The Australian Competition and Consumer Commissionβs (ACCC) confirms that the supermarket sector is highly concentrated and unduly challenging for small business suppliers, says the Australian ³ΤΉΟΝψ and Family Enterprise Ombudsman.
Mr Billson welcomed the release of the ACCCβs report and expressed encouragement at the Governmentβs continuing focus on the harms arising from acute market concentration.
βJust as a lost visitor seeking directions might receive the wry response: βWell, I wouldnβt start from hereβ, so those looking for a properly functioning supermarket sector - capable of delivering durable best value for consumers and a fair go and fully respectful commercial dealings between suppliers and big retailers - would not start from hereβ, Mr Billson said.
βBut we are where we are, and we must stay vigilant seeking to improve the competitiveness and fairer conduct between the parties in the highly concentrated supermarket sector.
Mr Billson praised the ACCC for its diligence, rigour and deftness in examining the true state of competition and fair dealing in the supermarket sector and consequences for consumers, suppliers and retailer profits.
βThe power and information imbalances between the major supermarkets and suppliers are immense, and thatβs why the Food and Grocery Code and Horticulture Code are so important.
βAny supplier or producer wanting scale of any kind to support efficient operations, innovation and capital investment has few options other than to deal with the big supermarkets. With so much invested and so much at stake, this dependency means that only a very courageous supplier that wants a battle with such a big and essential customerβ, Mr Billson said.
The ACCC estimates that Woolworths and Coles together account for 67% of supermarket grocery sales nationally, while Metcash-supplied independent retailers have been losing market share over time.
The ASBFEOβs experience accords with the ACCCβs findings that:
- many smaller suppliers of fresh produce and some packaged groceries are solely dependent on either Woolworths or Coles
- fresh produce growers often do not have the information or certainty they need to make efficient investment decisions
- some suppliersβ dependence on Coles and Woolworths means they take on extra costs and risk.
βThese conclusions reinforce the importance of the Australian Governmentβs commitment to introduce protections for small businesses from unfair business practicesβ, Mr Billson said.
βThis commitment reflects 4 years of advocacy by the ASBFEO and carry forward one of our 14 steps to energise enterprise.
βThe ASBFEO has warned that Australians are sleepwalking into a βbig corporateβ economy.
βWe have proposed 14 steps that will energise enterprise and help put the small and family business economy back on the right trajectory, to be able to fully realise its potential to contribute to livelihood opportunities, higher living standards and community vitalityβ, Mr Billson said.
The ACCCβs report notes ASBFEOβs citing of results of the Independent Reviewer Annual Report, which shows that more than 41% of surveyed Woolworths and Coles suppliers reported βfear of damaging a commercial relationshipβ as an impediment for raising an issue with the supermarket. The figure was 21% and 28% of surveyed ALDI and Metcash suppliers.
The Food and Grocery Code of Conduct was introduced to improve standards of business behaviour in the food and grocery sector β including the conduct of retailers and wholesalers towards suppliers.
From 1 April 2025, the ASBFEO is also pleased to help arrange mediation and arbitration under the new Code. To access our service, parties in dispute should approach us and we will assist with the process, including selecting a mediator or arbitrator from our list.
If you are a qualified arbitrator or mediator, we are also keen to hear from you should you wish to join our list by emailing us at info@asbfeo.gov.au.
More information about ASBFEO is available on the ASBFEO website.
MEDIA CONTACT: 0448 467 178 |media@asbfeo.gov.au