Metcash bosses tell ACCC inquiry it is integral to supermarket competition

Wholesaler Metcash has told an ACCC public hearing into supermarkets that the independent chains it supplies are a vital ingredient for competition and choice in the sector.

Metcash supplies around 75 per cent of the more than 2000 independent supermarkets in Australia. Picture: Bloomberg

The boss of wholesaler Metcash’s supermarkets and food arm has disagreed with the competition regulator’s interim findings that there is a lack of competition among independent supermarkets, despite Metcash being the dominant wholesaler to smaller grocery chains.

Grant Ramage told the Australian Competition & Consumer Commission public hearings into the supermarket sector that as a wholesaler, Metcash allowed smaller independent supermarket chains to better compete with industry giants Woolworths and Coles.

Asked questions about the power and dominance of Metcash by counsel assisting the inquiry, Naomi Sharp SC, Mr Ramage agreed that Metcash supplied around 75 per cent of the more than 2000 independent supermarkets in Australia, but this did not mean it was a barrier to competition among independent retailers.

“I strongly disagree,” Mr Ramage told the public hearing on Thursday.

“There is strong evidence that the way we work with independent customers and suppliers and use the scale that exists in our customer base … is a powerful force to allow them (independent supermarkets) to compete.

“It would be difficult if not impossible for them to compete without us,” Mr Ramage said.

Metcash CEO Doug Jones: ‘We provide choice, we provide a differentiated offer … we do that across the country and in many cases in regional and remote areas.’

He said independent supermarkets made up around 7 per cent market share of the Australian supermarket sector and that any further fragmentation of that grouping – if the regulator intervened in wholesaler operations – would only serve to weaken the independent chains and potentially cede more power to Woolworths and Coles.

The ACCC inquiry into supermarkets is hearing from retail executives, consumer groups and suppliers as part of its public hearings into the $120bn sector. The public hearing is being led by ACCC deputy chairman Mick Keogh.

Mr Ramage said that while there wasn’t another supermarket wholesaler the size of Metcash in Australia, this wasn’t impacting competition in the sector.

Three Metcash executives appeared before the public hearing on Thursday, including chief executive Doug Jones, who said the independent supermarkets were an “important ingredient” to competition and for choice.

“We provide choice, we provide a differentiated offer … we do that across the country and in many cases in regional and remote areas,” he told the hearing.

Mr Jones said in terms of store locations and properties, Woolworths and Coles often had an advantage over independent supermarkets as they can sometimes be favoured by shopping centre landlords and can get more competitive pricing on costs of doing business outside of the actual cost of the groceries, such as electricity and labour.

Earlier this week the ACCC heard from three executives from German discounter Aldi, including its national manager of buying, Jordan Lack, with Aldi requesting some of its testimony be held in private so as not to broadcast commercially confidential information.

Mr Keogh later allowed for that part of the hearing to be held in a closed session as Ms Sharp asked a range of questions around Aldi’s sales, margins and profitability.

The ACCC public hearing will next week hear from Woolworths executives over two days of testimony, to be followed the next week by executives from Coles.

The inquiry is set to hand its findings and report to the federal Treasurer Jim Chalmers by the end of February.