Metcash, the major grocery wholesaler and distributor to independent supermarkets has agreed to amend its supplier agreements as a result of the concerns expressed in the Report of the ACCC inquiry into the competitiveness of retail prices for standard groceries.
The report, issued in 2008, expressed the view that Metcash's arrangements with suppliers could make direct dealing between suppliers and independent retailers economically unattractive and enable Metcash to inhibit competitive supply.
The Australian Competition and Consumer Commission was specifically concerned with arrangements where suppliers of Metcash, supplying direct to Metcash's customers had to pay rebates to Metcash for products stocked by IGA>D, Metcash's distribution division. Suppliers who supplied direct to customers of Metcash had to provide details of such direct supply on a monthly basis.
The ACCC was concerned that such arrangements could act as a disincentive for suppliers to supply direct to retailers by making it economically unattractive to supply direct, and, in turn, that those retailers would then lack choice of supplier. The ACCC was concerned that this discouraged direct dealings between suppliers and independent retailers by increasing the cost of direct supply and/or reducing the discounts that might otherwise be made available to the retailer. As a result the ACCC decided to examine whether these arrangements breached the anti-competitive conduct provisions of the Trade Practices Act 1974 in particular sections 45, 46 and 47.
To alleviate these concerns, in early December 2008 Metcash told the ACCC that it had agreed to:
- amend its standard agreement so that all new agreements with suppliers would not contain the requirement to report direct deliveries to Metcash
- advise suppliers Metcash waived the requirement and would not enforce it, and
- vary existing agreements by deleting the requirement from each agreement.
The ACCC is, however, continuing to make inquiries in relation to Metcash's arrangements with its retailers, including arrangements where retailers are required to purchase all of their products or certain percentages of their products from Metcash.
The ACCC would like further information from retailers who feel restricted by purchasing from Metcash and whether they are able to source products from elsewhere. Any retailer who wants to provide information should contact the ACCC's Infocentre on 1300 302 502.
Media inquiries: Ms Lin Enright (02) 6243 1108 or 0414 613 520
General inquiries: Infocentre: 1300 302 502