Friday, November 29, 2013

Egg cartel case looming?

In a keynote address to an Economics Conference in Sydney, the Chairman of the Australian Competition and Consumer Commission, Rod Sims argued that Australia should embrace the root and branch review of competition policy and law and forshadowed major moves against egg producers who have been involved in collusion.

Here's a few quotes from his address: “Most of our consumer issues have an important competition dimension. For example, our work on credence claims, dealing with false claims as to where (Australia, King Island) or how (free range, or by a skilled artisan) a good is made is for two reasons. First, the consumer is not getting what they paid for; second, and often more important, genuine producers are losing out to those making the false claims.

Consider an industry with high entry barriers and three competitors who collude to raise prices. Suppose the demand curve for the goods is or is near vertical. In this case there may be no efficiency loss (at least in a static sense), just a transfer of wealth from the consumers to producers.

How is the welfare loss from this cartel to be compared to inappropriate monopoly utility pricing, or misleading consumers about their consumer guarantee rights?

With our collusion cases I expect more will be purely local cases, but international cases must always also be a priority, particularly when Australians, Australian businesses, and businesses in Australia suffer significant harm.

I expect to be able to announce the commencement of another domestic cartel case before the end of the year.”

Let's hope it gets rolling!!
Details of his address here:

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