The Hon. LYNDA VOLTZ
[6.30 p.m.]: In 2008 I raised in this Chamber the cosy relationship between the major chains, particularly supermarket chains, and major manufacturers. At the time the Australian Competition and Consumer Commission [ACCC] was undertaking a review of the competiveness of grocery prices within the retail sector. At the time I raised the gross profit margin demands for specific products and the imposition of baseline numbers on a whole category, whether these margins were being artificially manipulated and whether the setting of a hurdle rate was a pretext for deletion unless manufacturers bought more shelf display time via an activity fee. At the time the crux of my speech was that whilst the major supermarkets in an increasingly concentrated industry continue to come to terms of trade with major manufacturers and smaller competition is priced off the shelves, what is the knock-on effect to the Australian shopper? At the conclusion of the Australian Competition and Consumer Commission inquiry Graeme Samuel found:
The ACCC accepts that many Australian farmers are suffering and low prices for their products may be a significant contributing factor. However, it appears that the extent to which the market power of retailers contributes to this problem is limited.
The Australian Competition and Consumer Commission is guided by the principle that consumers gain from the opening of markets and greater choice. Certainly, it would consider the current milk price wars as part of that competitive process. Former chairman of the Australian Competition and Consumer Commission, Alan Fels, stated:
There may be a temporary outbreak of competition that is very welcome. There're not many third party pressures on those two on their prices. There're not many constraints from other players that would keep the prices down permanently. We're still at the mercy of the duopoly.
Coles, the main player behind the reduction in milk prices, insists its reduction in prices is long term and that it will absorb any losses rather than pass them on to suppliers. According to Coles, any suggestion that the milk industry might be destroyed is ludicrous. Lower prices, particularly for a food staple such as milk, is perhaps not a bad thing. Competition between the supermarkets is good for consumers and Coles is trying to reign in the overwhelming market dominance of Woolworths. However, I return to my original position: Whilst an increasingly concentrated industry continues to come to terms with major manufacturers, smaller competition is knocked off the shelf and there is a knock-on effect.
On the day that Coles reduced its prices I went to my local supermarket. For the first time I can remember it did not stock any two litre Dairy Farmers milk on that day. Only Coles' own brand was available—so much for choice and competition and that Coles would absorb the cost. I now buy my Dairy Farmers milk from the independent petrol station up the road and I shop at a delicatessen, butcher and greengrocer. The surprising thing is that I spend a lot less money. Who has ever been able to walk into a supermarket and buy only two litres of milk? Certainly busy parents with kids in tow are unable to do so. My experience is that I always come out with about 10 items that I did not go in to buy.
The Hon. Scot MacDonald:
You have no self-control.
The Hon. LYNDA VOLTZ:
No, I have no self-control, as most busy parents with kids do not. Now I get food when I need it and I get exactly what I want and in the quantities that I want. I buy the products I choose to buy, not those imposed on me by the major supermarket chains, which have over the years whittled away choice across brands. Coles' behaviour is nothing in comparison to that of Woolworths. In 2006 Woolworths suffered a $7 million penalty for entering into agreements with other traders, with the aim of preventing the entry of new competitors into the takeaway liquor market so as to protect its own share. In handing down his judgement on this matter, Justice Allsop said:
Lying at the heart of the Act is the competitive process. A subjective purpose of a substantial commercial entity of substantially affecting competition is of the utmost seriousness. This is especially so when experienced senior officers undertook such conduct deliberately to ensure that licences did not become any form of competitive platform or threat. Whilst no particular effect was proved, I should approach the matter on the basis that the conduct was seen as relevantly important to protect Woolworths' interest by ensuring the absence of a competitive platform. It was of relevant commercial significance to Woolworths and should be viewed in that light.
A substantial penalty was imposed. Woolworths' actions went to the culture of the supermarket corporation. The company's intent was clear: its aim was to kill off the competition. I suggest that Graeme Samuel read section 2 of the Trade Practices Act, which states:
The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.
Whilst downward pressure on price is not illegal under the Trade Practices Act, and there is not much recourse for farmers, the question must be asked how the promotion of competition to enhance the welfare of Australians is being fulfilled when there is a lack of scrutiny by the Australian Competition and Consumer Commission of the duopoly in the retail sector.