John Cummings, Chairman, NARGA.  Mr Cummings is also the President of the WA Independent Grocers Association and operates three supermarkets in Perth.

The National Association of Retail Grocers of Australia is a federation of State-based industry associations representing about 4500 small and medium-sized grocery and liquor retailers.  These stores employ about 225,000 (145,000 full-time equivalent) people and turn over about $15 billion annually  -  representing about 19 per cent of the national grocery market.

NARGA’s main role is federal political lobbying and primarily focused on reform of the Trade Practices Act to enhance competition.  NARGA does not seek subsidies or grants or special advantages for the independent sector  -  merely the elimination of unfair advantages accruing to the major supermarket chains from their position of market domination.

NARGA expects to play a major role in the forthcoming Grocery Pricing Inquiry.

Market domination of the retail grocery market by Woolworths and Coles is one of the most significant issues facing Australia.  Australia has the most concentrated grocery industry in the developed world, with Woolworths and Coles sharing 80 per cent of the grocery market.

Primary producers complain that they are not paid adequately for their produce, processors and manufacturers are intimidated by the chains’ market power, small and medium-sized retail competitors see the chains offering prices on key lines more cheaply than they can buy them and consumers are faced with grocery price inflation which far outstrips CPI..

The Trade Practices Act has not stopped increasing market domination by the supermarket chains.

The theme of NARGA’s submission to the Grocery Pricing Inquiry will be that “pricing” is a function of competition.  Fix the competition issues, make competition a fairer, more transparent process and you fix pricing.

National Competition Policy has failed to deliver substantial benefits, particularly in hyper-concentrated market sectors such as grocery retailing.  Despite the Trade Practices Act, market concentration has continued to run out of control.

Matters which need to be addressed as a matter of urgency include:
• creeping acquisitions  -  the ACCC might block an attempt by Woolworths or Coles to buy a group of 50 independent supermarkets, but, on its record, is unlikely to block the acquisition of a single store a week for 50 weeks  
• price discrimination, where a product is supplied to one customer on more advantageous terms than are available to another customer buying similar quantities  -  this has little to do with economies of scale and much to do with the application of market power to extract an advantage.

The ACCC, as the regulator under governments of both persuasions, has not stopped the slide to hyper-concentration.  If that is because of deficiencies of the legislation or deficiencies of regulatory activity, the matter needs to be considered by federal and state governments.  

The UK Competition Commission’s interim report on their grocery industry, where five chains hold 80 per cent (compared with Woolworths and Coles 80 per cent here) formally found that market concentration had resulted in an adverse impact on competition.  Their final report is due in April, in the middle of the ACCC’s inquiry.