Cyber Monday!  60% off ends at midnight!  As we enter the silly season, the pressure to buy more stuff is becoming excruciating.  Last night I spent at least 30 minutes contemplating whether our puppy needs a motion sensing, lifelike flopping fish toy for Christmas [1]. 

It made me wonder.  Is competition policy contributing to corporate pressure to buy crap we don’t need, to our own ultimate detriment when the world goes up in flames?

The object of our competition laws is ‘to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection’.  The manifestation of this purpose is often to maximise price competition.  Cheaper products = consumer welfare. 

One example is the prohibition on resale price maintenance.  It prohibits a brand from setting or controlling its downstream retail pricing.  RPM is prohibited outright, regardless of whether it actually impacts competition.  The underlying assumption is that in all situations, price competition (within a brand’s products) is paramount to consumer welfare.  

Is spending less, so we can buy more stuff, really in our interests?  Maybe maintaining brand value and reducing intra-brand price competition could actually be a good thing.  It might promote innovation.  It might allow brands to invest more in sustainable practices, pay their staff well, give back to their communities and produce higher quality products. 

It might also promote competition in the long term.  Heavy discounting favours the big players (both brands and retailers) who can afford to sustain lower prices.  It entrenches incumbents and makes it harder for new entrants to establish themselves.  This leads to market concentration and dominance (boo hiss).

There’s existing example of this kind of policy within Australian law, in the form of parallel import restrictions on books.  The restrictions are designed to protect the Australian book industry, allowing publishers to continue investing in new and diverse authors and subjects, so bookshops sell more than just the latest Matthew Reilly thriller. 

The book industry has been given this special treatment because of its important role in our cultural landscape.  It’s increasingly hard to see why this logic shouldn’t apply to consumer goods more broadly.  Demand is shifting towards environmentally and socially conscious products.  Our government is (slowly, slightly) accepting the risk of climate change.  Corporate citizenship and the interests of shareholders are evolving.  Perhaps it’s time for our competition policy and our concept of consumer welfare to evolve as well.