Consumer Action urges competition review to consider consumer experience and protection

Consumer Action Law Centre has welcomed the Competition Policy Review Draft Report and its emphasis ‘on protecting competition and not competitors.’ But Consumer Action will be asking the review’s panellists to consider how the demand side of the market—that is, consumers—can help promote competition.

Competition law in Australia has typically focused on suppliers, ensuring they play by the rules and that no one takes too much of the market share. Unfortunately this has come at the expense of demand side competition policies which drive competition by getting consumers engaged and active.

‘Consumers can have a whole range of product choices open to them, but if they’re not engaged and looking for the best offer the market will break down,’ said Gerard Brody, CEO of Consumer Action.

‘The Victorian energy market is a good example of how more choice hasn’t benefited consumers. There are many energy plans available and there is the potential to save money, but it is too complex and people just don’t bother. In responding to the Draft Report, we will ask the panel to take a close look at demand side policies to avoid this problem developing in other markets.

Consumer Action believes initiatives designed to increase competition in health and education must be complemented by increased consumer protections for low income and vulnerable consumers.  ‘We’ve seen low income Australians shut out of the mainstream credit market because lenders see them as bad risks. Sadly this makes them easy prey for predatory lenders who charge huge interest rates and exorbitant fees and charges. Competition can be a real plus for consumers, but we need to make sure we don’t leave vulnerable consumers to the wolves,’ said Mr Brody.

‘We already see similar problems in Australia’s education sector. Students who don’t qualify for, or can’t afford mainstream tertiary education are signed up to online or private courses which can cost a lot, but deliver little. Vulnerable consumers looking to improve their situation are often left out of pocket and without any meaningful qualifications. The Competition Policy Review panel should consider the how their recommendations will affect those who can’t afford to shop around,’ said Mr Brody.

‘We’d also encourage panel members to look at creating effective dispute resolution schemes where consumers can take complaints, and where poor trader behaviour is penalised and discouraged. Improving business behaviour gives consumers the confidence to enter the market and therefore improves competition,’ said Mr Brody.

Consumer Action welcomed the proposal for ‘market studies’ to be conducted to consider whether competition is working in particular markets, as was recommend by its submission. ‘Market studies need the power to impose rules to improve competition in particular markets, including measures to engage and inform consumers’, said Mr Brody.

Consumer Action will consider the Report’s other recommendations over the coming weeks before making an extensive submission to the Inquiry.