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The Destructive Duopoly- Where is the ACCC?

Mike Rogers
From an Independent Supermarket Perspective

Issue 58: March 2007
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Editor's Note: Recently, I visited a new IGA supermarket that had opened in Ballina, a town situated in the Northern Rivers region of NSW, which is near where I live.
I happened to pick up a free magazine called "Fightback for Australia" and noted that this represented an attempt to try and stem the bleeding of Australian small to medium enterprises, specifically the independent grocery supermarkets.
As I read the magazine it occurred to me that the independent food retailers were having a rather torrid time in trying to stay alive, and that in turn, Australian farmers and producers as well as the local manufacturers, were fast disappearing.
Pharmacy often collectively thinks of the supermarket groups as the "enemy" when in fact this term applies to two major Australian businesses - Coles and Woolworths.
Sensing an alliance of interests I telephoned the publisher, Mike Rogers, and found that there was a commonality and I asked if there had ever been a formal approach by the independent grocers to the PGA.
Mike advised that he had actually telephoned the president of the PGA during the Fourth Agreement negotiations and offered to channel political support on behalf of pharmacists.
I was disappointed to learn that the offer was not taken up and that the PGA did not get back to Mike as they had indicated.
Little wonder pharmacy is criticised when it is unable to handle a simple PR exercise and make a few friends on the side, apart from being just plain rude!
Mike further stated that the independent supermarkets did not want to own pharmacies inside their supermarkets and respected the business model that pharmacy had evolved, and fully understood why pharmacy retail prices had a service component within and could not always be discounted.
i2P and Fightback have now agreed to share suitable article material on a regular basis, and I think the perspective offered by the independent supermarkets would be enlightening to pharmacists in business.
Despite the fact that the independent supermarkets may also have the odd price differential between themselves and the duopoly, why not encourage your family and staff to shop with an indepentent on a permanent basis.
Actively pursued, that type of policy could be reciprocated to the benefit of all small to medium business owners.
The independents have much to teach pharmacists in the art of survival and growth in an adverse economic climate.

The Australian Consumer and Competition Commission (ACCC) continue to sit on its hands, whilst the duopoly (Coles and Woolworths) ‘takes over’ its competitors.
The market power of the duopoly has meant that thousands of small businesses are being put out of business.
The activities of the duopoly in purchasing smaller competitors continues, recently Coles acquired a chain of liquor stores in Queensland, Woolies picked up Action Supermarkets in Western Australia..
Currently we have a position where seventy six percent or more of the grocery industry is controlled by the duopoly, they are large players in the petrol retailing industry, their combined buying power means that just under half of the entire fruit and vegetable crop is bought by them, and they continue to buy liquor stores to control that industry.
Their department stores control sales of clothing, fishing tackle, bikes and travel ware.
It is no wonder that small businesses are closing in record numbers.
A recent documentary on Australian retailing said “this is just the beginning, Coles is just about to embark on opening stand alone Supa Centres, around five times the floor area of their largest current stores".
Manufacturers are worried, never before have they had so few customer to sell to.
In the past they had maybe five thousand retail outlets to call on nationally, now they supply just the buying groups, and the duopoly.
Manufacturers are quick to point out that their brands are vulnerable, if the retailers don't accept a product for ranging; months of work in bringing a product to market are wasted.
Like the grocery industry, research and development, and new product innovation has stopped.
It is time for the duopoly's market power to be curbed, and future expansion needs to be limited, otherwise we will see the duopoly moving into running wineries and grocery manufacturin,g in a bid to get lower costs so as to boost profits.
The ACCC has had ample opportunity, and the benefits of information tabled to a Senate Committee into Retailing to move forward.
In the United Kingdom where Tesco, Sainsbury's and ASDA control far smaller market shares they are currently looking at curbing their market power as a result of the findings of the ‘High Street Report’.
Although I believe their market power needs to be curbed, I also believe that it is vital that both retailers remain as Australian owned companies.
I think that it is un-Australian for retailers to prefer to buy foreign made food products in preference to Australian.
Not long ago Australians were self sufficient, and produced most of these products themselves. It is because retailers can make more money out of imported products that we are forced to buy inferior products.
Aussie's young and old should support our growers and farmers by boycotting Italian canned tomatoes, imported canned fruit, and imported dried fruit which is currently being dumped on the Australian market.
The short term gain will mean our industry will disappear, and with no competition the prices will rise.
The fabric of Australian society is built on a ‘fair go for all’, and ‘equal opportunity for all’, and we need competition to be fair.
We need a market where retailers are able to buy at the same price, and excessive market power of the duopoly should not exist.
Australian Governments past and present have worked solidly to destroy our manufacturing industry, the Free Trade philosophy is a dream for a perfect world and will not work.

Supporting Australian made products is a start, but supporting aussie products made by an Australian company means the profits, and jobs remain in Australia to benefit all Australians.

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