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He said competition law had so far failed to curb the “uncontrolled growth” of Coles and Woolworths, which had engaged in a “long-term pattern of anti-competitive behaviour” and allowed them to “continue to consolidate” their market power.
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The inquiry heard that in some cases, when Metcash reported potentially anti-competitive deals to the Australian Competition and Consumer Commission (ACCC), the regulator did not have the vision, strength or speed to intervene effectively.
In one case, in connection with the sale of a Foodland store in Brighton, South Australia, Coles made a high bid for the supermarket, which Ramage said Metcash was “forced” to match before reselling it to another independent at a lower price.
“It's a decapitation strategy,” Ramage said. “To start removing those supermarkets, you're actually undermining the viability of our independent network.”
“We are calling for greater protection and fair treatment for independent supermarkets, on the basis that they are not assaulted by chains through takeover…”
In response to Ramage's comments, a Woolworths spokesman said the supermarket was focusing on its business of growing stores and serving communities, not those of its rivals.
“Our customers expect us to build new stores, distribution centers and other facilities with the number of new stores in recent years reflecting population growth,” the spokesman said. “Most of our development projects in the past five years have been in new areas, including growth corridors, and about a third of them have been in increasingly dense urban areas.”
A Coles spokesman said construction of the site could take several years after the land is purchased. “Once a store is up and running, we generally sell the site to the owner to allow us to invest in building new stores,” the spokesman said.
“When you go into one of our supermarkets, you will often see an independent bakery, butcher, fruit and veg grocer or delicatessen nearby, for example, creating competition that ultimately benefits customers.”
There are no Aldi stores in Tasmania
Neither Metcash nor Aldi, who also appeared at the inquiry on Thursday, support the proposed divestment powers demanded by the Green Party. These forces will see supermarkets forced to sell stores if they become too big.
Aldi Group Managing Director Viktor Jakubek; Anna McGrath, CEO; and Jordan Luck, Managing Director of National Buying.credit: Alex Ellinghausen
Ramage said it was unclear whether the divestiture powers would provide consumers with additional choices, while Aldi Australia chief executive Anna McGrath warned of potential “unintended consequences”.
“What we don't want to see is consumers having less choice, or having fewer retail jobs or suppliers,” McGrath told the inquiry.
Tasmanian senators Nick McKim and Tammy Tyrrell also questioned why there were no Aldi stores on the island.
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McGrath noted there were still areas in major cities that the German-headquartered supermarket had yet to explore, but he said the larger the location – such as Tasmania or far north Queensland – supply chains became more complex.
“When we decide where to expand, we need to consider the additional costs and complexities involved, so when it comes to Tasmania, that will very much be the supply chain elements,” she said. “Saying that, it doesn't mean we're not constantly reviewing where we might expand in the future.”
The Senate inquiry into supermarket prices will continue next Monday and Tuesday, when outgoing Woolworths boss Brad Banducci and Coles boss Leah Wickert are due to appear.
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