The Australian Competition and Consumer Commission (ACCC) is urging people to reveal the wrongdoings of Coles and Woolworths, as the controversy surrounding the supermarket giant’s increases.
ACCC chairman Rod Sims has told supermarkets he is on a mission to uncover any abuses of market power, after receiving extensive allegations over the last six months.
”If people have concerns, come to us with the evidence,” he said.
“It is all very well for some of the industry representatives and others to talk about behaviour that is going on there, but we need evidence.”
The dairy industry has been voicing its outrage over the treatment by the major supermarkets since Coles decided to slash the price if milk to $1 a litre over a year ago.
Some Australian food companies have revealed the impact of the supermarket dominance on their businesses, with HJ Heinz labelling it an “inhospitable environment” and blaming it for the decision to relocate factories overseas.
The ever-increasing number of private label products on shelves has been slammed by the Australian Food and Grocery Council, the ACCC and Choice and Australian producer Dick Smith even labelled the behaviour of the major supermarkets “extreme capitalism.”
No time to wait
Jennifer Dowell, Australian Manufacturers Workers Union Food and Confectionery Division National Secretary told Food Magazine that a report which found 130 000 people in the food and grocery sector alone will be out of work by 2020 is wrong; it will happen sooner.
“It isn’t going to be 2020 before this happens, I have been here for 20 years and I am always in and out of factories and I can tell you with absolute certainty that it will be before 2020,” she said.
Dowell gave a scathing assessment of Australia’s powerful supermarket duopoly during a Senate inquiry into the food processing industry last week.
“The food processing industry is under incredible amounts of pressure, we’ve put that to the commission,” she told Food Magazine.
“In the Senate Inquiry, the committees do everything they can to raise the issues, because we have got is producers who providing for the domestic market, but the market is controlled by the duopoly of the two major retailers and that is something that doesn’t happen anywhere else in the world, no other market has these issues.
“Yes, you have private label competition in different areas overseas, but they have more than the two we have here.
“The food processing industry in Australia is captive to the duopoly, they don’t have control of their destiny whatsoever, the decision Coles and Woolworths make they just have to go with.
“There is increasing pressure to cut costs and to produce for private label so they’re being pushed to the wall.
“Small companies are going out of business, small and medium ones are going offshore, many already have facilities in Asia Pacific regions and at the moment there is just huge pressure for food manufacturers to keep their heads above water.”
Last month, the decision by Coles to slash the price of its produce in half was slammed by growers, and Simon Coburn, spokesperson for the peak representative body, AusVeg, told Food Magazine that farmers will end up absorbing the price gap and they will leave the industry.
“Long term this could deliver lots of damage to the industry,” he told Food Magazine.
“Depending where the reduced retail price is going to be absorbed, whether it’s a small grower or a big business, this will damage them long term.
“Eventually it will come back to growers and that’s where they’ll get into trouble.
“The industry will die off, probably not slowly, and imports will start flooding the market.
“So we face more imports and lose our identity and in the end the consumer will pay the same if not higher and we won’t have an Australian industry to fall back on.”
ACCC promises confidentiality
Outlining the ACCC’s priorities for 2012 in a speech to the Australia-Israel Chamber of Commerce in Melbourne, Sims said the ACCC will handle complaints about market abuse by Woolworths and Coles with care.
”They can come and talk to us confidentially and if we can get a number of people talking to us confidentially and we can build up a picture then we can take action in a general sense rather than doing it in a way that exposes that individual,” he said.
He said it will be focused on protecting vulnerable individuals and companies and finding ways to ensure competition in the sector
Last year rolled 13 state and national competition laws across Australia were rolled into one nationwide law and Sims said the ACCC will use the new legislation to ensure fair and safe practises are being undertaken.
But he acknowledged that until an example is made, and a criminal charge for cartel behaviour is handed down, businesses may not take the warnings seriously.
”The only way that you are going to get compliance with an act is if people see that it is being enforced,” he said.
“I think it is going to be an unfortunate day all-round when we have to take criminal action in relation to cartels, but if that is what it takes then that is what is going to have to happen.”
But Dowell told Food Magazine that companies are understandably too scared to voice their outrage over their treatment.
“Things are really difficult because people in the industry will not talk publically about Coles and Woollies and the industry will not talk publically about Coles and Woollies because if they do, you can be sure those products will disappear from the shelves.”
Woolworths, Coles dominating every market
Dowell believes the perception of Coles and Woolworths needs to change, and they need to be regarded as huge entities with influence in all sectors.
“We have been talking about this for years and I’ve watched it get worse and worse.
“They own just about everything; they’ve got petrol, pharmaceutical, pokie machines and alcohol so essentially they have this massive political influence so they intervene in those areas too.
“If a company like Nestle came out and said ‘we’re going to buy a stake in Coles, and dominate the shelves with our products,’ there would be uproar, it would be a huge scandal, but when the supermarkets do it, it’s a non-issue.
“That just doesn’t make sense,” she told Food Magazine.
“If I control a market I can just put all my own products in it, and as I have said at the inquiry, if I am mother pushing a trolley through Woollies with three screaming kids, and all they have is their own brand, I am not going to pack my kids up into the car and drive around to find non-existent corner stores that stock the product I actually want.
“They try to say they’re allowing consumers to decide, but they are making all the decisions for us, and it’s time we opened our eyes and saw that.”
“In the case of the duopoly of Coles and Woollies, the anti-competitive practices that go on are appalling, their behaviour is disgraceful and the ACCC needs to have more power to deal with it.
“[Senator] Kim Carr referred some incidents to the ACCC, but I’ve spoken to the ACCC as part of the process and encouraged manufacturers to speak to them, but the problem is that if you look at the legislation, there isn’t a lot they can do.
“Once you’ve achieved market dominance as they have through their creeping acquisitions, there’s not a lot of power for the ACCC.
“We think their power should be beefed up and we think there needs to be more oversight.
Dowell said the suggestion of a Supermarket Ombudsman, as suggested by the AFGC last year, would be a good start.
“I’ll support anything at this stage!” she told Food Magazine.
“If we get more powers given to the ACCC, any power to an Ombudsman, and get people the ability to raise issues without losing their job, then that is a step in the right direction, because right now they cannot.”