Economy

Inquiry must end market domination: Independent grocers

SmartCompany /

The growing domination of the grocery market by Coles and Woolworths should be the focus of the Rudd Government’s grocery price inquiry, the industry group for independent retail grocers says.

While some have dismissed the Australian Competition and Consumer Commission review of grocery prices as “yet another inquiry,” National Association of Retail Grocers of Australia (NARGA) chief executive Ken Henrick says if the inquiry produces results, it could have a very real impact on the businesses of retail grocers.

Henrick says both consumers and independent grocers are suffering from a competition law regime that has allowed Coles and Woolworths to seize 80% of the Australian grocery market.

“If there is a pricing problem in this country then the two companies with 80% of the market need to be the focus of any inquiry – they wield all the power in the industry and they effectively set the prices for consumers and suppliers all down the chain,” Henrick says.

A PricewaterhouseCoopers report commissioned by NARGA late last year found that Australia has one of the most concentrated grocery markets in the world – the 80% market share of Coles and Woolworths is shared between five supermarket chains in Britain, while the top two chains in the US hold less than 50% between them.

The solution to the problem lies in changes to laws governing creeping acquisitions and the way they are enforced by the ACCC, Henrick says.

The need for the changes is contested, of course, by a spokesman for the Australian National Retailers Association – a lobby group for large retailers – expressing hopes the inquiry will “dispel, once and for all, the misleading and inaccurate information about food pricing”.

Independent grocers are less positive about the inquiry, looking at proposals to introduce a system of per weight pricing called unit pricing.

Retail chain Aldi is already trialling unit pricing in its stores, and a soon to be released study on unit pricing has reportedly found that households spend an average $70 less per year when they are able to compare prices by weight.

NARGA fears that calculating and printing unit prices would impose significant administrative costs on small retailers and argues there is no consumer demand for the change.

Moves towards unit pricing appear to be gaining momentum, however. Minister for Competition Policy and Consumer Affairs Chris Bowen says while he would be reluctant to impose additional burdens on small retailers, “there is no doubt there are advantages to unit pricing”.

And in other pricing news, ACCC chairman Graeme Samuel has criticised oil companies for “artificial and opportunistic” petrol pricing.

“We’re really losing patience,” Samuel says. “I’m bewildered that the petrol companies just don’t understand the sensitivity of this issue and understand that they owe it to Australian motorists to prevent this occurring.”

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