Australian regulator steps up inquiry into supermarket tactics

Thu Feb 14, 2013 3:32am EST

Feb 14 (Reuters) - Australia's competition watchdog is deepening an investigation into whether the nation's leading supermarkets have abused their dominant positions in the market after speaking confidentially with around 50 suppliers.

The Australian retail market is dominated by just a few players, with only New Zealand more concentrated. Woolworths Ltd and Coles, which is owned by Wesfarmers Ltd, command over 70 percent of sales, while Metcash Ltd and Germany's Aldi are ranked third and fourth.

Supermarkets may have breached competition law by engaging in "unconscionable conduct" or favouring their own private label products, Australian Competition and Consumer Commission Chairman Rod Sims said in statement emailed to Reuters.

"The imbalance of bargaining power is one of the key issues identified," Sims said, adding that the Commission would conduct further interviews with suppliers before deciding whether or not to pursue legal action.

The Commission will look into whether suppliers faced persistent demands for additional payments and whether penalties were imposed by supermarkets. It will also examine whether supermarkets made threats to remove products from supermarket shelves, failed to pay prices agreed with suppliers, and whether they favoured their own-brands.

Sims noted that suppliers were reluctant to speak to the Commission for fear of the consequences.

"Whether or not that fear was justified, it was certainly held by the suppliers we spoke to," he said.

(Reporting by Miranda Maxwell in MELBOURNE; Editing by Edwina Gibbs)