Battle heats up over GROCERYChoice debacle, what really happened?

Posted by Daniel Palmer on 17th September 2009

A war of words is erupting between consumer group Choice and the leading representative of the major supermarket chains during a Senate inquiry into the failure of the GROCERYChoice website.

GROCERYChoice, an election commitment of the Rudd Government, was aborted in June just days before Choice was set to launch a revamped version of the site. An inquiry was launched to determine how much taxpayer money was wasted on the scheme and whether or not the major supermarkets exerted an influence on the decision to scrap the site.

Submissions to the Economics Committee have been made public and reveal allegations by Choice that the behaviour of industry body ANRA (Australian National Retailers Association) was anti-competitive even if it may not have breached the Trade Practices Act. ANRA, which represents Coles, Woolworths and Franklins, has denied the allegations.

Choice’s version of events

Choice notes that in late-May it was apparent that certain supermarkets would not be in a position to give the price information they required by the time the site was to go live. As a result, they sought and received a contract variation from the Minister for Competition Policy at the time (Chris Bowen).

The plan remained for a July 1 launch at that stage.

On June 9, a reshuffle of Federal Ministers saw a new Minister for Competition Policy anointed – Dr Craig Emerson. Choice CEO Nick Stace wrote to the new Minister to request a briefing – which was agreed to, with the Minister indicating he had already met with supermarkets.

A number of briefings were then held on June 23-24 with the PM’s Office, Government and Opposition representatives and journalists with feedback for the new website reportedly “positive”.

Dr Emerson had met Choice on June 23 and gave no indication of an impending abortion of the site.

At that meeting Dr Emerson allegedly agreed to hold talks with Choice, ANRA and the supermarkets soon after the site launched (July 1).

“Instead,” Choice said in their submission, “on 25 June 2009, Minister Emerson advised Choice that he had convened a meeting for the next day. The short notice meant appropriate officers from Choice could not attend. Minister Emerson proceeded to meet with supermarkets and ANRA on 26 June 2009.”

Pulling the plug

It was on June 26 when it was all revealed to Choice and the public that the site would not go live.

“Minister Emerson’s office rang the Choice CEO at 2pm, who was in a meeting,” the consumer group said regarding the day of the contract termination. “Choice received written termination by fax at 2.35pm and by email at 2.39pm. A media release from the Minister’s office was published at 2.52pm…. The Choice CEO learned of the termination after his meeting concluded at 3.15pm, when he was contacted by the Minister on the telephone.”

“Choice is still not clear why the decision to terminate the project was taken and firmly believes that it was the wrong decision.”

“At no time did we sense anything other than a high level of interest and support.”

Choice stopped short of accusing ANRA of exerting too much influence on the decision but were concerned by the course of events.

“It … seems curious that if the Minister had suspected the website wasn’t going to be of value, that he didn’t mention his doubts at the meeting convened with CHOICE on 23 June 2009,” their submission noted. “So close to launch it would have been more prudent to allow the site to launch, to gauge level of support and seek to add pressure on the non participating supermarkets to comply.”

However, Choice did claim that ANRA had hampered attempts to work with the supermarkets to provide extra information.

“The Australian National Retailers Association (ANRA) aggravated this problem (of receiving price data) when it took over discussion of their relationship with GroceryCHOICE from Woolworths, Coles and Franklins,” the submission states.

The consumer group said that Franklins and Coles had both indicated initial openness to the idea but became “increasingly distant” while Woolworths was reportedly “resistant to the idea from the beginning”. According to Choice, up until April 30 they had dealt with the supermarkets directly but, after that date, Coles, Franklins and Woolworths would only report through ANRA.

Choice believes that such a move prevented the necessary technical discussions with supermarkets to take place and “demonstrated ANRA’s ability to block progress towards creating a more competitive environment now and into the future”.

“Whether or not ANRA’s behaviour was in breach of the Trade Practices Act, it had the effect of advantaging sellers (supermarkets) at the expense of buyers (consumers),” they argued.

As for other chains, Aldi and FoodWorks were supportive of the revamped website while Ritchies and Metcash were waiting for the response of the two majors.

ANRA’s Response

“In its submission to this inquiry Choice has made a number of extreme statements in relation to ANRA,” the industry body countered. “In particular Choice has alleged that ANRA has acted at the expense of consumers and public policy.”

“ANRA emphatically rejects these claims which have no basis in fact. ANRA’s members operate in a highly competitive retail environment. ANRA supports pro‐competitive policies.”

“Such inflammatory statements are unhelpful at best, and at worst could be construed as self‐interested attempts by a membership subscription organisation to fuel its own commercial operations.”

ANRA suggested they would still be prepared to work on a revised price monitoring scheme if proposed by the government.

Choice is due to present in a public hearing in Canberra tomorrow along with the ACCC and the National Association of Retail Grocers of Australia – which represents independents. ANRA is likely to present in Melbourne next month.

To read all submissions to the inquiry please visit: www.aph.gov.au/senate/committee/economics_ctte/grocery_choice_09/submissions.htm