Speaker 1: I'm Daniel James and you're listening to seven AM. Tim
Speaker 1: Tams and tiny teddies aren't usually the stuff of federal
Speaker 1: court cases, but product by products, dollar by dollar. The
Speaker 1: A Triple C has been building its case against supermarket
Speaker 1: giants Coals and Woolworthse over what it claims were fake discounts.
Speaker 1: Now both cases have wrapped and the judges reviewing the evidence.
Speaker 1: With inflation and grocery prices soaring, the timing couldn't be
Speaker 1: more crucial. Today Chief economist at the Australian Institute, Greg
Speaker 1: Gerricho on the case against the supermarket giants and its
Speaker 1: implications for Australian shoppers this Tuesday, May twelfth, Greg, the
Speaker 1: A Triple C has now wrapped its case against Wilworth's.
Speaker 1: The judge is due to hand down his fining against
Speaker 1: both Woolies and Cohal's later this year. Can you start
Speaker 1: by reminding us what the supermarket giants were accused of.
Speaker 2: Yeah, Basically, the A Triple SEE is accusing them of
Speaker 2: deceptively pricing items, suggesting that they're on sale, whereas in
Speaker 2: reality they were not real sale. So what the case
Speaker 2: with Woolies has focused on is a dozen or so
Speaker 2: items out of a big long list of items that
Speaker 2: the A triple see found things like we're talking tim
Speaker 2: tams and fab and tiny teddies and all these other items,
Speaker 2: all the good stuff, all the good stuff.
Speaker 3: Wully saw the Oreo family pack at a regular price
Speaker 3: of three dollars fifty for almost seven hundred days, spi
Speaker 3: king to five dollars for just twenty two days. It
Speaker 3: was then added to its prices dropped line at four
Speaker 3: dollars fifty.
Speaker 4: Yeah.
Speaker 2: A good example is fat where the A triple see
Speaker 2: are basically saying it for four hundred and twenty five days,
Speaker 2: two kilogram pack of fab was seven bucks, and then
Speaker 2: for nineteen days Willies raised the price of that to
Speaker 2: fourteen dollars and then announced, oh, it's on sale at
Speaker 2: eight bucks. And the A triple c is saying, really, actually,
Speaker 2: what you've done is raised it from seven dollars to
Speaker 2: eight But you just put in a little nineteen days
Speaker 2: at a high price so that you could say it's
Speaker 2: on sale. It's a price cut. And Willies and Cohles
Speaker 2: did this for a range of items where for a
Speaker 2: long time it to be at a certain price that
Speaker 2: raise it for a couple of weeks, maybe three weeks,
Speaker 2: and then drop it to a higher price than it
Speaker 2: had been previous, but below that that sort of short
Speaker 2: term price, and the Air Triple C is saying, look,
Speaker 2: that's not a real sale, that's you manipulating the system.
Speaker 5: The A triples C alleges that to the price discounts
Speaker 5: as promoted were misleading because the discount was illusory. In addition,
Speaker 5: the Ariple C alleges that in many cases were worse
Speaker 5: and Cole's planned the temporary price spoke in order to
Speaker 5: establish a new hire Wars price for there was now
Speaker 5: price discount promotions.
Speaker 1: So what was Willor's defense to these allegations.
Speaker 4: Well, what was I say?
Speaker 2: Well, it is a sale though it was forty dollars,
Speaker 2: now it's eight.
Speaker 4: It has been dropped. We're not lying.
Speaker 3: Woollis argued suppliers drove the price hikes, stating following COVID
Speaker 3: there was a period of extraordinary inflation. At no stage
Speaker 3: do we mislead or deceive our customers.
Speaker 4: People know that prices go up.
Speaker 2: Things don't stay steady for all time, and so how
Speaker 2: long should we have to keep it? You know, we
Speaker 2: kept it up at this high price for a good
Speaker 2: period of time and then we legitimately did drop it.
Speaker 2: And when we say on the price tag that yes,
Speaker 2: like for fab we dropped it from fourteen dollars to
Speaker 2: eight dollars, Well, that is actually what happened.
Speaker 1: What happens if the people see wins this case, what
Speaker 1: will it mean for Coals and we're worse? And what
Speaker 1: are the implications more broadly are I'm tipping Greg This
Speaker 1: is probably one of the biggest cases the A People
Speaker 1: see has sort of brought forward.
Speaker 2: Yeah, it is a huge one, especially because of who
Speaker 2: we're dealing with here. I mean, we're not just this
Speaker 2: is in the corner store. This is everyone's quarter store.
Speaker 6: If this is found to be true, it's completely unacceptable.
Speaker 6: This is not the Australian spirit. Customers don't deserve to
Speaker 6: be treated as fools by the supermarkets.
Speaker 2: Coals and Woolies dominate the supermarket industry. But the good
Speaker 2: thing is that we will have broader implications for all businesses.
Speaker 2: No one else will be able to do this. If
Speaker 2: the A trip will see wins.
Speaker 5: We're seeking a significant penalty. This is serious conduct that
Speaker 5: is a great concern to us, that affected many consumers
Speaker 5: with millions of products sold subject to this practice. That
Speaker 5: penalty has to be high enough to be not a
Speaker 5: cost of doing business for such major companies to do.
Speaker 2: What it will really mean is that customers will have
Speaker 2: a lot more confidence when they actually do see sales
Speaker 2: on offer that it is a real sale. You know,
Speaker 2: if they win this case, whether it be coals and Woolies,
Speaker 2: whether it be you know, even things like hardware stores
Speaker 2: and so on, everyone is actually going to have to
Speaker 2: be true blue really about their sales. And it can't
Speaker 2: just manipulate it or let's just have it up for
Speaker 2: a time that we think is long enough to get
Speaker 2: away with, but actually one that we can justifiably say
Speaker 2: is actually, yes, this is the price that we're charging
Speaker 2: it at now, and if it is on sale, that
Speaker 2: is because we're offering it on sale.
Speaker 1: What are the chances of the supermarket losing?
Speaker 3: Though?
Speaker 1: Because the judge did make a comment during proceedings that
Speaker 1: the Wooly scheme didn't strike him as nefarious or misleading,
Speaker 1: does that indicate he'll side with the supermarket giants.
Speaker 2: Yeah, it's a little bit concerning for those who are
Speaker 2: cheering for the a triple C. It did suggest that
Speaker 2: they weren't doing this in a deliberate way to trick consumers.
Speaker 2: But the A triple C is essentially suggesting, Okay, maybe
Speaker 2: they're not doing it so much to trick him, but
Speaker 2: they're doing the least amount they had to do for
Speaker 2: it to be legal for it not to be construed
Speaker 2: as misleading. So in a sense, the A triple C
Speaker 2: is arguing, okay, letter of law maybe, but this a
Speaker 2: spirit of law. You know, prices do go up over time.
Speaker 2: If something goes up because of let's say, transport costs,
Speaker 2: how long do they have to keep that up before
Speaker 2: they can drop it down to a sale? Is certainly
Speaker 2: a legitimate argument. But I think what we're talking about
Speaker 2: here is not a case of they were having to
Speaker 2: lift prices for any reason. It was really a case
Speaker 2: because it was over so many items. There was no
Speaker 2: sort of conformity of these items. You can say, oh, yeah,
Speaker 2: they've all gone up because of transport costs, or you know,
Speaker 2: there was a wage rise in that industry. It was just, Hm,
Speaker 2: they all seem to have been able to raise these
Speaker 2: things for two or three weeks that they dropped them, and.
Speaker 4: There really didn't.
Speaker 2: Seem to be much justification from the supermarks in terms
Speaker 2: of all these were economic increases in costs. It seemed
Speaker 2: very much more like a strategy.
Speaker 1: Coming up the nuclear option to break out the deuopoli.
Speaker 1: Greg if the AHPLEC case is unsuccessful options, do we
Speaker 1: have to keep these bohemous honest when it comes to
Speaker 1: our sievemaker giants.
Speaker 2: Yeah, it's really tough because, you know, the A triple
Speaker 2: cee in this instance, for example, it's not really arguing about, oh.
Speaker 4: The prices are too high.
Speaker 2: It's really about being deceptive sort of false and misleading
Speaker 2: advertising essentially. And the problem with the A triple seed
Speaker 2: is most of its powers are link towards breaking either
Speaker 2: consumer lords such as laws of advertising or laws about competition.
Speaker 2: That they're colluding and what we know is the costs
Speaker 2: and woolies. Even though they both came up with this
Speaker 2: very similar marketing.
Speaker 1: Strategy almost identical, Yeah.
Speaker 2: Almost identical, they don't do it by wringing each other
Speaker 2: up and saying, let's do this. They just they kind
Speaker 2: of follow each other's lead and they know that they
Speaker 2: can collude without actually having to collude. And that makes
Speaker 2: it really tough if the A Triple C loses this.
Speaker 2: While the government has given them some more powers to
Speaker 2: look at prices to in a sense, force the companies
Speaker 2: to justify their prices. Really, that's more about are they
Speaker 2: price gouging? Are they really taking advantage rather than trying
Speaker 2: to get them to compete. And that's the real trouble,
Speaker 2: because they dominate so much that they don't feel the
Speaker 2: need to compete against each other. They compete almost with
Speaker 2: each other against everyone else. And when you do see
Speaker 2: them fight, they don't so much fight over price. They
Speaker 2: fight over, oh, if you spend twenty bucks you get
Speaker 2: a little Disney figurine or things like that. They fight
Speaker 2: over the sort of the edges, over the marginal things,
Speaker 2: and not actually over prices.
Speaker 1: Now I've collected all those figurines, so I know how
Speaker 1: tempting it could be when it comes to competition, Greg,
Speaker 1: the consumer seems to be sort of cornered here. I
Speaker 1: mean billionaire Adrian Portelli, who people might know is the
Speaker 1: Lambeaux guy or the guy who brought all the houses
Speaker 1: on the block, has been teasing to take on coals
Speaker 1: and woolies by launch in his own grocery chain. Is
Speaker 1: l'ba guy? The answer here, Greg, do we need more competition?
Speaker 4: Oh?
Speaker 2: Look, more competition is definitely what we need. What we
Speaker 2: saw for example, when Audi came into the market, that
Speaker 2: actually did set off a price war because Coles and
Speaker 2: Woolies were really scared. And then what we unfortunately saw
Speaker 2: is everyone kind of settled into their market share. You know,
Speaker 2: there's only so much that Audi is able to grab,
Speaker 2: given it certainly doesn't have as many supermarkets as Coles
Speaker 2: and Woolies. And yeah, if Lambeau guy comes in, he's
Speaker 2: clearly not going to be able to compete directly with
Speaker 2: Coles and Woolies. It's more likely he'll be you know,
Speaker 2: competing either with Audi or other smaller sort of corner
Speaker 2: store style supermarkets and groceries. So that's the problem is
Speaker 2: that they're so big and they have such they are
Speaker 2: so entrenched, and not only their trench, they also own
Speaker 2: you know, plots of les and where another supermarket might
Speaker 2: wish to put a supermarket SubTime, but Cole's or will
Speaker 2: He's already owned that with plans to one day maybe
Speaker 2: they'll put it there if it's profitable for them, but
Speaker 2: it's certainly not profitable that for them to allow anyone
Speaker 2: else to build there. So it's a pretty tough problem
Speaker 2: in that sense, and unfortunately a rich guy coming in
Speaker 2: say I'm going to set up some supermarkets. Yeah, it
Speaker 2: might work in a small geographical area, but certainly we're
Speaker 2: not in a national sense.
Speaker 1: The coalition in the past who's argued for divestita powers
Speaker 1: form a poble C, buy, sell and fils is also
Speaker 1: a fan. What would that look like and could it
Speaker 1: make a difference.
Speaker 2: I mean the vestitshre powers are basically where you have
Speaker 2: a company or companies who essentially control all of the market,
Speaker 2: and you split them up the government forces them to
Speaker 2: sell up parts of their business. A classic example one
Speaker 2: that many people think should happen, would be a company
Speaker 2: like Meta and saying okay, you basically control all the
Speaker 2: social media markers. You've got Facebook and Instagram and WhatsApp.
Speaker 2: We're going to force you to sell off Instagram, sell
Speaker 2: off WhatsApp. So certainly divest your powers are something also
Speaker 2: in calling for, because the kind of a last resort
Speaker 2: of nuclear option when you do have a company that
Speaker 2: has such almost monopoly powers. Really, the unfortunate thing with
Speaker 2: Australia's supermarket sector is it's kind of tough to see
Speaker 2: how that would work. With splitting up Coals and Woolies,
Speaker 2: because you'd need someone to actee want to buy them,
Speaker 2: and you know how it would be done would be unclear.
Speaker 6: I'm not sure who. If Cols sells their shop, who's
Speaker 6: going to move into the local supermarket chain. Chances are
Speaker 6: they'd be divesting towards each other. That's not the solution.
Speaker 2: But also the reason why Coles and Woolies dominate is
Speaker 2: Australia is a kind of a tough place to have
Speaker 2: a supermarket chain because we're spread out so wide with
Speaker 2: a pretty low population density. And so to encourage someone
Speaker 2: to come in and say, okay, you're going to have
Speaker 2: to take on Coals.
Speaker 4: And Woolies and their brands.
Speaker 2: Yes you're going to get some of their locations, but
Speaker 2: you now have to take on all the costs of
Speaker 2: transport and set up those supply chains yourself. It's a
Speaker 2: big ask and it's why we haven't had a real
Speaker 2: influx of international competitors coming in and saying, oh, have
Speaker 2: a bit of that. It's one of those cases where
Speaker 2: you'd like to go back thirty or forty years and
Speaker 2: in some ways sort of ensured that Coles and Woolies
Speaker 2: weren't able to grab such a huge market by land
Speaker 2: banking and other things.
Speaker 1: Inflation and grocery prices of course on the rise right now,
Speaker 1: which is a time when traditionally supermarkets tend to break
Speaker 1: it in and make sort of huge money. How timely
Speaker 1: does that make this decision from the court, I know
Speaker 1: it's later in the year, but we have a fairly
Speaker 1: clear indication that the cost of living is not going
Speaker 1: to sort of lessen its grip on us anytime soon.
Speaker 2: Yeah, it's really crucial. And the good thing with this
Speaker 2: is that we have some pretty recent evidence of what
Speaker 2: happens after the Russia invasion of Ukraine and the general
Speaker 2: opening up after COVID really set off a bit of
Speaker 2: an inflation boom across the world, and it was a
Speaker 2: situation where supermarkets and companies around the world and certainly
Speaker 2: here in Australia took advantage of because people really don't
Speaker 2: have any clue of why something is the cost it is,
Speaker 2: you know, and this is one of the.
Speaker 4: Key things of this trial.
Speaker 2: Like, for example, packet of tintams, you know, how much
Speaker 2: does it cost to make? What is the reasonable price
Speaker 2: for it? You don't really know other than of reference
Speaker 2: to what it was last week, or maybe what it
Speaker 2: is in another shop. Because of that, companies are able
Speaker 2: to raise prices on things by more than their actual
Speaker 2: costs are and people kind of think, oh, yeah, that
Speaker 2: damn straight of horn is raising the price of oil
Speaker 2: that we know that raises transport costs. So I guess
Speaker 2: that's what's going on. And it's a case of because
Speaker 2: of that lack of information opaqueness about what actually is
Speaker 2: causing prices to go up and enables supermarkets certainly to
Speaker 2: increase their profit margins.
Speaker 4: We saw that in twenty two and twenty three.
Speaker 2: Inflation rose because companies were raising prices more than they
Speaker 2: needed to to increase their profits. And what happened we
Speaker 2: were to pay higher in interest rates because the Reserve
Speaker 2: Bank was basically blaming us. So I think this case
Speaker 2: is very important in that regard because there needs to
Speaker 2: be at least some pushback on needs being able to
Speaker 2: price things. However, they want to make use of that
Speaker 2: lack of knowledge that we have to be able to say, look,
Speaker 2: if at least you're offering sales, they have to be
Speaker 2: a legitimate sale. Then of course we still have the
Speaker 2: other problem as well, and that doesn't stop them from
Speaker 2: increasing prices by more than they need to to cover
Speaker 2: their costs. And that's a whole other problem that we
Speaker 2: have to deal with.
Speaker 4: Greg. Thank you so much for your time, No problem
Speaker 4: is great to chat.
Speaker 1: Also in the news, Australia's first purpose built biocontainment facility
Speaker 1: will be used to how some of the Australian travelers
Speaker 1: caught up in the hand to virus outbreak. The five
Speaker 1: Australians on board the MV Hondias are traveling home on
Speaker 1: a charter flight and full PPE protective gear. On arrival,
Speaker 1: they'll undergo clinical assessment before being quarantined. The threat of
Speaker 1: the virus spreading further has been assessed as low. A
Speaker 1: Liberal Front bencher Tim Wilson now says he would never
Speaker 1: ever support a coalition government with one nation, despite refusing
Speaker 1: to rule out the possibility over the weekend, the Shadow
Speaker 1: Treasurer walked back his comments after other senior Liberals rejected
Speaker 1: the idea, but Barnaby Joyce says the Opposition will have
Speaker 1: no choice but to cooperate with the minor party after
Speaker 1: their dominant women Farah proved their power at the polls.
Speaker 1: I'm Daniel James Thank you so much for listening to
Speaker 1: seven AM. We'll be back tomorrow.