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Inquiries galore: the chaotic politics of tackling Coles and Woolworths supermarket supremacy

by Ian McGarrity | Jul 11, 2024 | Comment & Analysis, Latest Posts

Australia’s supermarkets are being blamed for profiteering in the cost-of-living crisis while politicians are launching competing inquiries. Ian McGarrity reports on the politics.

When in trouble or trying to make trouble politically, it’s always good to go after a public whipping boy baddie.

When the inflation dragon breathed its cost-of-living fire on all levels of government, oppositions and minor parties looking for an electoral advantage or to stave off criticism jumped, on the supermarket baddie bandwagon.

Now I’m sure that Woollies and Coles operate as far out on their vested interest fence as they can. They’re not there just to make life easier for their customers or suppliers.

But the rush of political parties to show which is the most hairy-chested and bringing Woolies and Coles to heel has produced one of the worst spectacles of the superficiality of the development of important public policy this writer has ever seen.

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Inquiries galore

First there was the PM, setting up the Emerson inquiry into the Supermarket Code of Practice. He also has pressured the ACCC into inquiring into supermarket price gouging. Finally he has given the ginger group Choice $1.1 m to quarterly review which supermarket is the cheapest for the next 3 years.

Nick McKim, for the Greens, set up a Senate Committee, which he chaired, out of which he developed a private members bill that contained wide-ranging break-up powers if Coles and Woolies misbehaved.

When McKim’s bill first hit the Senate, the National Senators were all in favour of it. Indeed, the Nationals Senate Whip, Ross Cadell, said on 27 March, “This bill is our solution….. I commend this bill….. Thank you, Senator McKim. I would support this bill.”.

What? The Nationals were going to support the Greens on a business-bashing bill and hand McKim all the credit?

Steady on sunshine, the Liberals in Canberra countered. Just six weeks later, Cadell, as one of the two Coalition members on the Senate Committee inquiring into McKim’s Bill, was saying: “It is not the view of Coalition Senators that the Bill should be passed.”

Sure enough, on 26 June, the Coalition joined with Labor in the Senate to knock off McKim’s bill.

Then, just six days later, Peter Dutton, David Littleproud and Shadow Treasurer Angus Taylor announced that the Nationals leader would himself introduce a private members bill that threatened the big supermarkets with break up if they misbehaved.

Supermarket profit margin ww

All about the politics

Neither McKim nor the Coalition seemed interested in waiting for what the ACCC might say in its enquiry into price gouging. Nor did they seem interested in what the Emerson Code of Conduct final report had to say about the worth of inserting break-up powers for supermarkets into the Consumer and Competition Act.

Emerson, a former Minister for Competition Policy and Consumer Affairs in the Rudd government, had made the following devastating comments about break-up powers applying to supermarkets on 24 June:

“The Review does not support a forced divestiture power to address market power issues in the supermarket industry…..If forced divestiture resulted in a supermarket selling some of its stores to another large incumbent supermarket chain, the result could easily be greater market concentration. If large incumbent supermarket chains were prohibited from buying the divested stores, that would leave only smaller supermarket chains and foreign supermarkets as potential buyers. Further, if these smaller chains were not interested or were not in a position to buy, these stores would be forced to close…..Advocates of forced divestiture laws for supermarkets argue that the threat of forced divestiture would be an effective deterrent to anti-competitive behaviour by supermarket chains. But the threat of forced divestiture would need to be credible to have this effect, and the problems outlined above would ensure it lacked credibility.”

Further to Emerson, each of the last three big reviews of competition law in Australia, in 1993 (Hilmer); in 2009 (Dawson); and in 2015 (Harper) rejected increased divestiture powers being introduced.

The current Chair of the ACCC, Gina Cass-Gottlieb, said on 4 April: “My priority is strengthening Australia’s merger laws and new powers to tackle unfair practices. We are not prioritising [break-up powers].”

In the meantime, the latest CPI release from the ABS, for the year to May 31, shows that while overall inflation spiked to 4%, the Woolies and Coles area of the figures, “Food and non-alcoholic beverages” showed an annual increase of 3.3%.

In effect, this major category of goods sold by the big supermarkets showed an annual price increase well below general inflation and wage increases.

Regulating for the wrong reasons

My argument is not that the big supermarkets do not need to be regulated and watched. Obviously, they have enormous influence on most of our lives.

But the processes the Federal Government, Opposition, and Greens have followed in trying to show how hairy-chested they are in chasing down a public bogey man each has tried to establish in the minds of consumers are ephemeral, inconsistent, and lacking credibility.

At the Coalition private members bill announcement on 2 July, great store was put on the fact that both the US and the UK have break-up powers in their competition law. No mention was made that neither New Zealand nor the European Union do.

Also, no one from the Greens, the Liberals, or the Nationals has yet said what Treasury advised in its briefing note on 15 April: that the last successful divestiture case in the US was in 1982 and in the UK in 2009.

Ian McGarrity is a freelance writer who formerly was the Executive Producer of ABC TV documentary and current affairs programs, and the first Head of SBS TV and later deputy to the Head of ABC TV. As nominee of the 7, 9 and 10 TV Networks he later became Chair of Digital Broadcasting Australia.

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