Thomas Oriti:
Andrew Leigh is the Assistant Minister for Competition. He is with us now on Drive. Andrew, good afternoon.
Andrew Leigh:
Good afternoon Thomas, great to be with you.
Oriti:
Thanks for joining us. How are you feeling about today’s decision?
Leigh:
Oh, it’s a great win for Aussie consumers and a real win for the ACCC and a tribute to Gina Cass‑Gottlieb and her team. This reaffirms the basic principle that a discount should be a real saving, not a pricing trick and that you should be able to trust the ticket on the shelf when it says it’s a discount that it actually is.
So this reinforces our reforms in which we’ve put more power behind the ACCC, we’ve increased the maximum penalty tenfold, we’ve better resourced the ACCC to go after misconduct in the supermarket and retail sectors and we’re continuing to strengthen the laws.
Oriti:
I mentioned that Woolworths is waiting for a similar judgment to be handed down by the same judge. Now obviously we need to respect the judicial process with that, but does this serve as a warning to other retailers about misleading promotions?
Leigh:
Look, I think every important competition case sends a message to the market at large, and you know, that’s a tribute to the ACCC for taking on one of the biggest corporations in the land. That sends a clear signal that it’s important that consumers aren’t taken as mugs and that competition is based on value and service, not tricks and manipulation. That’s why we’re so passionate about our competition reforms.
We’ve just passed the unfair trading practices reform through the house, which cracks down on subscription traps, drip pricing and unfair trading practices, and we continue to strengthen the laws to make sure that Australians get a better deal at the checkout.
Oriti:
Allan Fels, the former ACCC Chairman said today ‘It’s safe to say Woolworths is a goner’. Do you agree?
Leigh:
Far be it from me to pre‑judge a case. I think it’s important that judicial process flows its way. What I would say is that we are continuing to strengthen markets and strengthen competition.
Oriti:
Okay.
Leigh:
This week’s Budget had $67 million to boost the ACCC’s enforcement capability, building on that $30 million targeted at conduct in the supermarket retail sectors that I mentioned before.
It’s a big passion of mine; it’s a big passion of the government’s to make sure the markets are more competitive and more dynamic.
Oriti:
The ACCC says it’s going to be seeking a substantial penalty, that’s the word that’s been used. A substantial penalty. We’ve had concerns from listeners this afternoon, Andrew Leigh, that whatever the fine is it will just be handed to consumers. Is that a point? Is there anything to stop Coles from just hiking up the prices when they cop a fine?
Leigh:
Well the key is competition in the retail sector and the ability of consumers to go to another retailer, and that’s why we’ve been working on issues like planning and zoning to try and encourage new entrants in the supermarket sector and to ensure that there are real alternatives for major…
Oriti:
Hang on, hang on. There’s a supermarket duopoly at the moment. That really – the Chair also said this, I’ll just throw this in, ‘It’s very important that a penalty is not able to be dismissed as a cost of doing business and that it becomes a level that is a significant deterrent for such conduct’.
If you’ve got a duopoly – for a lot of people there’s no other option, no other place to shop. Is this a genuine deterrent for Australia’s second largest supermarket chain?
Leigh:
Well Thomas, 2 things on that. Firstly, we increased the penalties tenfold when we came to office to make sure they weren’t a cost of doing business.
Secondly, the companies are only able to pass those costs on in an uncompetitive market, and we’re working hard to make sure that the market is as competitive as it can be.
Oriti:
It’s not competitive at the moment. I don’t think you’d find many people that would argue that the supermarket industry is competitive. Two players?
Leigh:
No‑one has argued this more strongly than me Thomas. I certainly hear you. The 2 majors have had about a two‑thirds market share for quite a while. We saw the entry of Aldi, but that seems to have been accompanied by other minor supermarkets coming off, so that two‑thirds share has stayed.
We’ve been funding CHOICE in order to provide quarterly grocery price monitoring, that has regularly reported that Aldi is cheaper than the majors, and encouraged opportunities to shop around. And one of the things we’re working on right now is ensuring that competition tools are able to get access to the online prices that Woolies and Coles charge in order that people can shop around or do some of that split basket shopping, where you look to get the best deal at multiple supermarkets.
Oriti:
With respect Andrew Leigh, I just don’t feel like my question about the fine being handed down to consumers has been answered. I appreciate what you’re saying, I’m not trying to be disrespectful, but it sounds like there’s no regulatory teeth here at all to prevent Coles from doing that. They cop a fine that I assume will be in the tens of millions. There’s nothing to prevent them from passing it on to consumers?
Leigh:
Well Thomas, it’s competitive pressure that makes that. I am as aware as anyone listening that this is a sector where the 2 majors have a substantial market share and that’s why I’ve outlined to you many of the things we’re doing to try and inject more competition in the market. More competition makes it more likely the fine is borne by shareholders rather than customers, which is of course the main goal here.
Oriti:
Okay.
Leigh:
We want to make sure that this wrongdoing doesn’t go unpunished.
Oriti:
So you are confident that in the current market situation where for a lot of people Coles is their only option, there’s enough market pressure for them not to turn a very hefty fine into a price hike for consumers. There’s enough competition at the moment to prevent that from happening?
Leigh:
I would like to see this to be a more competitive sector, which is why we’ve been doing so much since we came to office 4 years ago to get more competition in the sector.
Now that involves a whole lot of measures. It involves getting more information to consumers, it involves making it easier for new entrants to come in. The Prime Minister even on one of his meetings last year, took time to stop in the UAE and talk to one of the international supermarkets about potentially entering Australia. We had Kaufland look at the option of coming into Australia a number of years back, and not to go ahead with it and I think that was disappointing.
And then we had markets like Northern Territory and Tasmania that don’t have Aldi, where the duopoly has a larger share and that’s something where we’d like to see more competition and more competitive pressure in those markets.
Oriti:
Okay. Allan Fels also said today, former ACCC Chair, this, which interested me, ‘For Coles the damage is a mess. There will be substantial fines, a class action for damages and reputational loss for the business’. Andrew Leigh, I’m keen to hear your views on this because while we still effectively do have a supermarket duopoly in this country with no sign that’s going to dramatically change – I appreciate you’re saying you’re trying to change it. Does Coles genuinely care about reputational damage? A lot of people have no choice but to shop there?
Leigh:
Look, I think they absolutely do and, you know, the other way of answering your question before is to say ‘well should you just go soft on firms with large market power because of the risk that they will pass that fine on?’ I don’t think that would be tenable, I don’t think anyone would think that’s reasonable. So we need substantial fines for wrongdoing.
I think inevitably, something like this has reputational consequences. But I would say to people, because there’s going to be a lot of listeners walking into a Coles in the next couple of days – don’t take this out on the staff, these are decisions that are made by management.
Oriti:
True.
Leigh:
Those frontline workers turn up, they work hard and the last thing they need is shoppers going in and giving them an earful about this court case.
Oriti:
Yeah, I agree. We’ve actually heard reports of some, and these are kids, you know, copping it at the cash register and that sort of thing. Absolutely. Please don’t do that, it’s far from their fault. We’ve got to move on but great having a chat Andrew, thanks for joining us.
Leigh:
Likewise, thanks Thomas.
Oriti:
Andrew Leigh there, the Assistant Minister for Competition joining us on Drive.