09/10/2007 - 22:00

Independents feel major retail heat

09/10/2007 - 22:00

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The National Association of Retail Grocers of Australia is calling for greater scrutiny of acquisitions made by the country’s biggest supermarket chains in an effort to curtail what it claims is escalating market share by the major operators.

The National Association of Retail Grocers of Australia is calling for greater scrutiny of acquisitions made by the country’s biggest supermarket chains in an effort to curtail what it claims is escalating market share by the major operators, Woolworths and Coles.

The call comes after the independent retail sector had a win late last month when the federal government passed an amendment to the Trade Practices Act, strengthening predatory pricing provisions.

NARGA chairman John Cummings said the association was now turning its focus to “creeping acquisitions”.

Mr Cummings is calling on both sides of government to toughen the Trade Practices Act to prevent big market players from growing in size by buying up small business operators across the country.

He wants individual acquisitions to be approved by the corporate watchdog, the Australian Competition and Consumer Commission.

“It is not to say they can’t go ahead with the acquisitions, but there needs to be better checks and balances,” Mr Cummings said.

“In every Western market there would be some form of trade practice that restricts competitors buying 100 per cent of the market.”

Mr Cummings said creeping provisions could include restricting a major market player to buying only a certain number of businesses in a sector during a certain timeframe.

Chamber of Commerce and Industry WA executive director policy, Deidre Willmott, said that, under section 50 of the Trade Practices Act, the ACCC already had the power to investigate and oppose any acquisition that would substantially lessen competition in the market.

“The ACCC used the power to examine Woolworth’s acquisition of 22 Action Supermarkets on a store-by-store basis in 2005,” she said.

“There are other examples where the ACCC has examined the purchase of individual stores, the most recent being in June this year involving Woolworth’s planned purchase of an IGA Supermarket and liquor store in Jindabyne.”

But Mr Cummings, who is also the president of the WA Independent Grocers Association, said the provisions of the Trade Practices Act needed to be tightened.

“All the research we have done shows that the biggest issue without a doubt is the market dominance of the chains and the pressure that creates,” he said.

Mr Cummings said NARGA had been given assurances from both the Liberal Party and the Labor Party that they would look into the matter following the federal election.

The focus on creeping acquisitions comes more than three years after a senate economics references committee recommended 17 changes to the act, including the introduction of a 'creeping' provision.

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