Suppliers promoting actions against Australian supermarket ‘duopoly’

Posted by AFN Staff Writers on 28th March 2012

More than 60 per cent of senior executives in Australia believe the Australian Government should intervene in, and regulate, the activities of Australia’s two leading supermarkets, Woolworths and Coles, according to a survey undertaken by international law firm Baker & McKenzie.

Baker and McKenzie surveyed 162 senior executives in Australia to ascertain the hurdles their businesses face, and what actions governments and regulators need to take to ensure that Australians will continue to benefit from readily available food at affordable prices. A report on the findings was published this week.

The survey found that 62 per cent of respondents would be in support of government intervention, which could include the creation of a Supermarket Ombudsman and a new Code of Practice, as proposed by the Australian Food and Grocery Council (AFGC).

Earlier this month, the AFGC announced that it is finalising proposed draft legislation for the establishment of a Supermarket Ombudsman. The AFGC said it is working with Baker & McKenzie to ensure the draft legislation meets the needs of industry and other organisations in the supply chain.

Baker & McKenzie’s report stated, “Whilst the popularity of supermarkets attests to consumer enthusiasm for them, their rise is not without risks. Their position in the market creates concern on both the supply and demand side for future food choice and affordability.”

Survey findings reflect badly on existing regulatory framework

Baker & McKenzie’s survey findings also suggest a lack of confidence in the existing regulatory framework in Australia, especially in the areas of parallel importing, marketing claims and food labelling.

The survey found that 68 per cent of respondents thought more (or better) regulation was needed for parallel importing (only 8 per cent disagreed). Many respondents said country of origin labelling is “critical” and should appear on packaging (71 per cent of respondents). Likewise, 75 per cent of respondents said better marketing claims regulation is required in Australia.

Western Australian farmers vote for boycott

In another development, the Western Australian Farmers Dairy Council has succeeded in obtaining an affirmative vote from the WA Farmers Federation to mount a boycott campaign against all businesses operated or owned by Wesfarmers, the listed parent company of the Coles supermarket group.

The action is a response to the Coles price-cutting campaign that especially has favoured Coles own home-branded milk at the expense of the supplier brands such as the dairy groups that most farmers supply.

The farmers say that this is a form of “predatory pricing” against the suppliers even though the ACCC to date, does not appear to consider Coles has acted outside current laws.

The other Wesfarmers owned businesses that might be impacted by a future boycott in Western Australia including the giant Bunning’s hardware and building supplies chain.