Hands off Coles: Wesfarmers
Mounting a spirited defence before shareholders of the Perth-based conglomerate's ownership of the nation's No.2 supermarket chain, Coles, Mr Goyder also made a play to the new Abbott government's "hands-off" approach to the economy, saying shoppers were benefiting from lower prices thanks to strong competitive forces in the grocery sector.
"I keep reading and hearing from market interventionists that market shares should be capped at 20 per cent like in the US," Mr Goyder told shareholders at the annual meeting on Thursday.
"Firstly, that would be a sure-fire recipe for higher prices for Australian consumers, and secondly, there is no such law in the USA. It's simply untrue. Indeed, the ACCC debunked this myth in front of a Senate select committee in 2012."
Mr Goyder, who in 2007 led Wesfarmers' purchase of the struggling Coles, said competition regulator reports have estimated that grocery prices would be 17 per cent higher in towns where a major supermarket such as Coles did not operate.
Internally, Coles and its arch rival Woolworths are greatly concerned that a government could one day try to push through caps on market shares to placate opposition to the perceived power of the supermarket chains. Some critics claim they have a combined grocery market share of about 70 per cent.
This would give a dream run to newer entrants such as German discounter Aldi and warehouse store Costco, the market-heavyweight supermarkets believe, robbing them of customers and freezing any growth opportunities.
The ACCC has led much of the charge, promising investigations into Coles and Woolworths for alleged treatment of farmers and suppliers, as well as shopper-docket schemes for fuel discounts at supermarket-owned petrol stations.
But Mr Goyder pushed back against critics, making some of his strongest comments to date. He said it was simplistic to blame all of the farm and food sector's ills on the chains' interaction with suppliers.
"So I get a bit perplexed when Coles is blamed for many of the challenges in the farming/food sector today," he said. "The farming and food industries do have challenges today, as they have had for many years.
"They are not helped by our strong currency, as well as productivity issues and cumbersome regulations.
"But, it is just too easy, too simplistic, to blame the supermarkets for a lot of these difficulties."
He said all stakeholders - suppliers, shoppers, staff and investors - benefited from the resuscitation of Coles. "Since Wesfarmers took ownership, Coles is now selling an extra $4 billion of Australian food and over 200,000 tonnes more Australian fruit and vegetables, valued at almost $1.5 billion."
He said earnings for shareholders who "took the risk" on Wesfarmers' purchase of Coles have seen the supermarket's pre-tax earnings increase 84 per cent between 2009 and 2013. "We sometimes make mistakes - we are not perfect, and we are very conscious of the important role we play in Australia for all our stakeholders," he said.
The Abbott government has promised a full review of the nation's competition framework.
Frequently Asked Questions about this Article…
Richard Goyder believes that government intervention, such as capping market shares, would lead to higher prices for consumers. He argues that the current competitive forces in the grocery sector are beneficial for shoppers, keeping prices lower.
Richard Goyder believes that government intervention, such as capping market shares, would lead to higher prices for consumers. He argues that the current competitive forces in the grocery sector are beneficial for shoppers, keeping prices low.
According to competition regulator reports, grocery prices could be 17% higher in areas where a major supermarket like Coles does not operate. This suggests that the presence of large supermarket chains helps keep prices competitive.
Since Wesfarmers took ownership of Coles, the supermarket has seen significant growth, including an increase in pre-tax earnings by 84% between 2009 and 2013. Coles is also selling more Australian food and produce, benefiting suppliers, shoppers, staff, and investors.
Richard Goyder argues that it is too simplistic to blame supermarkets like Coles for challenges in the farming and food sectors. He points out that these industries face issues such as strong currency, productivity problems, and cumbersome regulations.
Richard Goyder refutes the claims that the US has a law capping market shares at 20%. He states that such a law does not exist in the US and that implementing similar caps in Australia would result in higher consumer prices.
Since Wesfarmers took over Coles, the supermarket has increased its sales of Australian food by $4 billion and sold over 200,000 tonnes more Australian fruit and vegetables, valued at almost $1.5 billion. This has benefited suppliers, shoppers, staff, and investors.
Coles and Woolworths are concerned that government-imposed market share caps would benefit new entrants like Aldi and Costco, potentially robbing them of customers and stifling growth opportunities.
Coles' pre-tax earnings have increased by 84% between 2009 and 2013, reflecting the positive impact of Wesfarmers' ownership on the supermarket's financial performance.
The ACCC is actively investigating Coles and Woolworths for their treatment of farmers and suppliers, as well as their shopper-docket schemes for fuel discounts. The ACCC aims to ensure fair competition and practices in the sector.
Coles and Woolworths are concerned that government-imposed market share caps could benefit new entrants like Aldi and Costco, potentially robbing them of customers and hindering their growth opportunities.
Richard Goyder argues that it is too simplistic to blame supermarkets like Coles for challenges in the farming and food sectors. He points out that these industries face issues such as strong currency, productivity challenges, and cumbersome regulations.
The ACCC has been investigating Coles and Woolworths for their treatment of farmers and suppliers, as well as their shopper-docket schemes for fuel discounts at supermarket-owned petrol stations.
Stakeholders, including suppliers, shoppers, staff, and investors, have benefited from Coles' growth under Wesfarmers. The supermarket has increased its sales of Australian food and produce, contributing to the local economy.
The Abbott government has promised a full review of the nation's competition framework, indicating a potential reassessment of how competition is managed in the supermarket sector.
The Abbott government has promised a full review of the nation's competition framework, indicating a potential shift towards a 'hands-off' approach to the economy, which aligns with Richard Goyder's views on minimizing market intervention.
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