Australia’s supermarket groups deny dodgy dealings as ACCC threatens mandatory powers

Posted by AFN Staff Writers on 18th February 2013

The ACCC has launched an investigation into Coles and Woolworths over possible misuse of their market power and indications of “unconscionable conduct” in relation to deals with their suppliers.

While both supermarket groups are maintaining their innocence, the ACCC is also hinting it will be using its mandatory information-gathering powers to obtain more information.

The grocery giants have been accused of discriminating against supplier brands for the supermarkets’ own labels, and adding additional costs to suppliers with the “threat” to remove products if the costs are not paid or requests are not met.

The ACCC chairman Rod Sims had earlier raised the issue with the Federal Senate’s Economics Estimates Committee. Around fifty suppliers had come forward to the ACCC to raise issues of unfair supermarket activity by Coles and Woolworths, who together account for about 70 per cent of the Australian grocery market.

“The allegations raised with the ACCC, and subsequently illuminated in our investigations to date, include allegations of some conduct that does not conform to acceptable business practice and may be unconscionable or a misuse of market power,” Mr Sims said.

Mr Sims also said that usage by the ACCC of its “mandatory acquisition” powers to obtain information would help protect the anonymity of suppliers who had shown the ACCC evidence that supported their claims of “unfair supermarket activities.”

“Such an imbalance, when misused, can have important economic consequences,” Mr Sims added.

Meanwhile both Coles and Woolworths have maintained that they have “policies in place” and a “very strong focus” on enforcing fair behavior.

A supermarket and grocery industry working group, including Coles, Woolworths, the Australian Food and Grocery Council and the National Farmers Federation, is proposing that an industry code could be made enforceable under the Competition and Consumer Act.

Mr Sims said that he wanted it to be “clear” that the implementation of a code would not prevent the investigation.

“First, the development of any code will not dissuade the ACCC from completing its investigations and taking any consequential action it considers appropriate based on the information and evidence available to it,” Mr Sims said.

“Second, we will not hesitate to make it clear where we consider the development of a code falls short or is off track,” he concluded.

The ACCC is looking into supermarket misconduct and treatment of suppliers.