Project Significance

This project is significant because it concerns a sector that is of critical importance to Australia's food and beverage, grocery and fresh produce industry.

The industry turned over $114 billion in 2012-13, representing 28.9% of total manufacturing industry turnover, it employs approximately 300,000 people, makes a substantial contribution to Australia's international trade position and is central to the sustainability of our national food system.

Groceries affect the costs and quality of life of all Australians. Most Australians regularly visit supermarkets and the average Australian household spends around 17% after tax income on standard groceries.

However regulation of supermarket power is significant for many reasons beyond its impact on industry profits and household budgets. The issues raised by the competitiveness of the grocery sector are economic, political and social in nature and have short and long-term implications for consumers, businesses, workers and communities.

Substantial public moneys have been devoted to attempting to address the regulatory issues raised by the sector and the power of the major supermarket chains, in particular. These efforts are yet to result in any coherent or systematic regulatory response.

Despite the intense scrutiny to which this sector has been subject in recent years and the central role the major supermarkets play in the vast majority of consumer's lives, the various public inquiries to date have paid relatively little attention to the role of the major supply chains in shaping the regulatory environment and its outcomes.

Instead the focus has been directed towards the efficient functioning of retail grocery markets and the effects of the power of big supermarkets on conduct in and the performance of these markets, emphasising the implications for consumers, competitors and suppliers.

Thus, the approach taken in the many sector inquiries and investigations to-date has been of looking outside-in; analysing the implications of market structure and conduct through the narrow lens of the existing legal framework.

In contrast not much is known about how Coles and Woolworths came to dominate the grocery industry and how they have each adapted their strategies as the industry has matured, the regulatory environment has become more complex and consumers more demanding with regard to the attributes and values expected from retail traders.

There has been no in-depth study of the major supermarket chains' strategic development in these respects, even less from a competition law and regulatory perspective, and of the influences of their respective corporate structures, cultures, governance systems and financial imperatives in this process.

Nor has there been a detailed study of the web of relationships and networks involving the major supermarket chains and other regulatory participants, including industry associations and trade groups, unions, local governments, professional and community bodies, and the potential inherent in these broader industry dynamics to contribute to the regulation of the sector.

This project is seeking to fill these gaps.