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Green light for giant retailers to increase market share as SME business expansion hit

With vertically integrated Coles and Woolworths set for another huge supermarket capacity expansion, price and promotional war, the losers will be Australia’s grocery and fresh food suppliers and independent retailers as the two supermarket giants increase their stranglehold on the industry.

This comes against a backdrop of the voluntary Food and Grocery Code of Conduct, designed to establish clear principles for the trading relationship between Coles and Woolworths and its suppliers.

And in September, SME groups Master Grocers Australia and the Council of Small Business Australia (COSBOA) called for an effects test to allow for greater scrutiny of businesses that use their market power to damage their smaller competitors.

However, Australian Competition and Consumer Commission Chairman Rod Sims said in relation to the many problems with Section 46, involving the misuse of market power, that the competition regulator would not seek to stop larger companies competing on their merits lest it hurt smaller competitors.

“The ACCC wants to ensure competition is on its merits by dealing with exclusionary behaviour, when a business takes steps to prevent competitors entering a market. For example, the dominant firm buying up all available land, restricting supplies of essential materials, engaging in predatory pricing, or tying up customers in long-term contracts with anti-competitive rebates.”

Now the Coalition government has weakened small business by retrospectively cutting accelerated depreciation allowances for small business last week without consultation.

Peter Strong, chief executive of COSBOA, said that the change should not be back dated as this creates confusion for the small business community as well as extra paperwork for those who, in good faith, purchased goods and/or claimed these as part of their tax return.

“This change provides no problems for big business, only for small business,” Mr Strong said.

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