Supermarkets 'not competitive enough'

(AAP) - Supermarkets will have to introduce unit pricing in a bid to help shoppers understand the true prices of groceries, the consumer watchdog says.

The federal government will now look at the best way of introducing unit pricing in
which a price per kilogram, litre or unit is displayed for goods.

This was one of three key recommendations by the Australian Competition and Consumer
Commission (ACCC) following its six-month inquiry into grocery prices. It also urged
changes to some anti-competitive impacts of zoning and planning laws and to the
Horticulture Act.
Consumer Affairs Minister Chris Bowen said that despite the findings he could not
guarantee grocery prices would go down.
"We will do everything possible to ensure the market is as vigorous as possible to
ensure prices do go down," Mr Bowen told reporters.
He refused to say supermarkets were "ripping off" consumers.
Mr Bowen said the government would look at the best way of introducing unit pricing,
but a number of issues needed to be looked at before it could be introduced,
including the effect it may have on small businesses.
The 642-page report found there was not enough competition among supermarkets.
It found grocery retailing was "workably competitive", but restricted by factors
such as limited incentives for price competition between the major players, Coles
and Woolworths.
Mr Bowen and ACCC chairman Graeme Samuel said although there was some competition,
it was not as strong as it should be.
One of the inquiry's aims was to find out whether a lack of competition pushed up
prices.
Mr Samuel said only about five per cent of the profits made by the major supermarket
chains came from increased grocery prices.
A major concern for the ACCC was the anti-competitive nature of some leases held by
Woolworths and Coles.
Some of those leases, in popular sites such as shopping malls, have covenants which
make it very difficult for competitors to enter centres.
Mr Samuel said the ACCC wanted to hear from anyone with complaints about leases and
would look into the matter under the Trade Practices Act.
The move was welcomed by independent retailer Franklins but the company said there
were not enough recommendations in the report aimed at reducing the stranglehold by
major supermarkets.
The ACCC also will refer what it says are anti-competitive impacts of state and
local planning laws to the Council of Australian Governments (COAG).
But supermarket chain Coles rejected the notion it deliberately delayed planning
applications to block competitors entering the market.
"We think economic factors and our customers' shopping preferences should determine
the location of our supermarkets, not additional regulation that creates more red
tape," Coles managing director Ian McLeod said.
Coles has estimated it would cost the company between $10 million and $12 million to
implement unit pricing if it is forced to do so in the next six to 12 months.
The commission's recommendation to the federal government to toughen up aspects of
the Horticulture Code of Conduct will be taken up with the industry.
Mr Samuel said no evidence of exploitation of farmers by the supermarkets was given
to the inquiry.
National Retailers Association chief Margy Osmond said the organisation's main
concern was that unit pricing does not become too complex or costly for shoppers.
Woolworths spokesman Andrew Hall said the recommendations were likely to be
challenging for retailers, but supported them and would do its best to have them
implemented.
The first real move as a result of the inquiry begins on Wednesday - with the launch
of the GROCERYchoice website at www.GROCERYchoice.gov.au.
The website will give consumers a "snapshot" of the price of a typical basket of
goods in supermarkets across the country.
Federal Opposition Leader Brendan Nelson said the review would do nothing for
consumers and compared it to the government's FuelWatch scheme, calling it a
"stunt".