Coles and Woolworths could be forced to sell land if it prevents rival supermarkets from setting up shop, should the Liberal Party win the next election.
Australia’s two supermarket giants control almost two-thirds of the grocery market, making it the most concentrated duopoly in the world and driving higher consumer prices.
By purchasing land, they effectively block competition, which in 2020 saw German retail chain Kaufland cancel plans to open 20 supermarkets in Australia.
Opposition leader Peter Dutton has now vowed to potentially ban supermarket giants from buying land to stop competitors if the Coalition wins the 2025 election.
“In a particular geographic region where there was a concentration of Coles or Woolies stores, to the exclusion of those other competitors, and consumers were paying more in terms of price, then I think, in that circumstance, you would have to look at whether or not that would dominate. market would continue,” he told reporters in Sydney on Wednesday.
Coles and Woolworths could be forced to sell land if this prevents rival supermarkets from setting up, should the Liberal Party win the next election (pictured, a Sydney Coles supermarket)
‘We now find ourselves in a situation where Coles and Woolies have their own property development arms and are buying blocks of land so that other competitors cannot build in close proximity to their current or planned operations.
“So I think there’s a question mark about the appropriateness of that behavior.”
Former Woolworths chief executive Brad Banducci told the ABC’s Four Corners program in February that he bought land in anticipation of new development in the suburbs, but denied this was designed to stifle competition.
“That’s not something we actively do,” he said.
‘In some cases we buy land (this is one of the lands we have bought and developed), but it is not a way of trying to boost competition.
“It will be over, we need a store in a new area, so you will buy some land and wait for the community to start moving into the area.”
A Coles spokeswoman said it examined land close to growth corridors.
“There are many factors that help us determine where we buy land to build new stores, including proximity to new communities and growth corridors, or the need for full-service supermarkets within existing markets,” he told WhatsNew2Day Australia on Thursday. .
‘Due to regulatory and other requirements, several years may pass between the purchase of the land and the start of construction.
“Once the store is operational, we typically sell the land to a landowner to allow us to invest in building new stores.”
The German supermarket chain Kaufland canceled its plans to open 20 stores in Victoria and South Australia in 2020 because it could not find suitable sites.
“After careful and thorough consideration, Kaufland has decided to undertake an orderly withdrawal from the Australian market,” it said.
“The company will concentrate its business on its main European markets in the near future.”
Coles and Woolworths have a combined 65 per cent market share, making it the most concentrated duopoly in the world, according to a Treasury consultation paper published in February.
Opposition leader Peter Dutton has revealed that if the Coalition wins the 2025 election, supermarket giants would be banned from buying land to exclude their competitors.
Australia’s two supermarket giants control almost two-thirds of the grocery market, making it the most concentrated in the world (pictured, a Sydney Woolworths shopper)
“Australia’s small population, together with its distance from large global population centres, helps explain the high level of market concentration here, but confers greater market power on a small number of supermarket chains here than in most from other countries,” the Treasury said in its review of the food and grocery code.
In comparison, the UK’s top two supermarkets, Tesco and Sainsbury’s, have a 43 per cent market share.
In the United States, the top four Walmart, Costco, Kroger and Target combined have a 34 percent market share.
Australia’s headline inflation rate of 3.4 per cent in February was also higher than the US level of 3.2 per cent.
Bread and cereal prices have risen 7 per cent over the past year in Australia.
Former Woolworths chief executive Brad Banducci told the ABC’s Four Corners program in February that he bought land in anticipation of new development in the suburbs, but denied this was designed to stifle competition.