Stopping Coles and Woolworths strangle their competition by hoarding land and buying up smaller grocers could prove difficult as the federal government prepares to navigate multiple layers of red tape.
In tandem with a $30 million boost for the nation’s consumer watchdog to investigate unfair practices, Treasurer Jim Chalmers says he will work with the states and territories to prevent grocery chains land-banking.
“We think there’s an obvious case for commonwealth, state, territory and local government co-operation because the powers in many instances are held by other levels of government,” he said.
“There are concerns about land-banking and other issues, and we don’t want to see competitors to the big two supermarkets unnecessarily locked out because more competition is good for consumers, more options are good for consumers.”
The move to outlaw the practice follows concerns supermarkets are buying retail blocks with no intention of developing them, purely to prevent competitors using the location.
But the multimillion-dollar cash injection for the Australian Competition and Consumer Commission to tackle the issue could be the tip of the iceberg compared to the challenge of amalgamating planning laws.
“I think it’s right to recognise that a lot of the planning and zoning powers are held by other levels of government and that’s why national leadership is so important,” Dr Chalmers said.
According to an interim ACCC report, the regulator’s concerns centre on the way real estate-hoarding increases barriers for other companies to enter the market.
Woolworths had interests in 110 sites for future use and Coles intended to use 42 sites, the report said, while Aldi had 13 undeveloped locations.
A senate inquiry in April heard that in some cases, when food wholesaler and distributor Metcash notified the ACCC about alleged land banking, the watchdog was unable to take action.
“The ACCC’s ability to intervene in time to stop those is not there,” Metcash CEO Grant Ramage testified.
“That puts pressure on us to use other commercial means to try to stop that happening.”
Mr Ramage gave the example of a small independent grocer in Adelaide, which Coles tried to buy out in 2023.
Instead, MetCash felt it had no alternative but to match the bid itself and sell the Brighton business back to an independent company under the Foodland banner for a lower price.
“I couldn’t be confident that the ACCC would have the visibility and the power to act in time to stop it happening,” Mr Ramage old the inquiry.
“It’s a decapitation strategy … you start taking away those big stores, it really cuts into the viability of our independent network.”
The extra ACCC funding comes a week after the watchdog said it would take Coles and Woolworths to court over allegedly misleading price specials.
The commission claimed the major supermarkets had briefly increased the ticketed prices of items before placing them on special as a promotion at a slightly lower price but still higher than their original cost.
Coles and Woolworths make up 67 per cent of Australia’s supermarket sector.
