In the wake of Coles’ announcement that its sales grew 5.2% in the first quarter of the year, the Australian commerce watchdog, the Australian Competition and Consumer Commission (ACCC), said it was about to flex its muscles over supermarket chain abuse of commercial power.
Coles’ increased sales have come following a strong price cutting campaign by Australia’s two largest grocery chains. In spite of escalating global food prices, Coles’ first quarter figures show a decline of 1.8% in food and liquor prices through its stores.
Coles’ managing director Ian McLeod said the company’s price cutting was the key to its sales growth.
“Our ‘Down Down’ campaign has been supported by further investment in quality and innovation, in partnership with Australian growers and manufacturers,” McLeod said. “However, weak consumer confidence in the face of rising living costs will continue to make trading conditions challenging in the lead up to Christmas.”
However, representatives of Australian agricultural sector groups have been lobbying for some level of control on supermarket pricing strategies that undermine farm profitability. As a consequence of this concern, ACCC chairman Rod Sims told the Federal Senate Economics Legislation Committee last week that the ACCC’s ability to control the misuse of market power, by Australia’s leading supermarkets, is something that it “really needs to test”.
“I think it is clear that the supermarkets do have a lot of market power. That is particularly the case in relation to their suppliers and of course also the case in relation to their consumers,” Sims told the committee.
“What we need to do is to determine whether or not they are breaching the Act. We really need people to come forward with complaints with the appropriate evidence. It would be terrific if they did that. But we are going to keep an eye on them. They do have a lot of market power.”
Related posts:
- Australian supermarkets respond to fresh pressure by dropping milk prices
- Fonterra to be investigated by Australian Consumer Commission
- Coles not guilty of anti-competitive behaviour
- Australian government investigates milk prices
- Australian Food and Grocery Council accuses Coles of destabilising tactics
