Small business advocates have backed a call by a former chairman of Woolworths for stronger competition laws because companies like Bunnings are destroying their competitors.
John Dahlsen, who was also the director of the ANZ Bank for 20 years, is strongly in favour of strengthening section 46 of the Competition and Consumer Act by introducing an effects test, as recommended in the Harper competition review.
Speaking to Fairfax, Dahlsen said stronger competition rules are necessary because he believes Bunnings’ size is detrimental to independent hardware stores. He also accused Bunnings of understating its share of the local market.
“Bunnings’ market share is huge, far higher than that enjoyed by Coles and Woolworths in supermarkets – it is one of the highest retail concentrations we have in Australia,” Dahlsen said.
“Bunnings, in defining the market, is including many peripheral activities where it has a very tiny market share – in terms of the core activity its market share is huge. In some categories like paint Bunnings has over 40% market share and dominates the paint market.”
Peter Strong, chief executive of the Council of Small Business of Australia, told SmartCompany Dahlsen’s comments are a “huge statement” from someone who used to be at the helm of one of Australia’s big supermarkets.
“When they’re in charge of a corporation they’re held back by expressing their real opinions by corporate law,” Strong says.
“I believe Coles, Woollies and others know exactly what they’re doing to the Australian economy. The previous CEO of Woolworths once said while he was CEO he recognised what was good for Woolworths sometimes wasn’t good for the community. What he’s saying is, these organisations are too big and they’re holding back Australia’s economy. Good on him.”
Strong believes directors of companies with an overwhelming market share should be made responsible to the community as well as their shareholders.
“At the moment the community is suffering because they’re so big,” he says.
“In the short term they’ll get some money in their pocket, but in the long term the society they’re part of changes for the worst.”
Strong says that while Dahlsen now owns JC Dahlsen – one of Australia’s largest independent hardware chains – his comments about Bunnings and the need for tougher competition laws are no less valid.
“Everyone has a vested interest,” Strong says.
“But his nest is a very tiny nest – we want lots of tiny nests out there. The trouble is we’ve got one big nest that’s the nest of a vulture and all it does is feed on the carcasses of small business.”
Dahlsen also praised small businesses for standing up and speaking to politicians about how big companies like Bunnings and Coles affect their businesses.
“One of the reasons for the debate about the effects test is because every politician is being pestered by small businesses in their electorate who are finding it impossible to compete with Coles or Bunnings or Woolworths,” Dahlsen said.
“It’s a terrible problem. You can argue in the short-term the customer is gaining from what’s happening but in the long-term they may not.”
SmartCompany contacted Bunnings but the company declined to comment.