LOBBY groups are uncomfortable with the power of the supermarket chains - but the situation is set to continue, writes LESLIE WHITE
Coles and Woolworths' dominance of Australia's grocery trade is set to continue, with claims a third player would find it tough to erode their market share.
Despite the claims, the Australian Competition and Consumer Commission says there is competition in the sector.
According to a PriceWaterhouseCoopers report last year, Coles and Woolworths control up to 80 per cent of Australian grocery trade, up from 30 per cent in 1975. But the retail giants claim their share is 54 per cent. They also have massive portions of the petrol and packaged-liquor markets.
Australian Centre for Retail Studies retail analyst Alana Jones said the massive market share of the two put pressure on suppliers. She doubted a third player could take significant market share, even with huge financial backing.
"There's talk of (US giant) Costco ruffling feathers, but ultimately the sites are gone," she said.
A recent ACCC inquiry into grocery prices found access to suitable sites was a "critical barrier to entry" for a company chasing a share of the market. The report also claimed poor prices sometimes paid to growers were not the result of the duopoly.
Tasmanian grower and former supermarket produce buyer Richard Bovill disagrees.
"When you have that much (market share) you create market distortion - a supplier who has to deal with someone with that much power works from a weak position," he said.
Two retailers dominating sales did not qualify as a "market" under economic definitions, he said.
Mr Bovill said he was not surprised the ACCC had failed to find a grower willing to criticise the supermarkets at its inquiry.
"What's the implication of a holiday (industry speak for having your supermarket orders cut) for six weeks? If they're 60 per cent of your business you can't do it," Mr Bovill explained.
But ACCC chairman Graeme Samuel said he had offered growers "absolute confidentiality" should they come forward with concerns about supermarket behaviour.
The Victorian Farmers Federation, the Horticulture Australia Council and the Australian Beef Association all expressed concerns about the market power of Coles and Woolworths to the ACC. A HAC survey showed 85 per cent of growers were unwilling to raise issues with major retailers "for fear of retribution".
RACV petrol spokesman David Cumming said he was "extremely worried about the huge market share" of the two retail giants in the petrol sector.
The NRMA last week claimed motorists were paying eight to 10 cents more for petrol because of the dominance of Coles and Woolworths service stations in NSW.
Nationals senator Barnaby Joyce said inflated petrol prices would "certainly" have a knock-on effect on food prices.
He said the two majors "want a monopoly on giving you a hangover and then selling you the cure".
He said weak trade- practices laws were to blame for the centralisation of most of the grocery trade. Although he said the market dominance could be changed by government breaking the companies up, as had happened overseas, this would not happen because "the vested interests have an extremely strong hold on both sides of the political scene".
Fruit Growers Victoria general manager John Wilson said criticising supermarkets publicly "could be economic suicide" for a grower.
But he doubted growers would receive better deals for produce even if a significant third player entered the supermarket game.
Mr Samuel said the fact Franklins had posted its first profit this year, along with Costco's planned entry to Australia, showed there was competition in the industry.
A spokesman for Coles said the company had long-standing relationships with many growers.
"These growers choose to stay with Coles because we pay them fair and sustainable prices for their produce," he said.
Mr Bovill said many growers who supplied supermarkets directly were "very happy".
Woolworths failed to respond to questions from The Weekly Times.