The competition watchdog has indicated it may be unable to deal with claims of anti-competitive behaviour by the major supermarket chains.
A recent report from independent supermarket group Master Grocers Australia (MGA) called on the Australian Competition and Consumer Commission (ACCC) to investigate whether Coles and Woolworths were misusing their market power.
MGA said the supermarket giants were cross-subsidising a large number of loss making supermarkets in order to lessen competition in the grocery sector.
The ACCC is considering the claims, chairman Rod Sims said on Wednesday, but indicated it would be difficult to pursue the matter.
“By way of background, in order to meet the tests of conduct being against the law and anti-competitive, it has to be behaviour which is deliberately meant to damage competition,” he told an Australasian Convenience and Petroleum Marketers Association conference.
“The fact that a new store will operate at a loss in its early days is usually considered normal commercial behaviour.
“Similarly, if you open a new store, that by definition will bring more capacity than the market needs, because the market needs were presumably close to being met.”
Mr Sims went on to explain the difficulties the ACCC has in proving a misuse of market power, which is covered by section 46 of the Competition and Consumer Act.
To prove misuse of market power, the ACCC has to demonstrate to a court the intentions of a company’s actions, rather than just the effect of the company’s behaviour, he said.
The ACCC would also need to demonstrate a company has market power, “which is not as easy as you think”, Mr Sims said.
“Section 46 cases are almost always hard fought, as major companies are necessarily involved, and they are usually defending what they may see as a key part of their business strategy,” he said.
The ACCC’s current investigations price sharing by petrol retailers, the impact of fuel discount dockets and the treatment of suppliers by supermarkets are likely to take some time, Mr Sims added.
He also called for a national approach to accuracy in service station petrol price advertising, after the NSW government recently passed new laws to stop service stations displaying discounted fuel prices on price boards.
