Editorial: Supermarkets battered in court of public opinion, but can all claims really be believed?

By any measure, it’s been a shocking week for the two major supermarkets in the court of public opinion. Battered and bruised, Woolworths and Coles are now fighting to resurrect their reputations amid damning allegations from the competition regulator that have pushed them lower in the public’s estimation. “We will look very closely at the extent to which any market power held by the supermarkets has a role in increasing prices to consumers or decreasing prices to suppliers,” said Australian Competition and Consumer Commission deputy chair Mick Keogh in revealing the authority’s interim report about the supermarket sector. Consumers are losing trust in the sale price claims, he added — just days after announcing separate legal proceedings against both major supermarkets, alleging consumers were misled about discount price claims on hundreds of different items across the store If its allegations are true, the supermarkets have few places to look for blame and will have wrought the collapse in public trust upon themselves. But experts have noted the case will be hard to prove, and turn on fairly technical tenets of consumer law. Should the watchdog lose, the supermarkets will be vindicated but with little support from the Federal Government, which has been quick to join in the public pile-on. The supermarkets certainly have plenty of work to do to rebuild their standing with the community. But the Government also has a duty to customers, shareholders and employees that it’s honest and straightforward about its dealings with the sector, and not just bashing up the supermarkets for political gain. Australian-owned Coles and Woolworths are among the nation’s biggest taxpayers and employers and compete in an increasingly competitive sector — despite the continually narrow suggestions that their competition is merely Aldi and IGA. Profit margins, while high on an initial reading, are far below other sectors and aren’t even close to the staggering heights of other Australian companies — which have somehow managed to avoid the same level of scrutiny despite selling at least half of what can be found in most Woolworths or Coles supermarkets. The likes of Aldi manage to avoid the same level of scrutiny given its accounts are private and it’s foreign-owned. But little is said about its “product dupe” behaviour — where popular Australian products are replicated and then sold at a cheaper price than the brand-name product in its rival supermarkets. Coles boss Leah Weckert earlier this year said if her company took its post-tax profit and reinvested it into cutting prices, shelf prices would only reduce by “around 3 per cent”. Woolworths has made similar suggestions. These claims warrant further scrutiny but a similar argument has been made all year at various Parliamentary inquiries. Don’t feel sorry for the supermarkets. But if the legal cases don’t succeed, do question the public pile-on and do question the Government the next time it decides to find a new public enemy No.1.