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Govt to put duopoly on notice

 

trolley,supermarketThe federal government will outline its concerns about the price war between supermarket giants Woolworths and Coles and its impact on the Australian food growing industry.

Small Business Minister Bruce Billson will address the Australian Food and Grocery Council’s industry leaders forum in Canberra on Wednesday.

“While intensified competition between the two major chains has reduced grocery retail prices, there are concerns that those reductions come at the expense of suppliers and impact on the longer-term durable benefit to consumers,” he will tell the forum, according to a draft speech obtained by The Australian.

“We have to ask ourselves: will these price and market pressures impact on the viability of the food-and-grocery industry over the long term and will they stifle innovation and investment by suppliers? And will this result in higher grocery prices in the longer term?”

Speaking earlier this morning at the forum, Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims provided a regulator’s perspective on the debate surrounding the market share held by the two major supermarket chains.

“At the ACCC, we are completely clear that our role is only to protect the competitive process, and this is how we see the current debate,” Sims said.

“It is simply incorrect to label all those who question aspects of the degree of market power of the major supermarket chains as people wanting to protect inefficient businesses,” Sim said.

“Second, we see the supermarket issues capable of being dealt with under the Competition and Consumer Act, and we do not see use of the act as excessive regulation.

“Indeed, effective implementation of the act is vital for the success of our market economy. It provides clear and wide boundaries within which we can all benefit from the power of the profit motive,” Sims said.

“It is incorrect to argue that a market economy needs no regulation. It requires a modest amount of appropriate regulation to be effective, and this is what the act provides.”

 

AAP

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