It has come to the time where Australia must break up our two supermarket giants and start to care for the welfare of its citizens once again. These corporations combined control over 65% of the national grocery market, facilitating a duopoly where shoppers are stripped of their right to choose what they eat, and how much they pay for it.
Whilst these retailers may boast about ‘lowest prices’ and ‘beat it by 10 percent’ claims, this is just a ploy to hide the cost of their total dominance over consumers. It’s imperative that we ban together and take these giants to the stand to ask one simple question: Should the federal government have the power to break up large supermarket corporations? The answer…yes.
Our Money
Amidst the federal government’s investigation into price gouging in large supermarket chains, the ACCC concluded that “Coles and Woolworths have limited incentive to compete vigorously with each other on price”, so why are we as consumers facing increasing prices from our preferred grocer on a daily basis? If the supermarkets are making so much profit that they can actively participate in anti-competitive behaviour, then surely, we’d be able to shop on a reasonable budget. But this is not the case.
The presence of inflation in Australia is no question with increasing housing prices, gas, food and fuel- but supermarket giant profiteering is playing a much larger role in this than we all think. Where both retailers meet profit margins that are through the roof, there is no longer a need for supermarkets to compete for the best prices, rather they have turned to over-charging customers for the highest prices.
Recent leaked emails between Coles and one of their suppliers (who wished to remain anonymous) have revealed that Coles has been secretly profiting from higher shelf prices in return for hefty once-off payments from its suppliers. Because of the lack of competition between the grocers, these exploiters have turned to encouraging suppliers to scam their customers for even more profit than they already earn… It makes you think about where this profit is actually going. Another head office staff party at Vu de monde? A quick shopping spree for a new work outfit at Louis Vuitton? Keep in mind, this is all happening whilst we as shoppers are forced to live off of cheese that costs more than a Netflix subscription.
A source from one of Coles’ multi-national suppliers said “The emails show the supplier opted for a $25,000 one-off payment, to be put towards online promotions.” And, not only did Coles take the $25,000 in promotion money, but it still chose to pass on the full-price to customers. Meanwhile, according to the Salvation army, basic grocery items have increased by 62%, and 40% of renters say they are going to struggle to pay rent in the coming months, but supermarkets just don’t care.
Our Health
And let’s not forget about the physical repercussions of the food these giants are trying to sell to us and label as ‘healthy’. If shoppers didn’t already struggle to find filling meals for the families on the table, the ‘low priced’ pre-made veggie and salad selections at both Coles and Woolworths have been recalled due to E.Coli contamination. So, with the combined reported profit of $2.8 billion dollars, and their obvious up-kept communication to their suppliers, wouldn’t they be able to spend just a little bit more on food that’s not going to kill us?
As if the issue wasn’t already a huge financial dilemma for the government, the health department must now also step in. If the health department can ban together with the financial department in parliament, the government could take down these giants once and for all and bring back the market that once gave us a choice in what price we want to pay.
Gastroenterologist Dr. Vincent Ho says that “during harvesting and processing there can be cross-contamination, particularly if the equipment isn’t disinfected.” Where is all this money going if not to ensuring that our food is safely harvested, processed, and packaged?
And considering these products were recalled from all supermarket giants (Coles, Woolworths, Aldi and IGA), this gives us more reason to believe that these companies are abusing their profits for unfit measures and must be broken from each other.
The government currently believes that issuing a few heavy fines in one go will put an end to this disgrace by forcing supermarkets to have less money and subsequent lower prices once and for all.
This is not going to work.
The solution
These companies are prepared to be in a financial position where they can pay up any fine the government throws at them, and still survive in the future. What is the point of fining them now, having mildly better prices for a few months, and then getting over-charged again when they re-build the profits?
What this strategy fails to do is break up the supermarket chains, which is the whole goal in the first place. Coles and Woolworths have already established an ‘alliance’ of sorts, where there is no competition, just high prices, so who is to say that they wouldn’t ban together and pay these fines with combined profits? Take money out of IGA and Aldi accounts? Cut off small businesses and leave farmers with no outlet for supplying…? We need a permanent solution to take them out once and for all.
We need divestiture. This involves using a competition regulator to seek court orders in the event of significant breach of law. Any breach would oblige the big-time chains to sell parts of their business as per the Australian competition law. Essentially, the fear pushed upon the grocers that they would have to give up a portion of their profits to another investor, would act as a punitive measure to deter the entrenched duopoly from misbehaving, and ensure fair and sustainable trade to their consumers.
It is not only consumers that are under attack in our economy. It is our farmers, it is our environment, it is our health. And this is thanks to supermarket goliaths that strip every one of their rights to make their own excessive amounts of profit. If the government do not act now to separate them once and for all, we will not survive the economic changes that are upon us, and neither will our democracy.
