Encouraging competition and market entry are priorities for food processing industry, Treasury tells Senate inquiry

Posted by AFN Staff Writers on 10th October 2011

Treasury has told a Federal Senate inquiry that reducing unnecessary barriers to market entry and clamping down on anti-competitive behaviour should be a priority for Australia’s food processing industry.

In its submission to the Senate Select Committee on Australia’s Food Processing Sector, the Treasury pointed out that the food processing industry in Australia tends to be concentrated, with several major players and a number of smaller competitors. The Treasury said, “This market concentration is less likely to give rise to concern if there are no significant barriers to entry or expansion. Australian governments can play a role to ensure that regulations do not unnecessarily create barriers to entry or expansion.

The submission also stated that open trade with other countries can benefit the Australian economy by allowing the efficient production of goods, increasing competition and a better allocation of capital.

“Competition law plays a role by ensuring that anti-competitive behaviour, such as predatory pricing or mergers or acquisitions that substantially lessen competition, does not raise strategic barriers to entry,” the Treasury submission stated.

Government actions to protect Australia’s food processing industry from global competition could come at a cost for consumers. This cost could be manifested through higher domestic prices for consumers and businesses, higher taxes to finance such government action and “through adverse impacts on Australia’s overall productivity”, the submission said.

The Senate Select Committee is due to report to the Senate by 30 June 2012.