The Australian Competition and Consumer Commission has welcomed the Treasurer's decision to end price surveillance of major beer and cigarette manufacturers and other products.
"The ACCC believes that continued declaration may not be the most appropriate way to limit the room for the companies concerned to exercise market power," ACCC Chairman, Professor Allan Fels, said today. "The ACCC believes there is evidence of increasing competitive behaviour and moderation in price setting in the industries.
"Surveillance is a costly process for companies, and the ACCC, requiring formal notifications in advance of any proposed higher prices. For beer and cigarettes, this entails separate notifications for general price increases, new product launches, excise recovery price increases, and for any other price change.
"While the declarations have been rescinded, the companies have provided appropriate assurances to exercise price restraint.
"For the brewers, this takes the form of price capping arrangements that limit their price increases to slightly less than overall inflation, but without unnecessary paperwork. The cigarette manufacturers have also switched to such schemes.
"In respect of competition, the cigarette companies, in particular, engaged in an extensive 'price war' following the 1995 May Budget excise increase.
"The brewers have also continued to compete by introducing new products.
"The declarations of Carlton and United Breweries, Lion Nathan, W.D. and H.O. Wills, Rothmans and Philip Morris were due to expire on 18 November 1997.
"This decision highlights that with a combined competition/prices surveillance administration the greater emphasis is on competition rather than price regulation in most sectors."
"The ACCC believes that continued declaration may not be the most appropriate way to limit the room for the companies concerned to exercise market power," ACCC Chairman, Professor Allan Fels, said today. "The ACCC believes there is evidence of increasing competitive behaviour and moderation in price setting in the industries.
"Surveillance is a costly process for companies, and the ACCC, requiring formal notifications in advance of any proposed higher prices. For beer and cigarettes, this entails separate notifications for general price increases, new product launches, excise recovery price increases, and for any other price change.
"While the declarations have been rescinded, the companies have provided appropriate assurances to exercise price restraint.
"For the brewers, this takes the form of price capping arrangements that limit their price increases to slightly less than overall inflation, but without unnecessary paperwork. The cigarette manufacturers have also switched to such schemes.
"In respect of competition, the cigarette companies, in particular, engaged in an extensive 'price war' following the 1995 May Budget excise increase.
"The brewers have also continued to compete by introducing new products.
"The declarations of Carlton and United Breweries, Lion Nathan, W.D. and H.O. Wills, Rothmans and Philip Morris were due to expire on 18 November 1997.
"This decision highlights that with a combined competition/prices surveillance administration the greater emphasis is on competition rather than price regulation in most sectors."