Ruminations and recipes from a small kitchen in a big city.

13.8.08

BureaucratWatch.

First there was FuelWatch, soon to be tossed out by the Senate, then there was GroceryChoice.

A website is a policy?

No. A website is a waste of time.

Of course, some commentators have already stated the obvious in that those most in need of price comparisons are less likely to have internet or access to it.

My mother thinks a browser is someone who spends Tuesday afternoons at the library.

Associate Professor of Competition and Fair Trade at UNSW, Frank Zumbo calls the GroceryChoice scheme a dismal failure:

... (The) GroceryWatch website ... another version of the discredited FuelWatch. ... provides a very limited monthly snapshot that will be out of date as soon as it is posted on the web.

GroceryChoice completely ignores wider issues such as breadth of range and regional variation of stock. Metcash, which the ACCC pointedly and unfairly criticises, stocks independent supermarkets under the IGA and other banners. In stark contrast to Coles and Woolworths/Safeway, these independent supermarkets are encouraged to provide localised offerings. They support myriad Australian manufacturers while Coles and Woolworths/Safeway continue to push them off their shelves in their insatiable drive for high-margin overseas-produced house branded products.

Harry Ergas of Concept Economics slams the ACCC and chairman Graeme Samuel over criticisms of Metcash:

No less questionable are the ACCC's strident criticisms of Metcash, the main wholesaler to the independents. Metcash, the ACCC implies, acts as a monopolist, undermining the independents' ability to compete. This is fanciful. Metcash arose from mergers that were approved precisely because they would create a wholesaler large enough and capable of exercising sufficient discipline over retail outlets to achieve scale efficiencies and reverse the precipitous decline in the independents' market share. This is what Metcash has done and has every incentive to do.

Worse, despite having up to 20% of the grocery market, IGA isn't even listed on GroceryChoice. The Daily Telegraph reports:

A kilo of bananas, a kilo of fresh chicken breasts and a kilo of shaved honey leg ham came to $27.94 at IGA Supa Store Doonside; the same basket of goods cost $28.87 at Coles Doonside and $32.39 at Woolworths Marayong.

Budget-conscious mother of three Kylie Thompson said she travelled an extra 4km each week from her home in Blacktown past her local Coles and Woolworths to Doonside to shop at the IGA Supa Store there because it was "much cheaper".

"We've shopped everywhere looking for the cheapest place to get our food and this is it," she said.

Southern Sydney Retailers' Association president Craig Kelly ... said the website was "misleading" and called for it to be "abandoned immediately".

"Every day it remains operational, the GroceryWatch website is only causing an embarrassment to the Government and making the ACCC a laughing stock, completely discredited in the eyes of the public."


Meanwhile, the ACCC ignores the Coles and Woolworths/Safeway stranglehold on key shopping centres and growth corridors, with behaviour preventing competitors from entering in behaviour that the reasonable observer might describe as collusion. Zumbo calls the ACCC to account:

The ACCC has identified restrictive terms in leases where Coles and Woolworths are allegedly given a reduction in rents if a new competitor is introduced by the landlord into the shopping centre.

The ACCC will only look at these rather than take immediate action under the Trade Practices Act.

Instead, the ACCC should immediately be looking to test lease restrictions in court.

As for the alleged use of planning and zoning laws by Coles and Woolworths to prevent entry of competitors, the ACCC should be taking immediate legal action under the TPA.

Consumer Affairs and Competition Minister Chris Bowen is seeking to refer these matters to state and local governments. That's just buck-passing. The ACCC has power to take immediate legal action and it should.


Case in point: Coburg, centre of massive new development under the State government's 2030 plan, is home to two Coles stores a hundred metres apart. 150 metres south of the first Coles is a Safeway and a Woolworths-owned Dan Murphy liquor barn; while 300 metres north of the second Coles store, on Sydney Road, construction of a new supermarket/fuel outlet recently commenced.

Safeway branding went up last week.

2 comments:

grocer said...

great to see someone else is thinking a bit like me.

kitchen hand said...

Indeed, Grocer. My disdain for the two majors has just been renewed, having arrived at the pointy end of the peninsula to find Coles commencing building in a Sorrento main street already populated by two independents.