There has been much speculation in the media surrounding the ACCC’s investigation of Coles and Woolworths. Rod Sims, the Chairman of the ACCC, commented on the situation as part of Senate estimates on 13 February 2013 in response to a number of questions, as well as tabling a written statement tabled before the Senate Economics Legislation Committee.
Falling squarely within the ACCC’s enforcement priorities for 2013 (blogged about in February), Rod Sims confirmed that the ACCC is in the process of investigating the major supermarket chains for possible breaches of the Competition and Consumer Act 2010 (Cth) )(Act). He said that, “[n]ow that [the ACCC] fully understand[s] the broad nature and context of the alleged conduct, it is evident that, if fully put to proof, this conduct may constitute a breach of the Act and so it is now being investigated in even more detail”.
The alleged conduct that Mr Sims refers to includes:
- persistent demands for additional payments from suppliers, above and beyond that negotiated in their terms of trade;
- the imposition of suppliers of penalties that did not form part of any negotiates terms of trade, and which apparently do not relate to actual costs incurred by the major supermarket chains as a result of the conduct which has led to the penalty being imposed;
- threats to remove products from supermarket shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid;
- failure to pay prices agreed by suppliers; and
- conduct discriminating in favour of homebrand products.
If proven, this conduct may amount to unconscionable conduct or a misuse of market power. Of particular concern to the ACCC is that of the imbalance of bargaining power that the major supermarkets have as “such an imbalance, when misused, can have important economic consequences. For example, suppliers may find is more difficult to plan for and invest in their businesses”.
Helping with its investigation are the suppliers to the supermarkets who have spoken to the ACCC on a confidential and anonymous basis. The ACCC has identified around 50 suppliers prepared to speak the ACCC. In response to questions and concerns around confidentiality and protection, Mr Sims has stated that, “the way we are dealing with the investigation is that we have taken the information from the confidential discussions and we will now keep that confidential. To progress the investigation, we are going to use our compulsory information gathering powers largely on people who have not come forward. So that is the way we are protecting the confidentiality”.
The ACCC intends to conclude its investigation by mid-2013.
Photo Credit: Nutdanai Apikhomboonwaroot / FreeDigitalPhotos.net
