ACCC Grocery Price Inquiry report to recommend competition test?

Posted by James Ferre on 1st August 2008

The Australian Competition and Consumer Commission yesterday handed their 642-page report into the state of competition in the grocery industry to the Federal Government and it has been suggested that a “competition test” may be among the recommendations.

Changes already mooted have included unit pricing, which appears certain, changes to restrict “creeping acquisitions”, a price monitoring system and the introduction of an industry ombudsman.

Alterations to zoning restrictions are also considered likely, with Citibank Investment Research analysts telling The Age that a competition test, similar to a recommendation from the UK grocery inquiry, is anticipated to be recommended.

The competition test would not allow the major retailers to open a store in an area where they already have greater than a 60% local market share. The other changes to planning laws could incorporate the scrapping of legislation which prohibits competitors opening in shopping centres where there is a supermarket already present and alterations to restrictive zoning laws that prevent new entrants from suburbs.

The current laws were last week condemned by Former ACCC Chairman Allan Fels as a “tragedy for consumers”. “Tackling the power of the retail landlords should be an important part of any reform recommended by the ACCC,” he said. “Franklins, Superbarn and Aldi rarely get a look in. Shopping centres go straight for the big two.”

“What’s more, smaller chains are prevented from opening down the road because of ‘centres policy’ planning laws that concentrate major shopping centres in select areas banning or limiting competitors in surrounding suburbs.”

“… I believe that the biggest gains would come from looking at planning laws and their impact on competition. Tough federal and state action will be crucial if anything is to be done,” Professor Fels concluded.

The ACCC report will be made public next week.