ACCC takes aim at supermarket giants

Larissa Ham
August 2, 2012
The Age

The consumer watchdog will again set its sights on private-label brands, after allegations that supermarkets are misusing their powers to boost their own sales.

The chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims, said the watchdog was carrying out ‘‘an early stage investigation’’ after complaints from small businesses that supermarkets were acting improperly.

‘‘Where you’ve got a supermarket that is selling both its own products and selling the products of competing businesses, that vertical relationship is a situation that always is a concern for misuse of market power, ’’ Mr Sims said at the National Small Business Summit in Melbourne yesterday.

‘‘The claims that have been put [forward] are in relation to things that vary from availability of shelf space … to people being required to provide ideas, and lo and behold those ideas being used by their competitors.’’

Sales of private-label products are going through the roof, according to a new report by IBISWorld.

The report showed that private-label brands made up 13.5 per cent of total supermarket sales in the year to June 2008, a figure predicted to jump to 33 per cent by 2017-18.

One of the globe’s most successful supermarket bosses, Sir Terry Leahy, who transformed British chain Tesco into one of the world’s biggest grocers, recently warned there was a limit to shelf-domination of private-label goods – somewhere around the 40 to 45 per cent mark.

While numbers are far lower here, Woolworths and Coles are keen to boost their house brand sales rapidly.

Private-label sales have also taken off in the US. Walmart has more than 40 per cent private label penetration, while Kroger and Safeway have close to 25 per cent.

The watchdog is carrying out a range of investigations into Australia’s supermarkets, including the potential for unconscionable conduct between supermarkets and suppliers, misuse of market power and fuel discounting arrangements.

The ACCC has been holding confidential discussions with suppliers about their dealings with the supermarkets, amid complaints they were misusing their 80 per cent market share or squeezing suppliers to fund their price war.

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