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Dairy farmers disappointed with ACCC’s decision on Coles milk pricing

Members of the dairy industry have expressed disappointment at the decision by the Australian Competition and Consumer Commission (ACCC) to clear Coles of predatory pricing allegations over its milk price reductions.

The Queensland Dairy Farmers Organisation (QDO) has accused the ACCC of reaching premature conclusions, when it said Coles had not breached the Competition and Consumer Act 2010 in regards to its $1/litre milk discount.

“We’re extremely disappointed by this decision from the ACCC, announced in a Friday afternoon press release four days before the sixth month anniversary of the discount war started by Coles,” QDO President Brian Tessmann said.

“We’re also equally disappointed that the ACCC has not backed it up with substantiated evidence. The conclusion is premature because a lot more of the impact from this cutthroat discounting is still to come.

“The major impacts on farmers will hit home in the coming months, as farmers seek to renegotiate new contracts for the coming year.

“We believe the ACCC conclusion is short-sighted and lacks supportive evidence, and farmers have every right to be sceptical.”

Mr. Tessmann said the dairy industry had presented a “mountain of evidence” – including numerous submissions and presentations to the current Senate Inquiry – detailing the far-reaching and sinister impacts of the milk war.

“Over the last decade major supermarket discounting has stripped hundreds of millions of dollars out of the domestic fresh milk supply chain,” said Mr. Tessmann, adding “it just cannot continue like this”.

Echoing these concerns, Frank Zumbo, Associate Professor of Business Law at the University of New South Wales, has said:

“The ACCC appears to have a simplistic view that any pricing behaviour by Coles and Woolworths is generally fine.

“In the Coles matter, the ACCC fails to publicly and clearly articulate when it considers that discounting becomes predatory pricing. Allegations of predatory pricing require proof that a company is selling a product below the company’s cost of supplying the product.

“It’s not clear what measure of cost the ACCC used in the Coles matter.

“The measure of cost is the critical piece of information in a predatory pricing case and that piece is missing from the ACCC’s public comments.

“Unless the ACCC is able to clearly indicate the measure of cost used, then questions will remain regarding the ACCC’s analysis.

“The measure of cost is not commercial-in-confidence as it merely relates in a general manner to the way cost is to be calculated. Identifying the measure of cost used by the ACCC would not require identifying Coles’ actual cost of selling home brand milk.

Professor Zumbo also believes the ACCC has adopted a simplistic approach to whether consumers are better off because of Coles’ home brand milk price reductions.

“There is nothing to indicate that the ACCC has compared the home brand milk price reduction with any price rises there may have been on other products that consumers may purchase at Coles.

“If Coles has raised prices on other products by an amount exceeding the home brand milk price reduction, then consumers would be worse off.

“A failure of the ACCC to compare the home brand milk price reduction to any price rises in the up to 20,000 or more products at a Coles supermarket would unfortunately be a gap in the ACCC’s analysis.”

 

Image courtesy of https://resources1.news.com.au

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