An interim report into the supermarket duopoly and market share has recommended multimillion-dollar fines for breaches of a proposed code of conduct but fallen short of recommending forced breakups.
The Independent Review of the Food and Grocery Code of Conduct interim report, overseen by former Labor minister Dr Craig Emerson, found the current Food and Grocery Code of Conduct was ineffective.
“It contains no penalties for breaches, and supermarkets can opt out of important provisions by overriding them in their grocery supply agreements,” Dr Emerson said.
He said he would recommend the code be overhauled, made mandatory and contain “effective penalties”.
Dr Emerson also recommended the Australian Competition and Consumer Commission (ACCC) enforce the mandatory code. The ACCC would be given powers to seek penalties for major or systemic breaches of the code of up to $10 million, 10 per cent of a supermarket’s annual turnover or three times the benefit of the breach, whichever is the greatest.
Unenforceable
This all sounds great, and has made some sensational headlines, but dig a little deeper and the proposals aren’t quite so intimidating or even enforceable.
Dr Emerson recognises that legal proceedings would be unlikely to proceed because it would require a supplier to “stay the course” through a court case.
It doesn’t take a genius to work out that few suppliers would risk their livelihood by paying for what could be months or years of litigation, and in the process annoying their largest buyer.
Dr Emerson instead wants a low-cost alternative to going through the courts and recommends independent mediation and arbitration. Supermarkets would also be “strongly encouraged” to agree to pay compensation where recommended.
In no real-world situation would a business facing a multimillion-dollar fine hand over that sort of money after being “strongly encouraged”.
The report recommends that where mediation does not settle a dispute, independent arbitration could be considered but, owing to constitutional limitations, could not be imposed. However, it speculates supermarkets can “voluntarily enter arbitration to resolve disputes”.
So, to sum up, the report doesn’t recommend legal proceedings, can’t enforce mediation and feels “encouragement” will force supermarkets to pay multimillion-dollar fines.
Even Dr Emerson recognises that it’s not enforceable.
“Legally, a supermarket would be at liberty to refuse to agree to these arrangements. In so refusing, however, they would be judged harshly in the court of public opinion,” he stated.
So far Coles and Woolworths have shown in many, many ways they care not one jot for the court of public opinion.
This report probably cost a cool million or two with very little to show for it. What a waste of money and opportunity.
This week’s best specials
Aldi
Sensible: Jindurra Station Beef Rump Steak, $15.99/kg. No-one is ever going to pretend Aldi meat is melt-in-your-mouth stuff, but good enough for casseroles and slow cookers. Rump is also good in stir-fries.
Indulgence: Not so much indulgence but more what were they thinking? Aldi has released a range of Aldi-wear. You can now deck yourself top to toe in Aldi-branded clothing. Sounds ghastly. Strictly for losing dares and bad taste parties.
See the catalogue here.
Coles
Sensible: Finish dishwasher cleaners, half price $5.75. I do clean my dishwasher with vinegar and bicarb of soda, but sometimes it needs a bit more. These have the advantage that you can just toss them with careless abandon into the bottom of your dishwasher and don’t have to run a separate cycle.
Indulgence: Vittoria Freeze Dried Instant Coffee, half price $18.50. I know we are a nation of fancy coffee drinkers blah, blah, blah. But sometimes you just need a coffee and don’t have the time to be smug about it. Good brand and an amazing price.
See the catalogue here.
Woolworths
Sensible: Twinings Tea Bags, 10-pack, half price, $1.50. Great for when you need a break from the usual but don’t want to buy one of those monster packs. I love the occasional chai in winter months, but don’t want to slog through a pack of 100.
Indulgence: White grapes, $5/kg. Grapes are just coming off their best but are still in good condition. Grab them now before winter sets in.
See the catalogue here.
IGA
Sensible: Red plums, $4.49. The last of the stone fruit is hitting our shelves so snap them up while you can.
Indulgence: Sara Lee Chocolate Bavarian dessert, $7.45. Celebrate the fact that Sara Lee is been saved from the brink of financial collapse by eating a delicious dessert. It’s the least you can do.
See the catalogue here.
Do you think there is enough being done about supermarket power? Why not share your opinion in the comments section below?
Also read: How pricing psychology tricks us into buying more
All the huffing and puffing by politicians over the prices charged by supermarkets is a total sham. Just seeking the populist vote.
Supermarket chains are mammoth businesses that create jobs, feed folk and pay dividends. The difference between making a decent profit and going broke is marginal. Certainly, the difference between farm gate pricing and the checkout can be substantial, but surely farmers have their own organisations to fight that battle, not our MPs.
So, if we want to see the number of competitors reduced even further, keep up the good work Canberra.
Oh BTW, with a bit of smart thinking shoppers can do their bit by only buying the half price offers, whenever practical, and by checking the price/unit cost every time, frequently buying the pack isn’t cheaper, be warned.
Finally, the populace has no trouble being ripped off by pokies, betting agencies, whose only objective is to take food off our tables, so why not start with them?