Grocer plan to put new sites to test
A PLAN to make Australia's major supermarket chains pass a "competition test" before opening a new store and the appointment of a grocery commissioner are among the recommendations believed to have been included in a report handed to the government on grocery prices.
A PLAN to make Australia's major supermarket chains pass a "competition test" before opening a new store and the appointment of a grocery commissioner are among the recommendations believed to have been included in a report handed to the government on grocery prices. The Australian Competition and Consumer Commission's 642-page report has been delivered to the Federal Government and will be released next week.Woolworths and Coles and their significant stake in the nation's $70 million grocery trolley (which has been put at up to 80% in one report but is disputed by the chains) has been a central focus of the six-month inquiry.Citi Investment Research analysts believe the ACCC has recommended the introduction of a competition test for new stores in a bid to beef up competition.The test, which was recommended by the UK Competition Commission after a similar grocery inquiry in Britain, is for future store openings on vacant land.Under such a test, big players would not be allowed to establish new stores if it gave them more than 60% of the local market share.The ACCC is certain to introduce a grocery monitoring website where shoppers can compare supermarket food prices.Under the $12.9 million scheme, the ACCC will offer comparative prices on selected food items monthly.Another likely recommendation is mandatory unit pricing, which could help consumers to save a whopping $800 million, according to Citi. Aldi has already adopted the pricing system, which allows shoppers to screen a product's price by how much it costs per kilogram or litre. Woolworths, Coles and Franklins have already pledged to adopt unit pricing.Citi Investment Research believes the report includes a ban on restrictive lease covenants that prohibit rivals from setting up in shopping centres. Lease agreements allowing major chains to stay in shopping centres with a clause that denies competitors entering the shopping centre may be abolished.Restrictive zoning laws prohibiting new entrants from suburbs are also expected to be addressed.
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