The new head of the Australian Competition and Consumer Commission has said that he will be watching Australia’s supermarkets closely, signalling a more aggressive approach from the regulator.
- New chairman says supermarkets are "on notice"
- Price war is "good for consumers"
- Branded products in spotlight, but power to act unclear
Rod Sims took over from Graeme Samuel as the ACCC chairman in August.
Although Mr Sims inherited an embarrasing defeat in the Franklins/ Metcash case, he was upbeat about the state of the supermarket regulation.
Speaking to ABC Radio’s Michael Janda , Mr Sims was reserved over the effect that the price war was having on suppliers, including food manufacturers and farmers.
Whilst he noted that the current price war was reflective of greater competition, he stopped short of claiming any anti-competitive behaviour towards food manufacturers
“Look I didn’t so much as welcome [the price war] as observe that there is a bit of competition going on now between Coles and Woolworths and joined by the independents and Aldi and Costco.
“Obviously if you’re a supplier to Coles and Woolworths they can turn around and try and recoup the gains there.
“The approach under the act for that sort of behaviour is we do authorise collective bargaining. If on the other hand we see behaviour from the major supermarkets that we judge to be unconscionable then we’ll be able to take action.
However Mr Sims noted that the bar was set high for any action to be taken, and taking action against Coles and Woolworths for abusing their market power towards suppliers would be hard.
“If what they’re doing is trying in their terms to get the best price they can from their suppliers then in accordance with the act most would see that as probably legitimate behaviour” said Mr Sims
“If on the other hand they are doing particular unscrupulous things with their suppliers then that’s something the act can deal with.
“The definitions of misuse of market power and unconscionable conduct set a fairly high hurdle that has to be jumped before we can take action. What I was saying today is if that high hurdle is met then we’ll certainly be acting.
Mr Sims also hinted that the ACCC might look in to the damaging effect of supermarket home-branded products.
“If [the supermarkets] are misusing their market power for the purpose of damaging particular competitors like the branded products in their stores then again that’s something we can deal with.
He also told a Melbourne Press Club function that he would also be looking at the ability of smaller suppliers to negotiate agreements with Coles and Woolworths.
‘Many smaller suppliers to the supermarkets feel they lack a real ability to negotiate supply arrangements,’’ Mr Sims told a Melbourne Press Club function today. ‘‘The ACCC can and will watch closely to ensure any such dealings do not involve unconscionable conduct by the supermarkets.’’
However despite the rhetoric, it is yet to be seen whether the new head will be able to affect change for Australia’s smaller food manufacturers, with the regulator effectively hamstrung by weak regulation.
What do you think? Will the ACCC finally go into bat for Australian food manufacturers or will it continue to be a toothless tiger?
Image: Daily Telegraph