WEBVTT - Inside the Coles and Woolworths 'fake' discounts case

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<v Speaker 1>I'm Daniel James and you're listening to seven AM. Back

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<v Speaker 1>in twenty twenty four, the Age People See announced it

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<v Speaker 1>would take Colds and Woolworths to court over what it

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<v Speaker 1>says where fake discounts for more than five hundred everyday products.

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<v Speaker 1>If illow tip offs from citizens lose. We've been documenting

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<v Speaker 1>curious price changes on everyday products like chocolates and pasta.

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<v Speaker 1>Now that case is in federal court, with the watchdog

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<v Speaker 1>arguing Coals misled customers with its down down promotions, increasing

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<v Speaker 1>prices just before discounting them again. Coals denies and did

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<v Speaker 1>anything wrong, putting the price jumps down to rising costs.

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<v Speaker 1>A separate case against wil War's over its price dropped

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<v Speaker 1>promotions is expected to follow later today, we're bringing you

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<v Speaker 1>an episode from twenty twenty four where Ruby Jones speaks

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<v Speaker 1>with economist and journalist Peter Martin about the reckoning facing

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<v Speaker 1>Australia's two biggest supermarkets. Is Sunday, February twenty two. This

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<v Speaker 1>episode was first published in October twenty twenty four.

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<v Speaker 2>Peter, let's begin by talking about how this legal case

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<v Speaker 2>was built. Where did the a troble seize investigations.

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<v Speaker 3>Begin Initially it got phone calls. Now it gets a

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<v Speaker 3>lot of phone calls, and it has a lot of

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<v Speaker 3>discretion about what to investigate. In fact, most of the

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<v Speaker 3>things it gets it never investigates. In this instance, there

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<v Speaker 3>were so many that it looked further, and when it

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<v Speaker 3>looked further, it discovered social media. Hundreds of posts from

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<v Speaker 3>I don't know if you call them citizen data analysts

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<v Speaker 3>or citizen data journalists.

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<v Speaker 4>Colsm Wolworth. Pricing is fascinating, and I've got a really

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<v Speaker 4>great example.

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<v Speaker 3>One was from a guy called prist check guy. Now,

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<v Speaker 3>one post on TikTok about Cadbury Caramelo koalas has been

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<v Speaker 3>viewed three hundred and seventy three thousand times.

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<v Speaker 4>Okay, I'm actually a little bit upset by this product,

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<v Speaker 4>and I tell you why. Here was a product that

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<v Speaker 4>was consistently one dollar discounted to eighty cents, one dollar

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<v Speaker 4>discounted to eighty cents, and in one day it just

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<v Speaker 4>jumped up to two dollars. So now it's two dollars

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<v Speaker 4>discounted to one dollar, and calls is calling that a

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<v Speaker 4>half priced.

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<v Speaker 3>That's what the a triple C saw. But then it

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<v Speaker 3>was able to as it has the power to do

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<v Speaker 3>seek data from the parties in this case Coles and Morwitz.

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<v Speaker 3>Now it can only do that legally, normally if it's

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<v Speaker 3>preparing a legal action. So they knew something was coming

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<v Speaker 3>because the A Triple C has been going through the

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<v Speaker 3>data on their computers for some time.

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<v Speaker 2>Okay, so the A Triple C has been trolling the data.

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<v Speaker 2>So what has it said that it's uncovered about just

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<v Speaker 2>how many times these kinds of promotions were happening.

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<v Speaker 3>It's presented five hundred odd cases. It could have presented more,

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<v Speaker 3>but it said that it's wanted to only look at

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<v Speaker 3>cases where prices had been steady for at least six

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<v Speaker 3>months before the action. What happened in the action was

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<v Speaker 3>an increase of a few weeks and then prices being

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<v Speaker 3>discounted to a price that was no lower than the

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<v Speaker 3>price had been for months before. And the products of

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<v Speaker 3>the kind we all use aren't It's Timtams Kellogg Cereal

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<v Speaker 3>stay free pads. Those are some of the ones for

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<v Speaker 3>Warlworths Energizer, batteries, for coals, liber tampons, Ness Cafe, instant coffee.

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<v Speaker 3>If the A Triple C can establish that people took

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<v Speaker 3>them at their word. That's a key part of the

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<v Speaker 3>a trible c case, it says, and it needs to

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<v Speaker 3>establish this that people were led to believe that Coals

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<v Speaker 3>and Woolworths were looking after them by delivering lower prices.

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<v Speaker 3>In other words, that people didn't think it was a trick.

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<v Speaker 3>It has a strong case to argue that it's misleading

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<v Speaker 3>and deceptive.

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<v Speaker 2>As this court case is launched, how would you describe

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<v Speaker 2>the way the public feels about the big two supermarket chains.

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<v Speaker 3>I think the public hates the big two supermarket chains,

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<v Speaker 3>but it wasn't always like this. It's an appalling come

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<v Speaker 3>down in terms of public image. During COVID, Coles and

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<v Speaker 3>Woolworth's got together, they ensured we got toilet paper, all

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<v Speaker 3>of the things we needed. Warlworths, they were a me

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<v Speaker 3>year ago, in September, the most trusted brand in Australia

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<v Speaker 3>according to Roy Morgan. Now that same company, Woolworths, is

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<v Speaker 3>Australia's fifth least trusted brand. I think they probably always

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<v Speaker 3>behaved badly where they could. That's a guess. Don't hold

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<v Speaker 3>me to that. We'll see what comes out in court.

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<v Speaker 3>But when prices shot up in twenty twenty two, we saw,

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<v Speaker 3>according to the ABS, in two and a half, here's

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<v Speaker 3>a sixteen percent jump in prices. Previously that increased only slowly.

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<v Speaker 3>You know, a lot of that was just passing on costs.

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<v Speaker 3>But the a trip we'll see report says Woolworths widened

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<v Speaker 3>its margins in that time of high inflation. We started

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<v Speaker 3>paying attention. We saw the pain every time we went shopping.

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<v Speaker 3>We were horrified at what.

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<v Speaker 5>We saw robust competition.

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<v Speaker 1>I mean sums, the former head of the A Triple

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<v Speaker 1>C says that we had one of the most concentrated supermarkets,

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<v Speaker 1>lying it's not true.

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<v Speaker 3>And then we saw the walk out from a four

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<v Speaker 3>Corners interview from the chief executive of Allworth's earlier this year.

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<v Speaker 1>His words are the wide by the way, I don't

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<v Speaker 1>think you would impugne his integrity and his understanding of

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<v Speaker 1>competition law. I'm just saying the world has got much

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<v Speaker 1>more competitive. He retired eighteen months ago.

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<v Speaker 6>He's not okay, Well, can we teck that out?

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<v Speaker 3>Is that we saw the same chief executive, as a

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<v Speaker 3>result of that, being threatened with imprisonment when he refused

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<v Speaker 3>to give a clear answer to a Senate inquiry. I've

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<v Speaker 3>answered the Questionna.

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<v Speaker 7>You have not answered the question, mister Vanderci. Honestly, I'm

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<v Speaker 7>not interested in your spin or you bullshit. This is

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<v Speaker 7>a Senate inquiry answer. The question was your return on

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<v Speaker 7>equity twenty six percent in the last financial year, which

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<v Speaker 7>is more than two and a half time.

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<v Speaker 3>It's been really one, I suppose image blunder after another,

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<v Speaker 3>although none of them are as serious I think in

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<v Speaker 3>the mind of the public as this.

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<v Speaker 2>Coming up after the break, Will Coles and Willworth's fight back.

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<v Speaker 2>Peter Coles and Willworth's are being sued by the HBLEC

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<v Speaker 2>over allegedly misleading customers with these illusory discounts on everyday items.

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<v Speaker 2>Have the supermarket said about how they planned to respond.

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<v Speaker 3>Coles says it will respond and that's all. It issued

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<v Speaker 3>a statement to the Stock Exchange almost immediately after the

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<v Speaker 3>able C statement, which tends to indicate it thought it

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<v Speaker 3>was coming, and Woolworth's merely said it would continue to

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<v Speaker 3>engage with the Commission, which also indicates that it's been

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<v Speaker 3>engaging about this reluctantly letting the Commission inside its computers

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<v Speaker 3>for some time.

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<v Speaker 2>Do they have any chance of beating it?

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<v Speaker 3>It's an awful case to win. In fact, winning might

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<v Speaker 3>be even worse. What do you mean You wouldn't need

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<v Speaker 3>to let people inside your pricing practices. Everything would come

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<v Speaker 3>out in court. We saw this with Quantus. Quantus sold

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<v Speaker 3>those ghost flights, flights that had already canceled, and when

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<v Speaker 3>it made its submission to the Federal Court, using the

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<v Speaker 3>same provision of the Australian Consumer Law, it said people

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<v Speaker 3>did not buy tickets when they bought them for a flight,

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<v Speaker 3>they bought quote, a bundle of rights that enabled them

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<v Speaker 3>for various things. Now this made Quantus a laughing stock.

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<v Speaker 3>Does Coles want that? What Quantus did was to settle

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<v Speaker 3>out of court for a total of one hundred and

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<v Speaker 3>twenty million dollars And I think it regarded that as

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<v Speaker 3>fairly good value for money. And it's interesting that Walworth's

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<v Speaker 3>has not said it will fight it in court.

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<v Speaker 2>Okay, there's probably a lot of conversations happening behind the

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<v Speaker 2>scenes then about how both companies should handle this. I

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<v Speaker 2>would say, so, tell me about the possible penalties.

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<v Speaker 3>Labor increased the penalties shortly after it was elected. The

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<v Speaker 3>penalty was ten million dollars for an instance of misleading

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<v Speaker 3>and deceptive conduct. That's increased to fifty million. I don't

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<v Speaker 3>think anyone thinks that they'll add five hundred cases together

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<v Speaker 3>and multiply them by either ten or fifty million, that

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<v Speaker 3>that would be an extraordinary amount of money. There is

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<v Speaker 3>a provision in the law actually which says if it's

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<v Speaker 3>too complicated to calculate, there can be an award of

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<v Speaker 3>thirty percent of a measure of turnover, which would be enormous.

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<v Speaker 3>That's probably not going to happen. The Commissioners certainly said

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<v Speaker 3>it wants those firms Coson Woorworths to donate money to

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<v Speaker 3>charities that provide food to people in need. I think

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<v Speaker 3>what it wants is a big number. In interviews, Gina

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<v Speaker 3>cass Gottlib, the chair of the arible C, has said

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<v Speaker 3>she wants this to set an example, so they don't

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<v Speaker 3>want nothing. In fact, there probably will not be satisfied

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<v Speaker 3>with a genuine promise to fix the behavior. They want

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<v Speaker 3>this to set an example in the same way as

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<v Speaker 3>the Quantus case did.

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<v Speaker 2>So the ACHA will see they're seeking significant penalties. But Peter,

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<v Speaker 2>what else is the government doing beyond that?

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<v Speaker 3>Well, just this week on Tuesday, the Treasurer ramped up

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<v Speaker 3>the pressure on supermarkets. Further, he announced an extra thirty

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<v Speaker 3>million dollars to the atriple C to investigate their pricing

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<v Speaker 3>practices on an ongoing basis.

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<v Speaker 6>So what we're announcing today is all about more resources

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<v Speaker 6>for more investigation and more enforcement and more sites for competition.

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<v Speaker 3>And he that's what talked about negotiating with state governments

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<v Speaker 3>and through them local councils to sort of unpick planning logjams.

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<v Speaker 6>In addition to this crackdown, I'll also work closely with

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<v Speaker 6>states and territories to progress a reform of planning and

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<v Speaker 6>zoning regulations as fast as possible so that we can

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<v Speaker 6>boost competition in the super market sector by opening up

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<v Speaker 6>more sites for new stores.

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<v Speaker 3>The biggest thing, according to the draft report of the

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<v Speaker 3>atrible C Inquiry, that stops people going to a competitive

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<v Speaker 3>supermarket apart from inertia, is that there isn't one, and

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<v Speaker 3>that's because regulations make it hard to start a new

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<v Speaker 3>one and in some instances, and the Commission named two

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<v Speaker 3>a suspicion of land banking. That is to say that

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<v Speaker 3>Coles and Wolworth's buy a spot, they might say that

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<v Speaker 3>one day they're going to have a supermarket on it,

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<v Speaker 3>but The key effect in the meantime is that no

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<v Speaker 3>one else can. And there's even something bigger that certainly

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<v Speaker 3>the Greens and the Coalition as it happens once, and

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<v Speaker 3>that's that the a trible C applying to the Federal

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<v Speaker 3>Court gets the right to force supermarkets to divest, maybe

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<v Speaker 3>sell ten percent of their stores, maybe sell stores in

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<v Speaker 3>some states, maybe find an entire arm of the business

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<v Speaker 3>and hive it off. The Coalition supports that, labor does not.

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<v Speaker 3>It happens in the US and it's happened in the UK.

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<v Speaker 3>What's so different about Australia. Why should Australia be less?

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<v Speaker 3>I suppose free market in the sense of promoting competition

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<v Speaker 3>by breaking companies up than the US or the UK.

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<v Speaker 2>And just finally, so we've heard Jim Thomas say that

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<v Speaker 2>cracking down on zuper markets that's about relieving cost of

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<v Speaker 2>living pressure. So do you think that what has been

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<v Speaker 2>announced so this HC funding boost and more land potentially

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<v Speaker 2>becoming available for new super markets, do you think these

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<v Speaker 2>measures are going to do that to make the cost

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<v Speaker 2>of living more affordable for people.

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<v Speaker 3>I do think they'll have an effect if they're surrounded

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<v Speaker 3>by pressure from all sides. And you know, frankly, the

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<v Speaker 3>government's announcing a new thing every few days and there'll

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<v Speaker 3>be the major inquiry reporting in February. If they're surrounded

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<v Speaker 3>by pressure on all sides, they have the ability to

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<v Speaker 3>listen this bid. Like quantits. You Quantus charges high fares,

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<v Speaker 3>but it can cut them when there's competition or when

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<v Speaker 3>it's under scrutiny.

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<v Speaker 2>Peter, thank you so much for your time, A great pleasure.

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<v Speaker 1>I'm Daniel James seven am. Will be back tomorrow with

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<v Speaker 1>an episode on Elon Musk's plan to launch a million

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<v Speaker 1>satellites into orbit to power AI. What will that do

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<v Speaker 1>to the night sky and what happens if the satellites collide.

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<v Speaker 5>Near where I live in Saskatchewan, Canada, a SpaceX Crew

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<v Speaker 5>Dragon trunk, big pieces of it, landed on to farmland.

0:13:51.880 --> 0:13:56.240
<v Speaker 5>Farmers found these giant pieces guide in contact with an

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<v Speaker 5>astronomer and then had to figure out how do you

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<v Speaker 5>deal with pieces of foreign countries spacecraft on your farm?

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<v Speaker 1>Right, Thanks for listening. We'll be back tomorrow