Additional Comments from Senator Tammy Tyrrell

1.1It’s an undeniable fact that governments, to the detriment of consumers and producers, have allowed Coles and Woolworths to amass an unjustifiable duopolistic market power. The extent of this power is staggering, as we discovered during the inquiry. The major supermarkets have used their influence and power to stifle any potential competition, creating this market imbalance.

1.2The Senate Select Committee on Supermarket Prices was born out of pain at the checkout and pain at the farm gate. Yet, there is a gaping hole between the consumer and producer where the major supermarkets profit off the backs of others.

1.3It is my belief that it is the prerogative of Woolworths and Coles to maximise profits for shareholders. However, I do not believe that this prerogative can be exercised in a way that is incompatible with checks on market power.

1.4Coming from a state that has high rates of social and economic disadvantage, I’m especially concerned by the unaffordability of groceries for consumers. InHobart, we heard that some people are forced to dumpster dive to obtain reasonable food. We’ve heard from people who simply can’t afford to feed their family, impacting the quality of life for them and their children. For example, we heard that Tasmanians, even those who are employed, are struggling to make ends meet:

We seem to have a lot of agency and choice: food or doctor? Food or the power bill? Food or the uniform? There seems to be a lot of those sorts of choices. But I agree: there are not a lot of choices as far as food pricing… Everybody is suffering this, even people who work. You've now got a new working poor who are struggling to be able to make ends meet.[1]

1.5 It’s fairly obvious that Tasmania does not enjoy the competition that is seen on the mainland: we don’t have low-cost providers like Costco or ALDI. Tasmanians are missing out, and with the CEO of ALDI Australia ruling out investment in Tasmania,[2] they will continue to be disadvantaged by a concentrated market. ALDI Australia noted that difficult supply chains were a factor for not establishing stores in Tasmania.

1.6The committee heard that in communities where an Aldi is established, it placed downward pressure on the prices at competitors. In his evidence, Professor Allan Fels expressed that increasing competition is the principal mechanism for placing pressure on prices.[3] Despite Woolworths CEO Mr Brad Banducci’s deflection, pointing to the fact that there are 78 independent stores in Tasmania,[4] I hold concerns that the major supermarkets have entrenched their power in the Tasmanian market, preventing new entrants.

1.7That’s why the Australian Government should investigate ways to remove barriers to entry for grocery competitors, particularly in regional areas. Whilst this committee has recommended a number of ways to help lower prices for Australians at the checkout, it’s clear that increased competition will continue to be one of the best ways to achieve lower prices.

1.8The Australian Government should investigate ways to remove barriers to entry for grocery retailer competitors, including through collaboration with state and territory government where necessary. Such an investigation should focus on regional areas, and particularly Tasmania, which lacks competition and where unique logistical and supply chain issues apply.

1.9A major focus of this inquiry was how producers interact with, and are treated by, Coles and Woolworths. We saw producers sit in front of the committee shaking and crying because of fear of retribution. Several organisations spoke on behalf of farmers and producers, noting that their members did not want to appear themselves because they were scared. Tasmanian farmer Mike Badcock, a former supplier to Woolworths, plainly said:

The presentation I'm about to give, if I was an active supplier or a packer to a supermarket for what I'm going to present today, I would be history. I would be, for some reason or other, not getting any more orders.[5]

1.10Many producers raised concerns about the contracts they have with supermarkets. In most cases, there were no written agreements. Many of the concerns producers had about their relationships with supermarkets stemmed from this issue.

1.11The committee recommends that Treasury should take immediate steps to make the Food and Grocery Code of Conduct mandatory. This recommendation should ensure that all contract agreements are now in writing and enforce penalties if they are not. However, it will be important to assess if the mandatory code does work to improve producer-supermarket relationships, especially when it comes to contracts. This should be reviewed after 24 months of the code becoming mandatory. If a mandatory Food and Grocery Code fails to properly address problems with supplier contracts, there is a concern that local producers will continue to shut down, increasing issues with Australia’s food security.

1.12The inclusion of a price register for farmers as part of a mandatory Food and Grocery Code of Conduct is critical. The committee heard from producers that the lack of transparency around pricing information is another way in which the supermarkets hold power over suppliers. A price register would further address this power imbalance.

1.13It’s also clear that the use of supermarket-appointed arbiters is not working, with fear of retribution evident in the fact there have been very few formal complaints against the major supermarkets over the past few years. I stress the importance of appointing independent arbiters to maintain integrity in this process.

1.14It would be amiss of me not to reflect on the power Bunnings exhausts to stratify power and increase market power in the greenlife sector. We heard from KarenBrock, the Director of Brocklands Nursery, based in Tasmania. Ms Brock said the 'fear of retribution amongst the growers is real.' Ms Brock spoke to the impacts trading with Bunnings had on her husband's mental health.[6]

1.15Based on the evidence of Bunnings, Ms Brock, Mr Smith, and Greenlife Industry Australia, it is apparent that Bunnings has yielded significant power over growers. I strongly support recommendations by the committee to include greenlife industries in a mandatory Food and Grocery Code of Conduct.

1.16The effects of the Food and Grocery Code of Conduct becoming mandatory should be independently reviewed 24 months after implementation. The review should:

have a particular focus on agreements between producers and supermarkets;

invite public submissions; and

include provisions for producers to put in submissions without fear of retribution.

1.17Throughout this process, many people asked me: what can this inquiry actually do to help consumers?

1.18An area of concern was the difficulty consumers face in identifying a good discount. In some cases, promotional material can be misleading about the size of the discount, and in other cases, sometimes there was no discount found at all. Coles CEO Leah Weckert admitted that the store had not ‘kept up’ with changing price tickets where price for an item had increased. This is misleading to consumers and causes considerable confusion. Changes to the Unit Pricing Code for supermarkets to prominently disclose any changes in the price or size of products and adapt a mandatory information standard for unit pricing are welcome.

1.19The establishment of a Commission on Prices and Competition is necessary and welcome. Whilst the ACCC already does a lot of work in this area, a Commission is a permanent body designed to keep the supermarkets in check. It is important to ensure this body doesn’t recreate the wheel of work already done by the ACCC, but rather works collaboratively with the ACCC. The Commission will allow the public to track price changes over time and look at further pricing reform. It would also be worth considering how the Commission interacts with the public. The ACCC told the committee they don’t have the resources to respond to a lot of the correspondence they receive from the public regarding alleged price gouging, and this is a gap the Commission could fill.

1.20There was discussion throughout the inquiry about divestiture powers, with witnesses divided on whether this was a useful tool to deal with competition.The Australian Greens currently have the Competition and Consumer Amendment (Divestiture Powers) Bill 2024 before the Parliament. I believe divestiture powers are a tool that the Australian Government should have at its disposal. There are similar measures legislated internationally, and extends current divestiture power that can only be obtained where a breach of merger power has occurred.This is an entirely sensible approach, and as such, I support current legislation before the Parliament.

1.21This report contains a number of excellent recommendations that, if implemented, would relieve pressure on Australians' wallets and the hardship Australian farmers face. It is a thorough and wide-ranging report that encompasses many of the issues associated with the duopoly domination of market power. I look forward to working with the Government to progress these recommendations, and urge them to act swiftly to provide relief to Australians as soon as possible.

1.22These recommendations shouldn’t be left on a shelf collecting dust.

Senator Tammy Tyrrell

Member

Independent Senator for Tasmania

Footnotes

[1]Ms Louise Adams, private capacity, Committee Hansard, 7 March 2024, p. 10.

[2]Ms Anna McGrath, CEO, ALDI Stores Australia, Committee Hansard, 11 March 2024, p. 3.

[3]Professor Allan Fels, Committee Hansard, 15 April 2024, p. 5.

[4]Mr Brad Banducci, CEO, Woolworths Group, Committee Hansard, p. 17.

[5]Mr Michael Badcock, private capacity, Committee Hansard, 7 March 2024, p. 48.

[6]Ms Karen Brock, Brocklands Nursery, Committee Hansard, 11 April 2024, p. 41.