Food wholesaler Metcash has called on the government to strengthen competition laws to protect independent supermarkets from the alleged predatory business practices of major players.
During a Senate hearing on April 11, Grant Ramage, CEO of Metcash’s food division, said the growth of two major supermarket chains, Coles and Woolworths, had been left unchecked for a long time.
“In the 80s, the combined market share of the two major supermarkets was less than 40 percent. Today, it’s at least 70 percent and in some localities, over 90 percent,” he said.
The CEO said the lack of competitive constraint allowed the two supermarkets to cut costs, remove services, and replace staff at checkout without facing consequences.
Mr. Ramage also alleged that Coles’ and Woolworths’ unchecked growth enabled them to engage in non-competitive practices, including buying out and forcing competitors out of business.
“The chains try to buy out successful independent stores … and they’re often prepared to pay significantly inflated prices far more than any other independent could ever afford to pay,” he said.
“If they can’t buy the store, they try and buy the property. We have good examples where they then turf out the independent at the end of the lease, even when they already have multiple stores in that locality.”
The CEO alleged that, in some cases, the two supermarkets were willing to pay high prices that would not return them any benefit for many years.
According to his assumption, this was to prevent competition in certain regions.
Another non-competitive practice that Coles and Woolworths were alleged to engage in was applying for spot rezoning when they could not buy the property that housed independent stores.
“The problem with that is it really undermines planning in town centres. It distorts traffic flow, and damages local businesses … and ties up viable sites for supermarkets.
Mr. Ramage then concluded that the current competition laws failed to address the unchecked growth of Coles and Woolworths and their entrenched dominant position in Australia.
“We urgently need to strengthen competition laws in Australia to give a fair go to our independent retail network,” he said.
Major Supermarkets’ Response
A Woolworths spokesperson rejected Mr. Ramage’s allegation, saying the supermarket set up new stores according to customer demand.“Our customers would expect us to build new stores, distribution centres and other facilities with the number of new stores in recent years mirroring population growth,” the spokesperson told The Epoch Times.
“Most of our developments in the past five years have been in greenfield areas, including growth corridors, and around a third have been in urban areas that are densifying.”
“Our focus is on our business–strengthening our network of stores and better servicing communities–not on the business or plans of our competitors.”
The Epoch Times has reached out to Coles for comment but has yet to receive a reply.
In contrast to Metcash, Aldi Australia CEO Anna McGrath told the Senate inquiry that Coles and Woolworths did not create any barrier for the company to enter into new areas.
