The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Chris Bowen

Assistant Treasurer and Minister for Competition Policy and Consumer Affairs

3 December 2007 - 8 June 2009

Media Release of 05/08/2008

NO.065

Rudd Government Releases its Preliminary Action Plan in Response to the ACCC's Grocery Inquiry

The Rudd Government today released its preliminary action plan in response to the Report of the ACCC inquiry into the competitiveness of retail prices for standard groceries (the Report).

The Report reveals there is real reform to be had in Australia’s grocery sector.

Although the Report found that ‘grocery retailing is workably competitive’ it also highlights a number of factors that currently limit the level of competition including ’the complexities of planning applications…[which] provide the opportunity for Coles and Woolworths to ‘game’ the planning system to delay or prevent potential competitors entering local areas.’

According to the Report the biggest impediments to improved competition include:

  1. The high barriers to entry for large supermarkets,
  2. a lack of incentives for the major supermarkets to compete strongly on price, and
  3. the limited price competition from independent retailers.

The Government’s preliminary action plan in response to the ACCC’s recommendations covers four specific areas: zoning and planning laws; unit pricing; the Horticulture Code of Conduct and creeping acquisitions.

The Government intends to move in the following areas as a matter of urgency:

  • refer the anti-competitive impacts of state and local zoning and planning laws to the Council of Australian Governments (COAG);
  • the Government will consider the best way to introduce a mandatory nationally-consistent unit pricing regime. Issues such as the product range that’s captured and store size will need to be worked through in consultation with industry to ensure compliance costs are kept to a minimum. Unit pricing has proven to be a transparent and popular tool for overseas consumers;
  • the Minister for Agriculture will work together with the horticultural industry through the Horticulture Code Committee to carefully consider the ACCC’s 13 recommendations to enhance the operation of the Horticulture Code of Conduct (which regulates trade in horticulture produce between growers and traders and provides dispute resolution procedures); and
  • the Government will implement a creeping acquisition law, releasing a discussion paper by the end of August to gauge the best way forward.

The Report also highlights the positive impact ALDI has had in grocery price competition. The Government is committed to encouraging new entrants to the market (whether at the retail or the wholesale level) and has already relaxed restrictions that have prevented foreigners from buying vacant land to build new supermarkets.

The Government also welcomes the ACCC’s plan to review more cases so that restrictive provisions in leases between supermarkets and shopping centres that prevent or delay the entry of other supermarkets into a centre are prohibited under Part IV of the Trade Practices Act 1974 (the Act), where appropriate.

“I believe that our action plan, combined with the broader reforms that are already in train to further strengthen competition policy, such as the amendments to the misuse of market power provision and the criminalisation of serious cartel conduct, will ensure that the grocery market remains competitive,” the Assistant Treasurer said.

Finally, the Government is also fulfilling its election commitment made by the then Leader of the Opposition on the 11th July last year to set up a dedicated website that gives consumers a snapshot of local grocery prices. The GROCERYchoice website will be active from tomorrow Wednesday 6th August 2008.

“The ACCC has conducted a substantial amount of work to ensure only “like for like” items are included in the website,” Mr Bowen said.

Over the coming months we’ll be working with retailers and consumer organisations to further enhance the website with additional information and applications to help consumers make more informed purchasing decisions.

The website will provide a guide to consumers as to the cheaper supermarkets in their region. Consumers will then be able to make their choices based on customer service, convenience and other factors.

"The introduction of unit pricing combined with GROCERYchoice will empower consumers to find the best deals at the supermarket," Mr Bowen said.

“I would like to thank the ACCC for delivering this comprehensive and wide-ranging report into the grocery sector.”


Attachment

Report of the ACCC inquiry into the competitiveness of retail prices for standard groceries - Overview (PDF 68 KB)

5 August 2008