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Back to NCP Review of the Uniform Trade Measurement Legislation Index 4. Nature of the Restriction on CompetitionThis section discusses the nature of the restriction on competition. It will commence by describing the restriction on the sale of non-prepacked meat and will then classify the restriction. The final part will then link the restriction back to the objectives of the legislation. 4.1 Description of the Restriction: The uniform trade measurement legislation makes special provision for the sale of non-prepacked meat5. The restriction, which is uniform in all jurisdictions, is that it is an offence to sell non-prepacked meat otherwise than at a price determined by reference to the mass of the meat. Mass of meat means a reference to measurement in kilograms (kg).6 For example, a butcher selling rump steak that is not pre-packed marks the meat at a price per kilogram (ie. $7.00/kg). When selling the steak the butcher must calculate the price by reference to the steak's mass (ie. $7.00 x 0.4 kg = $2.80). The restriction does allow a person to sell a quantity of meat at a marked price (ie. $2.80 per steak). However, this can only occur if the mass of the meat is marked in the same manner and as prominently as the price marking. The price per kilogram must also be indicated as prominently as the price marking by a marking on the meat or by another statement in letters and figures not less than 10mm high that clearly refers to the meat. The restriction does not apply to meat sold as prepacked articles. These are articles that are packed in advance ready for sale are typically found in meat sections of supermarkets or grocery stores. Prepacked articles are subject to labelling restrictions that require them to be clearly marked with the net weight of the goods contained in the package (ie. 2kg, 500g). If the packs are in random weight sizes7, the price per kilogram and total price must also be marked. Articles that are not packed on the premises must also be marked with the full name and address of the person who packed the article. The restriction does not apply to the sale of cooked meat sold on premises on which it is cooked. This is intended to exempt restaurants, fast food outlets and the like. However, if cooked meat is produced for sale elsewhere, that sale is subject to this restriction. The extent of the restriction is that it applies to any person selling `meat', which includes both retailers and wholesalers. The definition of meat, as contained within the legislation, is so much of a slaughtered animal as is ordinarily sold for human consumption but does not include: (a) the whole or any part of a rabbit or shellfish; or (b) heads, feet, hearts, lights, kidneys, brains or sweetbread; or (c) meat packed as a prepacked article. The scoping study identified that Queensland, Victoria and the Northern Territory,, unlike the other States and Territories, do not interpret meat as including fish and poultry. There is diversity of opinion between jurisdictions as to whether the definition of meat in the legislation is intended to include competing foods such as fish and poultry. However, it is not clear from a policy point of view why fish and poultry should be exempt. The Review Committee considered that the policy underlying the restriction is that it should apply to all slaughtered animal meat sold for ordinary human consumption. The application of the legislation in Queensland, Victoria and the Northern Territory creates a situation where competing meat products are treated differently. In other States and Territories meat is interpreted to include fish and poultry. The following table details how the definition is applied in each jurisdiction:
Generally, the restriction does not apply to specialised meat products such as chicken kiev and beef wellingtons. The application of the restriction to specialised meat products is a grey area and subject to various interpretations regarding when `meat' ceases to be meat for the purposes of the restriction. The following table clarifies the various interpretations in regarding when `meat' ceases to be meat jurisdiction:
Generally, the restriction does not apply in the circumstances where a meat seller has added other food to the meat and has undertaken a substantial amount of labour to produce a specialised meat product. In these circumstances, consumers are purchasing more than the standard meat product. In summary:
4.2 Classification of the Restriction: There are various classifications of restrictions on market competition, including barriers to entry, price controls, conduct restrictions and quality restrictions. The restriction on the sale of non-prepacked meat can be classified as a control on the method of sale and a control on the form of pricing. The control on the method of sale is that meat can only be sold by reference to its mass. As a consequence, meat sellers who price their meat must mark at a price per kilogram. If a meat seller decides to sell a quantity of meat at a marked price, the meat seller must also mark the mass of the meat and the price per kilogram. These latter two issues are a control on the form of pricing. It should be noted that the restriction is not a price control provision that prescribes a process for determining the maximum or minimum prices for a specified good or service. The restriction merely creates a standard for any person selling meat. Consultation has indicated that if the restriction were removed, meat sellers would only make minor changes to their current selling practices. The issue of the size of the yield and standardising cuts of meat could force butchers to continue to sell meat at a price per each to ensure they conduct business in a fair and equitable fashion. The changes are most likely to be seen in the selling of semi-processed meat products (see section 5.2.1). Therefore, based on the likely impacts overall, it is considered that the restriction only represents a minor restriction on competition. This issue was raised during consultation with 46 meat sellers throughout Australia. The majority of meat sellers (89%) identified that the restriction was minor. 4.3 Objective of the Restriction: The rationale for the restriction is that it minimises transaction costs through information disclosure. In a completely free market, consumers may find it costly to obtain relevant, accurate and reliable information on the quality and quantity of meat sold by a meat seller. For example, when consumers are looking through a shop window at a range of meat products it can be extremely hard to make an assessment regarding the quality and quantity of the meat. This differentiates meat from other staple food such as fruit and vegetables that can be closely scrutinised by consumers through smell and touch. If the meat seller uses another pricing method such as per each pricing (ie $2.80 per rump steak), consumers may find it difficult to assess the relative value for money of the various meat products on display. This situation becomes even more difficult if a consumer tries to make an assessment of value for money between a number of meat sellers (ie between meat sellers selling rump steak at $2.80 each, $3.50 each and $7.00/kg). Consumers can overcome information failures by acquiring information about meat products. However, as meat is purchased regularly, consumers may face high transaction costs in trying to determine this information for themselves. This can lead to an inefficient market outcome and public dissatisfaction. The restriction requires the disclosure of information to consumers in the form of a price per kilogram description and a requirement to sell meat by a reference to the product's mass. This means that consumers are being provided with basic information regarding meat products. Consumers can use the price per kilogram description as a point of reference to compare between products sold by a meat seller and the description also enables consumers to compare products between meat sellers. Therefore, the restriction reduces transaction costs for consumers and enables them to shop for meat with confidence knowing that there is a standard basis for comparison amongst meat sellers.
Meat sellers may find it more difficult to compete with other meat sellers without the restriction. For example, consider a situation where a meat seller is selling rump steak at $8.00/kg. If the meat seller determines that a competitor is selling rump steak at $7.00/kg, the meat seller may reduce his/her price to remain competitive. If, however, the competitor is selling rump steak at $2.80 each, then it becomes more difficult for the meat seller to directly compete as the mass of the rump steak is not easily ascertainable. Meat sellers may also find it hard to convince consumers that they are providing good value for money when various pricing methods are used. Therefore, the restriction creates an equal platform from which meat sellers can trade and reduces their transaction costs. The restriction also provides consumer protection by preventing deceptive practices creeping into the market. Such deceptive practices may include displaying a certain size meat product for a fixed price by each and then substituting a smaller product upon purchase, or decreasing the mass of the meat product over time while maintaining a fixed price. Such practices would not only impact on consumers, but also make it hard for meat sellers to compete on an equal platform. In summary, the restriction:
Section 3 identified that the objectives of the legislation are the:
The restriction on the sale of non-prepacked meat meets objectives 1, 2 and 4 of the legislation. The restriction aids in promoting commercial certainty through the minimisation of transaction costs and providing an equal trading platform from which meat sellers can trade. The restriction saves butchers from performing the additional function of calculating the price per each. The restriction creates a reduction in potential costs to butchers associated with calculating the price of meat per each. The restriction also provides consumer protection, which maintains consumer confidence. These objectives are relevant in the current fresh meat market because meat continues to be a staple product purchased regularly by consumers. As there are a large number of meat sellers in the marketplace, consumers require a simple way to compare between meat sellers' products in order to minimise transaction costs. The standard method of sale provides a simple standard, which increases consumer confidence and facilitates transactions. 5 See section 25 of the Trade Measurement Act 1990 (Qld), Trade Measurement Act 1989 (NSW), Trade Measurement Act 1995 (Vic), Trade Measurement Act 1993 (SA), Trade Measurement Act 1999 (Tas), Trade Measurement Act 1991 (ACT), Trade Measurement Act 1990 (NT). 6 See section 5 of the Trade Measurement (Miscellaneous) Regulation 1991. 7 The standard sizes are 100g, 125g, 200g, 250g, 500g, 1 kg and integral multiples of 1kg. If packs of meat are not packed in these sizes, they are referred to as random weight sizes. Back to NCP Review of the Uniform Trade Measurement Legislation Index |
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© Commonwealth of Australia 2000 Ministerial Council on Consumer Affairs www.consumer.gov.au
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