Reactions to the Grocery Price Inquiry
The ACCC report into the state of competition in the grocery sector was released to mixed reactions yesterday.
“I believe that our action plan, combined with the broader reforms that are already in train to further strengthen competition policy, such as the amendments to the misuse of market power provision and the criminalisation of serious cartel conduct, will ensure that the grocery market remains competitive,” the Assistant Treasurer, Chris Bowen, said. “The introduction of unit pricing combined with GROCERYchoice will empower consumers to find the best deals at the supermarket.”
Mr Bowen did admit, however, that he could not guarantee prices would fall.
Liberal leader Dr Brendan Nelson condemned the report as a “stunt”, claiming it does little to help consumers and puts the onus back on the public to secure cheaper prices. “(Mr Rudd) said he’d do something about the price of groceries. The report today doesn’t do anything about it at all,” Dr Nelson proclaimed. “In fact what Mr Rudd’s now proposing as some sort of what he calls GROCERYchoice is in fact GroceryWatch and Australians have woken up to FuelWatch as being nothing more then a stunt. So too GroceryWatch. And giving shoppers a pair of binoculars and telling them to look at the price of groceries is not going to do anything to bring it down.”
He was also worried about the impact of unit pricing on small retailers. “I think we’ve got to be quite concerned about the compulsory nature of unit pricing on small independent retailers and grocers throughout the country. We know that Coles and Woolworths and Franklins are able to, and some of them have already started to move in the direction of unit pricing, but you’ve got to be very concerned about the impact on small retailers and small grocers throughout Australia,” Dr Nelson said.
Australian Food and Grocery Council Chief Executive, Kate Carnell, welcomed the report and believed it highlighted that manufacturing competition is robust. “A competitive food and grocery sector exists in Australia and delivers competitive prices for consumers. Australian manufacturers already compete in a market based very heavily on consistently low prices,” she said. “The industry has always maintained that packaged grocery production is a cost demanding industry and the ACCC has today reiterated our long held position in their report.”
“The industry has taken note of the ACCC’s recommendation regarding the development of a mandatory nationally-consistent unit pricing system and is committed to working with the ACCC and government to ensure that a best-practice regime is developed.”
Given that the report absolved Coles and Woolworths of much of the responsibility for rising food prices it is not surprising that the findings were approved by the two major retailers. Coles Director Ian McLeod indicated he was “happy to accept a broader level of competition”, and Woolworths spokesman Andrew Hall said Woolworths supported the recommendations of the Inquiry which “left no stone unturned”. The Australian National Retail Association also applauded the report, proclaiming it as a “myth-buster”, which dispelled opinions of a lack of competition in the retail grocery sector.
ALDI Managing Director Michael Kloeters endorsed the plan to relax planning laws and was excited about the ACCC singling out ALDI as a shining light in the industry.
Franklins Managing Director Aubrey Zelinsky, on the other hand, was not so complimentary, believing the report lacked an adequate plan for tackling the concentration of market power held by major operators. Ken Henrick, Chief Executive of NARGA (National Association of Retail Grocers of Australia) which represents independent supermarkets, was unhappy with the findings. He outlined inconsistencies in the report, suggesting it was “nonsense” that the ACCC could say the industry was “workably competitive” yet add that Woolworths and Coles had no incentive to compete on price.
The farming community was largely disappointed with the outcomes of the ACCC Inquiry, believing it “unable to shine significant light on the operations of the food supply chain”. “Although the ACCC analysis has started the process, farmers remain bemused as to why there is such a huge gap between what farmers are paid at the farm-gate and what consumers are charged at the checkout,” National Farmers’ Federation (NFF) Vice-President Charles Burke said. “Only a comprehensive review of the complete supply chain will help farmers and consumers to understand where the consumer dollar is going.”
This complaint was echoed by VFF (Victorian Farmers’ Federation) President Simon Ramsay. “It has failed to comprehensively address issues of market power at the farm end of the supply chain. Given the report’s six month time frame this comes as no surprise,” he said.
The mooted changes to the Horticulture Code were, however, approved of by the industry body for Australian farmers. “One thing farmers were looking for, and the ACCC has recognised, is that written contracts need to apply between all purchasers of horticultural produce… wholesalers, exporters, processors and retailers alike.”
Leading consumer group CHOICE was encouraged by the report, particularly by the GROCERYchoice website and unit pricing. “CHOICE has campaigned for unit pricing for many years because it will help drive competition. Overall it is expected to return millions of dollars to consumers,” CHOICE spokesman Christopher Zinn said. “The grocery price website has the potential to increase competition in the sector by alerting consumers as to the cheapest items and where to find them.”
“The ACCC grocery inquiry has thrown down the gauntlet. So while we await the arrival of more white knights armed with ‘competitive threats’, more immediate measures such as unit pricing and even the grocery website will do very nicely, thank you,” Mr Zinn concluded in an opinion piece on ABC Online.