraint was required before a corporation met the “substantial degree of power in a market” threshold. This meant the law could capture only monopolists or near monopolists.

Many large consumer markets in Australia are oligopolistic in nature – groceries, fuel and pharmaceutical products come to mind. While theoretically competition may exist in oligopolist markets, healthy competition is unlikely to – prices are more likely to be set by agreement (or at least tacit agreement) rather than the operation of supply and demand. This is a bad outcome for consumers.

The amendment to s46 needs to be tested before being criticised.

It may, over the long term, actually prove to be effective in stopping anti-competitive practices and lead to lower prices.

Indeed, similar laws prohibiting below cost pricing that operate in some states in America suggest those outcomes are being achieved.

The effective prevention of anti-competitive conduct must surely be the ultimate test of a good competition law, not hypothetical postulation about consumers missing out on bargains.

Gerard Brody
Director - Policy and Campaigns,
Consumer Action Law Centre

For providing the letter of the month, Gerard Brody has won a $50 book voucher from the LIV bookshop, redeemable for the next 12 months.

Time to check out cheques

Almost the only reason why I maintain a cheque account is so that I can write a cheque to make my annual payment of my professional indemnity insurance premium.

I’m sure that I’m not the only member who is irritated by the refusal by the Legal Practitioners’ Liability Committee to adopt modern commercial payment alternatives.

Paul Hobson

Hobson Legal

Budget misses balance

Despite the state’s crime rate dropping considerably since 1999, Victoria is spending more than ever on prisons and police.

A balanced Budget would better focus on tackling the root causes of crime. If we are truly serious about reducing crime, we need to devote more resources towards addressing core disadvantage: homelessness and housing-related poverty, systemic violence, racism, mental health, drug addiction and unemployment.

A prison cell is not, by any reasonable person’s measure, adequate housing for the homeless.Treasurer John Lenders announced in his 2008/09 Budget speech that “Victoria will record its highest ever police budget of $1.75 billion”. The Budget also allocated $591 million for more prison beds, including a new prison in Ararat.

Against this radical spending commitment, Treasurer Lenders further states that since 1999 Victoria’s crime rate has dropped by 23.5 per cent. But despite crime falling, Victoria’s prison numbers are exploding, with the number of prisoners in Victoria increasing by close to 60 per cent in the past 10 years.

Australian government figures confirm that each prisoner costs around $80,000 per year. ABS statistics confirm that around 53 per cent of the prison population has been in prison before.

Massive funding increases for prisons and police aim to satisfy an ill-informed law and order agenda.

Putting more people in prison is not only bad social policy; it is an incredible waste of taxpayers’ money.

The Victorian government is pursuing important reforms to tackle disadvantage, but much more needs to be done.

Spending on new prisons should be diverted towards tackling the causes of crime and promoting prisoner rehabilitation.

A balanced Budget that acknowledges the need for improving access to justice would also provide better funding to ensure that the legal needs and human rights of the most disadvantaged members of our community are effectively represented and protected.

Hugh de Kretser

Federation of Community Legal Centres
executive officer

[For more on the Victorian government Budget, see “State should be supreme litigation destination”, page 28.]

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