Concentrated Markets And Iceless Fokkers

He looked like a young, freshly sprouting Henry Kissinger, before complicity in war crimes coarsened him, and plagiarism became commonplace in allegedly relevant academic texts. The heavy-set flight attendant, his flabby covered jaw ever threatening to passengers, was apologetic, but firm in opinion. There would be no ice for anybody on this flight between the Queensland cities of Brisbane and Townsville. Tea, coffee, water, yes – ditchwater necessities for most who care nothing for them. And no, there was not even an option to purchase anything on this Fokker flight, thereby giving the passenger a thrilling chance to be fleeced.

It was an odd sort of day in a country with one of the most concentrated and shabby of aviation markets. Flight cancellations have become standard practice. Delays are the order of the day. There being no scheme of mandatory compensation in Australia, airlines such as Qantas and Virgin can subject the disappointed customer to trench warfare and dragging attrition. Get on the phone and stay there for days. We might eventually hear your complaint, but don’t expect us to be addressing it, let alone providing you compensation.

This betrays a broader, withering disease in markets of thick, undifferentiated concentration. Monopolies, duopolies, oligopolies, clot the marketplace and stifle any genuine notion of business engagement, let alone the provision of good, accountable service. A study by the e61 Institute found that all but one in 17 industry divisions in Australia as identified by the Australian Bureau of Statistics was more concentrated than their US counterparts. Between 2006 and 2020, Australia’s average CR4 measure of concentration – the share of the market controlled by the top four firms – rose by 3 percentage points.

The trends are not encouraging for believers in the competitive ideal. In highly concentrated industries, the top four firms were rarely knocked off their perch between 2007 and 2021. As authors affiliated with the e61 Institute go on to note in The Conversation, industries seeing a rise in market concentration in seven years to 2014 saw a decline in the entry of new firms. “This might mean we have as many as 6,300 fewer employing firms than we would have, giving Australian workers fewer employment options and suppressing real wage growth.”

The idea of competition in this closed, claustrophobic system is feeble and disingenuous, though it is one happily trumpeted by those who benefit from it. From banking to the supermarkets, from insurance to journalism and aviation, we see the same patterns. This is a nation that specialises in a cohering nightmare of mergers, agglomeration, and amalgamation, consolidating the establishment rather than permitting fresh blood.

When challenged about dominant market share, we can expect the response given to the Australian Competition and Consumer Commission (ACCC) by Woolworths chief executive Amanda Bardwell in November. When asked about the state of competition in the Australian supermarket sector, she suggested it was “fiercely competitive.” While it was true to say that Woolworths had “a substantial part of the market overall”, it was “dramatically changing and we compete every single day for customers to shop with us.” Such fantasists really ought to stay at home.

The Australian market is also under policed and under supervised when it comes to trends in concentration, a matter aided by the tardiness of companies to notify the ACCC that mergers are taking place. And who can blame them, given that the regulatory body has a less than stern guideline, rather than enforceable undertaking, that merging entities notify the regulator when substitutes or complements are made. Even then, the soft measure only applies to instances when the merged corporation comes out with more than 20% of the market share.

Companies have also found fiendish methods of limiting avenues of complaint regarding the quality of service. Consider, for instance, the liquor company Dan Murphy’s, a sharp outfit which claims to provide a wonderful service (when it does), and baulk at any suggestion that you contact personnel directly at the local outlet. In fact, phone numbers have been centralised to kill off any calls to a local branch, thereby eliminating any sense of what is actually happening at the store. Intimacy and access are shunned like bubonic plague, while customers are forced to an online service, steered by an infuriating, smug chat bot. “We do not provide our customers with the direct contact numbers of any of our stores,” the company explains. “If you want to check product prices and stock availability – they are all available on the website.”

Another central tactic to mitigate or avoid nagging responsibility is to outsource it. Give it to someone else. To outsource is to cut off the chain of accountability – or at least mangle and knot it. It’s a scheme that has become the central strategy of governments, administrative and corporate entities the world over.

The idea is certainly not a new one. The Catholic Church did this during the Inquisition with audacity, keeping the hands of their priests pure and physically clean while soiling the hands of their auxiliary torturers. The modern variation is much in the same vein. Pick couriers, agents, third parties and let them deliver advice or any product ranging from liquor and groceries to any assortment of mail. Blame them for being the pirates and privateers that they are. All the while, the main company can just keep raising prices. What a charming state of affairs to reflect upon this Christmas.

Dr. Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He currently lectures at RMIT University. Email: bkampmark@gmail.com

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