ACCC to focus on supermarket chains and NSW electricity
Posted : Wednesday, June 20, 2012
As supermarket chains increase their participation in sectors
such as home improvement, petrol and liquor, these changes will
affect market structures, competitiveness and consumer choice,
Australian Competition and Consumer Commission chairman,
Rod Sims told a CEDA audience in Sydney.
The national chains, Westfarmers and Woolworths, are increasing
their participation through small acquisitions, Mr Sims said.
"When the major supermarket chains (MSC) acquire an independent
player, they remove an alternative from the market, with
potentially a different product range and service offering," he
"This reduces consumer choice, and competition is unlikely to be
replaced by a chain or a new independent given the local and/or
national entry barriers."
While the Australian Competition and Consumer Commission (ACCC)
recognises that growth by the major supermarket chains has brought
benefits to consumers, there is a risk that with only two major
national chains, competition between them to offer lower prices and
better service will be softer than it otherwise might be, Mr Sims
Because of these concerns, he said the ACCC has been paying
increased attention to acquisitions in the grocery, liquor, home
improvement and petrol sectors to identify which acquisitions
require review and which raise competition concerns.
He outlined that in the past, there has been an informal and
cooperative arrangement between the ACCC, Wesfarmers and Woolworths
regarding the supermarket transactions.
"The ACCC is now actively engaging with Woolworths and
Wesfarmers to expand these arrangements to cover a wider range of
acquisitions and sectors. We are proposing improved arrangements
that we hope will bring mutual benefit," he said.
"We believe the process can be streamlined. This can, however,
only occur with appropriate notification, co-operation and upfront
Mr Sims also discussed the privatisation of the electricity
generation industry in NSW.
"If privatisation achieves a competitive market structure, NSW
consumers can benefit from lower electricity prices in the future,"
"While in the short-term, most consumers do not feel these
prices, as they have retail contracts that protect them from the
volatility, in the medium to long term, high wholesale prices do
flow onto all consumers.
"The NSW Government is in a unique position and has a one-off
opportunity to influence the level of competition in NSW
Mr Sims also said the ACCC needs to communicate its role more
widely and effectively to the community.
"The ACCC must be an effective communicator on all issues. In
terms of our role, approach to issues, and consumer communication
in relation to competition issues," he said.
"An important role for the ACCC is to communicate the importance
of competition in promoting the long-term interests of Australian
"Many people, for example, do not understand our role in a
market economy. We are sometimes so focussed on the doing, that we
do not always explain our actions and, as important, our
achievements sufficiently to the public."
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