More than half of consumers believe the Australian grocery market lacks healthy competition, with 72 per cent believing the sector is too dominated by Coles and Woolworths, a new study conducted by the the Master Grocers Australia/Liquor Retailers Australia (MGA/LRA) has found.
The MGA/LRA, which represents more than 2500 independent supermarkets and liquor store owners around Australia, with $14 billion in sales and employing more than 115,000 people, surveyed 1000 consumers nationwide about their attitudes to supermarket competition and market concentration in Australia.
According to the study, 72 per cent believe the grocery market is too dominated by Coles and Woolworths and that there is not healthy competition (the duopoly controls 75 to 80 per cent of the market). While 22 per cent say disagreed and said there is healthy competition within the sector.
Seventy five per cent of those surveyed said competition laws should be straightened. The motivation to strengthen laws is a fundamental belief that healthy competition delivers a range of benefits, such as, lower prices, 83 per cent; greater choice and variety of goods and services, 86 per cent; and a generally fairer society, 82 per cent.
Jos de Bruin, MGA/LRA CEO, said existing competition laws have permitted Coles and Woolworths to gain extreme market domination, up to 80 per cent of the grocery market.
“This survey shows a large majority of people believe there is something wrong with this state of affairs. They think the duopoly’s market concentration has already gone too far and they don’t believe there is healthy competition,” de Bruin said.
“They are concerned that they are the losers in terms of price and they want much more choice and variety. As one of the survey respondents put it, more of the same is not competition,” he said.
Seventy nine per cent see it as very or fairly important for the Australian Competition and Consumer Commission (ACCC) to have the legal power and resources it needs to fulfill its charter, including halting anti-competitive practices, however, many of the survey respondents consider the consumer watchdog to be “toothless” at the moment.
de Bruin said some respondents were also concerned about the supermarket giants wider impact on society.
“They perceive there is an unfair impact on Australian farmers and suppliers who have been forced to bow down to the market power of the big two. Many also mentioned preserving local jobs and creating a level playing field for small businesses against large ones.
“The survey shows a great deal of support for strengthening the competition laws to create healthy competition. Specifically the survey shows a high level of support for introducing an ‘effects’ test. The ‘effects’ test which would give the ACCC more power to stop Coles and Woolworths misusing their market power or engaging in anti-competitive behaviours which would have the effect of killing off competition.
“As far as we are concerned it is one minute to midnight for competition in the grocery sector and we will be working with the Federal Government to convince them that action needs to be taken now.”
