The senate inquiry into supermarket pricing has shone a light on some questionable supermarket practices, but can we expect any major changes, particularly when it comes to prices?
Unfortunately, the short answer is no.
While the inquiry has aired some supermarket dirty laundry, the reality is the government probably won’t enforce tangible change and the public has little choice and short memories.
Breaking up the duopoly has also been tossed around, but the government has no appetite for such a bold move, and in reality, there are no effective businesses to step into the void. Aldi now considers Australia a ‘mature’ market, that is, they have built enough stores for their business. And IGA and the independents operate on a different business model that could not simply step up and take over multiple stores.
Like many public parliamentary inquiries and royal commissions, this is purely for show. The government has no intention of making systemic market change. However, while we are looking elsewhere, rents continue to escalate, housing is out of reach for all but the wealthy and utility prices are going north at an alarming rate.
Memories are short
Swinburne University corporate governance expert Helen Bird told 9News the hearings were unlikely to lead to any drop in prices in store – even if the explanations by the supermarkets about their pricing practices were welcome.
“Sunlight is always the best disinfectant,” Bird said
“But memories are short and in due course, we’ll go back to the behaviours that they’ve happily engaged in for many years.
“It’s not going to change things, they’re just going to feel uncomfortable for a while. There’s nothing here at this point that’s going to make prices drop.”
Both Coles’ and Woolworths’ chief executives faced a grilling by hostile senators, with Woolworths CEO Brad Banducci threatened with contempt for stonewalling. Their appearances at the inquiry made national headlines, but that’s about it.
An interim report into the supermarket duopoly by former Labor minister Dr Craig Emerson commissioned by the government was heavy on recommendations, but none of them enforceable.
Not enforceable
It recommended ‘voluntary arbitration’, and ‘encouragement’ to change practices and declared supermarkets would have to face up to the ‘court of public opinion’. Two of Australia’s largest companies care not one jot about those things.
The voluntary arbitration suggestion was for disputes with suppliers so suppliers could avoid onerous court costs. No supplier in their right mind is going to take on Coles or Woolworths in a legal battle, court costs or not. They know they will be simply excluded from supplying to the big two ever again.
It also recommended multi-million dollar fines if the recommendations were breached. If such large fines are levied against these companies, they will instantly switch to the legal system. Firstly, because they know they can afford better lawyers than most of their suppliers and will probably win, and secondly, because they will not want to set a precedent of agreeing to such large fines from an arbitration board. To be fair, nobody would.
Still our favourites
But these companies have huge public relations resources and will bounce back in the public eye.
It’s telling that while supermarkets have been facing a lot of public backlash for their billion-dollar profits and increasing pricing, Woolworths is Australia’s second-most-trusted brand behind Bunnings according to Roy Morgan research. In fact, until that latest survey, it was in first position. Coles has fallen from third to fifth, but both those positions are astonishing for brands that apparently engender so much public hate.
The Senate inquiry is due to deliver its final report by May 7.
What do you think should be done to improve supermarket pricing? Why not share your opinion in the comments section below?
Also read: Coalition planning a ‘big stick’ to keep supermarkets in line
