The Green Party’s proposed Bill to introduce divestiture powers into Australian competition law is unlikely to progress given its potentially negative impact on consumers and retailers.
The bill, drafted as an inquiry, continues into Coles and Woolworths over alleged price gouging amid cost-of-living pressures, has been roundly opposed by the Australian Retailers Association, National Farmers Federation, and Ausveg – along with independent grocery operator Ritchies.
ARA CEO Paul Zahra warned that the proposed law, if implemented, will result in higher grocery prices.
“Large supermarkets operate with high fixed costs and intricate supply chains,” Zahra said. “The most likely outcome of any forced divestment would be to disrupt the economies of scale retailers have painstakingly built.”
“We recognise the current political focus is to single out supermarkets during a cost-of-living crunch,” Zahra added. “However, if we applied this divestiture logic to business sectors outside of supermarkets, this would set a dangerous precedent in Australia.”
Fred Harrison, CEO of supermarket operator Ritchies, said independent grocers are “not necessarily pushing for stores to be sold off by the chains”.
The Greens earlier said the Bill would give Australian courts and competition regulators the power to smash the supermarket duopoly, therefore benefiting consumers.
“We need to stop supermarket corporations ruthlessly using their market power to gouge prices while raking in billions of dollars in profits,” Greens economic justice spokesperson and senator, Nick McKim, said.
One supplier group, while not dismissing the plan entirely, urged caution.
“We support the threat of divestiture powers and the ability to address the market share issues that exist, but it has to be done cautiously,” Ausveg CEO Michael Coote, said. “We don’t want any of these current inquiries and processes that are looking into retailers to result in any unintended, negative consequences for vegetable producers, who are already doing it very tough.”
This story first appeared on our sister publication Inside Retail
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