New competition rules to have opposite effect

If the review of Australia’s competition rules recommend that the overwhelming advantages already enjoyed by the two major supermarkets be expanded, then the review itself can be described as nothing less than a failure, according to the Australasian Association of Convenience Stores (AACS).

AACS CEO Jeff Rogut said by opening the door for the major supermarkets to sell alcohol in store, while continuing to prevent convenience stores to participate in this category, the competition review has not only missed an opportunity, it has failed in its responsibility.

“The competition review recommendations, supposedly devised to put consumer interests first by providing more competition, appear to have completely ignored this responsibility,” Mr Rogut said.
“Inconceivably, the recommendations threaten to increase, not temper, the competitive advantages enjoyed by the major supermarkets while at the same time ignoring the interests of small retailers and the convenience of consumers.

“Between them, the two major supermarket chains control approximately 60% of the packaged alcohol market in Australia. The anti-competitive impacts of these chains being able to sell alcohol in their supermarkets as well, while continuing to deny the right for convenience stores to compete in this category, are exceedingly obvious.

“It makes no sense for a review designed to improve the competitive landscape in Australia to so recklessly hand the most dominant two forces even greater power.

“We strongly urge the Government, in its consideration of these recommendations, to recognise the anti-competitive landscape already in existence in the Australian retail market and prevent the balance from skewing further away from small businesses and independent retailers,” Mr Rogut said.

The AACS has long argued for deregulation in the packaged alcohol sector to enable convenience stores to have the right to responsibly sell these products if they choose to, subject to normal staff training and age regulations.

Mr Rogut said consumer purchasing habits when it comes to packaged alcohol aligns perfectly with the convenience store model.

“When purchasing packaged alcohol, consumers desire convenience and quick service while being influenced by store display, layout and product specials. These behaviours directly align with the competitive advantages of convenience stores,” Mr Rogut said.

“If the review was serious about putting consumer interests first, then this is an obvious and necessary place to start. It would unlock significant revenue potential for small businesses and added convenience and choice for consumers.

“In addition, there would be new employment opportunities created in the convenience sector in catering to this category.

“Instead the review’s recommendations appear to provide another leg up to the major supermarkets and skew the share of a market valued at over $16 billion even further in favour of two companies,” Mr Rogut said.

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