THE DISTILLERY: Supermarket check-out

Australia's top consumer watchdog Rod Sims has laid out five claims about practices of the big supermarkets that it plans to take on. Three of Australia's leading business commentators look at the Australian Competition and Consumer Commission's allegations, the implications and the latest movements by Woolworths and Wesfarmers.

Firstly, the five claims are neatly explained by The Australian Financial Review's Chanticleer columnist Tony Boyd.

"The five claims, which are not identical across both companies, are as follows: Persistent demands for additional payments from suppliers, above and beyond those negotiated in their terms of trade. The imposition on suppliers of penalties that did not form part of any negotiated terms of trade, and which apparently do not relate to actual costs incurred by the major supermarket chains as a result of the conduct which has led to the penalty being imposed. Threats to remove products from supermarket shelves or otherwise disadvantage suppliers if claims for extra payments or penalties are not paid. Failure to pay prices agreed with suppliers. Conduct discriminating in favour of home-brand products.”

Fairfax's Malcolm Maiden describes the statement by Sims to the Senate Estimates Committee last night as a "watershed moment”.

"The competition regulator can demand that information be supplied to it in the formal investigation it is now running, so allegations that the supermarkets misuse their power in dealings with suppliers will finally be thoroughly examined. It may in time come to be seen as the point at which the enormous power of the two retailing giants finally began to be reined in… In his statement to a Senate Estimates Committee hearing on Wednesday night he was careful not to say that the major chains have broken the law, and it is a fact that the use of market power is not illegal. The misuse of market power is illegal, however.”

The Australian's John Durie writes that if there was any doubt that the ACCC would pursue Woolworths and Wesfarmers through the courts, it has now been rested. The only question is when and what allegation is tested.

"The latest tactic aimed at overcoming supplier reluctance to complain publicly about Coles and Woolies is a slew of section 155 discovery notices to force them to come forward. Suppliers, too, will be on notice given their behaviour is not always perfect – or, as some say: ‘There are not too many virgins in a brothel.' Sims is right to wage his campaign because the balance of power is heavily weighted in the behemoths' favour, and that is where a competition regulator needs to be in an attempt to deliver better consumer outcomes.”

In other company news, The Australian's Barry Fitzgerald offers his thoughts on the first set of Rio Tinto results handed down by new chief executive Sam Walsh.

"All in all, Walsh is obviously comfortable in his new position. So much so, he might well have been wearing a new pair of shoes from Church's for the occasion. But without wanting to rain on his parade, the results from the dual-headed aluminium division continue to be appalling. So bovver boots might be more in order. Such is the bleeding, it could quickly determine Walsh's success or otherwise as Rio's chief executive. It needs to be kicked into shape in a hurry, something that should also be expected from BHP Billiton boss Marius Kloppers with that group's ailing aluminium arm.”

Fairfax's Malcolm Maiden writes in a separate piece that Rio appears to be hinting pretty strongly about better shareholder returns, or even directly sending money back to shareholders.

Yesterday, Business Spectator's Stephen Bartholomeusz also wrote about Rio's results, along with just about everything else. From just one day's news cycle, there's also a Bartholomeusz story on the shifting strategy at Optus, a Bartholomeusz story on the steady decline of return on equity as an issue at Wesfarmers and a Bartholomeusz story on the disastrous event from those shorting Alumina via the $452 million placement to China's CITIC Resources. Good heavens!

Meanwhile, The Australian's Bryan Frith writes that it's easy to feel sympathy for Andrew Coppin at Wilson HTM, who's currently dealing with a takeover offer from Mariner Corporation that, strictly speaking, adheres to corporations law, but at a stretch.

Elsewhere, The Australian's Glenda Korporaal muses that Superannuation Minister Bill Shorten might have been unable to make annual conference of Self-Managed Superannuation Professionals Association conference at the Melbourne Convention Centre yesterday because there's simply too much focus on his portfolio right now. Being put on the spot might have been a little difficult.

The Australian's economics correspondent Adam Creighton points out that special economic zones, like the one championed by mining billionaire Gina Rinehart and the one contemplated by the federal coalition, are not a new or untried idea. In fact they've worked in places like Hong Kong, West Berlin and China's Shenzen province.

And finally, The Australian's economics editor David Uren reports on the shrinking list of boasts that Treasurer Wayne Swan can claim for himself.