DOWN WITH THE DUOPOLY
For grocery giants Coles and Woolies, it’s like being beaten with a wet lettuce leaf.
The new ACCC Chairman this week called on suppliers to dob in the duopoly for misuse of market power.
Their response? Bring it on.
Like playground bullies, they’re accustomed to pummeling their victims into submission – in this case, the farmers.
Australia’s biggest tomato grower has just gone broke.
SP Exports Managing Director Andrew Philip blames the price wars, which moved from milk, bread and beer to fresh produce.
“The supermarkets can’t keep on screwing down the major growers and expect to have a local fresh fruit and vegetable industry,” says the chairman AusVeg, John Brent.
This is how it works.
The dreaded duopoly controls 80 per cent of the grocery market.
To retain their contracts, suppliers have to sell at dramatic discounts to pay for warehousing costs, shelf position, and breakage allowances.
Then there’s vertical integration.
Coles and Woolies aggressively market their generic brands, which are priced well below the cost of production.
The suppliers eventually go broke.
We all feel sorry for families forced to walk off the land. But, ultimately, whose fault is it?
Take a look in the mirror. It’s you, and me. (Ed: Trace, please don’t insult our readers! Me: It’s OK, stay with me!)
We’re busy people. We want convenience at a competitive price. But we don’t think about the consequences for the future of this great nation.
Successive governments have created this problem. But we have the power to fix it.
So, how did we get here?
In the late 1970s, the merger provision of the Trade Practices Act was watered down. This allowed Coles to gobble up smaller grocery retailers. There was détente in 1994 when Allan Fels stopped Coles taking over Franklins.
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