Coles, Woolworths blamed for high supermarket prices

By Chris Zappone
Updated November 5 2012 - 11:25pm, first published November 8 2009 - 11:42pm
Picture: GLENN HUNT
Picture: GLENN HUNT

Supermarket giants Coles and Woolworths are being blamed for Australians paying the fastest growing prices for groceries in the world.According to new OECD price data, food prices in Australia have increased 41.3 per cent since the start of 2000, it has been reported this morning.Spain has the next fastest rate of increase over that time at 41.2 per cent.University of NSW associate professor Frank Zumbo said comparing costs over 10 years eliminated variables such as drought, and exposed Australia's "cosy" supermarket duopoly as the main reason for the price surge."When you look internationally, it is our market concentration which explains why our grocery prices are rising faster," he told News Ltd."The reality is we've got one of the most highly concentrated supermarket sectors in the world," University of NSW associate professor Frank Zumbo told Radio 3AW. Coles and Woolworths account for about 80 per cent of the Australian market, with independent grocer chain IGA Supermarkets accounting for another 16 per cent, he said. "We're clearly paying more for grocery prices because we have two players who can act as a 'cozy club', that can push up prices at will and they do that because they have a strangle hold over the sector." By comparison, in the UK, four or five large supermarket chains control only 65 per cent of the market, with independents making up the difference, Mr Zumbo said. He said Australia lacked the small local grocery retailers that made up a large part of the UK's market and that Coles and Woolworths had a "stranglehold" over shopping centre leases and land development. "Because (they) are very good at protecting themselves from new competitors they're able to able to push up grocery prices," he said, adding there was no incentive for the pair to compete against one another on price. "We need those independents to keep Coles and Woolworth's honest." Mr Zumbo said Coles and Woolworths charged higher prices where they were the only two players, even when they charged less for the same products where a viable third-party player, such as Aldi, was active.Earlier this year, the federal government dumped its criticised Grocery Choice website.

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