The Australian Competition and Consumer Commission’s (ACCC) Supermarket Inquiry report confirms that the supermarket sector is highly concentrated and unduly challenging for small business suppliers, says the Australian Small Business and Family Enterprise Ombudsman Bruce Billson.
He welcomed the release of the ACCC’s report and expressed encouragement at the Government’s continuing focus on the harms arising from acute market concentration.
“Just as a lost visitor seeking directions might receive the wry response: ‘Well, I wouldn’t start from here’, 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 here”, Mr Billson said.
“But 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.
“The power and information imbalances between the major supermarkets and suppliers are immense, and that’s why the Food and Grocery Code and Horticulture Code are so important.
“Any 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 customer”, he 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 ASBFEO’s experience accords with the ACCC’s 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 suppliers’ dependence on Coles and Woolworths means they take on extra costs and risk.
“These conclusions reinforce the importance of the Australian Government’s commitment to introduce protections for small businesses from unfair business practices”, Mr Billson said.
“This commitment reflects four years of advocacy by the ASBFEO and carry forward one of our 14 steps to energise enterprise.
“The ASBFEO has warned that Australians are sleepwalking into a ‘big corporate’ economy.
“We 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 vitality”, he said.
The ACCC’s report notes ASBFEO’s citing of results of the Independent Reviewer Annual Report, which shows that more than 41% of surveyed Woolworths and Coles suppliers reported ‘fear of damaging a commercial relationship’ 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 – 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.”
