Push for grocery regulator

AUSTRALIA'S supermarket duopoly could face growing pressure, with the Nationals next month expected to push for the establishment of a specialist regulator for the industry.

AUSTRALIA'S supermarket duopoly could face growing pressure, with the Nationals next month expected to push for the establishment of a specialist regulator for the industry.

The move follows the launch of Britain's first supermarket regulator to be run by a high-profile farming industry executive.

Britain's new Groceries Code Adjudicator has been given the power to fine Britain's 10 biggest supermarkets if they are deemed to have unfairly treated their suppliers as outlined in a new code of conduct.

The move has reignited debate in Australia about the rising power of the two supermarket giants, which together generate more than $100 billion a year in revenue.

The Nationals plan to include a new regulator as part of an agenda item during a party room meeting to be held in Port Macquarie next Friday.

The meeting will also discuss re-opening an inquiry into the milk industry and the introduction of a grocery ombudsman and a small business and farm tribunal with powers to monitor the behaviour of the supermarket chains.

It comes on the eve of the two-year anniversary of Australia's savage $1-a-litre milk price war between Coles and Woolworths, which has hurt the dairy sector.

A spokesman for Coles said a British-style ombudsman had no merit and would add red tape and cost without any commitment from retailers or suppliers to work together.

"Coles supports a co-operative approach to retailer and supplier relationships and dispute resolution," he said. "The only support for an ombudsman comes from fringe political players that are looking for a platform to promote their name in an election year or those looking for regulatory leverage in commercial relationships."

Last year the Coalition committed to a review of the supermarket system and competition policy if elected to power and the Liberal National Party in Queensland, driven by Senator Barnaby Joyce, passed a motion in favour of divestiture of powers.

Since the milk and bread wars flared in 2011, the power of the supermarkets, and their expanding retail activities and use of private label brands, has spilt into the political and regulatory arenas.

Coles and Woolworths together account for at least 70 per cent of the grocery market, and 55 per cent if fresh produce is included.

The Gillard government has ruled out any legislative changes to curb the power of the supermarket chains, calling instead for a voluntary and co-operative industry approach. Last year it set up a forum for industry participants to develop a framework for improving relationships between supermarkets and suppliers.

The panel, which includes representatives from Coles and Woolworths, is expected to outline its proposals to the government next month.

A spokeswoman for Woolworths said the retailer had been "working constructively with the other major retailers, food and grocery manufacturers on an alternative path to an ombudsman".

The opposition's agriculture spokesman, John Cobb, said on Friday the supermarkets were marking the anniversary of the milk wars by extending the $1 per litre milk to their service stations to take market share from beleaguered corner stores.

"We all know that once the supermarkets have eliminated the competition the prices will go up, supermarket profits will go up and farmers will still get less. This campaign continues to drive more dairy farmers out of the industry," Mr Cobb said.

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