Supermarket powers to be watched closely by ACCC

Posted by AFN Staff Writers on 11th October 2011

The Australian Competition and Consumer Commission (ACCC) has warned Australia’s two major supermarket groups, Coles and Woolworths, that their wielding of purchasing power is being watched closely by the ACCC.

Addressing the Melbourne Press Club this week, the ACCC’s new Chairman Rod Sims said, “The two major supermarkets have significant market power, with many smaller suppliers feeling they lack a real ability to negotiate supply arrangements. The ACCC can and will watch closely to ensure any such dealings do not involve unconscionable conduct by the supermarkets.”

Mr Sims’ statement follows various reports and stories surfacing about different suppliers being forced by major retailers to accept sudden unilateral demands by the retailer for a price rebate or reduction with disregard for the previously negotiated price that was invoiced.

Mr Sims, whose predecessor Graeme Samuel was criticized in some circles for the ACCC’s enforcement selectiveness, said he will not be afraid to push into new areas to enhance market competition. In this regard, Mr Sims said the ACCC, under his own leadership, would “embrace the challenge to keep the competition torch burning to see competition introduced into new areas.”

“Sound competition policy – when it is carefully thought out – provides benefits for consumers and for society overall. Under my chairmanship I intend that the ACCC will be a sometimes noisy proponent of this view. We are the major Federal Government agency with the word ‘Competition’ in our title. So I believe it is part of our job,” he added.

Meanwhile, the peak horticulture body for Queensland, Growcom, today welcomed the ACCC’s announcement. Growcom CEO Alex Livingstone said, “The market power of the largest two supermarkets, with 65 per cent of market share between them, has been an ongoing concern for many of our growers and we hope that this speech by Mr Sims leads to a real focus on any potential market abuses.”

Mr Sims’ statement also coincides with an ongoing Senate Economics References Committee Inquiry into the impacts of supermarket price decisions on the dairy industry, as previously reported on by Australian Food News.

The strong concentration of supermarket power in Australia has also led to a joint submission by the Australian Food and Grocery Council with consumer advocacy group CHOICE to the Australian government calling for the introduction of a Supermarket Ombudsman, as previously reported by Australian Food News.