ACCC make further agreements to open competition

Posted by Janice Wong on 9th February 2010

The Australian Competition and Consumer Commission (ACCC) yesterday announced further agreements with major supermarket retailers to phase out restrictive provisions in supermarket leases in a bid to limit the market power of the major retailers. Competition Minister Dr Craig Emerson last month said that the  move will ensure the ACCC has the ability to reject acquisitions that would substantially lessen competition in any local, regional or national market.

ALDI Foods Pty Ltd, Franklins Pty Ltd, SPAR Australia Limited, Australian United Retailers Limited (trading as Foodworks) and Metcash Limited have all agreed with the ACCC, that they will not enter into any new leasing agreement which includes restrictive provisions and in the case of existing supermarket leases, will not enforce any restrictive provisions beyond five years after the commencement of trading.

Similar agreements had been already reached with Coles Group Limited and Woolworths Limited in September last year, which proved a significant move to allow more competition in the industry.

Supermarket aisle - shopping trolley

As indicated in September, the ACCC has since been committed to the phasing out of this industry practice and has continued to engage with other supermarket operators, following the agreement reached with Coles and Woolworths in 2009. This action taken by the ACCC will ensure that many more existing and future leases between grocery retailers and shopping centre landlords around Australia will not be impacted by restrictive provisions, thereby enabling greater competition.

“These further agreements with the next tier of supermarket operators mean that many more shopping centres will no longer be hamstrung by restrictive provisions in leases that prevent or hinder the entry of competing supermarkets,” Australian Competition and Consumer Commission chairman Graeme Samuel said.

“These supermarkets, to their credit, have all acknowledged the concerns of the ACCC in respect to restrictive provisions and have acted responsibly in cooperating with the ACCC to phase out restrictive provisions.”