Govt fleshes out plan to improve supermarket competition

The Government has expanded on how it will make supermarket giants open their wholesale arms to competitors.

It wants to improve competition in the sector by helping smaller retailers and new market entrants source and sell a wider range of groceries at better prices.

Commerce and Consumer Affairs Minister David Clark in late May said the Government would start working on a regulatory backstop to make big supermarket companies, like Foodstuffs and Woolworths, provide wholesale goods to competitors at a "fair price".

Today, he expanded on this commitment, saying "the existing duopoly will be required to negotiate wholesale offerings to their competitors on commercial terms".

"However if those prices are not what we would expect in a competitive wholesale market the new Grocery Commissioner will be able to impose additional regulation to force fairer prices.

"Ultimately if these interventions don't deliver a fair deal, new regulations can be utilised to require the major retailers to provide wholesale supply at certain terms, including price and range."

Clark said he planned to introduce a bill to Parliament by the end of the year to put a regulatory backstop in place. The bill will go through the regular parliamentary process, before taking effect soon after it's passed - likely in 2023.

In the meantime, Clark said "supermarkets are well advised to lock in good-faith wholesale arrangements on their own terms".

He said he had been reassured the big companies were already taking expressions of interest from smaller players that want to buy from their wholesale arms.

National Party Commerce and Consumer Affairs spokesperson Andrew Bayly said Clark's announcement was "great on intend, but light on detail".

Clark said, "The grocery sector needs to change, so that competing retailers – whether they are independent dairies, smaller chains, or a new entrant – can offer a wider selection of products at competitive prices.

"Alongside these improvements to wholesale access, the Government is also building flexibility into its approach to a collective bargaining exemption for grocery suppliers.

"Many suppliers, particularly small ones, are unable to effectively negotiate terms of supply with the major grocery retailers on their own. This exemption will allow greater scope for them to do this collectively, helping to address imbalances in bargaining power."

The Government has already updated the Commerce Act to stop supermarkets buying up land or dictating the terms of leases to block their competitors from getting a foothold in a neighbourhood.