It’s an online world
The impact of the online shopping on retail is nothing new but the impact that it may have on our definition of market in a competition context is where things gets interesting for us competition boffins. Consumers no longer are bound by geography and have greater options when it comes to getting what they want, and retailers can source deliver product that never hit their shelves.
Recently, the ACCC came out with a statement clarifying its position on the proposed David Jones/Myer merger, stating that it has not “indicated that it would be unlikely to object to a merger between Myer and David Jones” and “[s]hould Myer or David Jones decide to pursue a merger the ACCC will then conduct a very thorough review, in accordance with its published guidelines, that would explore a range of potential competition issues.”
This statement comes of the back of speculation that the ACCC would clear the merger because the definition of the relevant retail and wholesale markets has changed since in the advent of online shopping – David Jones and Myer not only compete with bricks and mortar but online stores as well – drastically broadening the market and competition within that market.
Further, in an interview with the Australian Financial Review on 24 February 2014, Mr Sims reinforced the ACCC’s earlier sentiment – “there’s a lot to look at… as each other’s closest competitors, there’d be a lot of issues to look at”. The issues Mr Sims was referring to are products and locations. Interestingly, in that same interview, Adam Jacobs, the co-founder of The Iconic, an online shopping website, does not believe that a merger between the two would have any impact stating that, “[w]e are seeing over 20 per cent growth in online fashion year-on-year. We know that we are in a sweet spot; the customers want to shop more and more”.
The ACCC has of course considered the competition between online and bricks and mortar stores, for example in relation to the Random house/Penguin publishing merger, the ACCC considered the retail supply of books to include online retailing (blogged about here and here).
However, the role of the internet on assessing competitive effects doesn’t stop with retailing. Most recently, Australian free-to-air TV broadcasters have called for the “reach rule” (which prevents commercial TV networks from reaching more than 75% of the population) to be relaxed, with Prime Media chief executive Ian Audsley calling the rule an “anachronism” and stating that “[their] view is it just serves absolutely no purpose in a post-analogue convergent world.”
With potential for a DJs/Myer proposal to be relaunched, and comments on possible deals in the media and cross-media space, we will be keeping watch over the influence the internet and its audience reach has on markets.
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