Legal battle makes mockery of code

JOHN DURIE
FEBRUARY 26, 2014
THE AUSTRALIAN

THE legal battle between the ACCC and the supermarket behemoths makes a mockery of last year’s grocery industry code of conduct and the regulatorÂ’s attempts to control pricing behaviour from Coles and Woolworths.
Just weeks into a court enforceable undertaking the two sides are already arguing over the terms.
What weight should a grocery supplier place in last year’s food industry code?
The answer is next to zero based on present evidence.
While we are at it, Small Business Minister Bruce Billson must be getting more than a little embarrassed that his root and branch review of the competition rules promised for late last year is yet to surface.
The terms of reference are wide enough to wrap around the world a couple of times but it seems the problem is at Prime Minister Tony Abbott’s door and the choice as chair of the inquiry.
The end result being we now are almost at March and still have no chair nor panel.
The industry code was an attempt by the supermarkets to water down the political campaign against them and in particular on concerns their push into private label goods was making life tough for Australian food manufacturers.
The supermarkets are happy to play the game as long as suppliers play their game.
The ACCC was concerned the supermarkets were using their control of the grocery market to distort the petrol market and so placed a limit on the discounts applied to the extent they were based on supermarket not convenience store profits.
Then Woolies started offering discounts with dual vouchers, one from the supermarket within the agreed 4c limit and another paid from the convenience store but with the crucial point being you could only get the second if you had the first.
The ACCC rightly argued the bundling was outside the agreement.
That is if you accept it is right for the ACCC to place limits on discounts.
Some would argue the undertaking is regulatory sanctioned price fixing.
The ACCC says no and instead argues the supermarkets were adjusting fuel prices to offset the discount hurting the 80 per cent of shoppers who don’t use the discount vouchers.
It should uphold the law and is right to take the behemoths to court.
There is however little evidence that the independents are suffering when over the last four years Coles market share has risen by 2 per cent to 24 per cent, Woolies by 1 per cent to 25 per cent while the independents’ share has doubled to 18 per cent.
Since 2009 consumer prices as measured by the ABS Consumer Price Index has increased by 10.9 per cent, food and beverage prices by 6.4 per cent and Coles food and liquor has fallen by 7.6 per cent.
Now there are statistics and statistics, but it would seem consumers are getting better prices at the supermarket and industry is being forced to rapidly adjust.
That is of course how competition is meant to work.
If the behemoths are abusing their power let’s throw the book at them and certainly take zero notice of their political games, but right now we are yet to land the first real punch against them.