Should there be an end the Woolworths/Coles duopoly to increase competition and put downward pressure on prices? The idea is gaining momentum in some very high places.
Australian Competition and Consumer Commission (ACCC) chair Gina Cass-Gottlieb told a parliamentary committee the bleeding obvious – that having fewer players in the market meant prices go up.
Coles and Woolworths hold about 74 per cent market share in grocery sales.
“I would accept that there is less constraint on them in a price competition than we would want to see,” she said in reference to the two biggest players, Coles and Woolworths.
Asked if the ACCC should be able to break up monopolies, she said it would be worthwhile for a court to have this power as a remedy for market concentration.
She said such a power could improve competition and put downward pressure on prices.
Ms Cass-Gottlieb conceded that there were several supply-side factors pushing up prices as well, including the recent extreme weather conditions and geopolitical factors.
“However, in a more competitive market, you may see those elements competed away,” she said.
Former ACCC chair Ros Sims also weighed in on the issue.
“It’s clear that Coles or Woolworths increase their prices by more than their costs and I think they find that easier to do because there’s just two of them,” Mr Sims said.
“If they’re both doing it, that’s fine, there’s no competitive detriment … and clearly that means higher prices for consumers.”
“It’s not that prices shouldn’t go up for inflation, of course they should, but if they go up by more than inflation then you’ve got to say: ‘Well how are they able to do that?’”
Greed goes to town
News.com.au reported that The Australia Institute’s director of the Centre for Future Work, Jim Stanford, was more ‘pointed’ in his criticism.
“After the pandemic, there were some unique circumstances, that allowed greed to go to town, and we ended up with unusually wide profit margins in a number of key sectors,” said Dr Stanford.
“Every company tries to point the finger at their own suppliers and say ‘look we have to pay more for our input, so we have to charge more for our output,’” he said.
“That is mathematically impossible, when the companies are earning higher profits. If all they were doing was passing on higher input costs, their profits wouldn’t change.”
The National Party has offered to support the federal government to improve consumer protections for farmers and suppliers to try to prevent potential abuses of market power by the big two chains.
The Guardian reported that the Nationals propose making the voluntary grocery code of conduct compulsory, boosting penalties of the code to a ‘punitive’ $10 million maximum and adding powers to break up grocery giants in the event of misconduct.
Punitive penalties
“The current penalty on breaching the grocery code, which is voluntary for our big supermarkets, is about $64,000 … That’s a cost of doing business,” National Party leader David Littleproud said.
“Let’s have punitive penalties there, $10m plus divestiture powers. I think if Woolies or Coles would lose … [alcohol retail business] Dan Murphy’s because they did the wrong thing by a farmer or by a small supplier, that they’d make sure they’re playing within the guidelines of fair and equitable trade.
“Let’s protect small business against big supermarkets.
“And it’s only regulatory. So if they’re doing the right thing, Coles, Woolies and Aldi shouldn’t care one iota.
“The small supplier, and particularly farmers, are getting done over and this is where they just need protection.
“They’re not asking for charity, they’re just asking for a fair price that’s transparent to their cost of production and what it is to get onto … their shelves and onto your plate.”
This week’s best deals
Woolworths
Sensible: Prima short cut bacon rashers, half price $7.75. If you are using bacon in cooking, as opposed to eating it on it’s own for breakfast, this short-cut style gives you plenty of bang for your buck. Freezes well.
Indulgence: Mersey Valley Chedder varieties, $6.90, save $3. One of my favourite supermarket brand cheeses. Packs a punch flavour-wise. I often sneak it onto a fancy cheese board and it always goes first.
See the catalogue here.
Aldi
Sensible: Ready, Steady, Cook, marinated chicken wings, $7.99 for 1kg. Lazy snacks don’t come much more lazy than this. A mere 25 minutes in the oven and you have delicious chicken wings. Only to be eaten in the privacy of your own home. There is no polite way to eat chicken wings in public.
Indulgence: British food sale. All the favourites here, Digestives, Branson Pickles, Fry’s Chocolate Cream, Coleman’s Mustard and Terry’s Chocolate Orange. My fave: English chip flavours including Smiths Bangers and Mash, Worcestershire Sauce and Prawn Cocktail. I want a beer just thinking about all that salty goodness.
See the catalogue here.
IGA
Sensible: Hass avocados, $1.49 each. With the Reserve Bank turning the screws on interest rates and smashed avo apparently crippling the economy, now’s time bring out your inner rebel and eat an avocado. No bank loan required at these prices.
Indulgence: Dine Wet Cat Food, multi-buy, two for $1.90, save $1.20. Good saving on a pet favourite. Dine has all the confirmation you need that pet food is nothing more than mystery meat with a variety just called ‘slices’. Every time I see ‘tender beef’ or ‘chicken’ on pet food my eyes roll so hard they scrape the back of my head.
See the catalogue here.
Coles
Sensible: Coles Beef Porterhouse, 2 pack, $16, save $2. Is there a much more Australian meal than grilled steak, salad and potatoes in whatever form? It’s a standard in our house and a quick and easy meal. A couple of dollars off makes it all the more appealing.
Indulgence: I&J Raw Prawns, half price, $12. You’ll never confuse these with beautiful, fresh Australian prawns, but great for cooking in dumplings or salads.
See the catalogue here.
Do you shop around for your groceries? Do you think there should be more competition? Why not share your opinion in the comments section below?
Also read: Three biggest money mistakes and how to avoid them
Really, government clowns trying to get involved in “business operations”, more of the people that tax payers pay for, that can’t doing any other job right other than give away our hard earned money and put the country in debt…….leave all business’s alone, people have got options of where to shop, Coles ,Woolworths, Aldi, IGA and many other smaller options.
Stop wasting tax payers hard earned cash and start earning what you government clowns are being overpaid for……when you get that done, look for other opportunities that you can actually “add some value” ,instead of sticking your noses into area you have no idea about.