by Joe Montero
Everyone is upset about how Coles and Woolworths jeep on bumping up prices. So they should be. After all, they control the bulk of the groceries retail market. What they do affects us all. When they used their monopoly power to rise prices far above what a competitive market would sustain, it has an unreasonable negative impact of the standard of living of the population.
News that the Australian Competition and Consumer Commission (ACCC) is investigating a particular trick allegedly practiced by these two giants, is welcome news for the broad Australian community.
In this instance, the using pretend discounts to trick customers.
“Many consumers rely on discounts to help their grocery budgets stretch further, particularly during this time of cost-of-living pressures,” said the ACCC chair Gina Cass-Gottlieb.
Th graph below shows how in a real case involving Oreo biscuits the price started at $3.60. This was raised to $5 for two weeks and marked down to $4.80 in an advertised price drop campaign.
By practicing this across many products, the supermarkets can widen their profit margins considerably. more so when they hook the public in with their dishonest “Prices Dropped” or “Down Down” promotion campaigns.
The ACCC allegations involve 245 products. At Coles and 266 products at Woolworths. And these are companies that score multibillion dollar profits each year. A report on these allegations will be out is due course, and the ACCC is signalling it intends to seek a court order to comal the two supermarket chains to contribute to charity. This would be a very mild penalty indeed. Any organisation guilty of fleecing the public on this scale should be considered to be involved in large scale theft and penalised accordingly if found guilty.
This is not too tough. Everyday Australians are finding it harder to put food on the table and a roof over their and their family’s heads. The rising cost of living is real. Jobs are getting scarcer. The economy is in the doldrums. This is a time for the nation to pull together, in a way where we look after each other, share the load and the reward.
Corporations operating in the opposite direction, driven by greed to maximise the bottom line and feed major shareholders, deserve the ire of society and to be held to account. What they do causes harm.
Image from The Australian: Supermarket CEOs love a healthy bottom line, pretend concern for cost of living affecting as the money flows to the shareholders
In this light the ACCC’s latest move on Coles and Woolworths, although welcome, is rather mild. Good if it can bring some easing of this particularly bad practice. But the reality of price gouging involves more than this.
Back in May, the ACCC released a report saying that there is evidence of price gouging coming out of the research of the Queensland University of Technology (QUT). The 195-page report detailed everything form the impact of pricing, excessive profitability, the wages and conditions of its staff, food waste, company mergers and land banking. It found many questionable practices. The ACCC recommended giving courts the power to break up anti-competitive monopolies and imposing a mandatory food and grocery code of conduct.
Nothing has come out of it so far. Price gouging is perfectly legal in Australia. Will anything come out of the look into false discount practices. Probably not, if the track record is an indicator. Up till now the major parties have not been willing to outlaw these practices. New Zealand, Britian and the United States have more laws to combat monopoly abuses than Australia does, and this goes to show just how far Australia is lagging.
Attention is needed to counter misleading advertising, the manipulation of stock availability to push up prices, understaffing and underpaying that leads to lowering service standards to widen an already wide profit margin, and the underpayment for produce from farmers and other suppliers for the same end.
A report commissioned by the Australian Council of Trade Unions (ACTU) last year, measured price gouging across a arrange of industries. It was led by former head of the ACCC Professor Alan Fels. It found evidence of price mark-ups, including the use of the weather and war to inflate prices. Labour costs are often blamed for putting up prices, despite that in real terms wage increases are minimal and well below the price increases, plus the wages share of national income is on a downward trajectory, while the corporation’s’ share is on an upward one.
The supermarket monopolies must be regarded as entities existing within society and having a shared responsibility to society. When the citizens are doing it tough, the monopolies must share the burden of overcoming this. When they fail to take on the responsibility, justice demands that they must be made to.
Maybe we have reached a point where we need fewer inquiries and more action. Cloes and Woolworths may not be the only guilty ones. But paying attention to them is a good start.
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