WEBVTT - Did Coles and Woolies con customers?

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

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<v Speaker 1>Tams and tiny teddies aren't usually the stuff of federal

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<v Speaker 1>court cases, but product by products, dollar by dollar. The

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<v Speaker 1>A Triple C has been building its case against supermarket

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<v Speaker 1>giants Coals and Woolworthse over what it claims were fake discounts.

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<v Speaker 1>Now both cases have wrapped and the judges reviewing the evidence.

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<v Speaker 1>With inflation and grocery prices soaring, the timing couldn't be

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<v Speaker 1>more crucial. Today Chief economist at the Australian Institute, Greg

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<v Speaker 1>Gerricho on the case against the supermarket giants and its

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<v Speaker 1>implications for Australian shoppers this Tuesday, May twelfth, Greg, the

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<v Speaker 1>A Triple C has now wrapped its case against Wilworth's.

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<v Speaker 1>The judge is due to hand down his fining against

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<v Speaker 1>both Woolies and Cohal's later this year. Can you start

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<v Speaker 1>by reminding us what the supermarket giants were accused of.

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<v Speaker 2>Yeah, Basically, the A Triple SEE is accusing them of

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<v Speaker 2>deceptively pricing items, suggesting that they're on sale, whereas in

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<v Speaker 2>reality they were not real sale. So what the case

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<v Speaker 2>with Woolies has focused on is a dozen or so

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<v Speaker 2>items out of a big long list of items that

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<v Speaker 2>the A triple see found things like we're talking tim

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<v Speaker 2>tams and fab and tiny teddies and all these other items,

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<v Speaker 2>all the good stuff, all the good stuff.

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<v Speaker 3>Wully saw the Oreo family pack at a regular price

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<v Speaker 3>of three dollars fifty for almost seven hundred days, spi

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<v Speaker 3>king to five dollars for just twenty two days. It

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<v Speaker 3>was then added to its prices dropped line at four

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<v Speaker 3>dollars fifty.

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<v Speaker 4>Yeah.

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<v Speaker 2>A good example is fat where the A triple see

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<v Speaker 2>are basically saying it for four hundred and twenty five days,

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<v Speaker 2>two kilogram pack of fab was seven bucks, and then

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<v Speaker 2>for nineteen days Willies raised the price of that to

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<v Speaker 2>fourteen dollars and then announced, oh, it's on sale at

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<v Speaker 2>eight bucks. And the A triple c is saying, really, actually,

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<v Speaker 2>what you've done is raised it from seven dollars to

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<v Speaker 2>eight But you just put in a little nineteen days

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<v Speaker 2>at a high price so that you could say it's

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<v Speaker 2>on sale. It's a price cut. And Willies and Cohles

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<v Speaker 2>did this for a range of items where for a

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<v Speaker 2>long time it to be at a certain price that

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<v Speaker 2>raise it for a couple of weeks, maybe three weeks,

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<v Speaker 2>and then drop it to a higher price than it

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<v Speaker 2>had been previous, but below that that sort of short

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<v Speaker 2>term price, and the Air Triple C is saying, look,

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<v Speaker 2>that's not a real sale, that's you manipulating the system.

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<v Speaker 5>The A triples C alleges that to the price discounts

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<v Speaker 5>as promoted were misleading because the discount was illusory. In addition,

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<v Speaker 5>the Ariple C alleges that in many cases were worse

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<v Speaker 5>and Cole's planned the temporary price spoke in order to

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<v Speaker 5>establish a new hire Wars price for there was now

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<v Speaker 5>price discount promotions.

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<v Speaker 1>So what was Willor's defense to these allegations.

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<v Speaker 4>Well, what was I say?

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<v Speaker 2>Well, it is a sale though it was forty dollars,

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<v Speaker 2>now it's eight.

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<v Speaker 4>It has been dropped. We're not lying.

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<v Speaker 3>Woollis argued suppliers drove the price hikes, stating following COVID

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<v Speaker 3>there was a period of extraordinary inflation. At no stage

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<v Speaker 3>do we mislead or deceive our customers.

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<v Speaker 4>People know that prices go up.

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<v Speaker 2>Things don't stay steady for all time, and so how

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<v Speaker 2>long should we have to keep it? You know, we

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<v Speaker 2>kept it up at this high price for a good

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<v Speaker 2>period of time and then we legitimately did drop it.

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<v Speaker 2>And when we say on the price tag that yes,

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<v Speaker 2>like for fab we dropped it from fourteen dollars to

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<v Speaker 2>eight dollars, Well, that is actually what happened.

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<v Speaker 1>What happens if the people see wins this case, what

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<v Speaker 1>will it mean for Coals and we're worse? And what

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<v Speaker 1>are the implications more broadly are I'm tipping Greg This

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<v Speaker 1>is probably one of the biggest cases the A People

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<v Speaker 1>see has sort of brought forward.

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<v Speaker 2>Yeah, it is a huge one, especially because of who

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<v Speaker 2>we're dealing with here. I mean, we're not just this

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<v Speaker 2>is in the corner store. This is everyone's quarter store.

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<v Speaker 6>If this is found to be true, it's completely unacceptable.

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<v Speaker 6>This is not the Australian spirit. Customers don't deserve to

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<v Speaker 6>be treated as fools by the supermarkets.

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<v Speaker 2>Coals and Woolies dominate the supermarket industry. But the good

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<v Speaker 2>thing is that we will have broader implications for all businesses.

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<v Speaker 2>No one else will be able to do this. If

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<v Speaker 2>the A trip will see wins.

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<v Speaker 5>We're seeking a significant penalty. This is serious conduct that

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<v Speaker 5>is a great concern to us, that affected many consumers

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<v Speaker 5>with millions of products sold subject to this practice. That

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<v Speaker 5>penalty has to be high enough to be not a

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<v Speaker 5>cost of doing business for such major companies to do.

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<v Speaker 2>What it will really mean is that customers will have

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<v Speaker 2>a lot more confidence when they actually do see sales

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<v Speaker 2>on offer that it is a real sale. You know,

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<v Speaker 2>if they win this case, whether it be coals and Woolies,

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<v Speaker 2>whether it be you know, even things like hardware stores

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<v Speaker 2>and so on, everyone is actually going to have to

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<v Speaker 2>be true blue really about their sales. And it can't

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<v Speaker 2>just manipulate it or let's just have it up for

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<v Speaker 2>a time that we think is long enough to get

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<v Speaker 2>away with, but actually one that we can justifiably say

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<v Speaker 2>is actually, yes, this is the price that we're charging

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<v Speaker 2>it at now, and if it is on sale, that

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<v Speaker 2>is because we're offering it on sale.

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<v Speaker 1>What are the chances of the supermarket losing?

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<v Speaker 3>Though?

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<v Speaker 1>Because the judge did make a comment during proceedings that

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<v Speaker 1>the Wooly scheme didn't strike him as nefarious or misleading,

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<v Speaker 1>does that indicate he'll side with the supermarket giants.

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<v Speaker 2>Yeah, it's a little bit concerning for those who are

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<v Speaker 2>cheering for the a triple C. It did suggest that

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<v Speaker 2>they weren't doing this in a deliberate way to trick consumers.

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<v Speaker 2>But the A triple C is essentially suggesting, Okay, maybe

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<v Speaker 2>they're not doing it so much to trick him, but

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<v Speaker 2>they're doing the least amount they had to do for

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<v Speaker 2>it to be legal for it not to be construed

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<v Speaker 2>as misleading. So in a sense, the A triple C

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<v Speaker 2>is arguing, okay, letter of law maybe, but this a

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<v Speaker 2>spirit of law. You know, prices do go up over time.

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<v Speaker 2>If something goes up because of let's say, transport costs,

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<v Speaker 2>how long do they have to keep that up before

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<v Speaker 2>they can drop it down to a sale? Is certainly

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<v Speaker 2>a legitimate argument. But I think what we're talking about

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<v Speaker 2>here is not a case of they were having to

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<v Speaker 2>lift prices for any reason. It was really a case

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<v Speaker 2>because it was over so many items. There was no

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<v Speaker 2>sort of conformity of these items. You can say, oh, yeah,

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<v Speaker 2>they've all gone up because of transport costs, or you know,

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<v Speaker 2>there was a wage rise in that industry. It was just, Hm,

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<v Speaker 2>they all seem to have been able to raise these

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<v Speaker 2>things for two or three weeks that they dropped them, and.

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<v Speaker 4>There really didn't.

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<v Speaker 2>Seem to be much justification from the supermarks in terms

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<v Speaker 2>of all these were economic increases in costs. It seemed

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<v Speaker 2>very much more like a strategy.

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<v Speaker 1>Coming up the nuclear option to break out the deuopoli.

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<v Speaker 1>Greg if the AHPLEC case is unsuccessful options, do we

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<v Speaker 1>have to keep these bohemous honest when it comes to

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<v Speaker 1>our sievemaker giants.

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<v Speaker 2>Yeah, it's really tough because, you know, the A triple

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<v Speaker 2>cee in this instance, for example, it's not really arguing about, oh.

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<v Speaker 4>The prices are too high.

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<v Speaker 2>It's really about being deceptive sort of false and misleading

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<v Speaker 2>advertising essentially. And the problem with the A triple seed

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<v Speaker 2>is most of its powers are link towards breaking either

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<v Speaker 2>consumer lords such as laws of advertising or laws about competition.

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<v Speaker 2>That they're colluding and what we know is the costs

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<v Speaker 2>and woolies. Even though they both came up with this

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<v Speaker 2>very similar marketing.

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<v Speaker 1>Strategy almost identical, Yeah.

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<v Speaker 2>Almost identical, they don't do it by wringing each other

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<v Speaker 2>up and saying, let's do this. They just they kind

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<v Speaker 2>of follow each other's lead and they know that they

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<v Speaker 2>can collude without actually having to collude. And that makes

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<v Speaker 2>it really tough if the A Triple C loses this.

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<v Speaker 2>While the government has given them some more powers to

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<v Speaker 2>look at prices to in a sense, force the companies

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<v Speaker 2>to justify their prices. Really, that's more about are they

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<v Speaker 2>price gouging? Are they really taking advantage rather than trying

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<v Speaker 2>to get them to compete. And that's the real trouble,

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<v Speaker 2>because they dominate so much that they don't feel the

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<v Speaker 2>need to compete against each other. They compete almost with

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<v Speaker 2>each other against everyone else. And when you do see

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<v Speaker 2>them fight, they don't so much fight over price. They

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<v Speaker 2>fight over, oh, if you spend twenty bucks you get

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<v Speaker 2>a little Disney figurine or things like that. They fight

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<v Speaker 2>over the sort of the edges, over the marginal things,

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<v Speaker 2>and not actually over prices.

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<v Speaker 1>Now I've collected all those figurines, so I know how

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<v Speaker 1>tempting it could be when it comes to competition, Greg,

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<v Speaker 1>the consumer seems to be sort of cornered here. I

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<v Speaker 1>mean billionaire Adrian Portelli, who people might know is the

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<v Speaker 1>Lambeaux guy or the guy who brought all the houses

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<v Speaker 1>on the block, has been teasing to take on coals

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<v Speaker 1>and woolies by launch in his own grocery chain. Is

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<v Speaker 1>l'ba guy? The answer here, Greg, do we need more competition?

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<v Speaker 4>Oh?

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<v Speaker 2>Look, more competition is definitely what we need. What we

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<v Speaker 2>saw for example, when Audi came into the market, that

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<v Speaker 2>actually did set off a price war because Coles and

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<v Speaker 2>Woolies were really scared. And then what we unfortunately saw

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<v Speaker 2>is everyone kind of settled into their market share. You know,

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<v Speaker 2>there's only so much that Audi is able to grab,

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<v Speaker 2>given it certainly doesn't have as many supermarkets as Coles

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<v Speaker 2>and Woolies. And yeah, if Lambeau guy comes in, he's

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<v Speaker 2>clearly not going to be able to compete directly with

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<v Speaker 2>Coles and Woolies. It's more likely he'll be you know,

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<v Speaker 2>competing either with Audi or other smaller sort of corner

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<v Speaker 2>store style supermarkets and groceries. So that's the problem is

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<v Speaker 2>that they're so big and they have such they are

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<v Speaker 2>so entrenched, and not only their trench, they also own

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<v Speaker 2>you know, plots of les and where another supermarket might

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<v Speaker 2>wish to put a supermarket SubTime, but Cole's or will

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<v Speaker 2>He's already owned that with plans to one day maybe

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<v Speaker 2>they'll put it there if it's profitable for them, but

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<v Speaker 2>it's certainly not profitable that for them to allow anyone

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<v Speaker 2>else to build there. So it's a pretty tough problem

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<v Speaker 2>in that sense, and unfortunately a rich guy coming in

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<v Speaker 2>say I'm going to set up some supermarkets. Yeah, it

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<v Speaker 2>might work in a small geographical area, but certainly we're

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<v Speaker 2>not in a national sense.

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<v Speaker 1>The coalition in the past who's argued for divestita powers

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<v Speaker 1>form a poble C, buy, sell and fils is also

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<v Speaker 1>a fan. What would that look like and could it

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<v Speaker 1>make a difference.

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<v Speaker 2>I mean the vestitshre powers are basically where you have

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<v Speaker 2>a company or companies who essentially control all of the market,

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<v Speaker 2>and you split them up the government forces them to

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<v Speaker 2>sell up parts of their business. A classic example one

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<v Speaker 2>that many people think should happen, would be a company

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<v Speaker 2>like Meta and saying okay, you basically control all the

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<v Speaker 2>social media markers. You've got Facebook and Instagram and WhatsApp.

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<v Speaker 2>We're going to force you to sell off Instagram, sell

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<v Speaker 2>off WhatsApp. So certainly divest your powers are something also

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<v Speaker 2>in calling for, because the kind of a last resort

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<v Speaker 2>of nuclear option when you do have a company that

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<v Speaker 2>has such almost monopoly powers. Really, the unfortunate thing with

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<v Speaker 2>Australia's supermarket sector is it's kind of tough to see

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<v Speaker 2>how that would work. With splitting up Coals and Woolies,

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<v Speaker 2>because you'd need someone to actee want to buy them,

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<v Speaker 2>and you know how it would be done would be unclear.

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<v Speaker 6>I'm not sure who. If Cols sells their shop, who's

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<v Speaker 6>going to move into the local supermarket chain. Chances are

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<v Speaker 6>they'd be divesting towards each other. That's not the solution.

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<v Speaker 2>But also the reason why Coles and Woolies dominate is

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<v Speaker 2>Australia is a kind of a tough place to have

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<v Speaker 2>a supermarket chain because we're spread out so wide with

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<v Speaker 2>a pretty low population density. And so to encourage someone

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<v Speaker 2>to come in and say, okay, you're going to have

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<v Speaker 2>to take on Coals.

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<v Speaker 4>And Woolies and their brands.

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<v Speaker 2>Yes you're going to get some of their locations, but

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<v Speaker 2>you now have to take on all the costs of

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<v Speaker 2>transport and set up those supply chains yourself. It's a

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<v Speaker 2>big ask and it's why we haven't had a real

0:13:38.559 --> 0:13:42.800
<v Speaker 2>influx of international competitors coming in and saying, oh, have

0:13:42.880 --> 0:13:45.240
<v Speaker 2>a bit of that. It's one of those cases where

0:13:45.240 --> 0:13:47.840
<v Speaker 2>you'd like to go back thirty or forty years and

0:13:48.280 --> 0:13:51.280
<v Speaker 2>in some ways sort of ensured that Coles and Woolies

0:13:51.320 --> 0:13:54.720
<v Speaker 2>weren't able to grab such a huge market by land

0:13:54.760 --> 0:13:55.840
<v Speaker 2>banking and other things.

0:13:56.360 --> 0:14:00.680
<v Speaker 1>Inflation and grocery prices of course on the rise right now,

0:14:01.640 --> 0:14:04.680
<v Speaker 1>which is a time when traditionally supermarkets tend to break

0:14:04.760 --> 0:14:07.480
<v Speaker 1>it in and make sort of huge money. How timely

0:14:07.520 --> 0:14:11.200
<v Speaker 1>does that make this decision from the court, I know

0:14:11.240 --> 0:14:13.600
<v Speaker 1>it's later in the year, but we have a fairly

0:14:13.640 --> 0:14:15.600
<v Speaker 1>clear indication that the cost of living is not going

0:14:15.679 --> 0:14:18.360
<v Speaker 1>to sort of lessen its grip on us anytime soon.

0:14:18.760 --> 0:14:21.680
<v Speaker 2>Yeah, it's really crucial. And the good thing with this

0:14:21.880 --> 0:14:25.040
<v Speaker 2>is that we have some pretty recent evidence of what

0:14:25.200 --> 0:14:30.440
<v Speaker 2>happens after the Russia invasion of Ukraine and the general

0:14:30.480 --> 0:14:32.960
<v Speaker 2>opening up after COVID really set off a bit of

0:14:32.960 --> 0:14:37.000
<v Speaker 2>an inflation boom across the world, and it was a

0:14:37.080 --> 0:14:41.840
<v Speaker 2>situation where supermarkets and companies around the world and certainly

0:14:41.880 --> 0:14:46.280
<v Speaker 2>here in Australia took advantage of because people really don't

0:14:46.320 --> 0:14:49.880
<v Speaker 2>have any clue of why something is the cost it is,

0:14:50.040 --> 0:14:51.560
<v Speaker 2>you know, and this is one of the.

0:14:51.680 --> 0:14:53.760
<v Speaker 4>Key things of this trial.

0:14:53.920 --> 0:14:56.760
<v Speaker 2>Like, for example, packet of tintams, you know, how much

0:14:56.800 --> 0:14:59.880
<v Speaker 2>does it cost to make? What is the reasonable price

0:15:00.080 --> 0:15:02.720
<v Speaker 2>for it? You don't really know other than of reference

0:15:02.760 --> 0:15:04.760
<v Speaker 2>to what it was last week, or maybe what it

0:15:04.920 --> 0:15:09.120
<v Speaker 2>is in another shop. Because of that, companies are able

0:15:09.200 --> 0:15:12.360
<v Speaker 2>to raise prices on things by more than their actual

0:15:12.400 --> 0:15:15.040
<v Speaker 2>costs are and people kind of think, oh, yeah, that

0:15:15.200 --> 0:15:18.480
<v Speaker 2>damn straight of horn is raising the price of oil

0:15:18.640 --> 0:15:21.520
<v Speaker 2>that we know that raises transport costs. So I guess

0:15:21.560 --> 0:15:25.120
<v Speaker 2>that's what's going on. And it's a case of because

0:15:25.120 --> 0:15:29.600
<v Speaker 2>of that lack of information opaqueness about what actually is

0:15:29.680 --> 0:15:34.480
<v Speaker 2>causing prices to go up and enables supermarkets certainly to

0:15:34.720 --> 0:15:36.160
<v Speaker 2>increase their profit margins.

0:15:36.200 --> 0:15:38.360
<v Speaker 4>We saw that in twenty two and twenty three.

0:15:39.720 --> 0:15:43.400
<v Speaker 2>Inflation rose because companies were raising prices more than they

0:15:43.440 --> 0:15:46.480
<v Speaker 2>needed to to increase their profits. And what happened we

0:15:46.480 --> 0:15:49.400
<v Speaker 2>were to pay higher in interest rates because the Reserve

0:15:49.480 --> 0:15:54.280
<v Speaker 2>Bank was basically blaming us. So I think this case

0:15:54.360 --> 0:15:56.800
<v Speaker 2>is very important in that regard because there needs to

0:15:56.840 --> 0:16:01.120
<v Speaker 2>be at least some pushback on needs being able to

0:16:01.280 --> 0:16:05.080
<v Speaker 2>price things. However, they want to make use of that

0:16:05.200 --> 0:16:08.400
<v Speaker 2>lack of knowledge that we have to be able to say, look,

0:16:08.800 --> 0:16:11.560
<v Speaker 2>if at least you're offering sales, they have to be

0:16:11.560 --> 0:16:14.600
<v Speaker 2>a legitimate sale. Then of course we still have the

0:16:14.680 --> 0:16:17.760
<v Speaker 2>other problem as well, and that doesn't stop them from

0:16:17.800 --> 0:16:20.480
<v Speaker 2>increasing prices by more than they need to to cover

0:16:20.520 --> 0:16:24.400
<v Speaker 2>their costs. And that's a whole other problem that we

0:16:24.480 --> 0:16:25.120
<v Speaker 2>have to deal with.

0:16:27.160 --> 0:16:29.680
<v Speaker 4>Greg. Thank you so much for your time, No problem

0:16:29.760 --> 0:16:30.320
<v Speaker 4>is great to chat.

0:16:38.320 --> 0:16:42.520
<v Speaker 1>Also in the news, Australia's first purpose built biocontainment facility

0:16:42.920 --> 0:16:45.280
<v Speaker 1>will be used to how some of the Australian travelers

0:16:45.280 --> 0:16:48.000
<v Speaker 1>caught up in the hand to virus outbreak. The five

0:16:48.040 --> 0:16:50.920
<v Speaker 1>Australians on board the MV Hondias are traveling home on

0:16:50.960 --> 0:16:54.440
<v Speaker 1>a charter flight and full PPE protective gear. On arrival,

0:16:54.480 --> 0:16:58.760
<v Speaker 1>they'll undergo clinical assessment before being quarantined. The threat of

0:16:58.800 --> 0:17:02.400
<v Speaker 1>the virus spreading further has been assessed as low. A

0:17:02.480 --> 0:17:05.320
<v Speaker 1>Liberal Front bencher Tim Wilson now says he would never

0:17:05.440 --> 0:17:09.320
<v Speaker 1>ever support a coalition government with one nation, despite refusing

0:17:09.359 --> 0:17:12.439
<v Speaker 1>to rule out the possibility over the weekend, the Shadow

0:17:12.480 --> 0:17:16.040
<v Speaker 1>Treasurer walked back his comments after other senior Liberals rejected

0:17:16.080 --> 0:17:19.399
<v Speaker 1>the idea, but Barnaby Joyce says the Opposition will have

0:17:19.440 --> 0:17:22.480
<v Speaker 1>no choice but to cooperate with the minor party after

0:17:22.520 --> 0:17:25.320
<v Speaker 1>their dominant women Farah proved their power at the polls.

0:17:26.119 --> 0:17:28.159
<v Speaker 1>I'm Daniel James Thank you so much for listening to

0:17:28.160 --> 0:17:31.560
<v Speaker 1>seven AM. We'll be back tomorrow.