Back to NCP Review of the Uniform Trade Measurement Legislation Index

EXECUTIVE SUMMARY

Requirement to review under National Competition Policy ("NCP") principles

The Competition Principles Agreement made between all Australian Governments in 1995 provides for the review and where appropriate reform of any legislated restrictions on competition by June 2002. Such a review is undertaken in the context of a public benefit test ("PBT") of the restrictions only, as opposed to the complete piece of legislation.

The Queensland legislation to be reviewed in this instance was:

• the Trade Measurement Act 1990
• the Trade Measurement (Pre-Packed Articles) Regulation 1991
• the Trade Measurement (Measuring Instruments) Regulation 1991
• the Trade Measurement (Weighbridges) Regulation 1991
• the Trade Measurement (Miscellaneous) Regulation 1991
• the Trade Measurement Amendment Act 1999 and Trade Measurement Regulation (No1) 1999

The review parameters encompassed significantly similar legislation in each other Australian State and Territory excepting Western Australia.

An independent consultant, Economic Insights Pty Ltd, was commissioned to undertake a targeted scoping study of the trade measurement legislation. The scoping study was to assess which restrictions on competition need to be subject to a detailed PBT and to develop a PBT plan as required.

A Review Committee comprising representatives from each stakeholder jurisdiction and including the National Standards Commission and Commonwealth as observers, was formed to oversee the progress of the review.

The role of the consultants was to advise the Review Committee of the arguments for and against modifications to the trade measurement legislation. Responsibility for the final recommendations on the future of the trade measurement legislation was to rest with the Review Committee.

The consultants' report (attachment A) to the Review Committee concluded that the potentially anti-competitive provisions of the trade measurement legislation fell into three areas - the method of sale; the use of measures and measuring instruments; and participation in the trade measurement industry.

Key restrictions considered in the report related to the method of sale of - meat, beer and spirits; and pre-packaged goods. Non-packed meat cannot currently be sold by each/portion and instead must be sold by kilogram. Spirits must be sold by volume, beer glasses must be marked with their volume and pre-packed goods must be labelled with the packer's name and address and quantity statement. Certain prescribed goods pre-packed in sizes outside a schedule of sizes must be unit priced (eg marked with the price per kilogram).

The report noted other minor restrictions on competition which were considered by the consultants to be sound, imposing few costs while potentially generating widespread and significant benefits. These restrictions relate to the oversight of measurement standards, the prohibition of end-and-end weighing at public weighbridges and the licensing of service organisations and public weighbridges.

It was argued that in practice, the restrictions on the sale of beer and spirits appeared to have little if any adverse impact on competition but provided benefits to consumers and are justifiable restrictions.

The restrictions on pre-packaged goods were also considered by the consultants to be justifiable as they generally help inform consumers while appearing to impose few costs. However, they did not find it possible to justify the unit pricing of pre-packed goods.

The consultants considered the restriction on the sale of non-prepacked meat to impose significant costs. In their report they argued that it limits the product range offered to consumers, may favour supermarkets and grocery stores over other retailers of non-packed meat and in Queensland favours chicken and fish over red meat. The consultants noted, however, that the restriction also provides benefits for some consumers by facilitating price comparisons between retailers.

The report therefore recommends that if the Review Committee wishes to maintain the restrictions on the sale of non-prepacked meat and unit pricing of pre-packed goods, a detailed public benefit test would be required. The consultant states that this could cost in the order of $200,000 with a significant share of the costs arising from the need for detailed surveys of consumer attitudes

The consultants' report recommends that such a review would be unnecessary if these restrictions were relaxed and considers that a reasonable case could be made for relaxation based on the work to date.

Review Committee's response to the consultants' scoping study

The Review Committee was satisfied with the key recommendation in the consultants' report that no further investigation is required of most of the restrictions to competition in the uniform trade measurement legislation because the restrictions are justifiable.

However, all jurisdictions disagreed with the extent of further work recommended by the consultants before a case could be made for retaining restrictions on the sale of non-prepacked meat and unit pricing of pre-packed goods.

Review Committee agreement was reached in relation to the perceived shortcomings of the report being:

• Lack of depth to arguments supporting outcomes related to the sale of non-prepacked meat and unit pricing on pre-packed goods;
• The outcome in relation to the sale of non-prepacked meat and the necessity for a further full public benefit test;
• Cost of consultants' proposed strategy for consultation on further PBT work;
• Methodology, especially lack of consumer consultation in the review process; and
• Factual errors in the document.