We will work constructively with governments and their agencies.
As one of the largest employers in Australia with operations across the country, Wesfarmers has a role to play in contributing to public policy and national debate on a range of issues. We also interact and co-operate with government agencies frequently, in relation to our business operations.
Public policy development
During the year, as well as Wesfarmers Managing Director Richard Goyder's role as Chair of the B20, we have liaised with federal and state governments through one-on-one meetings, other direct and indirect communications and participation in formal consultation processes in relation to a range of issues that affect our businesses and society, including the following:
- Competition regulation reform: Wesfarmers and Coles provided separate but complementary written submissions to the federal government’s review of competition policy headed by Professor Ian Harper.
- Retail trading hours: Wesfarmers and Coles continued discussions with the Western Australian state government on the issue of retail trading hours, seeking a liberalisation of the still restrictive trading hours regime in that jurisdiction.
- Liquor licensing: Wesfarmers continued communications seeking changes to liquor licensing laws in Queensland which require liquor store licensees to also be the owners of hotel licences. No other state has this requirement, the effect of which is to involve Wesfarmers in an industry it does not wish to be involved in - gambling, through the presence of gaming machines in hotels without which the hotels would not be financially viable.
- Carbon regulation: Wesfarmers made submissions to the federal government in relation to the Emissions Reduction Fund Terms of Reference and Green Paper and met with the relevant minister to discuss issues related to the proposed Emissions Reduction Fund.
- GST on imported goods: Wesfarmers has continued to put the position to the federal government that the taxation provision allowing GST exemption on imported goods to the value of less than $1,000 creates an uneven playing field which penalises Australian retailers.
- Food and Grocery Code of Conduct: Coles engaged in a long process of negotiation involving the federal government, the Australian Food and Grocery Council and other interested parties seeking to establish a Food and Grocery Code of Conduct. The next step is for a consulting phase to be conducted.
Cooperation with government agencies
Our businesses are subject to a complex array of laws, regulations and licences and each division has its own regulatory compliance management system. Below are some of our material interactions with government agencies and how we have addressed them:
- ACCC proceedings regarding Active Retail Collaboration program: The Australian Competition and Consumer Commission (ACCC) commenced proceedings in the Federal Court of Australia against Coles, alleging that Coles engaged in unconscionable conduct in relation to its Active Retail Collaboration program. The ACCC is seeking from Coles pecuniary penalties, declarations, injunctions and costs. Coles has filed its defence and the trial is scheduled to commence in April 2015.
- ACCC proceedings regarding bread marketing: The ACCC issued proceedings in the Federal Court in June 2013, alleging that claims made by Coles in-store and on bakery products were misleading and deceptive. Specific objection was made to the phrases 'Freshly Baked In-Store', 'Baked Today, Sold Today' and 'Coles Bakery'. The court delivered a judgment in June 2014 finding that Coles had contravened sections 18, 29(1)(a) and 33 of the Australian Consumer Law. Orders have subsequently been made.
- ACCC assessment of proposed divestment of Kleenheat Gas East Coast LPG operations: The ACCC is assessing an application by Elgas Limited for informal clearance of its proposed acquisition of the east coast LPG operations of Kleenheat Gas. The ACCC commenced market inquiries in April 2014 and released a statement of issues in June 2014 in which it expressed a preliminary view that the proposed transaction raises significant competition concerns for the distribution of LPG to customers in certain markets. Kleenheat responded formally to the Statement of Issues in June 2014 and has provided information to the ACCC in response to several further requests for information in relation to this transaction.
- Potential environmental non-conformances: From time to time, an environmental licence condition is either breached or not fully met. When these incidents occur, the relevant business takes immediate action to mitigate any damage and notifies the government agency in accordance with requirements. No recorded events this year resulted in any material environmental harm, injury, prosecution or fine. Please see our Chemicals, Energy and Fertilisers and Resources websites for details of their potential environmental non-conformances.
- Regulatory approvals for divestments: Approvals from the Commonwealth Treasurer, the Australian Securities and Investments Commission, the ACCC and the Australian Prudential Regulation Authority were obtained for the divestment of the Wesfarmers Insurance underwriting operations in the first half of 2014. For the divestment of the Wesfarmers Insurance broking operations in June 2014, approvals were obtained from the Foreign Investment Review Board, the New Zealand Overseas Investment Office and the Financial Conduct Authority of the United Kingdom.
- APRA requirements: Requirements set by the Australian Prudential Regulation Authority had to be met by the Insurance division.
There has been one legal action for anti-competitive behaviour, anti-trust or monopoly practices during the reporting period. Details of these proceedings are set out under the heading “ACCC proceedings regarding Active Retail Collaboration program” above.