#lackofcompetition

In Australia, we live in one of the most concentrated corporate markets in the world. In every sector duopolies and oligopolies control markets to the detriment of competition and consumers. Surely it’s time to stop all  mergers. Mergers benefit companies and shareholders at the expense of the market. Productivity is not improved via this concentration of corporate control over markets. This can be observed via the evidence, as the concentration of market power into the hands of fewer businesses has accompanied years of falling productivity. If companies don’t need to compete for market share they do not innovate and improve productivity rates. “Dec 11 (Reuters) - Australia's Sigma Healthcare (SIG.AX), opens new tab on Monday said it would merge with privately owned pharmacy giant Chemist Warehouse Group to create a A$8.8 billion ($5.79 billion) entity. Chemist Warehouse will own 85.8% of the merged company that will supply 1,000 Sigma-aligned pharmacies and own 600 Chemist Warehouse outlets, according to a statement. Chemist Warehouse is a pharmacy and retail chain in Australia known for cheap prices, large stores and major advertising campaigns.” (https://www.reuters.com/markets/deals/sigma-healthcare-combine-with-chemist-warehouse-58-bln-merger-2023-12-10/)

Over Concentration Of Market Power In Too Few Corporate Hands

We live in a global rentier age, where businesses make their profits from fees and charges. The cost of doing business has never been more expensive. Banks make 70% of their profits from these fees, fines, and charges. The pay to use economy has flourished at the expense of innovation and productivity driven by competition. Huge corporations have arisen from merger after merger to strut their stuff dwarfing all other entities – including governments and their monitoring agencies. The big 4 banks are making tens of billions via their control of markets. Woolworths and Coles dominate the supermarket and liquor skylines. The big 4 consultancy firms reap billions from governments outsourcing their work to avoid scrutiny. A duopoly of airlines maintain high travel costs with fees and charges built in to every fare. The mainstream media is a cabal of News Corp, Nine Media, and Kerry Stoke’s Seven West Media. Gas companies come in fours too. The miners are the same, extracting huge tax write offs from governments. If governments weren’t in hock to these corporate political donors they would be dismantling the corporate concentration rather than entertaining thoughts of more mergers. We do not need any more mergers. What we need is greater diversity and competition within markets and sectors.

Mergers Produce Ever More Powerful Corporate Entities Until we take all private donor moneys out of the political system we will continue to see vested interests controlling the policy decisions in government. The loudest voice in the room is the one with the deepest pockets. Flaky politicians making empty speeches like puppets undermine the public’s faith in our democratic governments. The ACCC has failed comprehensively to thwart the ever growing concentration of corporate power over markets. The ACCC is manifestly underfunded and is another toothless tiger unable to pick fights with these behemoth companies. The cost of living crisis is a result of corporate greed and Australian governments do little to attack this at its source. The RBA is another financial institution set up to keep big business happy at the expense of all other parties. There has been no criticism of the corporate profiteering happening throughout this cost of living crisis. This is despite the fact that in most sectors the companies can get away with price setting due to the lack of any real competition. “Australia has an extremely concentrated economy, with one or a small number of companies dominant in many parts of our economy, and this has consequences. Overall, the evidence suggests it means higher prices and poorer service for consumers, reduced productivity and so less prosperity for Australians, and more pronounced income inequality.” (https://www.theguardian.com/commentisfree/2023/sep/05/lack-of-competition-damages-australia-economy-rod-sims)

The ACCC stands for Australian Competition and Consumer Commission. Did you note that term ‘Competition’? This body is supposed to ensure that healthy levels of competition exist in markets. Yet, we in Australia have the highest levels of market concentration ever seen in our history. ACCC failings: What have they been doing? Down under in Oz we pay lip service to things to avoid actually doing anything about scams and fudges in the business world. Toothless tigers are our speciality when we establish the various commissions and overseeing bodies. Governments make sure that regulators like the ACCC don’t have the funding or the necessary connections to really achieve what their remit states. “The market power of Australia's largest firms has grown in the last two decades, and price mark-ups have increased. "Over recent decades, there have been a number of significant changes in the Australian economy," he says in a forward copy of his address. "The job-switching rate has fallen. The business start-up rate has declined. The largest firms have increased their market share. Mark-ups have increased. "All this suggests that the Australian economy has become less competitive." Andrew Leigh, the federal Assistant Minister for Competition, Charities, and Treasury” - (https://www.abc.net.au/news/2022-08-25/andrew-leigh-speech-large-firms-are-dominating-the-economy/101368066)

A couple of decades of neoliberalism permeating through our governments has seen a laisse faire approach to monitoring markets and corporations. The mantra ‘the market will look after itself,’ has been the excuse vigorously proffered by ministers sweetened by corporate largesse in the form of campaign donations and kickbacks. Personally, I am amazed that no one is pointing the finger at the champions of neoliberalism who ushered in many of the moves that see us in the mess where we find ourselves. The smug, leering face of Tony Abbott and his cronies for instance.

Australian Competition & Consumer Commission Missing In Action

The ACCC are an obvious scapegoat, as their job was to be the gatekeeper to prevent market concentration in the Australian economy.   “New research by the e61 Institute assesses a change in the 2008 Australian merger guidelines, finding: The change resulted in the number of deals reviewed decreasing by 75%. A significant portion of this decrease came from deals that were not publicly notified. The average time spent reviewing a deal also doubled after this change, suggesting greater resources were spent on larger transactions. With Australia’s voluntary disclosure regime, smaller transactions are potentially leaving blind spots in our understanding of the competitive landscape in Australia. An important starting point for merger reform in Australia will be obtaining a clearer picture of merger activity.” - (https://e61.in/as-the-clock-strikes-midnight/)

Qantas flying off with your money

Role Of The ACCC

“The Australian Competition and Consumer Commission is an independent Commonwealth statutory authority. We are Australia’s competition and consumer regulator. We promote competition and fair trading and regulate national infrastructure to make markets work for everyone. We make markets work by: protecting consumers and ensuring fair markets by enforcing the Competition and Consumer Act 2010 and the Australian Consumer Law collecting information from consumers and businesses to help us understand what issues cause the most harm to Australian businesses and consumers and where best to use our resources reviewing and assessing company mergers and asset acquisitions, authorisation and notification applications in Australia promoting competition in the communication, bulk water, postal, and transport industries.”

Woolworths record profits, high prices for consumers but no real competition. Australians Hoodwinked By Big Business Market concentration means price setting and higher prices for consumers and other businesses. It, also, means falling productivity and low wage growth. Lack of competition denudes capitalism and free market economies from functioning as they should. Control of the market and rent seeking takes wealth from us and delivers it to an ever smaller percentage of our population. Over the last 10 years, in particular, we have seen the rich grow much richer and the rest of us lose out becoming less well off. Very low wage growth and now a cost of living crisis is stripping money out of our hands as we speak. The housing crisis and the disappearance of social housing over the last 20 years – who do you think is responsible for this? Neoliberal champions! Market forces manipulated by powerful corporations and rampant neglect by the monitoring bodies. The ACCC has overseen this economic shift and done next to nothing about it.

Neoliberal champions who led us where we find ourselves - ripped off by our own economy! How much do the biggest firms control? Three stark examples: the US vs AustraliaIndustryMarket share of top four AU firmsMarket share of top four US firmsCommercial banking94%Supermarkets91%Liquor retailing78% This graphic was taken from a 2016 article In Choice Magazine. It compares us with what is happening in America at that time. https://www.choice.com.au/shopping/everyday-shopping/supermarkets/articles/market-concentration Think of all those sectors where market concentration means an oligopoly controls it. The big 4 banks, Coles & Woolies, big 4 consultancy/auditors, Qantas & Virgin, cinemas, real estate, Telstra & Optus, petrol stations, liquor retailers, News Corp & Nine Fairfax control the media via newspapers, TV & radio networks with the exception of the ABC, health insurance, general insurance, internet providers, chemists, mining, car companies, department stores, and all these dominating corporations have tentacles reaching into other industries and sectors. Many of these companies spend vast sums on advertising to implant positive messages in our psyches. Think of Qantas and their emotive spirit of Australia ads, banking ads are full of feel good stories about home ownership and growing together, insurance ads likewise tell a helping hand narrative in times of dire need, and so on. Meanwhile, we the consumers are being ripped off via the absence of any real competition. Indeed, quite a few of the other players in the market are actually owned by the dominant corporations in the oligopoly. ACCC Failings: What have they been doing? The ACCC has completely failed us in the Australian economy and there should be an enquiry into this. Governments are complicit, so this will not happen without real push from the wider public. Robert Sudha Hamilton is the author of Money Matters; Navigating Credit, Debt, and Financial Freedom.  ©WordsForWeb