On Friday, with incendiary timing in the lead-up to the election, the ACCC released its final report in the supermarket inquiry.
The headline finding was that “ALDI, Coles and Woolworths appear among the most profitable supermarket businesses globally”, according to the ACCC. They have increased their average profit margins over each of the past five financial years, and “Australians’ wages have not kept pace with grocery inflation”.
These days the duopoly remains, but with Aldi as price competition. Woolworths controls 38% of Australian supermarkets, Coles has 29% and Aldi 9%.
The ACCC described Aldi as an important price limiter “on the more limited range of goods that it supplies”. By contrast, they said, “we have not observed Coles and Woolworths seeking to substantially discount prices below each other”.
The ACCC noted that it has taken Aldi over 20 years to reach 9% of the market. The main factor they noted in their difficult entry into the market is restrictive planning and zoning laws.
This is a similar point to the Productivity Commission’s recent report on housing supply, which slammed the disjointed state of planning requirements in metropolitan areas.
Shadow treasurer Angus Taylor has joined the Greens in calling for parliamentary action on supermarket competition. The move is a savvy one in aligning the interests of consumers with farmers, who have little bargaining power with the supermarket duopoly.
Farmers can find themselves with either Coles or Woolworths as the sole buyer available in certain regions, according to the ACCC. This is not just a problem for fair pricing but also for investment, as farmers “do not have the information or certainty they need to make efficient investment decisions”.
The LNP move may against the supermarkets be part of a slower and deeper shift toward right-wing anti-corporate sentiment. Some on the right view the corporate embrace of identity-left positions such as gay marriage and the Voice to Parliament as signs of diverging interests between conservatives and large corporations, and even a betrayal given the LNP has for decades championed their interests on industrial relations.
The ACCC recommended that the government simplify planning and zoning regulations so they are more accessible to small players; require supermarkets provide primary producers with detailed price forecasts; make store prices easily accessible online; and be transparent to customers about food suppliers’ paid in-store advertising. Labor says that it accepts the report’s recommendations in principle.
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