End anti-competitive discounting of national supermarket chains

| September 5, 2013

The two national supermarket chains are locking shoppers in with cross-subsidised fuel and grocery deals, argues Russell Zimmerman, Executive Director of the Australian Retailers Association. He urges both Government and Opposition to stand up for the consumers in Australia.

Over the past week, the Australian Retailers Association (ARA) has been leading a retail alliance group called the *Independent Retailers of Australia in relation to serious competition issues surrounding petrol dockets, market control and distortions created in the independent retail sector.

We are proud to stand up along with three other business and grocery groups, representing over two million businesses and five million employees, and join forces to call for the end of the anti-competitive behaviour by the ever-expanding grocery chains.

Not content with dominating numerous industries, the two national supermarket chains have tried to lock shoppers in with cross-subsidised fuel and grocery deals – hurting other fuel operators and making consumers captives to the chains’ supermarkets. These tactics are simply unfair to the thousands of struggling independent retailers across Australia.

Our concern is that this issue will not only have long term effects on the independent supermarket chains and the independent fuel operators, but may also negatively influence other market segments of the independent small business operators.

We are in full support of the Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims’ comments that if the chains want to give a discount, they should simply reduce the price of the product in the supermarket.

Back in 2004, then ACCC Chairman Graeme Samuel flagged fuel shopper dockets as being a potential issue when he pointed out this could lead to less competition and higher petrol prices. Mr Samuel’s concern was identified when the discount levels were around 4 cents per litre – this year we have seen the supermarket chains offering 20 cents, 25 cents, 30 cents, 40 cents and upwards of 45 cents per litre discounts!

The major two retailers have gone from having zero percent in the petrol market to around 50 percent in a matter of only fourteen years. They now leverage their dominance in grocery and fuel to sell fuel below cost price which their competitors can’t do.

The discounts represent a short term gain for some consumers, but what people need to realise is that as competition is lost, workers will be out of jobs and businesses will close. Shoppers will ultimately be stuck with higher prices and less choice –which is an undesirable outcome for everyone involved.

We want to see support from the Government and Opposition on this issue, and over the last few days have contacted Mr Abbott and Mr Rudd directly, posing the question: What are you going to do to end supermarket chains anti-competitive discounting?

This is an election issue and needs addressing urgently by both major political parties. I hope to see the Government and the Opposition stand up for the consumers in Australia; pledge their support to assist the ACCC to take on the businesses that are creating market distortions and are driving independent retailers out of the market through unjust market power and discounting below cost.

*The Independent Retailers of Australia is made up of the Australian Retailers Association (ARA); Council of Small Business Organisations of Australia (COSBOA); the Australian Newsagents Federation Ltd (ANF); and the Master Grocers of Australia (MGA).