The year-long investigation by the Australian Competition and Consumer Commission into pricing practices by the major supermarkets has delivered 20 recommendations, with the caveat there is “no silver bullet” to address the issues identified and, in some cases, further investigations are needed.
What the report showed was the complexity of Australia’s supermarket sector, with issues like remote areas, changing consumer needs, real estate, and supplier requirements both compounding the oligopoly of Coles and Woolworths, their position as some of the most profitable supermarkets globally, and making opportunities for real change near impossible.
In fact, the ACCC was blunt in its assessment, “Coles and Woolworths’ dominance of the sector seems set to continue. While they face ongoing and evolving competitive challenges on many fronts, their entrenched position in an oligopolistic market means substantial pro-competitive departures from the status quo are unlikely in the foreseeable future.”
Across its 20 recommendations, broken down into Competition, Supplier, Consumer, and Remote Australia, transparency, notifications, and communication dominate and indicate the challenge for the ACCC to affect true change on the system.
“The issues identified by this inquiry are often highly complex, and we have sought to make recommendations that are proportionate considering the magnitude of the issues and the potential benefits of intervention. In some cases, further consultation will be required to thoroughly examine potential reforms or actions and mitigate the risk of unintended consequences,” the report said.
Coles said it welcomed any recommendations that improve transparency for suppliers and customers, but it warned against measures that would increase red tape and drive-up costs.
“We will review all of the recommendations in detail. We have listened intently and have already made changes such as simplifying our promotional tickets, providing additional information to customers about promotions and are working to make it easier for customers to compare products through clearer unit pricing,” Coles said.
Woolworths also said it had taken action to increase transparency for suppliers and customers.
Woolworths CEO, Amanda Bardwell, said the group welcomed recommendations that increased transparency for customers when they wouldn’t have unintended consequences or increase costs.
“Long standing and mutually beneficial relationships with our supplier partners, both small and large, are also critical to enable us to better serve our customers.
“We support improved transparency for suppliers, particularly fresh produce suppliers, and we stand by our previous commitment to the horticultural industry on this issue.
“Having fully cooperated with this Inquiry, we will review the report and its recommendations to identify any insights to make us a better business for our customers, suppliers and communities in which we operate,” Barwell said.
Fresh produce industry association, AUSVEG, said the report’s strong focus on the fresh produce category and associated recommendations validated the experiences of vegetable grower-suppliers to the big supermarkets.
But AUSVEG CEO, Michael Coote, said more detail was needed.
“While a range of measures recommended by the ACCC have the potential to provide growers with greater certainty and transparency, and improve their bargaining position, more detail still needs to be fleshed out about how these will work in practice. As always, whether or not these recommendations will improve business conditions for grower-suppliers to the retailers will be seen in their implementation, which also must include consideration of avoiding additional red tape and compliance consequences,” Coote said.
