A SURVEY by independent grocery retailers ahead of the release on Tuesday of the Harper competition policy review has found overwhelming public support for tougher laws to boost competition in the $88 billion grocery market.
The survey, conducted on behalf of Masters Grocers Australia, found that 72 per cent of respondents believe the grocery market is too dominated by Coles and Woolworths and only 22 per cent believe the level of competition is "healthy".
A large majority of respondents - 75 per cent - said competition laws should be strengthened to deliver a range of benefits including lower prices, greater choice and a generally fairer society, and almost 80 per cent agreed it was important for the Australian Competition and Consumer Commission (ACCC) to have the legal power and resources to fulfil its charter, including halting anti-competitive practices.
Master Grocers Australia (MGA) is a national industry association representing Australia's $9 billion independent grocery sector.
MGA chief executive Jos de Bruin said existing competition laws had allowed Coles and Woolworths to dominate the grocery market by lifting their combined share to between 75 and 80 per cent of supermarket sales.
"This survey shows a large majority of people believe there is something wrong with this state of affairs," said Mr de Bruin.
"They think the duopoly's market concentration has already gone too far and they don't believe there is healthy competition. They are concerned that they are the losers in terms of price and they want much more choice and variety. As one of the survey respondents put it: more of the same is not competition."
Mr de Bruin said the survey found a high level of support for strengthening competition laws by introducing an "effects" test , which would prevent large companies from misusing their market power by engaging in activity likely to have the effect - rather than just the purpose - of reducing competition.
The Harper competition law review's final report has recommended the introduction of an "effects test" to existing misuse of market power rules to ensure that provisions in Section 46 of the act are more workable.
Under an effects test, small businesses would no longer be required to prove that a large company had acted with the "purpose" of damaging a competitor. The existing "purpose" test would be changed to assess whether the company had acted with the "purpose, effect or likely effect" of substantially lessening competition.
ACCC chairman Rod Sims has previously backed the introduction of an effects test and has said it would serve consumers by focusing on the effect on competition, rather than the impact on competitors.
However, Woolworths and Wesfarmers are strongly opposed to an effects test, saying it could "chill" competition and have unintended consequences which could lead to higher prices for consumers.
"Size and scale bring substantial benefits through efficiencies that lead to lower prices," Wesfarmers said in its submission to the Harper review last year.
Coles and Woolworths declined to comment on the survey.
But the Australian National Retailers Association (ANRA), which represents major retail chains, rejected the survey's conclusions, saying the Harper review committee's draft report estimated the market share of the major supermarkets to be 55 per cent, not 75 to 80 per cent.
"Claims by other groups are unsubstantiated and misleading," said ANRA chief executive Anna McPhee.
An ACCC inquiry into the supermarket sector in 2008 found it to be workably competitive and found that food and grocery prices were 17 per cent lower in areas where major supermarkets operated, Ms McPhee said.
"Since 2008, the sector has expanded with the entry of Costco, Aldi and SPAR. The Harper review draft report estimates the competition has driven more than 20 consecutive quarters of food price deflation.
"Given the real benefits to consumers, with 20 consecutive quarters of food price deflation, the major retailers are concerned about Harper's recommendation to insert an effects test. All previous reviews have rejected the introduction of an effects test because of the chilling effect on competition," she said.
