ACCC gives supermarkets green light to co-operate

The competition regulator will allow the nation’s biggest supermarkets to co-ordinate over the sourcing and supply of food.

Woolworths has introduced plexiglass screens across its supermarket network to protect workers from being exposed to COVID-19. Picture: Dallas Kilponen

In an unprecedented move competition regulator the Australian Competition and Consumer Commission will allow the nation’s biggest supermarkets - Woolworths, Coles, Aldi and wholesaler Metcash - to work with each other over the sourcing, supply and shipment of food.

The interim authorisation would allow supermarkets to co-ordinate with each other when working with manufacturers, suppliers, and transport and logistics providers.

The change means market practices that were once viewed as potentially illegal and which could have lead to criminal sanctions can now be conducted in the open as the supermarkets are tasked with ensuring the supply of food and groceries in the wake of the coronavirus pandemic.

However, as a safeguard to halt any slide into collusion, the new competition ruling will not allow the supermarkets to agree on pricing.

The ACCC said on Tuesday that supermarket operators would be able to co-ordinate immediately to ensure consumers have reliable and fair access to groceries during the COVID-19 pandemic.

The ACCC said the change was designed to ensure the supply and the fair and equitable distribution of fresh food, groceries, and other household items to Australian consumers, including those who are vulnerable or live in rural and remote areas.

“Australia’s supermarkets have experienced unprecedented demand for groceries in recent weeks, both in store and online, which has led to shortages of some products and disruption to delivery services,” ACCC chairman Rod Sims said.

“This is essentially due to unnecessary panic buying, and the logistics challenge this presents, rather than an underlying supply problem.”

“We recognise and appreciate that individual supermarket chains have already taken a number of important steps to mitigate the many issues caused by panic buying. We believe allowing these businesses to work together to discuss further solutions is appropriate and necessary at this time,” Mr Sims said.

Woolworths chief executive Brad Banducci welcomed the ACCC decision.

"We’re pleased that the ACCC and the government are supportive of sensible collaboration between Coles, Aldi, Metcash and Woolworths in this challenging period for the Australian community,” he said.

“It’s in the national interest for retailers to be able to collaborate on issues such as the health and safety of team members and customers, and on ensuring Australia's supply chains are robust and operating effectively. This will ultimately mean more products, delivered safely to communities across Australia.”

The ACCC granted interim authorisation on Monday afternoon after receiving the application last Friday.

“We have worked very swiftly to consider this interim authorisation application, because of the urgency of the situation, and its impact on Australian consumers,” Mr Sims said.

The Department of Home Affairs has convened a Supermarket Taskforce, which meets regularly to resolve issues impacting supermarkets. Representatives from government departments, supermarkets, the grocery supply chain and the ACCC are on the taskforce. The interim authorisation applies to agreements made as a result of taskforce recommendations.

The authorisation applies to Coles, Woolworths, Aldi and Metcash. It will also apply to any other grocery retailer wishing to participate. Grocery retailers, suppliers, manufacturers and transport groups can choose to opt out of any arrangements.