As the Senate’s inquiry into supermarket price gouging continues to reveal bombshells, the first representatives from some of Australia’s biggest supermarkets are being called on to answer questions in the Senate, including executives from Aldi and IGA. So will the senators grill the supermarket bosses, or are they just trying to understand the mystery of Aldi’s middle aisle?
Though the Senate’s inquiry is mainly focusing on the business practices of supermarket duopoly Coles and Woolworths, to get a greater idea of the scope of the issue it must question the other members in the supermarket industry — which is where Aldi and IGA come in.
If the Australian Competition and Consumer Commission (ACCC) could be given the power to break up Coles and Woolworths, the Senate needs to ask how will it impact their competitors and if it might then shift the power balance too strongly into another company’s hands.
Let’s see what the representatives of each company had to say during their time in the hot seat.
What did the Senate inquiry ask Aldi?
First to cop a questioning from the Greens-led Senate inquiry was CEO of Aldi Australia, Anna McGrath.
The German-owned chain of stores makes up 10% of the supermarket industry, and has lately become a popular alternative to shopping at the major supermarkets — even if it means putting aside one’s pride and buying the alternate universe name-brand products.
@lachlanfairbairn How they not getting sued everyday
♬ original sound – lachlanfairbairn
If it’s a choice between going hungry or drinking a lemon soft drink named “Jump” instead of “Lift”, I’ll take the Jump.
McGrath was asked if Aldi would support having more transparency around how it chooses its prices, and improving the impact of the Food and Grocery Code of Conduct. McGrath said Aldi would support both.
The current Grocery Code Of Conduct is voluntary, and signed by all four major supermarket companies. However, the government is currently considering making it stricter and implementing serious punishments for those who breach the code.
Where McGrath’s compliance stopped was when she was asked whether Aldi would support the breaking up of Coles and Woolworths duopoly powers, as she feared it would have “unintended consequences”.
Additionally, in devastating news for Tasmanians, she also confirmed that Aldi has no plans of opening stores in the island state, due to difficulty in supply chains. Sorry Tassie, still no discount chainsaws for you.
Before leaving the Senate questioning, McGrath was asked one of the biggest questions about Aldi.
No, not why it sells such random things in the middle aisle. But how does it keep its prices so competitively low?
Apparently, Aldi conducts comparisons of its competitor’s prices on similar products and ensures that its own range is the most affordable by lowering the price.
This behaviour, as well as Aldi’s presence in the market, has resulted in lower prices from other major supermarket chains according to the CEO.
Competition is healthy for creating lower prices? Ya don’t say!
What did the Senate inquiry ask IGA?
Grant Ramage, CEO of Metcash, faced the senate and made some pretty damning accusations of the Colesworth duo. The boss of Metcash — which operates the supermarket chains IGA and Ritchies — alleged that the supermarket giants were land banking to reduce competition.
Somebody call Purple Pingers (hi Jordan, love your work), because if the allegations of price gouging aren’t bad enough, Coles and Woolies could also be dodgy landlords.
Ramage told the Senate he believed both the major supermarkets in Australia were “deliberately engaging” in the act of purchasing land to develop on but never doing it to prevent other businesses from starting up in the area.
“Their sheer scale gives them the financial capability to do that. It gives them greater sway with developers, landlords, and other parties, like state governments,” explained Ramage.
Though land banking is not illegal, Ramage encouraged the Senate to consider strengthening the laws around it to increase market competition.
“It happens under the radar, there is no obligation for the majors to divulge when they acquire property, it’s not illegal,” he said.
These are some pretty big accusations from IGA and Ritchies, AKA the forgotten child in the Australian supermarket family.
Honestly, I feel like it’s kind of punching down to make fun of Ritchies. Like, I know they’re part of a billion-dollar company.
But also… awww cute, they think they’re a supermarket.
When will the Senate inquiry question Coles and Woolworths?
Coles and Woolworths will receive their own grillings very soon, with Coles’ CEO Leah Weckert and Woolworths’ retiring CEO Brad Banducci to face the senate on Tuesday, April 16.
Will Brad will be able to make it through his entire interview this time? You can do it Brad, just don’t forget to wear your trusty Woolworths polo and name badge!
